<PAGE>
RULE NO. 424(b)(3)
REGISTRATION NO. 333-80903
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus supplement is not complete and may be +
+changed. This prospectus supplement and the accompanying prospectus is not an +
+offer to sell these securities and we are not soliciting offers to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 7, 1999
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 7, 1999)
Securities
BANK ONE CAPITAL I
% Preferred Securities
$25 liquidation amount
fully and unconditionally guaranteed, on a subordinated
basis, as described herein by
BANK ONE CORPORATION
[LOGO OF BANK ONE CORPORATION]
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A brief description of the % preferred securities can be found under
"Summary" in this prospectus supplement.
Application will be made to list the % preferred securities on the New York
Stock Exchange. If approved for listing, BANK ONE expects that the % preferred
securities will begin trading on the New York Stock Exchange within 30 days
after they are first issued.
You are urged to carefully read the "Risk Factors" section beginning on page
S-7, where specific risks associated with these % preferred securities are
described, along with the other information in this prospectus supplement
before you make your investment decision.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
These securities are not deposits or savings accounts. These securities are
not insured by the Federal Deposit Insurance Corporation or any other
governmental agency or instrumentality.
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<TABLE>
<CAPTION>
Per Preferred Security Total
---------------------- -----
<S> <C> <C>
Public offering price $ $
Underwriting commissions to be paid by BANK ONE
CORPORATION (1) (1)
Proceeds to BANK ONE Capital I $ $
</TABLE>
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(1) Underwriting commissions of $ per % preferred security, or $ for all
% preferred securities, will be paid by BANK ONE CORPORATION; except that
for sales of 10,000 or more % preferred securities to a single purchaser,
the commissions will be $ per % preferred security.
We have given the underwriters an option to purchase additional %
preferred securities.
BANK ONE expects that the % preferred securities will be ready for delivery
in book-entry form only through The Depository Trust Company on or about
September , 1999.
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Salomon Smith Barney Banc One Capital Markets, Inc.
Merrill Lynch & Co.
Morgan Stanley Dean Witter
A.G. Edwards & Sons, Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
September , 1999
<PAGE>
In making your investment decision, you should rely only on the information
contained or incorporated by reference in this prospectus supplement and the
attached prospectus. We have not authorized anyone to provide you with
additional information. If you receive any information not authorized by us,
you may not rely on it.
We are offering the Preferred Securities for sale only in places where we
are permitted.
You should not assume that the information contained or incorporated by
reference in this prospectus supplement or the attached prospectus is accurate
as of any date other than its respective date.
Certain of our affiliates, including Banc One Capital Markets, Inc., may use
the prospectus supplement and the attached prospectus in connection with the
purchase and sales of Preferred Securities in the secondary market. These
affiliates may act as principal or agent in those transactions. Any sale by an
affiliate will be made at the prevailing market price at the time of the sale.
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Prospectus Supplement
Summary............................. S-3
Consolidated Ratios of Earnings to
Fixed Charges...................... S-7
Risk Factors........................ S-7
BANK ONE CORPORATION................ S-10
Forward-Looking Statements.......... S-12
BANK ONE Capital I.................. S-13
Capitalization...................... S-15
Accounting Treatment................ S-15
Use of Proceeds..................... S-16
Selected Consolidated Financial
Data............................... S-17
Description of the Preferred
Securities......................... S-18
Description of the Preferred
Securities Guarantee............... S-32
Description of the Junior
Subordinated Debt Securities....... S-32
Effect of Obligations Under the
Junior Subordinated Debt Securities
and the Preferred Securities
Guarantee.......................... S-40
United States Federal Income
Taxation........................... S-42
ERISA Considerations................ S-44
Underwriting........................ S-46
Legal Matters....................... S-48
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Prospectus
Summary..................................................................................................... 1
Where You Can Find More Information About the Company and the BANK ONE Capital Trusts....................... 2
Forward-Looking Statements.................................................................................. 3
The Company................................................................................................. 5
Ratio of Earnings to Fixed Charges.......................................................................... 6
The BANK ONE Capital Trusts................................................................................. 6
Use of Proceeds............................................................................................. 8
Regulatory Matters.......................................................................................... 8
Description of Debt Securities.............................................................................. 13
Senior Securities........................................................................................... 18
Senior Subordinated Securities.............................................................................. 19
Description of the Junior Subordinated Debt Securities...................................................... 24
Description of the Preferred Securities..................................................................... 29
Description of the Preferred Securities Guarantees.......................................................... 31
Effect of Obligations Under the Junior Subordinated Debt Securities and the Preferred Securities Guarantee.. 35
Global Securities........................................................................................... 36
Plan of Distribution........................................................................................ 38
Legal Matters............................................................................................... 39
Experts..................................................................................................... 39
</TABLE>
S-2
<PAGE>
SUMMARY
In this summary, we highlight certain information found in this prospectus
supplement and the attached prospectus. To understand the terms of the
Preferred Securities, the related Preferred Securities Guarantee and the
Junior Subordinated Debt Securities, as well as other considerations that are
important to you in making your investment decision, you should carefully read
this entire prospectus supplement and the attached prospectus. You should also
read the documents we have referred you to under the caption "Where You Can
Find More Information About the Company and the BANK ONE Capital Trusts" on
page 2 of the attached prospectus.
About this Prospectus Supplement
This prospectus supplement summarizes the specific terms of the securities
being offered and supplements the general description contained in the
attached prospectus. This prospectus supplement may also update or supersede
information in the attached prospectus. In case of inconsistencies, this
prospectus supplement will apply. If we use capitalized terms in this
prospectus supplement and do not define them in this document, the capitalized
terms will have the meaning given to them in the attached prospectus.
The Issuer and BANK ONE
The issuer of the securities is BANK ONE Capital I which we refer to in
this prospectus supplement as the "Trust". The Trust is a Delaware business
trust and was created for the sole purpose of issuing the % Preferred
Securities, which we refer to as the "Preferred Securities". The Trust will
only engage in the other transactions which we describe in this prospectus
supplement and the attached prospectus. The BANK ONE Capital Trustees
described on pages 7 and 8 of the attached prospectus will conduct the
business affairs of the Trust.
BANK ONE CORPORATION, which we refer to in this prospectus supplement as
the "Company" or "BANK ONE", is a bank holding company. Through its
subsidiaries, BANK ONE provides domestic retail banking, worldwide corporate
and institutional banking and trust and investment management services. At
June 30, 1999, BANK ONE had assets of $256.03 billion and stockholders' equity
of $21.05 billion.
BANK ONE's and the Trust's executive offices are located at One First
National Plaza, Chicago, Illinois 60670, and the telephone number is (312)
732-4000.
The Preferred Securities
Each Preferred Security will represent an undivided beneficial ownership
interest in the assets of the Trust.
The Trust will sell the Preferred Securities to the public and its common
securities, which we refer to as the "Common Securities", to BANK ONE. The
Trust will use the proceeds from those sales to purchase $ aggregate
principal amount of % Junior Subordinated Deferrable Interest Debentures due
, 2029, which we refer to as the "Junior Subordinated Debt Securities".
BANK ONE will pay interest on the Junior Subordinated Debt Securities at the
same rate and on the same dates as the Trust makes payments on the Preferred
Securities. The Trust will use the payments it receives on the Junior
Subordinated Debt Securities to make the corresponding payments on the
Preferred Securities and Common Securities.
S-3
<PAGE>
Distributions
If you purchase Preferred Securities, you will be entitled to receive
cumulative cash distributions at the annual rate of % of the stated
liquidation amount of $25 per Preferred Security. Distributions will accumulate
from , 1999. The Trust will make distribution payments on the Preferred
Securities quarterly in arrears, on February 15, May 15, August 15, and
November 15 of each year, beginning November 15, 1999, unless those payments
are deferred as described below.
Deferral of Distributions
BANK ONE may elect, on one or more occasions, to defer the quarterly
interest payments on the Junior Subordinated Debt Securities for a period of up
to 20 consecutive quarterly periods. In other words, BANK ONE can declare one
or more interest payment moratoriums on the Junior Subordinated Debt
Securities, each of which may last up to five years. However, no interest
deferral may
. extend beyond the stated maturity date of the Junior Subordinated Debt
Securities or
. begin if BANK ONE is in default in the payment of interest on the Junior
Subordinated Debt Securities.
If BANK ONE exercises its right to defer interest payments on the Junior
Subordinated Debt Securities, the Trust will also defer distribution payments
on the Preferred Securities.
Although you will not receive distribution payments on the Preferred
Securities if interest payments on the Junior Subordinated Debt Securities are
deferred, interest will continue to be compounded quarterly on the Junior
Subordinated Debt Securities, and deferred interest payments will accrue
additional interest at an annual rate of %, to the extent permitted by law.
As a result, additional distributions will continue to accumulate on the
deferred distributions at the annual rate of %, compounded quarterly.
If BANK ONE defers payments of interest on the Junior Subordinated Debt
Securities, the Junior Subordinated Debt Securities will be treated as being
issued with original discount for United States federal income tax purposes.
This means that you must include interest income with respect to the deferred
distributions on the Preferred Securities in gross income for United States
federal income tax purposes, prior to receiving any cash distributions. For a
description of how a payment deferral may affect you, see "United States
Federal Income Taxation--Interest Income and Original Issue Discount".
Redemption
The Trust will redeem the Preferred Securities and its Common Securities on
, 2029, the stated maturity date of the Junior Subordinated Debt Securities.
In addition, if BANK ONE redeems or repays the Junior Subordinated Debt
Securities held by the Trust prior to the stated maturity date, the Trust will
use the cash it receives to redeem on a proportionate basis its Preferred
Securities and Common Securities having an aggregate liquidation amount equal
to the aggregate principal amount of the Junior Subordinated Debt Securities
redeemed.
The redemption terms of the Junior Subordinated Debt Securities are
summarized in this prospectus supplement under "The Junior Subordinated Debt
Securities--Optional Redemption". How these redemption provisions apply to you
as a holder of Preferred Securities is described under "Description of the
Preferred Securities--Mandatory Redemption" and "--Special Event Redemption".
Upon any redemption of the Preferred Securities, you will be entitled to
receive a redemption price equal to the Liquidation Amount of the Preferred
Securities redeemed, plus any accumulated and unpaid distributions to the date
of redemption.
S-4
<PAGE>
Liquidation of the Trust and Distribution of Junior Subordinated Debt
Securities
BANK ONE may dissolve the Trust at any time, subject to its receipt of any
required prior approval by the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board").
If BANK ONE dissolves the Trust, after the Trust satisfies all of its
liabilities as required by law, the BANK ONE Capital Trustees will distribute
the Junior Subordinated Debt Securities to the holders of the Preferred
Securities. In such an event, BANK ONE will use its best efforts to have the
Junior Subordinated Debt Securities listed or quoted on any securities exchange
or quotation system on which the Preferred Securities were listed at the time
of the Trust's dissolution.
Book-Entry
The Preferred Securities will be represented by one or more global
certificates registered in the name of and deposited with The Depository Trust
Company ("DTC") or its nominee. This means that you will not receive a
certificate for your Preferred Securities, and Preferred Securities will not be
registered in your name, except under certain limited circumstances described
in this prospectus supplement under "Description of the Preferred Securities--
Book-Entry Only Issuance--The Depository Trust Company".
Listing of the Preferred Securities
BANK ONE will apply to list the Preferred Securities on the New York Stock
Exchange. We expect that the Preferred Securities will begin trading on the New
York Stock Exchange within 30 days after their initial delivery.
The Junior Subordinated Debt Securities
Maturity and Interest
The Junior Subordinated Debt Securities will mature on , 2029. They
will pay interest at the annual rate of % on their principal amount. Interest
on the Junior Subordinated Debt Securities will accrue from , 1999. BANK
ONE will pay interest quarterly in arrears on February 15, May 15, August 15
and November 15 of each year, beginning November 15, 1999.
Ranking
The Junior Subordinated Debt Securities held by the Trust will constitute
one series of junior subordinated debt securities and will be issued by BANK
ONE under the Junior Indenture referred to in the attached prospectus. The
Junior Subordinated Debt Securities will be unsecured and will rank junior to
all of BANK ONE's present and future Existing Indebtedness and General
Obligations. Since BANK ONE is a holding company, the Junior Subordinated Debt
Securities are also effectively junior in rank to all existing and future
liabilities of BANK ONE's subsidiaries, including depositors of its banking
subsidiaries.
For a definition of what constitutes Existing Indebtedness and General
Obligations with respect to the Junior Subordinated Debt Securities, see
"Description of the Junior Subordinated Debt Securities--Subordination" in this
prospectus supplement. Substantially all of BANK ONE's debt, other than other
junior subordinated indebtedness previously issued or that which may be issued
in the future, constitutes Existing Indebtedness.
Certain Payment Restrictions Applicable to BANK ONE
During any period in which BANK ONE has elected to defer interest payments
on the Junior Subordinated Debt Securities, BANK ONE generally may not make
payments on capital stock, or debt securities or guarantees of BANK ONE, which
are of an equal or junior rank to the Junior Subordinated Debt Securities,
subject to certain limitations.
S-5
<PAGE>
Redemption
BANK ONE may elect to redeem any or all of the Junior Subordinated Debt
Securities on one or more occasions on or after , 2004. In addition, if
certain changes in tax, investment company or bank regulatory law occur and
certain other conditions are satisfied, BANK ONE may elect to redeem all, but
not less than all, of the Junior Subordinated Debt Securities. For a
description of the changes that would permit such a redemption, see
"Description of the Preferred Securities--Special Event Redemption".
If Preferred Securities and Common Securities are outstanding at the time of
the redemption, the redemption proceeds will be used by the Trust to redeem, on
a proportionate basis, its Preferred Securities and Common Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Debt Securities redeemed.
If required under the Federal Reserve Board's capital rules, BANK ONE will
obtain the approval of the Federal Reserve Board prior to exercising its
redemption rights described above.
Events of Default
The following events, which are referred to as "Events of Default" and
described on page 27 of the attached prospectus, are events of default with
respect to the Junior Subordinated Debt Securities:
. BANK ONE fails to pay interest within 30 days after the due date; or
. BANK ONE fails to pay principal or premium when due; or
. BANK ONE materially breaches a covenant or agreement in the Junior
Subordinated Indenture and the breach continues for 90 days after notice
by the trustee under the Junior Subordinated Indenture or of holders of
at least 25% of the principal amount of the Junior Subordinated Debt
Securities; or
. certain events occur involving the bankruptcy, insolvency or
reorganization of BANK ONE.
Upon an event of default, the trustee under the Junior Subordinated Indenture
may declare the principal and interest on the Junior Subordinated Debt
Securities immediately due and payable. Under certain limited circumstances,
the holders of the Preferred Securities may institute a direct action against
BANK ONE to exercise certain rights and remedies under the Junior Subordinated
Indenture.
Guarantee by BANK ONE
BANK ONE will fully and unconditionally guarantee payment of amounts on the
Preferred Securities on a subordinated basis to the extent that the Trust has
funds available for payment of those amounts. We refer to this obligation as
the "Preferred Securities Guarantee". However, the Preferred Securities
Guarantee does not cover payments if the Trust does not have sufficient funds
to make the distribution payments, including for example, if BANK ONE has
failed to pay the Trust the amounts due under the Junior Subordinated Debt
Securities.
BANK ONE, as issuer of the Junior Subordinated Debt Securities, is also
obligated to pay the expenses and other obligations of the Trust, other than
the Trust's obligations to make payments on the Preferred Securities.
S-6
<PAGE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for BANK ONE, which are computed on
the basis of the total enterprise (as defined by the SEC) by dividing earnings
before fixed charges and income taxes by fixed charges, are set forth below for
the periods indicated. Also set forth below are the ratios of earnings to
combined fixed charges and preferred stock dividends, which are computed on the
basis of the total enterprise by dividing earnings before fixed charges and
income taxes by fixed charges and preferred stock dividend requirements for the
periods indicated. Fixed charges consist principally of interest expense on all
long- and short-term borrowings, excluding or including interest on deposits as
indicated.
<TABLE>
<CAPTION>
Six Months
Ended June
30, Year Ended December 31,
---------- ------------------------
1999 1998 1998 1997 1996 1995 1994
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding interest expense on
deposits.............................. 2.8x 2.6x 2.3x 2.4x 2.6x 2.2x 2.6x
Including interest expense on
deposits.............................. 1.8x 1.6x 1.5x 1.5x 1.6x 1.5x 1.6x
Earnings to Combined Fixed Charges and
Preferred Dividends:
Excluding interest expense on
deposits.............................. 2.8x 2.6x 2.3x 2.3x 2.5x 2.1x 2.5x
Including interest expense on
deposits.............................. 1.8x 1.6x 1.5x 1.5x 1.6x 1.5x 1.6x
</TABLE>
RISK FACTORS
Before deciding whether to purchase any Preferred Securities, you should pay
special attention to the following risk factors.
BANK ONE's Obligations under the Preferred Securities Guarantee and the Junior
Subordinated Debt Securities Are Subordinated.
BANK ONE's obligations under the Junior Subordinated Debt Securities and the
Preferred Securities Guarantee are subordinate and junior in right of payment
to all present and future Existing Indebtedness and General Obligations of BANK
ONE. This means that BANK ONE cannot make any payments on the Junior
Subordinated Debt Securities or under the Preferred Securities Guarantee at any
time when BANK ONE is in default with respect to any payment due on any
Existing Indebtedness or General Obligations. In addition, in the event of the
bankruptcy, insolvency or liquidation of BANK ONE, BANK ONE's assets must be
used to pay off its Existing Indebtedness and General Obligations before any
payments may be made on the Junior Subordinated Debt Securities or the
Preferred Securities Guarantee. Substantially all of BANK ONE's existing debt,
other than other junior subordinated debt securities previously issued or which
may be issued in the future, is Existing Indebtedness.
The Junior Subordinated Indenture, the Preferred Securities Guarantee and
the Declaration with respect to the Trust and the Preferred Securities do not
limit the ability of BANK ONE to incur additional secured or unsecured debt.
See "BANK ONE CORPORATION", "Description of the Preferred Securities
Guarantees--Status of the Preferred Securities Guarantees" and "Description of
the Junior Subordinated Debt Securities" in the accompanying prospectus, and
"Description of the Junior Subordinated Debt Securities--Subordination" in this
prospectus supplement.
Status of BANK ONE as a Holding Company May Affect Your Payments.
BANK ONE is a holding company that conducts substantially all of its
operations through subsidiaries. As a result, its ability to make payments on
the Junior Subordinated Debt Securities and the Preferred Securities
S-7
<PAGE>
Guarantee will depend primarily upon the receipt of dividends and other
distributions from its subsidiaries. Various legal limitations restrict the
extent to which BANK ONE's subsidiaries may extend credit, pay dividends or
other funds or otherwise engage in transactions with or to BANK ONE or certain
of its other subsidiaries.
In addition, BANK ONE's rights to participate in any distribution of assets
from any subsidiary, upon the subsidiary's liquidation, or otherwise, is
subject to the prior claims of creditors of that subsidiary, except to the
extent that BANK ONE is recognized as a creditor of that subsidiary. As a
result, the Junior Subordinated Debt Securities and the Preferred Securities
Guarantee will be effectively subordinated to all existing and future
liabilities of BANK ONE's subsidiaries. You should look only to the assets of
BANK ONE as the source of payment for the Junior Subordinated Debt Securities
and the Preferred Securities Guarantee.
BANK ONE Is Not Required to Pay You under the Preferred Securities Guarantee if
the Trust Does Not Have Cash Available.
The ability of the Trust to pay amounts due on the Preferred Securities is
solely dependent upon BANK ONE making payments on the Junior Subordinated Debt
Securities as and when required. In addition, the Preferred Securities
Guarantee only guarantees that BANK ONE will make distributions and redemption
payments if the Trust had funds available to make the payments but failed to do
so.
If the Trust defaults on its payment obligations under the Preferred
Securities because BANK ONE has failed to make the corresponding payment on the
Junior Subordinated Debt Securities, you will not be able to rely on the
Preferred Securities Guarantee payment. Instead, you may institute a legal
proceeding directly against BANK ONE for enforcement of its payment obligations
under the Junior Subordinated Indenture and the Junior Subordinated Debt
Securities.
Deferral of Distributions Would Have Adverse Tax Consequences for You and May
Adversely Affect the Trading Price of the Preferred Securities.
If distributions on the Preferred Securities are deferred, you will be
required to recognize interest income for United States federal income tax
purposes in respect of your ratable share of the interest on the Junior
Subordinated Debt Securities held by the Trust before you receive any cash
distributions relating to this interest. In addition, you will not receive this
cash if you sell the Preferred Securities before the end of any deferral period
or before the record date relating to distributions which are paid.
BANK ONE has no current intention of deferring interest payments on the
Junior Subordinated Debt Securities and believes that such deferral is a remote
possibility. However, if BANK ONE exercises its right in the future, the
Preferred Securities may trade at a price that does not fully reflect the value
of accrued but unpaid interest on the Junior Subordinated Debt Securities. If
you sell the Preferred Securities during an interest deferral period, you may
not receive the same return on investment as someone else who continues to hold
the Preferred Securities. In addition, the existence of BANK ONE'S right to
defer payments of interest on the Junior Subordinated Debt Securities may mean
that the market price for the Preferred Securities, which represent an
undivided beneficial ownership interest in the Junior Subordinated Debt
Securities, may be more volatile than other securities that do not have these
rights.
See "United States Federal Income Taxation" in this prospectus supplement
for more information regarding the tax consequences of purchasing, holding and
selling the Preferred Securities.
Preferred Securities May Be Redeemed at Any Time if Certain Changes in Tax,
Investment Company or Bank Regulatory Law Occur.
Under certain circumstances, within 90 days after the occurrence of a Tax
Event, Investment Company Event or a Capital Treatment Event, each of which
terms is defined in this prospectus supplement on
S-8
<PAGE>
page S-21, BANK ONE may elect to redeem the Junior Subordinated Debt Securities
in whole but not in part. That redemption would cause a mandatory redemption of
the Preferred Securities at a redemption price equal to their liquidation
amount, $25 per Preferred Security, plus accumulated and unpaid distributions
to the redemption date. See "Description of the Preferred Securities--Special
Event Redemption" and "Description of the Junior Subordinated Debt Securities"
in this prospectus supplement.
Preferred Securities May Be Redeemed at the Option of BANK ONE.
The Preferred Securities may be redeemed, in whole, at any time, or in part,
from time to time, on or after , 2004, at a redemption price equal to their
liquidation amount, $25 per Preferred Security, plus accumulated and unpaid
distributions to the redemption date. You should assume that this redemption
option will be exercised if BANK ONE is able to refinance at a lower interest
rate or it is otherwise in the interest of BANK ONE to redeem the Junior
Subordinated Debt Securities. If the Junior Subordinated Debt Securities are
redeemed, the Trust must redeem the Preferred Securities and the Common
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debt Securities to be redeemed. See
"Description of the Preferred Securities--Mandatory Redemption" in this
prospectus supplement.
There Can Be No Assurance as to the Market Prices for the Preferred Securities
or the Junior Subordinated Debt Securities.
BANK ONE and the Trust cannot give you any assurance as to the market prices
for the Preferred Securities or the Junior Subordinated Debt Securities that
may be distributed in exchange for Preferred Securities. Accordingly, the
Preferred Securities that an investor may purchase, whether pursuant to the
offer made by this prospectus supplement and the accompanying prospectus or in
the secondary market, or the Junior Subordinated Debt Securities that a holder
of the Preferred Securities may receive in exchange for Preferred Securities,
may trade at a discount to the price that the investor paid to purchase the
Preferred Securities. As a result of the Trust's right to defer distributions
on the Preferred Securities, the market price of the Preferred Securities may
be more volatile than the market prices of other securities to which optional
distribution deferrals do not apply.
There Could Be an Adverse Tax Consequence to You if BANK ONE Terminates the
Trust and Distributes Junior Subordinated Debt Securities to Holders, Resulting
in Possible Tax and Liquidity Consequences to You.
BANK ONE has the right to terminate the Trust at any time so long as it
obtains any required regulatory approval. If BANK ONE decides to exercise its
right to terminate the Trust, the Trust will redeem the Preferred Securities
and the Common Securities by distributing the Junior Subordinated Debt
Securities to holders of the Preferred Securities and the Common Securities on
a ratable basis.
Under current United States federal income tax law, a distribution of Junior
Subordinated Debt Securities to you upon the dissolution of the Trust would not
be a taxable event to you. However, if the Trust is characterized for United
States federal income tax purposes as an association taxable as a corporation
at the time it is dissolved or if there is a change in law, the distribution of
the Junior Subordinated Debt Securities to you may be a taxable event to you.
There May Be No Trading Market for the Junior Subordinated Debt Securities if
the Trust Distributes Them to You.
If the Junior Subordinated Debt Securities are distributed to you, BANK ONE
will use its best efforts to list the Junior Subordinated Debt Securities on
the New York Stock Exchange, or any other exchange on which the Preferred
Securities are then listed. However, BANK ONE cannot assure you that the Junior
Subordinated Debt Securities will be approved for listing or that a trading
market will exist for those securities.
S-9
<PAGE>
You Have Limited Voting Rights.
You will have limited voting rights. In particular, except for the limited
exceptions described under "Description of the Preferred Securities--Voting
Rights" in this prospectus supplement, only BANK ONE can elect or remove any of
the BANK ONE Capital Trustees.
BANK ONE CORPORATION
General
BANK ONE CORPORATION is a multi-bank holding company organized in 1998 under
the laws of the State of Delaware to effect the merger, effective October 2,
1998, of First Chicago NBD Corporation with BANC ONE CORPORATION.
Through its bank subsidiaries, BANK ONE provides retail banking, worldwide
corporate and institutional banking, and trust and investment management
services. BANK ONE operates banking offices in Arizona, Colorado, Florida,
Illinois, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Texas, Utah,
West Virginia and Wisconsin. BANK ONE also owns nonbank subsidiaries that
engage in businesses related to banking and finance, including credit card and
merchant processing, consumer and education finance, mortgage lending and
servicing, insurance, venture capital, investment and merchant banking, trust,
brokerage, investment management, leasing, community development and data
processing.
Like its predecessors, BANK ONE continually evaluates its business
operations and organizational structures and routinely explores opportunities
to (A) acquire financial institutions and other financial services-related
businesses and assets, and (B) enter into strategic alliances to expand the
scope of its services and its customer base. When consistent with its overall
business strategy, BANK ONE will also sell assets or exit certain businesses
and markets.
BANK ONE directly or indirectly raises funds principally to finance the
operations of its nonbank subsidiaries. A substantial portion of the Company'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.
BANK ONE is a legal entity separate and distinct from BANK ONE's banking
subsidiaries (the "Banks") and BANK ONE's other affiliates. There are various
legal limitations on the extent to which the Banks may extend credit, pay
dividends or otherwise supply funds to BANK ONE. As of January 1, 1999, the
Banks could have declared additional dividends of approximately $2.0 billion
without the approval of banking regulatory agencies. The payment of dividends
by any Bank may also be affected by other factors, such as the maintenance of
adequate capital for such Bank. Bank regulatory agencies have the authority to
prohibit the banking organizations they supervise from paying dividends if, in
the regulator's opinion, the payment of such dividends would, in light of the
financial condition of such bank, constitute an unsafe or unsound practice. In
addition, there are numerous other governmental requirements and regulations
that affect the activities of BANK ONE and its subsidiaries.
Under the longstanding policy of the Federal Reserve Board, a bank holding
company is expected to act as a source of financial strength for its subsidiary
banks and to commit resources to support such banks. As a result of this
policy, BANK ONE may be required to commit resources to the Banks in
circumstances where it might not otherwise do so.
Because BANK ONE is a holding company, its rights and the rights of its
creditors, including the holders of the Junior Subordinated Debt Securities and
the Preferred Securities Guarantee, to participate in the distribution and
payment of assets of any subsidiary upon the subsidiary's liquidation or
recapitalization would be subject to the prior claims of the subsidiary's
creditors except to the extent that BANK ONE may itself be a creditor with
recognized claims against the subsidiary.
S-10
<PAGE>
BANK ONE's executive offices are located at One First National Plaza,
Chicago, Illinois 60670, and the telephone number is (312) 732-4000.
Recent Developments
On August 24, 1999, BANK ONE announced that, based on a revised outlook for
the second half of calendar year 1999, it anticipated that full-year 1999
operating earnings per share of common stock would be between $3.60-$3.65.
While down 7%-8% from current market estimates, this figure would be 11%-12%
above operating earnings for 1998.
This revised earnings outlook is entirely the result of a recent change in
the growth and margin prospects for First USA, BANK ONE's credit card unit. The
factors driving this change include:
. acceleration in underlying trends for credit cards, specifically slower
industry growth and increased competition;
. selected First USA-specific factors including:
. lower relative marketing investment;
. higher than anticipated account attrition; and
. specific pricing initiatives.
This revision represents a resetting of BANK ONE's base earnings level
because of the lower credit card profit contribution now anticipated for the
second half of 1999. BANK ONE's earnings growth rate today is less than 15%
given the current business mix and related returns.
The merger integration of First Chicago NBD Corporation and BANC ONE
CORPORATION, including activities related to the credit card business, remains
on plan and unaffected by these developments. BANK ONE still expects to achieve
the full $1.2 billion in targeted merger-related synergies, including expense
savings. All of BANK ONE's other lines of business are achieving their 1999
targeted rates of growth and return.
To address the issues in the credit card business, BANK ONE's credit card
unit has taken the following steps:
. modified the pricing of new solicitation programs;
. allocated additional marketing and staff resources to improve customer
relations; and
. identified additional operating expense efficiency opportunities.
Year 2000 Readiness Disclosure
BANK ONE continues to execute project plans established by its predecessor
companies to assure Year 2000 readiness. Total project costs are estimated to
reach $350 million over the life of the project. Year 2000 costs incurred
through June 30, 1999, were approximately $297 million, with $32 million
incurred during the second quarter of 1999.
BANK ONE met the June 30, 1999 regulatory guideline stating that testing of
mission critical systems be complete and that the implementation of mission
critical systems be substantially complete.
At June 30, 1999, 98% of BANK ONE's information technology applications were
tested and returned to production. Information technology systems and equipment
are largely compliant, with some deployments extending into the third quarter
of 1999. Facilities and equipment managed by BANK ONE are Year 2000 ready.
S-11
<PAGE>
Year 2000 readiness is highly dependent on external entities and is not
limited to operating risk. BANK ONE is working extensively with external
entities to ensure that their systems will be Year 2000 compliant. However,
BANK ONE bears risk and could be adversely affected if outside parties, such as
customers, vendors, utilities and government agencies, do not appropriately
address Year 2000 readiness issues. In addition, BANK ONE may have increased
credit risk related to customers whose ability to repay debt is impaired due to
Year 2000 readiness costs or risk or whose collateral becomes impaired due to
lack of Year 2000 readiness.
Critical business processes have been identified, and the most reasonable
recovery strategies have been selected. Contingency plans have been documented
and validated for effectiveness. BANK ONE will continue to review and validate
the scope and content of its contingency plans throughout 1999. BANK ONE also
has developed and tested a comprehensive event plan to forecast the tasks,
roles, responsibilities and schedule for the turn of the century and other key
dates.
FORWARD-LOOKING STATEMENTS
This prospectus supplement, including information included or incorporated
by reference in this prospectus supplement, contains certain forward-looking
statements with respect to the financial condition, results of operations,
plans, objectives, future performance and business of BANK ONE and 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 and revenue
enhancements may not be fully realized or realized within the expected time
frame; (b) competitive pressures among depository and other financial
institutions may increase significantly; (c) costs or difficulties related to
the integration of the businesses of BANC ONE CORPORATION and First Chicago NBD
Corporation may be greater than expected; (d) changes in the interest rate
environment may reduce margins; (e) general economic or business conditions,
either nationally or in the states in which BANK ONE 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; (f) legislative or regulatory
changes may adversely affect the business in which BANK ONE is engaged; (g)
technological changes (including the costs of remediating or failing to
remediate "Year 2000" and "Euro" data systems compliance issues, including
those of BANK ONE and those of other persons by whom BANK ONE's business may be
affected) may be more difficult or expensive than anticipated; and (h) changes
may occur in the securities and capital markets.
S-12
<PAGE>
BANK ONE CAPITAL I
BANK ONE Capital I is a statutory business trust formed under Delaware law
pursuant to
. a declaration of trust, originally dated as of June 17, 1999, executed
by BANK ONE, as sponsor (the "Sponsor"), and the trustees of BANK ONE
Capital I (the "BANK ONE Capital Trustees"); and
. the filing of a certificate of trust with the Secretary of State of the
State of Delaware on June 17, 1999.
The declaration of trust will be amended and restated in its entirety (as so
amended and restated, the "Declaration") substantially in the form filed as an
exhibit to the registration statement of which this prospectus supplement and
the accompanying prospectus form a part. The Declaration has been qualified as
an indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
Upon issuance of the Preferred Securities, the purchasers will own all of
the Preferred Securities. See "Description of the Preferred Securities--Book-
Entry Only Issuance--The Depository Trust Company". BANK ONE will directly or
indirectly acquire the Common Securities in an aggregate liquidation amount
equal to at least 3 percent of the total capital of the Trust. The Preferred
Securities and the Common Securities of the Trust together are referred to in
this prospectus supplement as the "Trust Securities".
The Trust exists for the exclusive purposes of:
. issuing the Trust Securities representing undivided beneficial ownership
interests in the assets of the Trust,
. using the proceeds from the sale of the Trust Securities to acquire the
Junior Subordinated Debt Securities, and
. engaging in only those other activities necessary or incidental to the
above activities, such as registering the transfer of the Trust
Securities.
Under the Declaration, the number of BANK ONE Capital Trustees will initially
be five. Three of the BANK ONE Capital Trustees (the "Regular Trustees") will
be persons who are employees or officers of, or who are affiliated with, BANK
ONE. The fourth trustee will be a financial institution that is unaffiliated
with BANK ONE, which trustee will serve as institutional trustee under the
Declaration and as indenture trustee for the purposes of compliance with the
provisions of the Trust Indenture Act (the "Institutional Trustee").
Initially, The Chase Manhattan Bank ("Chase") will be the Institutional
Trustee until removed or replaced by the holder of the Common Securities as
permitted in the Declaration. For the purpose of compliance with the Trust
Indenture Act, The Chase Manhattan Bank will act as Preferred Securities
Guarantee Trustee under the Preferred Securities Guarantee and as Debt Trustee,
as defined below, under the Junior Subordinated Indenture. The fifth trustee
will be an entity that maintains its principal place of business in the state
of Delaware (the "Delaware Trustee"). Chase Manhattan Bank Delaware ("Chase
Delaware") will initially act as Delaware Trustee.
The Institutional Trustee will hold title to the Junior Subordinated Debt
Securities for the benefit of the holders of the Trust Securities and will have
the power to exercise all rights, powers and privileges under the Junior
Subordinated Indenture as the holder of the Junior Subordinated Debt
Securities. In addition, the Institutional Trustee will maintain exclusive
control of a segregated non-interest bearing bank account (the "Property
Account") to hold all payments made on the Junior Subordinated Debt Securities
for the benefit of the holders of the Trust Securities. The Property Account
may be held at the Institutional Trustee or any Paying Agent of the
Institutional Trustee, including Bank One Trust Company, N.A. ("BOTC"), a
subsidiary of BANK ONE.
S-13
<PAGE>
The Institutional Trustee will make payments of distributions and payments
on liquidation, redemption and otherwise to the holders of the Trust Securities
out of funds from the Property Account. The Preferred Securities Guarantee
Trustee will hold the Preferred Securities Guarantee for the benefit of the
holders of the Preferred Securities. BANK ONE, as the direct or indirect holder
of all the Common Securities, will have the right to appoint, remove or replace
any BANK ONE Capital Trustee and to increase or decrease the number of BANK ONE
Capital Trustees. BANK ONE will pay all fees and expenses related to BANK ONE
Capital I and the offering of the Trust Securities. See "Description of the
Junior Subordinated Debt Securities -- Miscellaneous".
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are described in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities".
The principal executive offices of the Trust are located at One First
National Plaza, Chicago, Illinois 60670 and its telephone number is (312) 732-
4000.
Chase, which serves as the Institutional Trustee, the Debt Trustee and the
Preferred Securities Guarantee Trustee, has a principal corporate trust office
at 450 West 33rd Street, New York, New York 10001. Chase serves as trustee for
certain subordinated debt securities issued by BANK ONE under indentures
originally dated as of July 1, 1986, July 15, 1992, April 30, 1993, May 17,
1995 and December 1, 1995. Chase also serves as trustee under both the Senior
Indenture and the Senior Subordinated Indenture, each as defined in the
accompanying prospectus.
Chase also serves as the institutional or property trustee under
declarations of trust for three statutory business trusts formed under the laws
of the State of Delaware and sponsored by BANK ONE. In connection with those
transactions, Chase also serves as the debt trustee under an indenture
originally dated as of November 15, 1996 and the Junior Subordinated Indenture
with respect to junior subordinated debentures of BANK ONE purchased by such
trusts. Chase is also the guarantee trustee under each of three guarantee
agreements dated as of December 3, 1996, December 5, 1996 and January 31, 1997,
from BANK ONE to the applicable trust guaranteeing certain payments to such
trust.
Chase Delaware, which is an affiliate of Chase, serves as the Delaware
Trustee for BANK ONE Capital I and has a principal office at 1201 Market
Street, Wilmington, Delaware 19801. Chase Delaware also serves as trustee for
subordinated debt securities issued by BANK ONE under an indenture originally
dated March 1, 1989. Chase Delaware is also the Delaware trustee for the three
Delaware business trusts described in the preceding paragraph of this section.
BANK ONE and its affiliates have normal banking relationships with Chase,
Chase Delaware and their affiliates in the ordinary course of business.
S-14
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of BANK ONE at June
30, 1999, and the "As Adjusted" column reflects the application of the
estimated proceeds from the sale of the Preferred Securities. See "Use of
Proceeds". The table should be read along with BANK ONE's consolidated
financial statements and notes to the financial statements included in the
documents incorporated by reference in this prospectus supplement and the
accompanying prospectus. See "Where You Can Find More Information About the
Company and the BANK ONE Capital Trusts" in the accompanying prospectus.
<TABLE>
<CAPTION>
June 30, 1999
--------------------
Actual As Adjusted
------- -----------
(in millions)
<S> <C> <C>
Long-term debt
Long-term debt...................................... $26,725 $26,725
Guaranteed preferred beneficial interest in BANK
ONE's junior subordinated debt..................... 1,003
------- -------
Total long-term debt................................ 27,728
------- -------
Stockholders' equity
Preferred stock..................................... 190 190
Common stock -- $0.01 par value, 2,500,000,000
shares authorized, and 1,181,934,000 shares
issued............................................. 12 12
Surplus............................................. 10,762 10,762
Retained earnings................................... 10,673 10,673
Accumulated other adjustments to stockholders'
equity............................................. (146) (146)
Deferred compensation............................... (137) (137)
Treasury stock at cost, 5,393,000 shares............ (304) (304)
------- -------
Total stockholders' equity........................ 21,050 21,050
------- -------
Total long-term debt and stockholders' equity..... $48,778 $
======= =======
</TABLE>
On May 18, 1999, the Company announced that its Board of Directors
authorized the purchase of up to 65 million shares of its common stock. Such
purchase will occur periodically over the next few years.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of BANK ONE. Accordingly, the accounts of the Trust will be included in the
consolidated financial statements of BANK ONE. The Preferred Securities will be
reported as "Guaranteed preferred beneficial interests in BANK ONE's junior
subordinated debt" as a separate line item in the consolidated balance sheet of
BANK ONE. Appropriate disclosures about the Preferred Securities, the Preferred
Securities Guarantee and the Junior Subordinated Debt Securities will be
included in the notes to the consolidated financial statements. For financial
reporting purposes, BANK ONE will classify distributions payable on the
Preferred Securities as an expense in the consolidated statements of income.
BANK ONE has agreed that its future financial reports will:
. report the preferred securities issued by other trusts created by BANK
ONE as "Guaranteed preferred beneficial interests in BANK ONE's junior
subordinated debt" as a separate line item in the consolidated balance
sheet;
. include in a footnote to the financial statements disclosure that the
sole assets of the trusts are the junior subordinated debentures
(specifying as to each trust the principal amount, interest rate and
maturity date of junior subordinated debentures held); and
S-15
<PAGE>
. if Staff Accounting Bulletin 53 treatment is sought, include, in an
audited footnote to the financial statements, disclosure that
(a) the trusts are wholly owned,
(b) the sole assets of the trusts are the junior subordinated
debentures (specifying as to each trust the principal amount,
interest rate and maturity date of junior subordinated debentures
held), and
(c) the obligations of BANK ONE under the junior subordinated
debentures, the relevant indenture, trust agreement and guarantee,
in the aggregate, constitute a full and unconditional guarantee by
BANK ONE of such trust's obligations under the preferred securities
issued by such trust.
USE OF PROCEEDS
The Trust will use all proceeds received from the sale of the Preferred
Securities to purchase Junior Subordinated Debt Securities from BANK ONE. BANK
ONE intends to use the net proceeds from the sale of the Junior Subordinated
Debt Securities for general corporate purposes, including the funding of
investments in, or extensions of credit to, BANK ONE's subsidiaries. Pending
such use, BANK ONE may temporarily invest the net proceeds in various short-
term securities or apply the net proceeds to reduce short-term indebtedness.
Based upon the historic and anticipated future growth of BANK ONE and the
financial needs of its subsidiaries, BANK ONE anticipates that it will, on a
recurrent basis, engage in additional financings in character and amount to be
determined.
S-16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for BANK
ONE for each of the years in the three year period ended December 31, 1998 and
for the six month periods ended June 30, 1999 and June 30, 1998. This financial
data is based on and derived from, and should be read in conjunction with, BANK
ONE's consolidated financial statements and the related notes for the
respective periods, which are incorporated in this prospectus supplement and
the accompanying prospectus by reference. See "Where You Can Find More
Information About the Company and the Bank One Capital Trusts" in the
accompanying prospectus.
The consolidated balance sheets of BANK ONE as of December 31, 1998, 1997
and 1996, and the related consolidated statements of income, stockholders'
equity and cash flows for each year in the three-year period ended December 31,
1998 have been audited by Arthur Andersen LLP, independent public accountants.
<TABLE>
<CAPTION>
Six Months Ended
Year Ended December 31, June 30,
---------------------------- ---------------------
1998 1997 1996 1999 1998
-------- -------- -------- -------- --------
($ in millions)
<S> <C> <C> <C> <C> <C>
Income Summary
Interest income......... $ 17,524 $ 17,545 $ 17,064 $ 8,432 $ 8,786
Interest expense........ 8,177 8,084 7,819 3,841 4,149
-------- -------- -------- -------- --------
Net interest income.... 9,347 9,461 9,245 4,591 4,637
Provision for credit
losses................. 1,408 1,988 1,716 556 791
Net interest income
after provision for
credit losses.......... 7,939 7,473 7,529 4,035 3,846
Non-interest income..... 8,071 6,694 5,994 4,812 4,004
Non-interest expense.... 11,545 9,740 8,681 5,747 5,150
-------- -------- -------- -------- --------
Income before taxes..... 4,465 4,427 4,842 3,100 2,700
Income taxes............ 1,357 1,467 1,611 957 872
-------- -------- -------- -------- --------
Net income.............. $ 3,108 $ 2,960 $ 3,231 $ 2,143 $ 1,828
Period Ending Balances
Loans outstanding....... $155,398 $159,579 $153,496 $157,464 $160,023
Total assets............ 261,496 239,372 225,822 256,033 244,178
Total deposits.......... 161,542 153,726 145,206 156,454 154,507
Long term debt(1)....... 22,298 21,546 15,363 27,728 22,248
Common stockholders'
equity................. 20,370 18,724 18,856 20,860 19,575
Total equity............ 20,560 19,050 19,507 21,050 19,765
Selected Financial
Ratios
Return on average
assets................. 1.30% 1.29% 1.43% 1.71%(3) 1.54%(3)
Return on average common
equity................. 15.9 15.8 17.5 21.0 (3) 19.4 (3)
Net interest margin(2).. 4.52 4.75 4.70 4.28 (3) 4.54 (3)
Efficiency ratio........ 65.8 59.7 56.3 60.7 59.2
Loans to deposits at
period end............. 96 104 106 101 104
Selected Credit Data
Net charge-offs to
average loans.......... 0.97% 1.21% 1.04% 0.72%(3) 1.08%(3)
Allowance for credit
losses to loans at
period end............. 1.46 1.77 1.75 1.43 1.72
Non-performing assets at
period end............. $ 819 $ 670 $ 607 $ 1,137 $ 710
Non-performing assets to
related assets......... 0.53% 0.42% 0.40% 0.72% 0.44%
Capital Ratios (at
period end)
Common equity to
assets................. 7.8% 7.8% 8.3% 8.1% 8.0%
Regulatory risk-based
capital ratios
Tier 1................. 7.9 8.2 9.5 8.1 8.3
Total.................. 11.3 12.3 13.6 11.4 12.3
Leverage ratio.......... 8.0 7.8 8.9 8.1 8.0
</TABLE>
- --------
(1) Includes Trust Preferred Capital Securities.
(2) On a fully taxable equivalent basis.
(3) Ratios for interim periods have been annualized.
S-17
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued under the Declaration. The
Declaration has been qualified as an indenture under the Trust Indenture Act.
The Institutional Trustee, Chase, will act as indenture trustee for the
Preferred Securities under the Declaration for the purpose of compliance with
the Trust Indenture Act. The terms of the Preferred Securities will include
those stated in the Declaration and those made part of the Declaration by the
Trust Indenture Act.
The following summary of the material terms and provisions of the Preferred
Securities, which supplements, and to the extent inconsistent, replaces, the
description under the caption "Description of the Preferred Securities" in the
accompanying prospectus, does not claim to be complete and is subject to, and
qualified in its entirety by reference to, Delaware law, the Trust Indenture
Act and the Declaration. A copy of the form of the Declaration is filed as an
exhibit to the registration statement of which this prospectus supplement and
the accompanying prospectus form a part.
General
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities. All of the Common Securities will be owned,
directly or indirectly, by BANK ONE. The Common Securities rank equally, and
payments will be made on the Common Securities on a ratable basis, with the
Preferred Securities. Upon the occurrence and during the continuance of a
Declaration Event of Default, however, the rights of the holders of the Common
Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Preferred Securities. The Declaration does not permit the
issuance by the Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by the Trust.
Under the Declaration, the Institutional Trustee will own the Junior
Subordinated Debt Securities purchased by the Trust for the benefit of the
holders of the Trust Securities. The payment of distributions out of money held
by the Trust, and payments upon redemption of the Preferred Securities or
liquidation of the Trust, are guaranteed by BANK ONE to the extent described
under "Description of the Preferred Securities Guarantees" in the accompanying
prospectus. The Preferred Securities Guarantee will be held by The Chase
Manhattan Bank, the Preferred Securities Guarantee Trustee, for the benefit of
the holders of the Preferred Securities. The Preferred Securities Guarantee
does not cover payment of distributions when the Trust does not have sufficient
available funds to pay such distributions. In that event, the remedy of a
holder of Preferred Securities is to vote to direct the Institutional Trustee
to enforce the Institutional Trustee's rights under the Junior Subordinated
Debt Securities except in the limited circumstances in which the holder may
take Direct Action, as defined below. See "--Voting Rights" and "--Declaration
Events of Default".
Distributions
Each Preferred Security will be entitled to distributions at an annual rate
equal to % (the "Distribution Rate,") applied to the stated liquidation
amount of $25. Distributions in arrears for more than one quarter will bear
interest at the Distribution Rate compounded quarterly. The term "distribution"
as used in this prospectus supplement includes any interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1999 and, except as otherwise described below, will be payable
quarterly in arrears on February 15, May 15, August 15 and November 15 of each
year, commencing November 15, 1999, when, as and if available for payment.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
S-18
<PAGE>
distribution to the holders of the Preferred Securities will be limited to
payments received from BANK ONE on the Junior Subordinated Debt Securities. See
"Description of the Junior Subordinated Debt Securities" in this prospectus
supplement.
Distributions on the Preferred Securities will be payable to holders as they
appear on the books and records of the Trust on the relevant record dates. As
long as the Preferred Securities remain in book-entry only form, the record
date will be one Business Day prior to the relevant payment dates.
Distributions will be paid through the Institutional Trustee. The Institutional
Trustee will hold amounts received on the Junior Subordinated Debt Securities
in the Property Account for the benefit of the holders of the Trust Securities.
The Property Account may be held at the Institutional Trustee or any Paying
Agent of the Institutional Trustee, including BOTC. Subject to any applicable
laws and regulations and the provisions of the Declaration, each payment will
be made as described under "--Book-Entry Only Issuance--The Depository Trust
Company" below.
In the event that the Preferred Securities do not continue to remain in
book-entry only form, the record dates for payment of distributions will be
February 1, May 1, August 1 and November 1 of each year, as applicable. In the
event that any date on which distributions are payable is not a Business Day,
then payment of the distributions payable on that date will be made on the next
succeeding day which is a Business Day, except that, if such Business Day is in
the next succeeding calendar year, payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the payment date. The date on which distributions are actually payable is a
"Distribution Date".
A "Business Day" means any day other than Saturday, Sunday or any other day
on which banking institutions in New York, New York or Chicago, Illinois are
authorized or required by any applicable law or executive order to close.
Deferral of Distributions
As long as no Indenture Event of Default has occurred and is continuing,
BANK ONE has the right under the Junior Subordinated Indenture to defer
payments of interest on the Junior Subordinated Debt Securities by extending
the interest payment period from time to time on the Junior Subordinated Debt
Securities. This right, if exercised, would defer quarterly distributions on
the Preferred Securities, though these distributions would continue to accrue
with interest because interest would continue to accrue on the Junior
Subordinated Debt Securities at the Distribution Rate, during any such
extension period. This right to extend the interest payment period for the
Junior Subordinated Debt Securities is limited to a period not exceeding 20
consecutive quarters and the period may not extend beyond the stated maturity
of the Junior Subordinated Debt Securities.
In the event that BANK ONE exercises this right, then BANK ONE will not
. declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of BANK
ONE's capital stock or
. make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of BANK ONE that rank
equally in all respects with or junior in interest to the Junior
Subordinated Debt Securities or make any guarantee payments with respect
to any guarantee by BANK ONE of the debt securities of any subsidiary of
BANK ONE if such guarantee ranks equally with or junior in interest to
the Junior Subordinated Debt Securities, other than
(a) dividends or distributions in common stock of BANK ONE,
(b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance
of stock under any such plan in the future, or the redemption
or repurchase of any rights under such plan,
S-19
<PAGE>
(c) payments under the Preferred Securities Guarantee or Common
Securities Guarantee,
(d) purchases of common stock related to the issuance of common
stock or rights under any of BANK ONE's benefit plans for its
directors, officers, or employees and
(e) obligations under any dividend reinvestment and stock purchase plan.
Prior to the termination of any extension period, BANK ONE may further
extend the interest payment period. However, any extension period, together
with all previous and further extensions of the period, may not exceed 20
consecutive quarters or extend beyond the stated maturity of the Junior
Subordinated Debt Securities. Upon the termination of any extension period and
the payment of all amounts then due, BANK ONE may elect to begin a new
extension period, subject to the foregoing requirements. See "Description of
the Junior Subordinated Debt Securities--Interest" and "--Option to Extend
Interest Payment Period" in this prospectus supplement.
BANK ONE has no current intention of exercising its right to defer payments
of interest by extending the interest payment period of the Junior Subordinated
Debt Securities.
Mandatory Redemption
The Junior Subordinated Debt Securities will mature on , 2029. The Junior
Subordinated Debt Securities are redeemable
. in whole or in part, at any time on or after , 2004, or
. in whole, but not in part, at any time within 90 days following the
occurrence of a Tax Event, Investment Company Event or Capital Treatment
Event or, if the approval of the Federal Reserve Board is then required
for redemption, on a later date as promptly as practicable after such
approval is obtained.
In either case the redemption price will be equal to the accrued and unpaid
interest on the Junior Subordinated Debt Securities so redeemed to, but
excluding, the date fixed for redemption, plus 100% of the principal amount of
the Junior Subordinated Debt Securities so redeemed. See "Description of the
Junior Subordinated Debt Securities".
Upon the repayment of the Junior Subordinated Debt Securities, whether at
maturity or upon redemption, the proceeds from the repayment or payment will
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debt Securities repaid or redeemed. The redemption price for the
Preferred Securities will be equal to the liquidation amount, $25 per Preferred
Security, plus accrued and unpaid distributions on the Preferred Security to
the redemption date. Holders of Trust Securities will be given not less than 30
nor more than 60 days' notice of any redemption. See "Description of the Junior
Subordinated Debt Securities--Optional Redemption".
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed ratably as described
under "--Book-Entry Only Issuance--The Depository Trust Company" below. Any
redemption or distribution of the Junior Subordinated Debt Securities may
require the prior approval of the Federal Reserve Board if such approval is
then required under applicable law, rules, guidelines or policies.
Special Event Redemption
Subject to the prior approval of the Federal Reserve Board if approval is
then required under applicable law, rules, guidelines or policies, if, at any
time, a Tax Event, Investment Company Event or Capital Treatment Event, each a
"Special Event", occurs and is continuing, BANK ONE has the right to redeem the
Junior Subordinated Debt Securities. BANK ONE may exercise this right upon not
less than 30 nor more than 60 days' notice. This redemption must be for all the
Junior Subordinated Debt Securities, not just part, and must
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<PAGE>
be for cash within 90 days following the occurrence of the Special Event. If
the approval of the Federal Reserve Board is required for the redemption, the
redemption may occur on a later date as promptly as practicable after such
approval is obtained. Following the redemption, all Trust Securities will be
redeemed by the Trust at the redemption price described above.
"Tax Event" means the receipt by the Trust of an opinion of counsel to BANK
ONE experienced in such matters to the effect that, as a result of any:
. amendment to, or change, including any announced prospective change, in,
the laws or associated regulations of the United States or any political
subdivision or taxing authority of the United States, or
. official administrative pronouncement or judicial decision interpreting
or applying these laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after
the date of issuance of such Preferred Securities under the Declaration,
there is more than an insubstantial risk that
. the Trust is, or will be within 90 days of the date of the opinion,
subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debt Securities,
. interest payable by BANK ONE on the Junior Subordinated Debt Securities
is not, or within 90 days of the date of the opinion, will not be,
deductible by BANK ONE, in whole or in part, for United States federal
income tax purposes, or
. the Trust is, or will be within 90 days of the date of the opinion,
subject to more than a minimal amount of other taxes, duties or other
governmental charges.
"Investment Company Event" means that the Regular Trustees will have
received an opinion of a nationally recognized independent counsel experienced
in such matters which states that, as a result of the occurrence of a change
in law or regulation or a written change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Trust
is or will be considered an "investment company" which is required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
"Capital Treatment Event" means the reasonable determination by BANK ONE
that, as a result of:
. the occurrence of any amendment to, or change, including any announced
prospective change, in, the laws or any associated regulations of the
United States or any political subdivision of the United States, or
. any official or administrative pronouncement or action or judicial
decision interpreting or applying these laws or regulations, which
amendment or change is effective or such pronouncement, action or
decision is announced on or after the date of issuance of the Preferred
Securities under the Declaration,
there is more than an insubstantial risk that BANK ONE will not be entitled to
treat an amount equal to the liquidation amount of the Preferred Securities as
"Tier 1 Capital", or the then equivalent, for purposes of the capital adequacy
guidelines of the Federal Reserve Board, as then in effect and applicable to
BANK ONE.
Distribution of the Junior Subordinated Debt Securities
BANK ONE has the right at any time to liquidate the Trust and cause the
Junior Subordinated Debt Securities to be distributed to the holders of the
Trust Securities, subject to the prior approval of the Federal Reserve Board
if approval is then required under applicable law, rules, guidelines or
policies.
After the date for any distribution of Junior Subordinated Debt Securities
upon dissolution of the Trust:
. the Preferred Securities will no longer be deemed to be outstanding,
. the Depositary or its nominee, as the record holder of the Preferred
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debt Securities to be delivered
upon the distribution, and
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. any certificates representing Preferred Securities not held by the
Depositary or its nominee will be deemed to represent Junior
Subordinated Debt Securities having an aggregate principal amount equal
to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, such Preferred Securities
until the certificates are presented to BANK ONE or its agent for
transfer or reissuance.
There can be no assurance as to the market prices for the Junior
Subordinated Debt Securities if a dissolution and liquidation of the Trust were
to occur. Accordingly, Junior Subordinated Debt Securities may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities.
Redemption Procedures
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If (1) the Trust gives an irrevocable notice of redemption in respect of
Preferred Securities and (2) BANK ONE has paid to the Institutional Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Junior Subordinated Debt Securities, then, by 12:00 noon, New York City
time, on the redemption date the Trust will irrevocably deposit with the
Depositary funds sufficient to pay the applicable redemption price. The Trust
will also give the Depositary irrevocable instructions and authority to pay the
redemption price to the holders of the Preferred Securities. See "--Book-Entry
Only Issuance--The Depository Trust Company".
Once notice of redemption has been given and funds have been deposited as
required, then, from and after the announced redemption date, distributions
will cease to accrue. In addition, all rights of holders of Preferred
Securities so called for redemption will cease, except the right of the holders
of the Preferred Securities to receive the redemption price but without
interest on the redemption price.
In the event that any date fixed for redemption of Preferred Securities is
not a Business Day, then payment of the redemption price payable on such date
will be made on the next succeeding day that is a Business Day, without any
interest or other payment in respect of any such delay, except that, if such
Business Day falls in the next calendar year, the payment will be made on the
immediately preceding Business Day.
In the event that payment of the redemption price on the Preferred
Securities is improperly withheld or refused and not paid either by the Trust,
or by BANK ONE under the Preferred Securities Guarantee, distributions on the
Preferred Securities will continue to accrue at the then applicable rate from
the original redemption date to the date of payment. In this case, the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the redemption price.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed in accordance with
procedures of the Depository as described below under "--Book-Entry Only
Issuance--The Depository Trust Company".
Subject to the above and applicable law including, without limitation,
United States federal securities laws and the regulations of the Federal
Reserve Board, BANK ONE or its subsidiaries may at any time, and from time to
time, purchase outstanding Preferred Securities by tender, in the open market
or by private agreement.
If a partial redemption of the Preferred Securities resulting from a partial
redemption of the Junior Subordinated Debt Securities would result in the
delisting of the Preferred Securities, BANK ONE may only redeem the Junior
Subordinated Debt Securities in whole. Such a redemption would cause the
redemption of all Preferred Securities.
Liquidation Distribution Upon Dissolution
This prospectus supplement refers to any voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Trust as a
"Liquidation".
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If a Liquidation occurs, the holders of the Preferred Securities will be
entitled to receive out of the assets of the Trust, after satisfaction of
liabilities to creditors, distributions in an amount equal to the aggregate of
the stated liquidation amount of $25 per Preferred Security plus accrued and
unpaid distributions to the date of payment (the "Liquidation Distribution").
However, holders will not receive the Liquidation Distribution in connection
with a Liquidation if BANK ONE instead distributes Junior Subordinated Debt
Securities on a ratable basis to the holders of the Preferred Securities. The
Junior Subordinated Debt Securities to be distributed in this case must be in
an aggregate stated principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Preferred Securities.
If, upon any Liquidation, the Liquidation Distribution can be paid only in
part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities will be paid on a ratable basis. The holders
of the Common Securities will be entitled to receive distributions upon any
such dissolution ratably with the holders of the Preferred Securities. However,
if a Declaration Event of Default has occurred and is continuing, the Preferred
Securities will have a preference over the Common Securities with regard to the
distributions.
Under the Declaration, the Trust will terminate:
. on , 2054, the expiration of the term of the Trust,
. upon the bankruptcy of BANK ONE,
. upon (a) the filing of a certificate of dissolution or its equivalent
with respect to BANK ONE, the filing of a certificate of cancellation
with respect to the Trust after obtaining the consent of the holders of
at least a majority in liquidation amount of the Trust Securities
affected thereby voting together as a single class to file such
certificate of cancellation or the revocation of the charter of BANK ONE
and (b) the expiration of 90 days after the date of revocation without a
reinstatement thereof,
. upon the distribution of Junior Subordinated Debt Securities to holders
of the Preferred Securities,
. upon the entry of a decree of a judicial dissolution of BANK ONE or the
Trust, or
. upon the redemption of all the Trust Securities.
Declaration Events of Default
An event of default under the Junior Subordinated Indenture relating to the
Junior Subordinated Debt Securities (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"). Under the Declaration, however,
the holder of the Common Securities will be deemed to have waived any
Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have
been cured, waived or otherwise eliminated. Until the Declaration Events of
Default with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Preferred Securities. Only the holders
of the Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore
the Junior Subordinated Indenture.
If the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debt Securities after a holder of Preferred Securities has made a
written request, the holder of record of Preferred Securities may institute a
legal proceeding against BANK ONE to enforce the Institutional Trustee's rights
under the Junior Subordinated Debt Securities without first instituting any
legal proceeding against the Institutional Trustee or any other person or
entity.
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If a Declaration Event of Default has occurred and is continuing and the
event is due to the failure of BANK ONE to pay interest or principal on the
Junior Subordinated Debt Securities when due, then a holder of Preferred
Securities may institute a "Direct Action". This means that a holder may sue
directly for enforcement of payment to such holder of the principal of or
interest on the Junior Subordinated Debt Securities having a principal amount
equal to the aggregate liquidation amount of the Preferred Securities of the
holder on or after the respective due date specified in the Junior Subordinated
Debt Securities. The holder need not (1) direct the Institutional Trustee to
enforce the terms of the Junior Subordinated Debt Securities or (2) sue BANK
ONE to enforce the Institutional Trustees' rights under the Junior Subordinated
Debt Securities.
In connection with a Direct Action, BANK ONE will be subrogated to the rights
of the holder of Preferred Securities under the Declaration to the extent of
any payment made by BANK ONE to the holder of Preferred Securities in the
Direct Action. This means that BANK ONE will be entitled to payment of amounts
that a holder of Preferred Securities receives in respect of an unpaid
distribution that results in the bringing of the Direct Action to the extent
that the holder receives or has already received full payment relating to any
unpaid distributions from the Trust. The holders of Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
the Junior Subordinated Debt Securities.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee, as the sole holder of the Junior Subordinated Debt Securities, will
have the right under the Junior Subordinated Indenture to declare the principal
of and interest on the Junior Subordinated Debt Securities to be immediately
due and payable.
BANK ONE and the Trust are each required to file annually with the
Institutional Trustee an officer's certificate as to compliance with all
conditions and covenants under the Declaration.
Voting Rights
Except as described in this section and under "Description of the Preferred
Securities Guarantees--Modification of the Preferred Securities Guarantees;
Assignment" in the accompanying prospectus, as provided under Delaware law and
the Trust Indenture Act, and as otherwise required by law and the Declaration,
the holders of the Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances described below in the following paragraphs,
the holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct any proceeding for any remedy available to
the Institutional Trustee so long as the Institutional Trustee receives the tax
opinion. Under the Declaration, the holders of Preferred Securities have the
right to direct the Institutional Trustee, as holder of the Junior Subordinated
Debt Securities, to:
(1) exercise the remedies available to it under the Junior Subordinated
Indenture as a holder of the Junior Subordinated Debt Securities;
(2) waive any past Indenture Event of Default that is waivable under the
Junior Subordinated Indenture;
(3) exercise any right to rescind or annul a declaration that the
principal of all the Junior Subordinated Debt Securities will be due and
payable; or
(4) consent to any amendment, modification or termination of the Junior
Subordinated Indenture or the Junior Subordinated Debt Securities where
such consent of the holders of the Junior Subordinated Debt Securities is
required.
Where a consent or action under the Junior Subordinated Indenture would require
the consent or act of holders of more than a majority in principal amount of
the Junior Subordinated Debt Securities (a "Super-Majority"), only the holders
of at least a Super-Majority in aggregate liquidation amount of the Preferred
Securities may direct the Institutional Trustee to give such consent or take
such action.
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If the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debt Securities after a holder of record of Preferred Securities
has made a written request, the holder of record of Preferred Securities may
institute a legal proceeding directly against BANK ONE to enforce the
Institutional Trustee's rights under the Junior Subordinated Debt Securities
without first instituting any legal proceeding against the Institutional
Trustee or any other person or entity.
If a Declaration Event of Default has occurred and is continuing and the
event is due to the failure of BANK ONE to pay interest or principal on the
Junior Subordinated Debt Securities when due, then a holder of Preferred
Securities may institute a Direct Action for enforcement of payment to the
holder of the principal of or interest on the Junior Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of the holder on or after the respective due date
specified in the Junior Subordinated Debt Securities. The Institutional Trustee
will within 90 days notify all holders of the Preferred Securities of any
notice of default received from the Debt Trustee with respect to the Junior
Subordinated Debt Securities. This notice will state that the Indenture Event
of Default also constitutes a Declaration Event of Default.
Except for directing the time, method and place of conducting a proceeding
for a remedy, the Institutional Trustee will not take any of the actions
described in clauses (1), (2) or (3) of the third preceding paragraph above
unless it receives an opinion of a nationally recognized tax counsel. The
opinion must be to the effect that, as a result of such action, for the
purposes of United States federal income tax, the Trust will not be classified
as other than a grantor trust.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debt Securities may annul any declaration of acceleration
under the Junior Subordinated Indenture. They may also waive any default if the
default has been cured and an amount sufficient to pay all matured installments
of interest and principal due otherwise than by acceleration has been deposited
with the Debt Trustee. In the case of the Junior Subordinated Debt Securities
held by the Institutional Trustee on behalf of the Trust, a waiver of any
default will not be effective until a majority in liquidation amount of the
Trust Securities consent to the waiver. However, if the Junior Subordinated
Indenture requires the consent of a Super-Majority, the waiver will only be
effective if the holders of at least the proportion in liquidation amount of
the Trust Securities which the relevant Super-Majority represents of the
aggregate principal amount of the Junior Subordinated Debt Securities
outstanding so consent.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debt Securities, is required under the Junior Subordinated
Indenture for any amendment, modification or termination of the Junior
Subordinated Indenture, the Institutional Trustee will request the direction of
the holders of the Trust Securities for the amendment, modification or
termination. The Institutional Trustee will vote on the amendment, modification
or termination as directed by a majority in liquidation amount of the Trust
Securities voting together as a single class. Where a consent under the Junior
Subordinated Indenture, however, would require the consent of a Super-Majority,
the Institutional Trustee may only give the consent at the direction of the
holders of at least the proportion in liquidation amount of the Trust
Securities which the relevant Super-Majority represents of the aggregate
principal amount of the Junior Subordinated Debt Securities outstanding. The
Institutional Trustee will not take any action in accordance with the
directions of the holders of the Trust Securities unless it has obtained a tax
opinion to the effect described above.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
that purpose, at a meeting of all of the holders of Trust Securities or by
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of the holders is
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to be taken, to be mailed to each holder of record of Preferred Securities.
Each notice will include a statement describing the following information:
. the date of the meeting or the date by which the action is to be taken;
. a description of any resolution proposed for adoption at the meeting on
which the holders are entitled to vote or of the matter upon which
written consent is sought; and
. instructions for the delivery of proxies or consents.
No vote or consent of the holders of Preferred Securities will be required for
the Trust to redeem and cancel Preferred Securities or distribute Junior
Subordinated Debt Securities in accordance with the Declaration.
Despite the fact that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at that time by BANK ONE or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, BANK ONE, will not be entitled to vote or consent. Instead, these
Preferred Securities will be treated as if they were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "--Book-Entry Only Issuance--The
Depository Trust Company" below.
Holders of the Preferred Securities will have no rights to appoint or remove
the BANK ONE Capital Trustees, who may be appointed, removed or replaced solely
by BANK ONE as the indirect or direct holder of all of the Common Securities.
Modification of the Declaration
The Declaration may be modified and amended if approved by the Regular
Trustees and, in certain circumstances, the Institutional Trustee. If, however,
any proposed amendment provides for, or the Regular Trustees otherwise propose
to effect,
. any action that would adversely affect the powers, preferences or
special rights of the Trust Securities, whether by way of amendment to
the Declaration or otherwise or
. the dissolution, winding-up or termination of the Trust other than
pursuant to the terms of the Declaration,
then the holders of the Trust Securities voting together as a single class will
be entitled to vote on the amendment or proposal. In this instance, the
amendment or proposal will not be effective except with the approval of at
least a majority in liquidation amount of the Trust Securities affected by it.
If, however, any amendment or proposal referred to in the first bullet point
above would adversely affect only the Preferred Securities or the Common
Securities, then only the affected class will be entitled to vote on the
amendment or proposal. In this case, the amendment or proposal will not be
effective except with the approval of a majority in liquidation amount of that
class of Trust Securities.
Despite the foregoing, no amendment or modification may be made to the
Declaration if such amendment or modification would
. cause the Trust to be classified for purposes of United States federal
income taxation as other than a grantor trust,
. reduce or otherwise adversely affect the powers of the Institutional
Trustee or
. cause the Trust to be deemed an "investment company" which is required
to be registered under the 1940 Act.
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Mergers, Consolidations or Amalgamations
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, the Institutional
Trustee or the Delaware Trustee, consolidate, amalgamate, merge with or into,
or be replaced by a trust organized as such under the laws of any State of the
United States, provided, that:
. if the Trust is not the survivor, such successor entity either
(1) expressly assumes all of the obligations of the Trust under the
Trust Securities or
(2) substitutes for the Preferred Securities other securities having
substantially the same terms as the Trust Securities (the
"Successor Securities"), so long as the Successor Securities rank
the same as the Trust Securities rank with respect to distributions
and payments upon liquidation, redemption and otherwise;
. BANK ONE expressly acknowledges a trustee of such successor entity
possessing the same powers and duties as the Institutional Trustee as
the holder of the Junior Subordinated Debt Securities;
. the Preferred Securities or any Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on
any national securities exchange or another organization on which the
Preferred Securities are then listed or quoted;
. the merger, consolidation, amalgamation or replacement does not cause
the Preferred Securities, including any Successor Securities, to be
downgraded by any nationally recognized statistical rating organization;
. the merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the holders
of the Trust Securities, including any Successor Securities, in any
material respect, other than with respect to any dilution of the
holders' interest in the new entity;
. the successor entity has a purpose identical to that of the Trust;
. prior to the merger, consolidation, amalgamation or replacement, BANK
ONE has received an opinion of a nationally recognized independent
counsel to the Trust experienced in these matters to the effect that
(A) the merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the
holders of the Trust Securities, including any Successor
Securities, in any material respect, other than with respect to any
dilution of the holders' interest in the new entity, and
(B) following the merger, consolidation, amalgamation or replacement,
neither the Trust nor the successor entity will be required to
register as an investment company under the 1940 Act; and
. BANK ONE guarantees the obligations of the successor entity under the
Successor Securities at least to the extent provided by the Preferred
Securities Guarantee and the Common Securities Guarantee, as described
in the accompanying prospectus under the caption "Description of the
Preferred Securities Guarantee".
Despite the foregoing, the Trust will not, except with the consent of holders
of 100 percent in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it,
if such consolidation, amalgamation, merger or replacement would cause the
Trust or the Successor Entity to be classified as other than a grantor trust
for United States federal income tax purposes.
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Book-Entry Only Issuance--The Depository Trust Company
The Depository Trust Company ("DTC") will act as securities depositary (the
"Depositary") for the Preferred Securities. The Preferred Securities will be
issued only as fully-registered securities registered in the name of Cede &
Co., DTC's nominee, or such other nominee as selected by DTC. One or more
fully-registered global Preferred Securities certificates (each, a "Global
Certificate") representing the total aggregate number of Preferred Securities,
will be issued and will be deposited with DTC.
Beneficial interests in the Preferred Securities will be shown on, and
transfers will be effected only through records maintained by DTC and its
participants, including depositaries for Morgan Guaranty Trust Company of New
York, Brussels Office, as operator of the Euroclear System ("Euroclear") and
Cedelbank, societe anonyme ("Cedelbank"). Investors may elect to hold
beneficial interest in the Preferred Securities through either DTC (in the
United States), Cedelbank or Euroclear (outside the United States) if they are
participants of such systems or directly through organizations which are
participants in such systems.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form ("Certificated
Securities"). These laws may impair the ability to transfer beneficial
interests in the global Preferred Securities as represented by a global
certificate.
DTC management is aware that some computer applications and systems used for
processing dates were written using two digits rather than four to define the
applicable year and therefore may not recognize a date using "00" as the Year
2000. This could result in the inability of these systems to properly process
transactions with dates in the Year 2000 and thereafter. DTC has developed and
is implementing a program to address this problem so that its applications and
systems relating to the payment of distributions, including principal and
interest payments, to securityholders, book-entry deliveries and settlements of
trades within DTC continue to function properly. This program includes a
technical assessment and a remediation plan, each of which is complete. DTC
plans to implement a testing phase of this program which is expected to be
completed within appropriate time frames.
In addition, DTC is contacting, and will continue to contact, third party
vendors that provide services to DTC to determine the extent of their Year 2000
compliance, and DTC will develop contingency plans as it deems appropriate to
address failures in Year 2000 compliance on the part of third party vendors.
However, there can be no assurance that the systems of third party vendors will
be timely converted and will not adversely affect the proper functioning of
DTC's services.
The information set forth in the preceding two paragraphs has been provided
by DTC for informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind. BANK ONE and the
Trust make no representations as to the accuracy or completeness of such
information.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Participants in DTC include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants") . DTC is owned by a number of its
Participants and by the New York Stock Exchange, the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others, such as securities brokers and dealers,
banks and trust companies that clear
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transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the SEC.
Purchases of Preferred Securities within the DTC system must be made by or
through Participants, which will receive a credit for the Preferred Securities
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records, including Euroclear and
Cedelbank. Beneficial Owners will not receive written confirmation from DTC of
their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Preferred Securities. Transfers of
ownership interests in the Preferred Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in the Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities is discontinued.
Transfers between Participants will be effected in accordance with DTC's
procedures and will be settled in same-day funds. Transfers between
participants in Euroclear and Cedelbank will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Cross-market transfers between Participants, on the one hand, and Euroclear
participants or Cedelbank participants, on the other hand, will be effected in
DTC in accordance with DTC's rules on behalf of Euroclear or Cedelbank, as the
case may be, by its respective depositary; however, these cross-market
transactions will require delivery of instructions to Euroclear or Cedelbank,
as the case may be, by the counterparty in that system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of
that system. Euroclear or Cedelbank, as the case may be, will, if the
transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf
by delivering or receiving interests in the Preferred Securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Cedelbank
participants may not deliver instructions directly to the depositaries for
Euroclear or Cedelbank.
Because of time zone differences, the securities account of a Euroclear or
Cedelbank participant purchasing an interest in a Preferred Security from a
Participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear participant or Cedelbank participant, during the
securities settlement processing day (which must be a business day for
Euroclear and Cedelbank, as the case may be) immediately following the DTC
settlement date. Cash received in Euroclear or Cedelbank as a result of sales
of interests in a Preferred Security by or through a Euroclear participant or
Cedelbank participant to a Participant in DTC will be received with value on
the DTC settlement date but will be available in the relevant Euroclear or
Cedelbank cash account only as of the business day for Euroclear or Cedelbank
following the DTC settlement date.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or the nominee, as the case may be, will be considered
the sole owner or holder of the Preferred Securities represented thereby for
all purposes under the Declaration and the Preferred Securities. No beneficial
owner of an interest in a Global Certificate will be able to transfer that
interest except in accordance with DTC's applicable procedures, in addition to
those provided for under the Declaration.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Preferred Securities, including the presentation of
Preferred Securities for exchange as described below, only at the
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direction of one or more Participants to whose account the DTC interests in the
Global Certificates are credited and only in respect of such portion of the
aggregate liquidation amount of Preferred Securities as to which such
Participant or Participants has or have given such direction. However, if there
is a Declaration Event of Default, DTC will exchange the Global Certificates
for Certificated Securities, which it will distribute to its Participants.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Preferred Securities held in book-entry
form will be sent to Cede & Co. If less than all of the Preferred Securities
are being redeemed, DTC will determine the amount of the interest of each
Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an omnibus proxy to the Trust as soon as possible
after the record date. The omnibus proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Preferred Securities
are credited on the record date.
Distributions on the Preferred Securities held in book-entry form will be
made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payments on such payment date. Payments by
Participants and Indirect Participants to Beneficial Owners will be governed by
standing instructions and customary practices and will be the responsibility of
such Participants and Indirect Participants and not of DTC, the Trust or the
Company, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of distributions to DTC is the responsibility
of the Trust, disbursement of such payments to Participants is the
responsibility of DTC, and disbursement of these payments to the Beneficial
Owners is the responsibility of Participants and Indirect Participants.
Except as provided in this prospectus supplement, a Beneficial Owner of an
interest in a Global Certificate will not be entitled to receive physical
delivery of Preferred Securities. Accordingly, each Beneficial Owner must rely
on the procedures of DTC to exercise any rights under the Preferred Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among DTC's Participants, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company, the Trust
nor the Institutional Trustee will have any responsibility for the performance
by DTC or its Participants or Indirect Participants under the rules and
procedures governing DTC. DTC may discontinue providing its services as
securities depositary with respect to the Preferred Securities at any time by
giving notice to the Trust. Under those circumstances, in the event that a
successor securities depositary is not appointed, Preferred Security
certificates are required to be printed and delivered. Additionally, the Trust,
with the consent of the Company, may decide to discontinue use of the system of
book-entry transfers through DTC, or a successor depositary. In that event,
certificates for the Preferred Securities will be printed and delivered. In
each of the above circumstances, the Company will appoint a paying agent for
the Preferred Securities.
The information in this section concerning DTC and DTC's book entry system
has been obtained from sources that BANK ONE and the Trust believe to be
reliable, but neither BANK ONE nor the Trust takes responsibility for the
accuracy of this information.
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Payment
Payments on the Preferred Securities represented by the Global Certificates
will be made to DTC, which will credit the relevant accounts at DTC on the
applicable Distribution Dates. In the case of Preferred Securities represented
by Certificated Securities, payments will be made by check mailed to the
address of the holder entitled to the payment as the holder's address appears
on the securities register.
Registrar, Transfer Agent and Paying Agent
BOTC will act as registrar, transfer agent and paying agent for the
Preferred Securities (the "Paying Agent"). A corporate trust office of BOTC is
located at One First National Plaza, Chicago, Illinois 60670. If the Preferred
Securities do not remain in book-entry only form, one or more additional paying
agents may be appointed if so required by any rule or regulation of any
securities exchange upon which the Preferred Securities may be listed at such
time. The Paying Agent will be permitted to resign as Paying Agent upon 30
days' written notice to the Institutional Trustee. In the event that BOTC will
no longer be the Paying Agent, the Institutional Trustee will appoint a
successor to act as Paying Agent. A successor Paying Agent will be a bank or
trust company acceptable to BANK ONE.
Registration of transfers of Preferred Securities will be made without
charge by or on behalf of the Trust, but upon payment of any tax or other
government charges which may be imposed in relation to the transfer. The Trust
or BANK ONE may also require a transferee to provide certain indemnity in
connection with a transfer.
The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
Information Concerning the Institutional Trustee
The Institutional Trustee, prior to the occurrence of a default with respect
to the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only the duties as are specifically described
in the Declaration. After a default, the Institutional Trustee will exercise
the same degree of care as a prudent individual would exercise in the conduct
of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by
the Declaration at the request of any holder of Preferred Securities, unless
offered reasonable indemnity by the holder against the costs, expenses and
liabilities which might be incurred by it. However, the Institutional Trustee
will not be relieved of its obligation to exercise the rights and powers vested
in it by the Declaration following the occurrence of a Declaration Event of
Default. The Institutional Trustee also will serve as trustee under the
Preferred Securities Guarantee and the Junior Subordinated Indenture. For
information concerning the relationship between the Institutional Trustee and
BANK ONE, see "BANK ONE Capital I" in this prospectus supplement.
Governing Law
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the laws of the State of Delaware.
Miscellaneous
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a grantor trust for
United States federal income tax purposes. BANK ONE is authorized and directed
to conduct its affairs so that the Junior Subordinated Debt Securities will be
treated as indebtedness of BANK ONE for United States federal income tax
purposes. In this connection, BANK ONE and the Regular Trustees are authorized
to take any action, not inconsistent with applicable law, the Declaration or
the certificate of
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incorporation of BANK ONE, that each of BANK ONE and the Regular Trustees
determine in their discretion to be necessary or desirable to achieve that end,
so long as the action does not adversely affect the interests of the holders of
the Preferred Securities or vary the terms of the Preferred Securities.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Under the Preferred Securities Guarantee, BANK ONE will irrevocably and
unconditionally agree, to the extent described in the Preferred Securities
Guarantee, to pay in full as and when due to the holders of the Preferred
Securities the Guarantee Payments as defined in the accompanying prospectus
except to the extent paid by the Trust. BANK ONE will make these Guarantee
Payments regardless of any defense, right of set-off or counterclaim which the
Trust may have or assert. BANK ONE's obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by BANK ONE to the
holders of Preferred Securities or by causing the Trust to pay the amounts to
these holders.
The Preferred Securities Guarantee has been qualified as an indenture under
the Trust Indenture Act. Chase will act as the Preferred Securities Guarantee
Trustee under the Preferred Securities Guarantee. The terms of the Preferred
Securities Guarantee will be those described in such Preferred Securities
Guarantee and those made part of such Preferred Securities Guarantee by the
Trust Indenture Act. The Preferred Securities Guarantee will be held by the
Preferred Securities Guarantee Trustee for the benefit of the holders of the
Preferred Securities. A summary description of the Preferred Securities
Guarantee appears in the accompanying prospectus under the caption "Description
of the Preferred Securities Guarantees".
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
The following is a description of the material terms and provisions of the
Junior Subordinated Debt Securities in which the Trust will invest the proceeds
from the issuance and sale of the Trust Securities. This description
supplements the general terms and provisions of the Junior Subordinated Debt
Securities described in the accompanying prospectus under the caption
"Description of the Junior Subordinated Debt Securities". The following
description is not complete and is subject to, and is qualified in its entirety
by reference to, the description in the accompanying prospectus and the Junior
Subordinated Indenture, originally dated as of January 1, 1997 (the "Base
Indenture"), between BANK ONE and Chase, as Trustee (the "Debt Trustee"), as
supplemented by a First Supplemental Indenture, dated as of January 31, 1997, a
Second Supplemental Indenture dated as of October 2, 1998, and a Third
Supplemental Indenture dated as of September , 1999 (the Base Indenture, as
so supplemented, is referred to in this prospectus supplement as the "Junior
Subordinated Indenture"), the forms of which are filed as exhibits to the
registration statement of which this prospectus supplement and the accompanying
prospectus form a part. Certain capitalized terms used in this section of the
prospectus supplement are defined in the Junior Subordinated Indenture.
BANK ONE will have the right to liquidate the Trust and cause the Junior
Subordinated Debt Securities to be distributed to the holders of the Trust
Securities.
General
The Junior Subordinated Debt Securities will be issued as unsecured
indebtedness under the Junior Subordinated Indenture. The Junior Subordinated
Debt Securities will be limited in aggregate principal amount to approximately
$ , which amount is the sum of the aggregate stated liquidation of the
Preferred Securities and the Common Securities.
The Junior Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debt
Securities will mature and become due and payable, together with any accrued
and unpaid interest including Compound Interest and Additional Sums, if any, on
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If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in the Trust,
the Junior Subordinated Debt Securities will initially be issued as a Global
Security (as defined below under "--Book-Entry and Settlement"). As described
in this prospectus supplement, Junior Subordinated Debt Securities may be
issued under certain limited circumstances in certificated form in exchange for
a Global Security. See "--Book-Entry and Settlement" below.
In the event that Junior Subordinated Debt Securities are issued in
certificated form, the Junior Subordinated Debt Securities will be in
denominations of $25 and multiples of $25 and may be transferred or exchanged
at the offices described below. Payments on Junior Subordinated Debt Securities
issued as a Global Security will be made to DTC, a successor depositary or, in
the event that no depositary is used, to a Paying Agent for the Junior
Subordinated Debt Securities. In the event Junior Subordinated Debt Securities
are issued in certificated form, principal and interest will be payable, the
transfer of Junior Subordinated Debt Securities will be registrable and Junior
Subordinated Debt Securities will be exchangeable for Junior Subordinated Debt
Securities of other denominations of a like aggregate principal amount at the
corporate trust office of
. the Institutional Trustee in New York, New York,
. BOTC in Chicago, Illinois, or
. any other Paying Agent or transfer agent appointed in addition to or
instead of the foregoing.
However, payment of interest may be made at the option of BANK ONE by check
mailed to the address of the holder entitled to such payment or by wire
transfer to an account appropriately designated by the holder entitled to the
payment. So long as the holder of any Junior Subordinated Debt Securities is
the Institutional Trustee, the payment of principal and interest on the Junior
Subordinated Debt Securities held by the Institutional Trustee will be made at
the place and to the account designated by the Institutional Trustee.
Any moneys deposited with the Debt Trustee or any Paying Agent, or then held
by BANK ONE in trust, for the payment of principal of and premium, if any or
interest on any Junior Subordinated Debt Securities and remaining unclaimed for
two years after such principal and premium, if any, or interest has become due
and payable will, at the request of BANK ONE, be repaid to BANK ONE. If this
occurs, the holder of a Junior Subordinated Debt Security will look after that
time, as a general unsecured creditor, only to BANK ONE for payment of the
Junior Subordinated Debt Security.
The Junior Subordinated Indenture does not contain provisions that give
holders of the Junior Subordinated Debt Securities protection in the event of a
highly leveraged transaction or other similar transaction involving BANK ONE
that may adversely affect those holders.
Subordination
The Junior Subordinated Indenture provides that the Junior Subordinated Debt
Securities are subordinated and junior in right of payment to all present and
future Existing Indebtedness, as defined in this prospectus supplement and
which includes both senior and subordinated indebtedness for money borrowed,
and General Obligations, as defined in this prospectus supplement. The Junior
Subordinated Debt Securities rank equally and are equivalent to creditor
obligations of those holding general unsecured claims not entitled to statutory
priority under the United States Bankruptcy Code of 1978 or otherwise. In
addition, no direct or indirect payment may be made of principal, premium, if
any, or interest on the Junior Subordinated Debt Securities, or in respect of
any redemption, repayment, retirement, purchase or other acquisition of any of
the Junior Subordinated Debt Securities, at any time when there is a default in
the payment of the principal of, premium, if any, interest on or otherwise with
respect to any Existing Indebtedness, whether at maturity or any date fixed for
prepayment or by declaration or otherwise, unless and until such default has
been cured or waived or has ceased to exist or all Existing Indebtedness has
been paid.
Upon any distribution of assets of BANK ONE to creditors upon any
dissolution, winding-up, liquidation or reorganization, whether voluntary or
involuntary, or in a bankruptcy, insolvency, receivership or other proceedings,
the payment of the principal of, and interest on, the Junior Subordinated Debt
Securities will, to
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the extent set forth in the Junior Subordinated Indenture, be subordinated in
right of payment to the prior payment in full of all Existing Indebtedness and
General Obligations of BANK ONE. Upon any payment or distribution of assets to
creditors upon dissolution, winding-up, liquidation, reorganization, assignment
for benefit of creditors, marshalling of assets or any bankruptcy, insolvency
or similar proceedings of BANK ONE, the holders of all Existing Indebtedness
and the creditors in respect of all General Obligations will first be entitled
to receive payment in full of all amounts due or to become due before the
holders of the Junior Subordinated Debt Securities will be entitled to receive
and retain any payments in respect of the principal of, or interest on, the
Junior Subordinated Debt Securities. By reason of such subordination, in the
event of the insolvency of BANK ONE, holders of Existing Indebtedness and
creditors in respect of General Obligations may receive more, ratably, and
holders of Junior Subordinated Debt Securities having a claim pursuant to such
securities may receive less, ratably, than other creditors of BANK ONE.
The term "Existing Indebtedness" means, with respect to BANK ONE, the
principal of, premium, if any, and interest on
. all of BANK ONE's indebtedness for money borrowed, but excluding trade
accounts payable arising in the ordinary course of business, whether
outstanding on the date of execution of the Junior Subordinated
Indenture or thereafter created, assumed or incurred and
. any deferrals, renewals or extensions of any such Existing Indebtedness,
except that Existing Indebtedness does not include
(1) any indebtedness that is by its terms subordinated to or ranks on
an equal basis with the Junior Subordinated Debt Securities,
(2) any indebtedness between or among BANK ONE or its affiliates,
including all other debt securities and guarantees in respect of
those debt securities, issued to any other trust, or a trustee of
such trust, partnership or other entity affiliated with BANK ONE
that is a financing vehicle of BANK ONE (a "financing entity") in
connection with the issuance by that financing entity of securities
that rank on an equal basis with, or junior to, the Trust
Securities, and
(3) indebtedness evidenced by securities issued under an indenture
dated as of November 15, 1996, between BANK ONE and Chase, as
trustee (unless such securities are by their terms senior in right
of payment to the securities previously issued under this
indenture).
The term "indebtedness for money borrowed" as used in this section includes,
without limitation, any obligation of, or any obligation guaranteed by, BANK
ONE for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments, and any deferred obligation for
the payment of the purchase price of property or assets.
The term "General Obligations" means all the obligations of BANK ONE to make
payment on account of claims in respect of derivative products such as interest
and foreign exchange rate contracts, commodity contracts and similar
arrangements, other than (1) obligations on account of Existing Indebtedness,
(2) obligations on account of indebtedness for money borrowed ranking on an
equal basis with or subordinate to the Junior Subordinated Debt Securities and
(3) obligations which by their terms are expressly stated not to be superior in
right of payment of the Junior Subordinated Debt Securities or to rank on a
parity with the Junior Subordinated Debt Securities.
Notwithstanding the previous paragraph, in the event that any rule,
guideline or interpretation promulgated or issued by the Federal Reserve Board,
or other competent regulatory agency or authority, as from time to time in
effect, establishes or specifies criteria for the inclusion in regulatory
capital of subordinated debt of a bank holding company requiring that such
subordinated debt be subordinated to obligations to creditors in addition to
those set forth above, then the term "General Obligations" will include such
additional obligations to creditors (excluding trade accounts payable arising
in the ordinary course of business), as from time to time in effect pursuant to
such rules, guidelines or interpretations. For purposes of this definition,
"claim" will have the meaning assigned thereto in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended to the date of the Junior
Subordinated Indenture.
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To the extent of any payments made on Existing Indebtedness and General
Obligations, the rights of the holders of the Junior Subordinated Debt
Securities will be subrogated to the rights of holders of Existing Indebtedness
and General Obligations of BANK ONE until all amounts owing to the holders of
the Junior Subordinated Debt Securities are paid in full. Such Existing
Indebtedness and General Obligations will continue to be Existing Indebtedness
and General Obligations and be entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term of
such Existing Indebtedness and General Obligations.
The Junior Subordinated Indenture does not limit the aggregate amount of
Existing Indebtedness that may be issued by BANK ONE or the amount of General
Obligations which BANK ONE may incur. As of June 30, 1999, Existing
Indebtedness and General Obligations of BANK ONE aggregated approximately $17.9
billion. In addition, because BANK ONE is a holding company, the Junior
Subordinated Debt Securities are effectively subordinated to all existing and
future liabilities of BANK ONE's subsidiaries, including depositors of its
banking subsidiaries.
Optional Redemption
Subject to BANK ONE having received prior approval of the Federal Reserve
Board if then required under applicable law, rules guidelines or policies of
the Federal Reserve Board, BANK ONE has the right to redeem the Junior
Subordinated Debt Securities,
. in whole or in part, at any time, on or after , 2004, or
. in whole, but not in part, at any time within 90 days following the
occurrence of a Tax Event, Investment Company Event or Capital Treatment
Event, or if the approval of the Federal Reserve Board is then required
for redemption, on a later date as promptly as practicable after such
approval is obtained,
in either case, upon not less than 30 nor more than 60 days' notice. The
redemption price for the Junior Subordinated Debt Securities will be equal to
100 percent of the principal amount to be redeemed plus any accrued and unpaid
interest, including Additional Sums (as defined below), if any, to the
redemption date.
In the event of any redemption, neither BANK ONE, the Debt Trustee nor any
Paying Agent will be required to issue, register the transfer of or exchange
. Junior Subordinated Debt Securities for the period beginning 15 days
before the day of selection of Junior Subordinated Debt Securities to be
redeemed and ending on the day of the mailing of the redemption notice, or
. Junior Subordinated Debt Securities so selected for redemption, except,
in the case of any Junior Subordinated Debt Securities being redeemed in
part, any portion of such security not to be redeemed.
If a partial redemption of the Preferred Securities resulting from a partial
redemption of the Junior Subordinated Debt Securities would result in the
delisting of the Preferred Securities, BANK ONE may only redeem the Junior
Subordinated Debt Securities in whole.
Interest
The Junior Subordinated Debt Securities will bear interest at a rate per
annum equal % per annum (the "Interest Rate"), from , 1999, payable
quarterly in arrears on February 15, May 15, August 15, and November 15 of each
year, commencing November 15, 1999. Such interest will be payable to the person
in whose name the Junior Subordinated Debt Securities is registered, subject to
certain exceptions, at the close of business on the Business Day next preceding
such Interest Payment Date. In the event the Junior Subordinated Debt
Securities are not in book-entry only form, except if the Junior Subordinated
Debt Securities are held by the Institutional Trustee, the record dates will be
the February 1, May 1, August 1 and November 1 prior to the applicable Interest
Payment Date.
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In the event that any Interest Payment Date is not a Business Day, then
payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day, except that, if such Business Day is in
the next succeeding calendar year, then such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. The date on which the interest payment is actually
payable is called an "Interest Payment Date". The amount of interest payable on
the Junior Subordinated Debt Securities will be computed on the basis of a 360-
day year of twelve 30-day months.
Option to Extend Interest Payment Period
So long as no Indenture Event of Default has occurred and is continuing,
BANK ONE has the right at any time, and from time to time, to defer payments of
interest by extending the interest payment period for a period not exceeding 20
consecutive quarters. However, no extension period may extend beyond the stated
maturity of the Junior Subordinated Debt Securities. At the end of the
extension period, BANK ONE will pay all interest then accrued and unpaid
including any Additional Sums, together with interest on such amount,
compounded quarterly at the Interest Rate to the extent permitted by applicable
law ("Compound Interest"). During any extension period, BANK ONE will not, and
will not permit any subsidiary of BANK ONE to:
. declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of BANK
ONE's capital stock or
. make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of BANK ONE that rank on
an equal basis in all respects with or junior in interest to the Junior
Subordinated Debt Securities or make any guarantee payments with respect
to any guarantee by BANK ONE of the debt securities of any subsidiary of
BANK ONE if that guarantee ranks on an equal basis with or junior in
interest to the Junior Subordinated Debt Securities, other than
(a) dividends or distributions in common stock of BANK ONE,
(b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance
of stock under any such plan in the future, or the redemption or
repurchase of any rights under such plan,
(c) payments under the Preferred Securities Guarantee or Common
Securities Guarantee,
(d) purchases of common stock related to the issuance of common
stock or rights under any of BANK ONE's benefit plans for its
directors, officers, or employees and
(e) obligations under any dividend reinvestment and stock purchase
plan.
Prior to the termination of any extension period, BANK ONE may further defer
payments of interest by extending the interest payment period. This extension
period, including all previous and further extensions,
however, may not exceed 20 consecutive quarters or extend beyond the stated
maturity of the Junior Subordinated Debt Securities. Upon the termination of
any extension period and the payment of all amounts then due, BANK ONE may
begin a new extension period, subject to the terms described in this section.
No interest will be due and payable during an extension period, except at the
end of the period.
BANK ONE has no present intention of exercising its right to defer payments
of interest by extending the interest payment period on the Junior Subordinated
Debt Securities.
If the Institutional Trustee is the sole holder of the Junior Subordinated
Debt Securities, BANK ONE will give the Regular Trustees and the Institutional
Trustee notice of its selection of an extension period at least one Business
Day prior to the earlier of (A) the date distributions on the Preferred
Securities are payable or (B) the date the Trustees or the Trust are required
to give notice to the New York Stock Exchange, or other applicable self-
regulatory organization, or to holders of the Preferred Securities of the
record date or the date such distribution is payable, but in any event not less
than one Business Day prior to the record date. The Regular
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Trustees will give notice of BANK ONE's selection of such extension period to
the holders of the Preferred Securities.
If the Institutional Trustee is not the sole holder of the Junior
Subordinated Debt Securities, BANK ONE will give the holders of the Junior
Subordinated Debt Securities notice of its selection of the extension period at
least ten Business Days before the earlier of (A) the next succeeding Interest
Payment Date, or (B) the date upon which BANK ONE is required to give notice of
the record date or payment date of the interest payment to the New York Stock
Exchange, or other applicable self-regulatory organization, or to holders of
the Junior Subordinated Debt Securities.
Additional Sums
In the event a Tax Event has occurred and is continuing and the Trust is
required to pay any taxes, duties, assessments or governmental charges of
whatever nature, other than withholding taxes, imposed by the United States, or
any other taxing authority, then, in any such case, BANK ONE will pay
additional sums ("Additional Sums") on the Junior Subordinated Debt Securities.
These additional amounts will be in amounts sufficient so that the net amounts
received and retained by the Trust after paying any of these taxes, duties,
assessments or other governmental charges will be not less than the amounts the
Trust would have received had it not been subject to such taxes, duties,
assessments or other governmental charges as a result of the Tax Event. This
means that the Trust will be in the same position it would have been in if it
did not have to pay such taxes, duties, assessments or other charges.
Indenture Events of Default
If any Indenture Event of Default occurs and is continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debt
Securities, will have the right to declare the principal of and the interest on
the Junior Subordinated Debt Securities, including any Compound Interest and
Additional Sums, if any, and any other amounts payable under the Junior
Subordinated Indenture to be due and payable and to enforce its other rights as
a creditor with respect to the Junior Subordinated Debt Securities. See
"Description of Junior Subordinated Debt Securities--Events of Default, Waiver
and Notice" in the accompanying prospectus for a description of the Indenture
Events of Default.
An Indenture Event of Default also constitutes a Declaration Event of
Default. The holders of Preferred Securities in certain circumstances have the
right to direct the Institutional Trustee to exercise its rights as the holder
of the Junior Subordinated Debt Securities. See "Description of the Preferred
Securities--Declaration Events of Default" and "--Voting Rights".
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debt Securities may annul any declaration of acceleration
under the Junior Subordinated Indenture and waive any default if the default
has been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Debt Trustee.
In the case of the Junior Subordinated Debt Securities held by the
Institutional Trustee on behalf of the Trust, a waiver of any default will not
be effective until a majority in liquidation amount of the Trust Securities
consent to the waiver. If the Junior Subordinated Indenture, however, requires
the consent of a Super-Majority, the waiver will only be effective if the
holders of at least the proportion in liquidation amount of the Trust
Securities which the relevant Super-Majority represents of the aggregate
principal amount of the Junior Subordinated Debt Securities outstanding so
consent.
If an Indenture Event of Default has occurred and is continuing and such
event is due to the failure of BANK ONE to pay interest or principal on the
Junior Subordinated Debt Securities when due, BANK ONE acknowledges that a
holder of Preferred Securities may then institute a Direct Action for payment
on or after the respective due date. Despite any payments made to a holder of
Preferred Securities by BANK ONE in
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connection with a Direct Action, BANK ONE will remain obligated to pay the
principal of or interest on the Junior Subordinated Debt Securities held by the
Trust or the Institutional Trustee of the Trust. BANK ONE will be subrogated to
the rights of the holder of such Preferred Securities with respect to payments
on the Preferred Securities to the extent of any payments made by BANK ONE to
such holder in any Direct Action. The holders of Preferred Securities will not
be able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debt Securities.
Book-Entry and Settlement
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Trust,
the Junior Subordinated Debt Securities will be issued in the form of one or
more global certificates (each a "Global Security") registered in the name of
the Depositary or its nominee. Except under the limited circumstances described
below, Junior Subordinated Debt Securities represented by the Global Security
will not be exchangeable for, and will not otherwise be issuable as, Junior
Subordinated Debt Securities in definitive form. The Global Securities may not
be transferred except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary or to a successor Depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. These laws may impair
the ability to transfer beneficial interests in a Global Security.
Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debt Securities in definitive form and will not be considered the
holders, as defined in the Junior Subordinated Indenture, of the Junior
Subordinated Debt Securities for any purpose under the Junior Subordinated
Indenture. No Global Security representing Junior Subordinated Debt Securities
will be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if that person is not a
Participant, on the procedures of the Participant through which that person
owns its interest in the Junior Subordinated Debt Securities to exercise any
rights of a holder under the Junior Subordinated Indenture.
The Depositary
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of those holders' interests in the Trust,
DTC will act as Depositary for the Junior Subordinated Debt Securities. For a
description of DTC and the specific terms of the depositary arrangements, see
"Description of the Preferred Securities--Book-Entry Only Issuance--The
Depository Trust Company". As of the date of this prospectus supplement, the
description in this prospectus supplement of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. BANK ONE
may appoint a successor to DTC or any successor depositary in the event DTC or
such successor depositary is unable or unwilling to continue as a depositary
for the Global Securities.
None of BANK ONE, the Trust, the Institutional Trustee, any Paying Agent and
any other agent of BANK ONE, or the Debt Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a Global Security for Junior
Subordinated Debt Securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
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<PAGE>
Discontinuance of the Depositary's Services
A Global Security will be exchangeable for Junior Subordinated Debt
Securities registered in the names of persons other than the Depositary or its
nominee only if
. the Depositary notifies BANK ONE that it is unwilling or unable to
continue as a depositary for the Global Security and no successor
depositary is appointed,
. the Depositary, at any time, ceases to be a clearing agency registered
under the Exchange Act at which time the Depositary is required to be so
registered to act as such depositary and no successor depositary is
appointed,
. BANK ONE, in its sole discretion, determines that such Global Security
will be so exchangeable, or
. an Indenture Event of Default with respect to the Junior Subordinated
Debt Securities has occurred.
Any Global Security that is exchangeable as provided in the preceding sentence
will be exchangeable for Junior Subordinated Debt Securities registered in
those names as the Depositary directs. It is expected that such instructions
will be based upon directions received by the Depositary from its Participants
with respect to ownership of beneficial interests in the Global Security.
Governing Law
The Junior Subordinated Indenture and the Junior Subordinated Debt
Securities will be governed by, and construed in accordance with, the laws of
the State of New York.
Information Concerning the Debt Trustee
The Debt Trustee will have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to these provisions, the Debt Trustee is under no
obligation to exercise any of the powers vested in it by the Junior
Subordinated Indenture at the request of any holder of Junior Subordinated
Debt Securities, unless offered reasonable indemnity by the holder against the
costs, expenses and liabilities which might be incurred by it. The Debt
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Debt
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. The Debt Trustee also serves as the Institutional
Trustee under the Declaration and the trustee under the Preferred Securities
Guarantee. For information concerning the relationship between the Debt
Trustee and the Company, see "BANK ONE Capital I" in this prospectus
supplement.
Miscellaneous
The Junior Subordinated Indenture will provide that BANK ONE will pay all
fees and expenses related to
. the offering of the Trust Securities and the Junior Subordinated Debt
Securities,
. the organization, maintenance and dissolution of the Trust,
. the retention of the BANK ONE Capital Trustees and
. the enforcement by the Institutional Trustee of the rights of the
holders of the Preferred Securities.
The payment of these fees and expenses will be fully and unconditionally
guaranteed by BANK ONE.
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EFFECT OF OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBT
SECURITIES AND THE PREFERRED SECURITIES GUARANTEE
As described in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial ownership interests in the
assets of the Trust, and to invest the proceeds from the issuance and sale in
the Junior Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debt Securities, these payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors:
. the aggregate principal amount of Junior Subordinated Debt Securities
will be equal to the sum of the aggregate stated liquidation amount of
the Trust Securities;
. the interest rate and the interest and other payment dates on the Junior
Subordinated Debt Securities will match the distribution rate and
distribution and other payment dates for the Preferred Securities;
. BANK ONE will pay all, and the Trust will not be obligated to pay,
directly or indirectly, costs, expenses, debts and liabilities of the
Trust, other than with respect to the Trust Securities; and
. the Declaration provides that the BANK ONE Capital Trustees will not
take or cause or permit the Trust to, among other things, engage in any
activity that is not consistent with the purposes of the Trust.
Payments of distributions, to the extent funds are available, and other
payments due on the Preferred Securities, to the extent funds are available,
are guaranteed by BANK ONE as and to the extent described under "Description of
the Preferred Securities Guarantees" in the accompanying prospectus. If BANK
ONE does not make interest payments on the Junior Subordinated Debt Securities,
the Trust will not have sufficient funds to pay distributions on the Preferred
Securities. The Preferred Securities Guarantee does not apply to any payment of
distributions unless and until the Trust has sufficient funds for the payment
of these distributions. The Preferred Securities Guarantee covers the payment
of distributions and other payments on the Preferred Securities if and to the
extent that BANK ONE has made a payment of interest or principal on the Junior
Subordinated Debt Securities held by the Trust as its sole asset.
The Preferred Securities Guarantee, when taken together with BANK ONE's
obligations under the Junior Subordinated Debt Securities and the Junior
Subordinated Indenture and its obligations under the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of the Trust, other
than with respect to the Trust Securities, provide a full and unconditional
guarantee on a subordinated basis of amounts due on the Preferred Securities.
If BANK ONE fails to make interest or other payments on the Junior
Subordinated Debt Securities when due, taking into account any extension
period, the Declaration provides a mechanism for the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities--Book-Entry Only Issuance--The Depository Trust Company" and "--
Voting Rights", to direct the Institutional Trustee to enforce its rights under
the Junior Subordinated Debt Securities. If the Institutional Trustee fails to
enforce its rights under the Junior Subordinated Debt Securities, a holder of
Preferred Securities may institute a legal proceeding against BANK ONE to
enforce the Institutional Trustee's rights under the Junior Subordinated Debt
Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity.
If a Declaration Event of Default has occurred and is continuing and the
event is due to the failure of BANK ONE to pay interest or principal on the
Junior Subordinated Debt Securities when due, then a holder of Preferred
Securities may institute a Direct Action for payment on or after the respective
payment date. In connection with such Direct Action, BANK ONE will be
subrogated to the rights of the holder of Preferred Securities under the
Declaration to the extent of any payment made by BANK ONE to the holder of
Preferred Securities in such Direct Action. BANK ONE, under the Preferred
Securities Guarantee, acknowledges that the
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Preferred Securities Guarantee Trustee will enforce the Preferred Securities
Guarantee on behalf of the holders of the Preferred Securities. If BANK ONE
fails to make payments under the Preferred Securities Guarantee, any holder of
Preferred Securities may institute a Direct Action against BANK ONE to enforce
the Preferred Securities Guarantee Trustee's rights under the Preferred
Securities Guarantee without first instituting a legal proceeding against the
Trust, the Preferred Securities Guarantee Trustee, or any other person or
entity.
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UNITED STATES FEDERAL INCOME TAXATION
General
The following is a summary of applicable United States federal income tax
consequences of the purchase, ownership, and disposition of the Preferred
Securities. Unless otherwise stated, this summary deals only with Preferred
Securities held as capital assets (generally, assets held for investment) by
holders who purchase the Preferred Securities upon original issuance. This
discussion does not address all aspects of United States federal income
taxation that may be applicable to holders in light of their particular
circumstances or to holders subject to special treatment under United States
federal income tax law (including, without limitation, certain financial
institutions, insurance companies, tax-exempt entities, dealers in securities,
persons that will hold the Preferred Securities as a position in a "straddle",
or as part of a "hedge" or "conversion transaction" or other integrated
investment and, except to the extent described below, Non-U.S. Holders). In
addition, this summary does not address any aspects of state, local, or foreign
tax laws. This summary is based on the United States federal income tax law in
effect as of the date of this prospectus supplement, which is subject to
change, possibly on a retroactive basis. Each investor is urged to consult his
tax advisor as to the particular tax consequences of purchasing, owning and
disposing of the Preferred Securities, including the application and effect of
United States federal, state, local and foreign tax laws.
Classification of the Junior Subordinated Debt Securities
In connection with the issuance of the Junior Subordinated Debt Securities,
Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel to BANK ONE and the
Trust, will render an opinion generally to the effect that under current law
and assuming full compliance with the terms of the Junior Subordinated
Indenture and certain other documents, and based on certain facts and
assumptions contained in such opinion, the Junior Subordinated Debt Securities
to be held by the Trust will be classified, for United States federal income
tax purposes, as indebtedness of BANK ONE.
Classification of BANK ONE Capital I
In connection with the issuance of the Preferred Securities, tax counsel
will render an opinion generally to the effect that, under current law and
assuming full compliance with the terms of the Declaration, the Junior
Subordinated Indenture, and other documents, and based on certain facts and
assumptions contained in such opinion, the Trust will be classified, for United
States federal income tax purposes, as a grantor trust and not as an
association taxable as a corporation. Accordingly, for United States federal
income tax purposes, each holder of Preferred Securities will generally be
treated as the owner of an undivided interest in the Junior Subordinated Debt
Securities and, as further discussed below, each holder will be required to
include in ordinary income its allocable share of interest, including original
issue discount, paid or accrued on the Junior Subordinated Debt Securities.
Interest Income and Original Issue Discount
Under applicable Treasury Regulations, a debt instrument will be deemed to
be issued with original issued discount if there is more that a "remote"
contingency that periodic stated interest payments due on the instrument will
not be timely paid. Because the exercise by BANK ONE of its option to defer the
payment of stated interest on the Junior Subordinated Debt Securities would
prevent BANK ONE from declaring dividends on any class of equity, BANK ONE
believes that the likelihood of its exercising the option is "remote" within
the meaning of the Regulations. As a result, BANK ONE intends to take the
position, based on the advice of tax counsel, that the Junior Subordinated Debt
Securities will not be deemed to be issued with original issue discount.
Accordingly, based on this position, stated interest payments on the Junior
Subordinated Debt Securities will be includible in the ordinary income of a
holder at the time that such payments are paid or accrued in accordance with
the holder's regular method of accounting. Because the Regulations have not yet
been addressed in any published rulings or other published interpretations
issued by the Internal Revenue Service, it is possible that the Internal
Revenue Service could take a position contrary the position taken by BANK ONE.
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<PAGE>
Exercise of Deferral Option. If BANK ONE were to exercise its option to
defer the payment of stated interest on the Junior Subordinated Debt
Securities, the Junior Subordinated Debt Securities would be treated, solely
for purposes of the original issue discount rules, as being "re-issued" at such
time with original issue discount. Under those rules, a holder of the Junior
Subordinated Debt Securities would be required to include original issue
discount in ordinary income, on a current basis, over the period that the
instrument is held even though BANK ONE would not be making any actual cash
payments during the extended interest payment period. The amount of interest
income includible in the taxable income of a holder of the Junior Subordinated
Debt Securities would be determined on the basis of a constant yield method
over the remaining term of the instrument and the actual receipt of future
payments of stated interest on the Junior Subordinated Debt Securities would no
longer be separately reported as taxable income. The amount of original issue
discount that would accrue, in the aggregate, during the extended interest
payment period would be approximately equal to the amount of the cash payment
due at the end of such period. Any original issue discount included in income
would increase the holder's adjusted tax basis in the Junior Subordinated Debt
Securities and the holder's actual receipt of interest payments would reduce
such basis.
Because income on the Preferred Securities will constitute interest income
for United States federal income tax purposes, corporate holders of Preferred
Securities will not be entitled to claim a dividends received deduction in
respect of such income.
Receipt of Junior Subordinated Debt Securities or Cash upon Liquidation of BANK
ONE Capital I
If BANK ONE exercises its right to liquidate the Trust and cause the Junior
Subordinated Debt Securities to be distributed on a ratable basis to the
holders of the Preferred Securities, such distribution would be treated as a
nontaxable event to the holders. In such event, each holder of Preferred
Securities would have an adjusted tax basis in the Junior Subordinated Debt
Securities received in the liquidation equal to the adjusted tax basis in its
Preferred Securities surrendered therefor and the holding period of the Junior
Subordinated Debt Securities would include the period during which the holder
had held the Preferred Securities. If, however, the Trust is characterized, for
United States federal income tax purposes, as an association taxable as a
corporation at the time of such liquidation, the distribution of the Junior
Subordinated Debt Securities would constitute a taxable event to the holders of
Preferred Securities.
If the Junior Subordinated Debt Securities are redeemed for cash and the
proceeds of such redemption are distributed to holders in redemption of their
Preferred Securities, the redemption would be treated as a sale of the
Preferred Securities, in which gain or loss would be recognized, as described
immediately below.
Sales of Preferred Securities
Upon the sale of the Preferred Securities, a holder will recognize gain or
loss in an amount equal to the difference between adjusted tax basis in the
Preferred Securities and the amount realized in the sale, except to the extent
of any amount received in respect of accrued but unpaid interest not previously
included in income. This gain or loss will be a capital gain or loss and will
be a long term capital gain or loss if the Preferred Securities have been held
for more than one year.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest, or original issue discount if
the Junior Subordinated Debt Securities are treated as having been issued, or
reissued, with original issue discount, with respect to the underlying Junior
Subordinated Debt Securities. A holder who disposes of its Preferred Securities
will be required to include in ordinary income (1) any portion of the amount
realized that is attributable to the accrued but unpaid interest to the extent
not previously included in income or (2) any amount of original issue discount
that has accrued on its ratable share of the underlying Junior Subordinated
Debt Securities during the taxable year of sale through the date of
disposition. Any such income inclusion will increase the holder's adjusted tax
basis in his Preferred Securities disposed of. To the extent that the amount
realized on the sale is less than the holder's adjusted tax basis, a holder
will recognize a capital loss. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
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Non-U.S. Holders
For purposes of this discussion, a "Non-U.S. Holder" is any person other
than: (i) a citizen or resident of the United States, (ii) a corporation,
partnership, or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is subject to United States federal income taxation regardless of its
source or (iv) a trust if a United States court is able to exercise primary
supervision over its administration and one or more United States persons have
the authority to control all of its substantial decisions.
Payments made to a holder of a Preferred Securities that is a Non-U.S.
Holder will not be subject to withholding of United States federal income tax,
provided that
(a) the beneficial owner of the Preferred Securities does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of BANK ONE entitled to vote,
(b) the beneficial owner of the Preferred Securities is not a controlled
foreign corporation that is related to BANK ONE through stock ownership, and
(c) either (A) the beneficial owner of the Preferred Securities certifies to
the Trust or its agent, under penalties of perjury, that it is not a United
States holder and provides his name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Preferred Securities in that capacity, certifies
to the Trust or its agent, under penalties of perjury, that the statement has
been received from the beneficial owner by it or by a Financial Institution
between it and the beneficial owner and furnishes the Trust or its agent with a
copy thereof.
In addition, a Non-U.S. Holder of Preferred Securities will not be subject
to withholding of United States federal income tax on any gain realized upon
the sale or other disposition of a Preferred Security.
The United States Treasury Department has issued regulations that may change
the certification procedures regarding withholding on certain amounts paid to
Non-U.S. Holders after December 31, 2000. Non-U.S. Holders should consult their
tax advisors concerning the effect, if any, of such new Treasury regulations on
an investment in the Preferred Securities.
Information Reporting Holders
Income on the Preferred Securities will be reported to holders on Forms
1099, which forms should be mailed to holders of Preferred Securities by
January 31 following each calendar year.
ERISA CONSIDERATIONS
Each of BANK ONE (the obligor with respect to the Junior Subordinated Debt
Securities held by the Trust) and its affiliates and the Institutional Trustee
may be considered a "party in interest", within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or a "disqualified
person", within the meaning of Section 4975 of the Code, with respect to many
employee benefit plans ("Plans") that are subject to ERISA. The purchase and/or
holding of Preferred Securities by a Plan that is subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
Section 4975 of the Code, including individual retirement arrangements and
other plans described in Section 4975(e)(1) of the Code, and with respect to
which BANK ONE, the Institutional Trustee or any affiliate is a service
provider, or otherwise is a party in interest or a disqualified person, may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code, unless the Preferred Securities are acquired pursuant to and in
accordance with an applicable exemption, such as on of the following prohibited
transaction class exemptions ("PTCE"):
. PTCE 84-14 -- an exemption for certain transactions determined by an
independent qualified professional asset manager,
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. PTCE 91-38 -- an exemption for certain transactions involving bank
collective investment funds,
. PTCE 90-1 -- an exemption for certain transactions involving insurance
company pooled separate accounts,
. PTCE 95-60 -- an exemption for transactions involving certain insurance
company general accounts or
. PTCE 96-23 -- an exemption for certain transactions determined by an in-
house asset manager.
Any purchaser or holder of the Preferred Securities or any interest in a
Preferred Security will be deemed to have represented by its purchase and
holding of the Preferred Securities that either (a) it is not a Plan or an
entity whose underlying assets include "plan assets" by reason of any Plan's
investment in that entity and is not purchasing the securities on behalf of or
with "plan assets" of any Plan or (b) it is eligible for exemptive relief
available such as that provided under PTCE 96-23, 95-60 91-38, 90-1 or 84-14
with respect to such purchase or holding.
In addition, a Plan fiduciary considering the purchase of Preferred
Securities should be aware that the assets of the Trust may be considered
"plan assets" for ERISA purposes unless the Preferred Securities meet the
conditions for the "publicly offered securities" exception from the "plan
asset" rules under ERISA. These conditions include, but are not limited to,
investment in the Preferred Securities by more than 100 investors independent
of BANK ONE and each other.
In the event that the "publicly offered securities" exception were not
available and the assets of the Trust were, accordingly, deemed to be "plan
assets" of Plans that are holders of the Preferred Securities, the
Institutional Trustee, as well as any other persons exercising discretion with
respect to the Junior Subordinated Debt Securities, would be fiduciaries and
parties in interest with respect to the investing Plans. To avoid certain
additional prohibited transactions under ERISA and the Code that could thereby
result, each investing Plan, by purchasing the Preferred Securities, will be
deemed to have directed the Trust to invest in the Junior Subordinated Debt
Securities and to have appointed the Institutional Trustee. In this regard, it
should be noted that, in the event of a Declaration Event of Default, BANK ONE
may not remove the Institutional Trustee. Any purchaser proposing to acquire
Preferred Securities with assets of any Plan should consult with its counsel.
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UNDERWRITING
Subject to the terms and conditions described in the Underwriting Agreement,
BANK ONE Capital I has agreed to sell to each of the Underwriters named below,
and each of the Underwriters has severally agreed to purchase the number of
Preferred Securities next to its name below. In the Underwriting Agreement, the
several Underwriters have agreed, subject to the terms and conditions of the
agreement, to purchase all the Preferred Securities offered under this
prospectus supplement if any of the Preferred Securities are purchased. In the
event of default by an Underwriter, the Underwriting Agreement provides that,
in certain circumstances, the purchase commitments of the non-defaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
Number of
Underwriters Preferred Securities
------------ --------------------
<S> <C>
Total...............................................
</TABLE>
The Underwriters propose to offer the Preferred Securities, in part,
directly to the public at the initial public offering price included on the
cover page of this prospectus supplement, and, in part, to certain securities
dealers at such price less a concession of $ per Preferred Security,
provided that such concession for sales of 10,000 or more Preferred Securities
to a single purchaser will not be in excess of $ per Preferred Security. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per Preferred Security to certain brokers and dealers. After the
Preferred Securities are released for sale to the public, the offering price
and other selling terms may from time to time be varied by the Underwriters.
BANK ONE and the Trust have granted the Underwriters an option to purchase
up to additional Preferred Securities at the initial public offering price
plus accrued distributions from 1999, less the underwriting commissions
payable by BANK ONE. Such option, which will expire 7 days after the closing
date for the issuance and sale of the Preferred Securities, may be exercised
solely to cover over-allotments. To the extent that the Underwriters exercise
such option, each of the Underwriters will have a firm commitment, subject to
certain conditions, to purchase from the Trust approximately the same
percentage of the Preferred Securities as the amount set forth next to such
Underwriter's name in the above table bears to the amount of Preferred
Securities set forth as the total to be purchased in the above table.
In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used to purchase the Junior Subordinated Debt
Securities of BANK ONE, the Underwriting Agreement provides that BANK ONE will
pay as compensation to the Underwriters arranging the investment of such
proceeds, an amount in immediately available funds of $ per Preferred
Security, or $ in the aggregate, for the accounts of the several
Underwriters. However, such compensation will be $ per Preferred Security
for sales of 10,000 or more Preferred Securities to a single purchaser.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Preferred Securities as interests in a direct
participation program, this offering is being made in compliance with Rule 2810
of the NASD's Conduct Rules. The Underwriters may not confirm sales to any
accounts over which they exercise discretionary authority without the prior
written approval of the transaction by the customer.
During the period from the date of the Underwriting Agreement and continuing
to and including the date that is 7 days after the closing date for the
issuance and sale of the Preferred Securities, neither the Trust nor BANK ONE
will, without the prior written consent of Salomon Smith Barney, directly or
indirectly, offer, sell, offer to sell, or otherwise dispose of any Preferred
Securities, any other beneficial interests in the assets of the Trust, or any
preferred securities or any other securities of the Trust or BANK ONE which are
substantially
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similar to the Preferred Securities, including any guarantee of such securities
(except for the Preferred Securities offered by this prospectus supplement and
the accompanying prospectus).
Each Underwriter has represented and agreed that (a) it has not offered or
sold and prior to the date six months after the date of issue of the Preferred
Securities will not offer or sell any Preferred Securities to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments, as principal or
agent, for the purposes of their businesses or otherwise in circumstances which
do not constitute an offer to the public in the United Kingdom for the purposes
of the Public Offers of Securities Regulations 1995, (b) it has complied, and
will comply with, all applicable provisions of the Financial Services Act 1986
with respect to anything done by it in relation to the Preferred Securities in,
from or otherwise involving the United Kingdom, and (c) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the Preferred Securities to a
person who is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom the document may otherwise lawfully be issued or passed on.
A portion of the Preferred Securities will be offered by the Underwriters
directly or through their representative selling agents outside the United
States. Investors may elect to hold beneficial interests in the Preferred
Securities through either DTC (in the United States), Cedelbank or Euroclear
(outside the United States), if they are participants of these systems, or
indirectly through organizations which are participants in these systems.
Prior to this offering there has been no public market for the Preferred
Securities. The Trust and BANK ONE have applied to list the Preferred
Securities on the New York Stock Exchange. Trading of the Preferred Securities
on the New York Stock Exchange is expected to commence within a 30-day period
after the initial delivery of the Preferred Securities. The Underwriters have
advised the Trust that they intend to make a market in the Preferred Securities
prior to commencement of trading on the New York Stock Exchange. The
Underwriters will have no obligation to make a market in the Preferred
Securities, however, and may cease market making activities, if commenced, at
any time. No assurance can be given as to the liquidity of the trading market
for the Preferred Securities.
In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell the Preferred Securities to a minimum of 400 or more beneficial holders.
The Trust and BANK ONE have agreed to indemnify the Underwriters against, or
contribute to payments that the Underwriters may be required to make in respect
of, certain liabilities, including liabilities under the Securities Act.
It is expected that delivery of the Preferred Securities will be made
against payment for them on or about September , 1999, which is the fifth
business day following the date of this prospectus supplement (such settlement
cycle being referred to in this prospectus supplement as "T+5"). The ability to
settle secondary market trades of the Preferred Securities effected on the date
of pricing and the succeeding business day may be affected by T+5 settlement.
In connection with this offering and in accordance with applicable law and
industry practice, the Underwriters may over-allot or effect transactions that
stabilize, maintain or otherwise affect the market price of the Preferred
Securities at levels above those that might otherwise prevail in the open
market. This may be done by, among other things, entering stabilizing bids,
effecting syndicate covering transactions or imposing penalty bids, each of
which is described below.
. A stabilizing bid means the placing of any bid, or the effecting of any
purchase, for the purpose of pegging, fixing or maintaining the price of
a security.
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. A syndicate covering transaction means the placing of any bid on behalf
of the underwriting syndicate or the effecting of any purchase to reduce
a short position created in connection with the offering.
. A penalty bid means an arrangement that permits the managing underwriter
to reclaim a selling concession from a syndicate member in connection
with the offering when Preferred Securities originally sold by the
syndicate member are purchased in syndicate covering transactions.
These transactions may be effected on the New York Stock Exchange, in the
over-the-counter market, or otherwise. The Underwriters are not required to
engage in any of these activities, or continue these activities if commenced.
One of the Underwriters, Banc One Capital Markets, Inc. ("BOCM"), is a
wholly owned subsidiary of BANK ONE. The participation of BOCM in the offering
and sale of the Preferred Securities will comply with Rule 2720 of the Conduct
Rules of the NASD.
This prospectus supplement and the accompanying prospectus may be used by
affiliates of BANK ONE, including BOCM, in connection with offers and sales
related to secondary market transactions in the Preferred Securities. Any
affiliate, including BOCM, may act as principal or agent in these transactions.
These sales will be made at prices related to the prevailing market prices at
the time of sale or otherwise.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, BANK ONE and its subsidiaries in the conduct
ordinary course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Declaration and the creation of the Trust
will be passed upon by Skadden, Arps, Slate, Meagher & Flom LLP, special
Delaware counsel to the Company and the Trust. The validity of the Junior
Subordinated Debt Securities and the Preferred Securities Guarantee and matters
relating thereto will be passed upon for BANK ONE by Sherman I. Goldberg, Esq.,
Executive Vice President, General Counsel and Secretary of BANK ONE and for the
Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP. Certain United States
federal income taxation matters will be passed upon for BANK ONE and the Trust
by Skadden, Arps, Slate, Meagher & Flom LLP.
As of July 31, 1999 Sherman I. Goldberg was the record and beneficial owner
of 396,008 shares of common stock of BANK ONE and had options to purchase
245,817 shares of common stock of BANK ONE.
S-48
<PAGE>
PROSPECTUS
$1,500,000,000
BANK ONE CORPORATION
Senior Debt Securities
Senior Subordinated Debt Securities
Junior Subordinated Debt Securities
BANK ONE Capital I
BANK ONE Capital II
BANK ONE Capital III
BANK ONE Capital IV
BANK ONE Capital V
Preferred Securities
(fully and unconditionally guaranteed on a subordinated basis, as
describedherein, by BANK ONE CORPORATION)
This prospectus contains a general description of the securities which BANK
ONE CORPORATION and/or a BANK ONE Capital Trust may offer for sale. The
specific terms of the securities will be contained in one or more supplements
to this prospectus. Read the prospectus and any supplement carefully before
you invest.
The securities will be unsecured obligations of BANK ONE CORPORATION and/or
a BANK ONE Capital Trust and will not be savings accounts, deposits or other
obligations of any bank and are not insured by the Federal Deposit Insurance
Corporation, the Bank Insurance Fund or any other government agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
This prospectus may not be used to sell securities unless accompanied by a
prospectus supplement.
The date of this prospectus is September 7, 1999.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................. 1
Where You Can Find More Information about the Company and the BANK ONE
Capital Trusts.......................................................... 2
Forward-Looking Statements............................................... 3
The Company.............................................................. 5
Ratio of Earnings to Fixed Charges....................................... 6
The BANK ONE Capital Trusts.............................................. 6
Use of Proceeds.......................................................... 8
Regulatory Matters....................................................... 8
Description of Debt Securities........................................... 13
Senior Securities........................................................ 18
Senior Subordinated Securities........................................... 19
Description of Junior Subordinated Debt Securities....................... 24
Description of the Preferred Securities.................................. 29
Description of the Preferred Securities Guarantees....................... 31
Effect of Obligations Under the Junior Subordinated Debt Securities and
the Preferred Securities Guarantee...................................... 35
Global Securities........................................................ 36
Plan of Distribution..................................................... 38
Legal Matters............................................................ 39
Experts.................................................................. 39
</TABLE>
i
<PAGE>
SUMMARY
This document is called a prospectus. This summary highlights selected
information from this prospectus and may not contain all of the information
that is important to you. To understand the terms of the securities, you should
carefully read this prospectus with the attached prospectus supplement. This
prospectus and the prospectus supplement together give the specific terms of
the securities being offered. You should also read the documents referred to
under the heading "Where You Can Find More Information About the Company and
the BANK ONE Capital Trusts" for information on BANK ONE CORPORATION and its
financial statements. The Company has its principal offices at One First
National Plaza, Chicago, Illinois (telephone: 312-732-4000). Certain
capitalized terms used in this summary are defined elsewhere in this
prospectus.
BANK ONE CORPORATION, a Delaware corporation (also referred to as the
"Company", "BANK ONE", "us" or "we"), and BANK ONE Capital I, BANK ONE Capital
II, BANK ONE Capital III, BANK ONE Capital IV and BANK ONE Capital V, each a
statutory business trust formed under the laws of the State of Delaware
(separately, each trust is also referred to as a "BANK ONE Capital Trust" and
together as the "BANK ONE Capital Trusts") have filed a registration statement
with the Securities and Exchange Commission under a "shelf" registration
procedure. Under this procedure the Company and each BANK ONE Capital Trust, as
applicable, may offer and sell from time to time, in one or more series, up to
$1,500,000,000, or the equivalent in one or more foreign currencies, including
composite currencies such as the Euro, of any of the following securities:
. unsecured senior debt securities,
. unsecured senior subordinated debt securities,
. unsecured junior subordinated debt securities,
. preferred securities of a BANK ONE Capital Trust, and
. guarantees, described below, relating to the preferred securities of
each BANK ONE Capital Trust.
The securities may be sold for U.S. dollars, foreign-denominated currency or
currency units; amounts payable with respect to any such securities may be
payable in U.S. dollars or foreign-denominated currency or currency units.
This prospectus provides you with a general description of the securities we
may offer. Each time we offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
securities being offered. The prospectus supplement may also add, update or
change information contained in this prospectus.
The prospectus supplement will also contain information about certain United
States federal income tax considerations relating to the securities covered by
the prospectus supplement.
The Company and each BANK ONE Capital Trust may sell securities to
underwriters who will sell the securities to the public on terms fixed at the
time of sale. In addition, the securities may be sold by the Company and each
BANK ONE Capital Trust directly or through dealers or agents designated from
time to time, which agents may be affiliates of the Company and each BANK ONE
Capital Trust. If the Company, directly or through agents, solicits offers to
purchase the securities, the Company reserves the sole right to accept and,
together with its agents, to reject, in whole or in part, any such offer.
The prospectus supplement will also contain, with respect to the securities
being sold, the names of the underwriters, dealers or agents, if any, together
with the terms of offering, the compensation of such underwriters and the net
proceeds to the Company and each BANK ONE Capital Trust.
1
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Any underwriters, dealers or agents participating in the offering may be
deemed "underwriters" within the meaning of the Securities Act of 1933.
One or more of our subsidiaries may buy and sell any of the securities after
the securities are issued as part of their business as a broker-dealer. Those
subsidiaries may use this prospectus and the related prospectus supplement in
such transactions. Any sale by a subsidiary will be made at the prevailing
market price at the time of sale.
WHERE YOU CAN FIND MORE INFORMATION ABOUT THE COMPANYAND THE BANK ONE CAPITAL
TRUSTS
The Company and each BANK ONE Capital Trust have filed a registration
statement with the SEC. This prospectus is part of the registration statement
but the registration statement also contains additional information and
exhibits. The Company also files proxy statements, annual, quarterly and
special reports, and other information with the SEC. You may read and copy the
registration statement and any reports, proxy statements and other information
at the public reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549 and the SEC's Regional Offices in New York, New
York and Chicago, Illinois.
You can call the SEC for further information about its public reference
rooms at 1-800-732-0330. Such material is also available at the SEC's website
at "http://www.sec.gov".
You can also inspect reports, proxy statements and other information about
the Company at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York, and the Chicago Stock Exchange, 440 South LaSalle Street,
Chicago, Illinois.
The SEC allows the Company to incorporate documents by reference in this
prospectus. This means that by listing or referring to a document which the
Company has filed with the SEC in this prospectus, that document is considered
to be a part of this prospectus and should be read with the same care. When the
Company updates the information contained in documents which have been
incorporated by reference, by making future filings with the SEC, the
information incorporated by reference in this prospectus is considered to be
automatically updated.
The documents listed below are incorporated by reference into this
prospectus:
<TABLE>
<CAPTION>
Company SEC Filings Period
------------------- ------
<S> <C>
Annual Report on Form 10-K...................... Year ended December 31, 1998
Quarterly Reports on Form 10-Q.................. Quarter ended:
.March 31, 1999
.June 30, 1999
Current Reports on Form 8-K..................... Dated:
.January 19, 1999
.April 20, 1999
.May 18, 1999
.June 15, 1999
.July 20, 1999
.August 25, 1999
</TABLE>
The Company also incorporates by reference additional documents that it may
file with the SEC between the date of this prospectus and the termination of
the offering of the securities. These documents include periodic reports, such
as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as well as proxy statements.
2
<PAGE>
You can obtain any of the documents incorporated by reference in this
document through us, or from the SEC through the SEC's web site at the address
described above. Documents incorporated by reference are available from us
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this prospectus. You
can obtain documents incorporated by reference in this prospectus by requesting
them in writing or by telephone from us at the following address and telephone
number:
Investor Relations
BANK ONE CORPORATION
One First National Plaza
Mail Code IL1-0738
Chicago, Illinois 60670-0738
Telephone (312) 732-4812
If you request any incorporated documents from us, we will mail them to you
by first class mail, or another equally prompt means, within one business day
after we receive your request.
YOU SHOULD ONLY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT OR INCORPORATED BY REFERENCE. THE COMPANY HAS NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
No separate financial statements of any BANK ONE Capital Trust are included
in this prospectus. The Company and the BANK ONE Capital Trusts do not consider
that such financial statements would be material to holders of the preferred
securities because each BANK ONE Capital Trust is a newly formed special
purpose entity, has no operating history or independent operations and is not
engaged in and does not propose to engage in any activity other than holding as
trust assets the Corresponding Junior Subordinated Debt Securities (as defined
below under the heading "The BANK ONE Capital Trusts") of the Company and
issuing the trust securities.
Furthermore, taken together, the Company's obligations under each series of
Corresponding Junior Subordinated Debt Securities, the Junior Indenture under
which the Corresponding Junior Subordinated Debt Securities will be issued, the
related Declaration and the related Preferred Securities Guarantee provide, in
the aggregate, a full, irrevocable and unconditional guarantee of payments of
distributions and other amounts due on the related preferred securities of a
BANK ONE Capital Trust. For a more detailed discussion see "The BANK ONE
Capital Trusts", "Description of Preferred Securities", "Description of Junior
Subordinated Debt Securities", "Description of the Preferred Securities
Guarantees" and "Effect of Obligations Under the Junior Subordinated Debt
Securities and Preferred Securities Guarantee". In addition, the Company does
not expect that any of the BANK ONE Capital Trusts will be filing reports with
the SEC under the Securities Exchange Act of 1934.
The Company is not making an offer of its securities in any state or country
where the offer is not permitted. You should not assume that the information in
this prospectus or any prospectus supplement is accurate as of a later date
than the date of this prospectus or any prospectus supplement.
FORWARD-LOOKING STATEMENTS
This prospectus, including information included or incorporated by reference
in this prospectus, contains certain forward-looking statements with respect to
the financial condition, results of operations, plans, objectives, future
performance and business of the Company and its predecessors, BANC ONE
CORPORATION and First Chicago NBD Corporation as well as certain information
relating to the merger of BANC ONE and First Chicago NBD to form the Company,
including, without limitation, statements relating to the cost savings, revenue
enhancements and restructuring charges estimated to result from the merger and
3
<PAGE>
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 and
revenue enhancements from the merger may not be fully realized or realized
within the expected time frame; (b) revenues following the merger may be lower
than expected, or deposit attrition, operating costs or customer loss and
business disruption following the merger may be greater than expected; (c)
competitive pressures among depository and other financial institutions may
increase significantly; (d) costs or difficulties related to the integration of
the businesses of BANC ONE and First Chicago NBD may be greater than expected;
(e) changes in the interest rate environment may reduce margins; (f) general
economic or business conditions, either nationally or in the states in which
the Company is doing business, may be less favorable than expected resulting
in, among other things, a deterioration in credit quality or a reduced demand
for credit; (g) legislative or regulatory changes may adversely affect the
business in which the Company is engaged; (h) technological changes (including
the costs of remediating or failing to remediate "Year 2000" and "Euro" data
systems compliance issues, including those of the Company and those of other
persons by whom the Company's business may be affected) may be more difficult
or expensive than anticipated; and (i) changes may occur in the securities and
capital markets.
4
<PAGE>
THE COMPANY
BANK ONE CORPORATION is a multi-bank holding company organized in 1998 under
the laws of the State of Delaware to effect the merger, effective October 2,
1998, of First Chicago NBD with BANC ONE.
Through its bank subsidiaries, the Company provides domestic retail banking,
worldwide corporate and institutional banking, and trust and investment
management services. The Company operates banking offices in Arizona, Colorado,
Florida, Illinois, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma,
Texas, Utah, West Virginia and Wisconsin. The Company also owns nonbank
subsidiaries that engage in businesses related to banking and finance,
including credit card and merchant processing, consumer and education finance,
mortgage lending and servicing, insurance, venture capital, investment and
merchant banking, trust, brokerage, investment management, leasing, community
development and data processing.
Like its predecessors, the Company 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. When consistent with its overall
business strategy, the Company also will sell assets or exit certain businesses
and markets.
The Company is a legal entity separate and distinct from its affiliate banks
and its nonbank subsidiaries (collectively, the "affiliates"). Accordingly, the
right of the Company, and thus the right of the Company's creditors and
shareholders, to participate in any distribution of the assets or earnings of
any affiliate is necessarily subject to the prior claims of creditors of the
affiliate, except to the extent that claims of the Company in its capacity as a
creditor may be recognized. The principal sources of the Company's revenues are
dividends, interest on loans and fees from its affiliates. Accordingly, the
Debt Securities and Junior Subordinated Debt Securities will be effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of Debt Securities and Junior Subordinated Debt
Securities should look only to the assets of the Company for payments on the
Debt Securities and Junior Subordinated Debt Securities.
The Company's executive offices are located at One First National Plaza,
Chicago, Illinois 60670, and the telephone number is (312) 732-4000.
5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for the Company, which are computed
on the basis of the total enterprise (as defined by the SEC) by dividing
earnings before fixed charges and income taxes by fixed charges, are set forth
below for the periods indicated. Also set forth below are the ratios of
earnings to combined fixed charges and preferred stock dividends, which are
computed on the basis of the total enterprise by dividing earnings before fixed
charges and income taxes by fixed charges and preferred stock dividend
requirements for the periods indicated. Fixed charges consist principally of
interest expense on all long- and short-term borrowings, excluding or including
interest on deposits as indicated.
<TABLE>
<CAPTION>
Six Months
Ended June 30, Year Ended December 31,
-------------- ------------------------
1999 1998 1998 1997 1996 1995 1994
------- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding interest expense on
deposits.......................... 2.8x 2.6x 2.3x 2.4x 2.6x 2.2x 2.6x
Including interest expense on
deposits.......................... 1.8x 1.6x 1.5x 1.5x 1.6x 1.5x 1.6x
Earnings to Combined Fixed Charges
and Preferred Dividends:
Excluding interest expense on
deposits.......................... 2.8x 2.6x 2.3x 2.3x 2.5x 2.1x 2.5x
Including interest expense on
deposits.......................... 1.8x 1.6x 1.5x 1.5x 1.6x 1.5x 1.6x
</TABLE>
THE BANK ONE CAPITAL TRUSTS
Each BANK ONE Capital Trust is a statutory business trust created under
Delaware law pursuant to:
. a declaration of trust executed by the Company, as sponsor (the
"Sponsor") of the BANK ONE Capital Trust, and the BANK ONE Capital
Trustees (as defined below) of such BANK ONE Capital Trust, and
. a certificate of trust filed with the Delaware Secretary of State.
Each declaration of trust will be amended and restated in its entirety
(each, as so amended and restated, a "Declaration") substantially in the form
filed as an exhibit to the registration statement of which this prospectus
forms a part.
Each Declaration will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act").
Each BANK ONE Capital Trust may offer to the public, from time to time,
preferred securities (the "Preferred Securities") representing preferred
beneficial interests in the applicable BANK ONE Capital Trust.
Each BANK ONE Capital Trust exists for the exclusive purposes of:
. issuing and selling its Trust Securities, (as defined below)
. using the proceeds from the sale of such Trust Securities to acquire
a series of Corresponding Junior Subordinated Debt Securities (as
defined below) issued by the Company, and
. engaging in only those other activities necessary or incidental to
the above activities (such as registering the transfer of the Trust
Securities).
Each BANK ONE Capital Trust will sell common securities representing
undivided beneficial ownership interests in such BANK ONE Capital Trust to the
Company (the "Common Securities") and Preferred Securities representing
undivided beneficial ownership interests in such trust to the public. The
Common Securities and the Preferred Securities together are also referred to as
the "Trust Securities".
6
<PAGE>
When any BANK ONE Capital Trust sells its Preferred Securities to the public
it will use the money it receives together with the money it receives from the
sale of its Common Securities to buy a series of the Company's Junior
Subordinated Debt Securities (the "Corresponding Junior Subordinated Debt
Securities"). The payment terms of the Corresponding Junior Subordinated Debt
Securities will be virtually the same as the terms of that BANK ONE Capital
Trust's Preferred Securities (the "Related Preferred Securities").
Each BANK ONE Capital Trust will own only the applicable series of
Corresponding Junior Subordinated Debt Securities. The only source of funds for
each BANK ONE Capital Trust will be the payments it receives from the Company
on the Corresponding Junior Subordinated Debt Securities. The BANK ONE Capital
Trust will use such funds to make cash payments to holders of the Preferred
Securities.
Each BANK ONE Capital Trust will also have the right to be reimbursed by the
Company for certain expenses.
All of the Common Securities of each BANK ONE Capital Trust will be owned by
the Company. The Common Securities of a BANK ONE Capital Trust will rank
equally, and payments will be made on such securities pro rata, with the
Preferred Securities of such BANK ONE Capital Trust, except that upon the
occurrence and continuance of an event of default under a Declaration resulting
from an event of default under the Junior Indenture, the rights of the Company,
as holder of the Common Securities, to payment in respect of distributions and
payments upon liquidation or redemption will be subordinated to the rights of
the holders of the Preferred Securities of such BANK ONE Capital Trust. See
"Description of the Preferred Securities". The Company will acquire Common
Securities in an aggregate liquidation amount equal to not less than 3% of the
total capital of each BANK ONE Capital Trust.
The prospectus supplement relating to any Preferred Securities will contain
the details of the cash distributions to be made periodically to the holders of
the Preferred Securities.
Under certain circumstances, the Company may redeem the Corresponding Junior
Subordinated Debt Securities which it sold to a BANK ONE Capital Trust. If it
does this, the BANK ONE Capital Trust will redeem a like amount of the
Preferred Securities which it sold to the public and the Common Securities
which it sold to the Company.
Under certain circumstances the Company may terminate each BANK ONE Capital
Trust and cause the Corresponding Junior Subordinated Debt Securities to be
distributed to the holders of the Related Preferred Securities. If this
happens, owners of the Related Preferred Securities will no longer have any
interest in such BANK ONE Capital Trust and will only own the Corresponding
Junior Subordinated Debt Securities.
Generally the Company needs the approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") to redeem the Corresponding
Junior Subordinated Debt Securities or to terminate one or more BANK ONE
Capital Trusts.
Unless otherwise specified in the applicable prospectus supplement:
. Each BANK ONE Capital Trust will have a term of approximately 55 years
from the date it issues its Trust Securities, but may terminate earlier
as provided in the applicable Declaration.
. Each BANK ONE Capital Trust's business and affairs will be conducted by
its trustees (collectively, the "BANK ONE Capital Trustees").
. The trustees will be appointed by the Company as holder of the
applicable BANK ONE Capital Trust's Common Securities.
. The duties and obligations of the trustees are governed by the
Declaration for the applicable BANK ONE Capital Trust.
7
<PAGE>
. The trustees will be The Chase Manhattan Bank, as the institutional
Trustee (the "Institutional Trustee"), Chase Manhattan Bank Delaware, as
the Delaware Trustee (the "Delaware Trustee"), and one or more
individual trustees (the "Regular Trustees") who are employees or
officers of or affiliated with the Company. The Chase Manhattan Bank, as
Institutional Trustee, will act as sole indenture trustee under each
Declaration for purposes of compliance with the Trust Indenture Act. The
Chase Manhattan Bank will also act as trustee under the Guarantees and
the Junior Indenture. See "Description of the Preferred Securities
Guarantees", "Description of Debt Securities" and "Description of the
Junior Subordinated Debt Securities".
. The Company, as the holder of the Common Securities, has the right to
vote to appoint, remove or replace any of, or increase or reduce the
number of, the BANK ONE Capital Trustees of a trust.
. The Company will pay all fees and expenses related to each BANK ONE
Capital Trust and the offering of the Preferred Securities and will pay,
directly or indirectly, all ongoing costs, expenses and liabilities of
each BANK ONE Capital Trust.
. No amendment or modification may be made to any Declaration which would
adversely affect the rights or preferences of the applicable Trust
Securities without the approval of the majority in liquidation amount of
the relevant Trust Securities (which may be only the Preferred
Securities or Common Securities of such trust if only that class is
affected).
The principal executive office of each BANK ONE Capital Trust is One First
National Plaza, Chicago, Illinois 60670 and its telephone number is (312) 732-
4000.
USE OF PROCEEDS
Each BANK ONE Capital Trust will use all proceeds received from the sale of
the Preferred Securities to purchase Junior Subordinated Debt Securities from
the Company. The Company intends to use the net proceeds from the sale of the
Junior Subordinated Debt Securities and the Debt Securities for general
corporate purposes. These corporate purposes may include the funding of
investments in, or extensions of credit to, the Company's subsidiaries. Except
as described in the applicable prospectus supplement, specific allocations of
the proceeds to such purposes have not been made, although Company management
will have determined at the date of the applicable prospectus supplement that
funds should be borrowed at that time. Pending the uses described above, the
Company may temporarily invest the net proceeds in various short-term
securities or apply the net proceeds to reduce short-term indebtedness. Based
upon the historic and anticipated future growth of the Company and the
financial needs of its subsidiaries, the Company anticipates that it will, on
an ongoing basis, engage in additional financings in character and amount to be
determined.
REGULATORY MATTERS
The following discussion describes certain of the material elements of the
regulatory framework applicable to bank holding companies and their
subsidiaries and provides certain specific information relevant to the Company.
This regulatory framework is intended primarily for the protection of
depositors and the federal deposit insurance funds and not for the protection
of security holders. To the extent that the following information describes
statutory and regulatory provisions, it is qualified in its entirety by
reference to those provisions. A change in the statutes, regulations or
regulatory policies applicable to the Company or its subsidiaries may have a
material effect on the business of the Company.
General
As a bank holding company, the Company is regulated under the Bank Holding
Company Act of 1956, (the "BHCA"), and is subject to inspection, examination
and supervision by the Federal Reserve. Under the BHCA, bank holding companies
generally may not acquire the ownership or control of more than 5% of the
8
<PAGE>
voting shares or substantially all the assets of any company, including a bank,
without the Federal Reserve's prior approval. In addition, bank holding
companies generally may engage, directly or indirectly, only in banking and
such other activities as are determined by the Federal Reserve to be closely
related to banking.
The Federal Reserve will also assess the degree to which the Company and its
subsidiary banks have taken appropriate steps to assure that their electronic
data processing systems and those of their vendors are Year 2000 compliant, as
well as plans for ensuring Year 2000 readiness.
Various governmental requirements, including Sections 23A and 23B of the
Federal Reserve Act, limit borrowings by the Company and its nonbank
subsidiaries from the Company's affiliate banks. These requirements also limit
various other transactions between the Company and its nonbank subsidiaries, on
the one hand, and the Company's affiliate banks, on the other. For example,
Section 23A limits to no more than 10% of its total capital the aggregate
outstanding amount of any bank's loans and other "covered transactions" with
any particular nonbank affiliate, and limits to no more than 20% of its total
capital the aggregate outstanding amount of any bank's covered transactions
with all of its nonbank affiliates. Section 23A also generally requires that a
bank's loans to its nonbank affiliates be secured, and Section 23B generally
requires that a bank's transactions with its nonbank affiliates be on arms'
length terms.
Most of the Company's affiliate banks (the "Banks") are national banking
associations and, as such, are subject to regulation primarily by the Office of
the Comptroller of the Currency ("OCC") and, secondarily, by the Federal
Deposit Insurance Corporation ("FDIC") and the Federal Reserve. The Company's
state-chartered banks also are subject to regulation by the FDIC and the
Federal Reserve and, in addition, by their respective state banking
departments. The Banks' operations in other countries are subject to various
restrictions imposed by the laws of those countries. The Company and its
subsidiaries also are affected by the fiscal and monetary policies of the
federal government and the Federal Reserve, and by various other governmental
requirements and regulations.
Liability for Bank Subsidiaries
The Federal Reserve requires that a bank holding company act as a source of
financial and managerial strength to each of its subsidiary banks and maintain
resources adequate to support each such subsidiary bank. This support may be
required at times when the Company may not have the resources to provide it. In
addition, Section 55 of the National Bank Act, permits the OCC to order the pro
rata assessment of shareholders of a national bank whose capital has become
impaired. If a shareholder fails within three months to pay such an assessment,
the OCC can order the sale of the shareholder's stock to cover the deficiency.
In the event of a bank holding company's bankruptcy, any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital of
a subsidiary bank would be assumed by the bankruptcy trustee and entitled to
priority of payment.
Any depository institution insured by the FDIC, such as the Banks, 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 the Company's subsidiary banks are FDIC-insured
institutions.
In the event of the default of one of the Company's subsidiary banks, the
claims of depositors and of holders of any other general or subordinated
obligation (including the FDIC) are entitled to a priority of payment over the
claims of holders of any obligation to shareholders including any depository
institution holding company (such as the Company) or any shareholder or
creditor of the depository institution (such as holders of the Debt Securities
or of the Guarantees with respect to the Preferred Securities). Thus, in the
event of such default, any obligations of the defaulting bank to the Company
would be subordinate to all such third party claims (including otherwise
"subordinated" claims and the claims of the FDIC).
9
<PAGE>
Capital Requirements
The Company is subject to capital requirements and guidelines imposed by the
Federal Reserve, which are substantially similar to the capital requirements
and guidelines imposed by the Federal Reserve, the OCC and the FDIC on the
depository institutions within their respective jurisdictions. For this
purpose, a depository institution's or holding company's assets and certain
specified off-balance sheet commitments are assigned to four risk categories,
each weighted differently based on the level of credit risk that is assigned to
such assets or commitments. In addition, risk weighted assets are adjusted for
low-level recourse and market risk equivalent assets. A depository
institutions's or holding company's capital, in turn, is divided into three
tiers: core ("Tier 1") capital, which includes common equity, non-cumulative
perpetual preferred stock and a limited amount of cumulative perpetual
preferred stock and related surplus (excluding auction rate issues), and
minority interests in equity accounts of consolidated subsidiaries, less
goodwill, certain identifiable intangible assets and certain other assets;
supplementary ("Tier 2") capital, which includes, among other items, perpetual
preferred stock not meeting the Tier 1 definition, mandatory convertible
securities, subordinated debt and allowances for loan and lease losses, subject
to certain limitations, less certain required deductions; and market risk
("Tier 3") capital, which includes qualifying unsecured subordinated debt.
The Company, like other bank holding companies, currently is required to
maintain Tier 1 and total capital (the sum of Tier 1, Tier 2 and Tier 3
capital) equal to at least 4% and 8% of its total risk-weighted assets,
respectively. At June 30, 1999, the Company met both requirements, with Tier 1
and total capital equal to 8.1% and 11.4% of its total risk-weighted assets,
respectively.
The Federal Reserve, the FDIC and the OCC have adopted rules to incorporate
market and interest rate risk components into their risk-based capital
standards. Amendments to the risk-based capital requirements, incorporating
market risk, became effective January 1, 1998. Under the new market risk
requirements, capital will be allocated to support the amount of market risk
related to a financial institution's ongoing trading activities.
The Federal Reserve also requires bank holding companies to maintain a
minimum "leverage ratio" (Tier 1 capital to adjusted total assets) of 3%, if
the holding company has the highest regulatory rating or has implemented the
risk-based capital measures for market risk, or 4% if the holding company does
not meet these requirements. At June 30, 1999, the Company's leverage ratio was
8.1%.
The Federal Reserve may set capital requirements higher than the minimums
noted above for holding companies whose circumstances warrant it. For example,
holding companies experiencing or anticipating significant growth may be
expected to maintain capital ratios including tangible capital positions well
above the minimum levels. Furthermore, the Federal Reserve has indicated that
it will consider a "tangible Tier I capital leverage ratio" (deducting all
intangibles) and other measures of capital strength in evaluating proposals for
expansion or new activities. The Federal Reserve has not, however, imposed any
such special capital requirement on the Company.
Each of the Banks is subject to similar risk-based and leverage capital
requirements adopted by its applicable federal banking regulatory agency. Each
of the Banks was in compliance with the applicable minimum capital requirements
as of June 30, 1999.
Failure to meet capital requirements could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business, which are described below.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the applicable federal banking regulatory
agencies to implement systems for "prompt corrective action" for insured
depository institutions that do not meet minimum capital requirements within
such categories. FDICIA imposes
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progressively more restrictive constraints on operations, management and
capital distributions, depending on the category in which an institution is
classified. Failure to meet the capital guidelines could also subject a
depository institution to capital raising requirements. An "undercapitalized"
depository institution must develop a capital restoration plan and its parent
holding company must guarantee that bank's compliance with the plan. The
liability of the parent holding company under any such guarantee is limited to
the lesser of 5% of the depository institution's assets at the time it became
"undercapitalized" or the amount needed to comply with the plan. Furthermore,
in the event of the bankruptcy of the parent holding company, such guarantee
would take priority over the parent's general unsecured creditors. In addition,
FDICIA requires the various federal banking regulatory agencies to prescribe
certain non-capital standards for safety and soundness relating generally to
operations and management, asset quality and executive compensation and permits
regulatory action against a financial institution that does not meet such
standards.
As of June 30, 1999, each of the Banks 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 laws and regulations limit the amount of dividends
the Banks can pay to the Company without regulatory approval. For example,
approval generally is required for any national bank, or any state chartered
bank that is a member of the Federal Reserve System, to pay any dividend that
would cause the bank's total dividends paid during any calendar year to exceed
the sum of the bank's net income for the current year combined with retained
net income for the prior two years. Such a bank generally may not pay any
dividend in an amount greater than its net profits then on hand without
regulatory approval. At January 1, 1999, $2.0 billion of the total
stockholders' equity of the Banks was available for payment of dividends to the
Company without approval by the applicable regulatory authority.
In addition, federal bank regulatory authorities have authority to prohibit
the Banks from engaging in an unsafe or unsound practice in conducting their
business. The payment of dividends, depending upon the financial condition of
the bank in question, could be deemed to constitute such an unsafe or unsound
practice. The ability of the Banks to pay dividends in the future is currently,
and could be further, influenced by bank regulatory policies and capital
guidelines.
Deposit Insurance Assessments
The deposits of each of the Banks are insured up to regulatory limits by the
FDIC and, accordingly, are subject to deposit insurance assessments to maintain
the Bank Insurance Fund ("BIF") and Savings Association Insurance Fund ("SAIF")
administered by the FDIC. The FDIC has adopted regulations establishing a
permanent risk-related deposit insurance assessment system. Under this system,
the FDIC places each insured bank in one of nine risk categories based on (a)
the bank's capitalization and (b) supervisory evaluations provided to the FDIC
by the bank's primary federal regulator. Each insured bank's insurance
assessment rate is then determined by the risk category in which it is
classified by the FDIC.
Effective January 1, 1997, the annual insurance premiums on bank deposits
insured by the BIF and SAIF vary between $0.00 per $100 of deposits for banks
classified in the highest capital and supervisory evaluation categories to
$0.27 per $100 of deposits for banks classified in the lowest capital and
supervisory evaluation categories.
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
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Financing Corporation ("FICO") funding. The FDIC's 1998 FICO assessment rates
were approximately $0.012 per $100 annually for BIF-assessable deposits and
$0.061 per $100 annually for SAIF-assessable deposits. The Banks held
approximately $10.2 billion of SAIF-assessable deposits as of June 30, 1999.
The FICO assessments do not vary depending upon a depository institution's
capitalization or supervisory evaluations.
Depositor Preference Statute
Federal law provides that deposits and certain claims for administrative
expenses and employee compensation against an insured depository institution
are afforded a priority over other general unsecured claims against such
institution, including federal funds and letters of credit, in the "liquidation
or other resolution" of the institution by any receiver.
Brokered Deposits
Under FDIC regulations, no FDIC-insured depository institution can accept
brokered deposits unless it (a) is well capitalized, or (b) is adequately
capitalized and receives a waiver from the FDIC. In addition, these regulations
prohibit any depository institution that is not well capitalized from (i)
paying an interest rate on deposits in excess of 75 basis points over certain
prevailing market rates or (ii) offering "pass through" deposit insurance on
certain employee benefit plan accounts unless such institution provides certain
notice to affected depositors.
Interstate Banking
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
("Riegle-Neal"), subject to certain concentration limits and other
requirements, (a) bank holding companies such as the Company are permitted to
acquire banks and bank holding companies located in any state; (b) any bank
that is a subsidiary of a bank holding company is permitted to receive
deposits, renew time deposits, close loans, service loans and receive loan
payments as an agent for any other bank subsidiary of that holding company; and
(c) banks are permitted to acquire branch offices outside their home states by
merging with out-of-state banks, purchasing branches in other states, and
establishing de novo branch offices in other states; provided that, in the case
of any such purchase or opening of individual branches, the host state has
adopted legislation "opting in" to those provisions of Riegle-Neal; and
provided that, in the case of a merger with a bank located in another state,
the host state has not adopted legislation "opting out" of that provision of
Riegle-Neal. The Company might use Riegle-Neal to acquire banks in additional
states and to consolidate its affiliate banks under a smaller number of
separate charters.
Other Regulatory Supervision
The Company's nonbank subsidiaries and banking-related business units are
subject to regulation by various state and federal regulatory agencies and
self-regulatory organizations. Activities subject to such regulation include
investment management, investment advisory services, commodities and securities
brokerage, insurance services and products, municipal securities dealing and
transfer agency services.
Future Legislation
Various legislation, including proposals to substantially change the
financial institution regulatory system, expand the powers of banking
institutions and bank holding companies, and limit the investments that a
depository institution may make with insured funds, has from time to time been
introduced in Congress. This legislation may change banking statutes and the
operating environment of the Company and its subsidiaries in substantial and
unpredictable ways. The Company cannot determine whether such potential
legislation will ultimately be enacted, and if enacted, the ultimate effect
that this potential legislation, or implementing regulations, would have upon
the financial condition or results of operations of the Company or its
subsidiaries.
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DESCRIPTION OF DEBT SECURITIES
General
The following description applies to the debt securities (other than the
Junior Subordinated Debt Securities) offered by this prospectus (the "Debt
Securities"). The Debt Securities will be unsecured and may be issued in one or
more series. Such Debt Securities may be either senior (the "Senior
Securities") or subordinated (the "Senior Subordinated Securities") in priority
of payment.
. The Senior Securities will be issued under an Indenture dated as of
March 3, 1997, originally between BANC ONE and The Chase Manhattan
Bank ("Chase"), as trustee, which was supplemented by a First
Supplemental Indenture dated as of October 2, 1998, between the
Company and Chase, as trustee (as so supplemented, the "Senior
Indenture").
. The Senior Subordinated Securities will be issued under an Indenture
dated as of March 3, 1997, originally between BANC ONE and Chase, as
trustee, which was supplemented by a First Supplemental Indenture
dated as of October 2, 1998, between the Company and Chase, as
trustee (as so supplemented, the "Senior Subordinated Indenture").
. The Senior Indenture and the Senior Subordinated Indenture are
referred to together as the "Indentures".
. References to the "Senior Trustee" means Chase in its capacity as
trustee under the Senior Indenture or the Senior Subordinated
Indenture, as applicable.
The statements under this caption are brief summaries of certain provisions
contained in the Indentures, do not claim to be complete and are qualified in
their entirety by reference to the applicable Indenture, copies of which are
exhibits to, or incorporated by reference in, the registration statement of
which this prospectus forms a part. Whenever defined terms are used but not
defined in this prospectus, those terms have the meanings given to them in the
applicable Indenture.
The following material describes certain general terms and provisions of the
Debt Securities to which any prospectus supplement may relate. The particular
terms of any Debt Security and the extent, if any, to which these general
provisions may apply to such Debt Securities will be described in the
prospectus supplement relating to the Debt Securities.
Neither of the Indentures limits the aggregate principal amount of Debt
Securities which may be issued under it. Rather, each Indenture provides that
Debt Securities of any series may be issued under it up to the aggregate
principal amount which may be authorized from time to time by the Company. Debt
Securities may be denominated in any currency or currency unit designated by
the Company. Neither the Indentures nor the Debt Securities will limit or
otherwise restrict the amount of other debt which may be incurred or the other
securities which may be issued by the Company or any of its subsidiaries.
Debt Securities of a series may be issuable in registered form without
coupons ("Registered Securities"), in bearer form with or without coupons
attached ("Bearer Securities") or in the form of one or more global securities
in registered or bearer form (each a "Global Security"). Bearer Securities, if
any, will be offered only to non-United States persons and to offices located
outside the United States of certain United States financial institutions.
You must review the prospectus supplement for a description of the following
terms, where applicable, of each series of Debt Securities for which this
prospectus is being delivered:
. the title of the Debt Securities;
. the limit, if any, on the aggregate principal amount or aggregate
initial public offering price of the Debt Securities;
. the priority of payment of the Debt Securities;
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. the price or prices, which may be expressed as a percentage of the
aggregate principal amount, at which the Debt Securities will be
issued;
. the date or dates on which the principal of the Debt Securities will
be payable;
. the interest rate or rates, which may be fixed or variable, for the
Debt Securities, if any, or the method of determining the same;
. the date or dates from which interest, if any, on the Debt
Securities will accrue, the date or dates on which interest, if any,
will be payable, the date or dates on which payment of interest, if
any, will commence and the regular record dates for the interest
payment dates;
. the extent to which any of the Debt Securities will be issuable in
temporary or permanent global form, or the manner in which any
interest payable on a temporary or permanent global Debt Security
will be paid;
. each office or agency where the Debt Securities may be presented for
registration of transfer or exchange;
. the place or places where the principal of, premium, if any, and
interest, if any, on the Debt Securities will be payable;
. the date or dates, if any, after which the Debt Securities may be
redeemed or purchased in whole or in part, (i) at the option of the
Company or (ii) mandatorily pursuant to any sinking, purchase or
similar fund or (iii) at the option of the holder, and the
redemption or repayment price or prices;
. the terms, if any, upon which the Debt Securities may be convertible
into or exchanged for securities or indebtedness of any kind of the
Company or of any other issuer or obligor and the terms and
conditions upon which the conversion or exchange would be made,
including the initial conversion or exchange price or rate, the
conversion period and any other additional provisions;
. the authorized denomination or denominations for the Debt Securities;
. the currency, currencies or units based on or related to currencies
for which the Debt Securities may be purchased and the currency,
currencies or currency units in which the principal of, premium, if
any, and any interest, if any, on the Debt Securities may be
payable;
. any index used to determine the amount of payments of principal of,
premium, if any, and interest, if any, on the Debt Securities;
. whether any of the Debt Securities are to be issuable as Bearer
Securities and/or Registered Securities, and if issuable as Bearer
Securities, any limitations on issuance of the Bearer Securities and
any provisions regarding the transfer or exchange of the Bearer
Securities, including exchange for registered Debt Securities of the
same series;
. the payment of any additional amounts with respect to the Debt
Securities;
. whether any of the Debt Securities will be issued as Original Issue
Discount Securities (as defined below);
. information with respect to book-entry procedures, if any;
. any additional covenants or Events of Default not currently included
in the applicable Indenture; and
. any other terms of the Debt Securities not inconsistent with the
provisions of the applicable Indenture.
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If any of the Debt Securities are sold for one or more foreign currencies or
foreign currency units or if the principal of, premium, if any, or interest, if
any, on any series of Debt Securities is payable in one or more foreign
currencies or foreign currency units, the restrictions, elections, tax
consequences, specific terms and other information with respect to that issue
of Debt Securities and those currencies or currency units will be described in
the applicable prospectus supplement.
A judgment for money damages by courts in the United States, including a
money judgment based on an obligation expressed in a foreign currency, will
ordinarily be rendered only in U.S. dollars. New York statutory law provides
that a court shall render a judgment or decree in the foreign currency of the
underlying obligation and that the judgment or decree shall be converted into
U.S. dollars at the exchange rate prevailing on the date of entry of the
judgment or decree.
Debt Securities may be issued as original issue discount Debt Securities
which bear no interest or interest at a rate which at the time of issuance is
below market rates ("Original Issue Discount Securities"), to be sold at a
substantial discount below the stated principal amount thereof due at the
stated maturity of such Debt Securities. There may be no periodic payments of
interest on Original Issue Discount Securities. In the event of an acceleration
of the maturity of any Original Issue Discount Security, the amount payable to
the holder of the Original Issue Discount Security upon acceleration will be
determined in accordance with the prospectus supplement, the terms of the
security and the Indenture, but will be an amount less than the amount payable
at the maturity of the principal of the Original Issue Discount Security.
Federal income tax considerations with respect to Original Issue Discount
Securities will be described in the applicable prospectus supplement.
Registration and Transfer
Unless otherwise indicated in the applicable prospectus supplement, Debt
Securities will be issued only as Registered Securities. If Bearer Securities
are issued, the United States federal income tax consequences and other special
considerations, procedures and limitations relating to the Bearer Securities
will be described in the applicable prospectus supplement.
Debt Securities issued as Registered Securities will not have interest
coupons. Debt Securities issued as Bearer Securities will have interest coupons
attached, unless issued as zero coupon securities.
Registered Securities (other than a Global Security) may be presented for
transfer, with the form of transfer endorsed thereon duly executed, or
exchanged for other Debt Securities of the same series at the office of the
security registrar specified in the applicable Indenture. The Company has
agreed in each of the Indentures that, with respect to Registered Securities
having The City of New York as a place of payment, the Company will appoint a
security registrar or co-security registrar located in The City of New York for
such transfer or exchange. Transfer or exchange will be made without service
charge, but the Company may require payment of any taxes or other governmental
charges. Provisions relating to the exchange of Bearer Securities for other
Debt Securities of the same series, including, if applicable, Registered
Securities, will be described in the applicable prospectus supplement. In no
event, however, will Registered Securities be exchangeable for Bearer
Securities.
Book-Entry Debt Securities
Debt Securities of a series may be issued in whole or in part in the form of
one or more Global Securities. Each Global Security will be deposited with, or
on behalf of, a depositary (the "Depositary") identified in the applicable
prospectus supplement. Global Securities may be issued in either registered or
bearer form and in either temporary or permanent form. Until exchanged in whole
or in part for the individual securities which it represents, a Global Security
may not be transferred except as a whole by the Depositary for the Global
Security to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
nominee to a successor Depositary or any nominee of the successor.
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The specific terms of the depositary arrangement for a series of Debt
Securities and certain limitations and restrictions relating to a series of
Bearer Securities in the form of one or more Global Securities will be
described in the applicable prospectus supplement. See also "Global Securities"
in this prospectus.
Payment and Paying Agents
Unless otherwise indicated in an applicable prospectus supplement, payment of
principal of, premium, if any, and any interest on Registered Securities will
be made at the office of such paying agent or paying agents as the Company may
designate from time to time. In addition, at the option of the Company, payment
of any interest may be made (i) by check mailed to the address of the person
entitled to the payment at the address in the applicable security register or
(ii) by wire transfer to an account maintained by the person entitled to the
payment as specified in the applicable security register. Unless otherwise
indicated in an applicable prospectus supplement, payment of any installment of
interest on Registered Securities will be made to the person in whose name such
Debt Security is registered at the close of business on the regular record date
for such payment.
Unless otherwise indicated in an applicable prospectus supplement, payment of
principal of, premium, if any, and any interest on Bearer Securities will be
payable, subject to any applicable laws and regulations, at the offices of such
paying agents outside the United States as the Company may designate from time
to time, at the option of the holder, by check or by transfer to an account
maintained by the holder with a bank located outside the United States. Unless
otherwise indicated in an applicable prospectus supplement, payment of interest
on Bearer Securities will be made only against surrender of the coupon for such
interest payment date. Payment on any Bearer Security will not be made at any
office or agency of the Company in the United States or by check mailed to any
address in the United States or by transfer to an account maintained with a
bank located in the United States.
Consolidation, Merger or Sale of Assets
Each Indenture provides that the Company may, without the consent of the
holders of any of the Debt Securities outstanding under the applicable
Indenture, consolidate with, merge into or transfer its assets substantially as
an entirety to any person, provided that:
(1) any successor assumes the Company's obligations on the applicable
Debt Securities and under the applicable Indenture,
(2) after giving effect to the consolidation, merger or transfer, no
Event of Default (as defined in the Senior Indenture) in the case
of the Senior Securities, or Default (as defined in the Senior
Subordinated Indenture) in the case of the Senior Subordinated
Securities, will have happened and be continuing and
(3) certain other conditions under the applicable Indenture are met.
Any consolidation, merger or transfer of assets substantially as an entirety,
which meets the conditions described above, would not create any Event of
Default or Default which would entitle holders of the Debt Securities, or the
Senior Trustee acting on their behalf, to take any of the actions described
below under "Senior Securities--Events of Default, Waivers, Etc." or "Senior
Subordinated Securities--Events of Default, Defaults, Waivers, Etc."
Leveraged and Other Transactions
Each Indenture and the Debt Securities do not contain provisions which would
protect holders of the Debt Securities in the event of a highly leveraged or
other transaction involving the Company which could adversely affect the
holders of Debt Securities.
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Modification of the Indenture; Waiver of Covenants
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Debt
Securities of each affected series, modifications and alterations of the
Indenture may be made which affect the rights of the holders of the Debt
Securities. However, no such modification or alteration may be made without
the consent of the holder of each Debt Security affected which would, among
other things,
(1) modify the terms of payment of principal, premium, if any, or
interest on the Debt Securities; or
(2) reduce the percentage in principal amount of outstanding Debt
Securities required to modify or alter the applicable Indenture.
Regarding Chase
Chase is the Senior Trustee under both the Senior Indenture and the Senior
Subordinated Indenture. Chase serves as trustee for certain subordinated debt
securities issued by the Company under indentures originally dated as of July
1, 1986, July 15, 1992, April 30, 1993, May 17, 1995 and December 1, 1995.
Chase also serves as the institutional or property trustee under
declarations of trust for three statutory business trusts formed under the
laws of the State of Delaware and sponsored by the Company. In connection with
those transactions, Chase also serves as the debt trustee under an indenture
originally dated as of November 15, 1996 and the Junior Indenture (as defined
in the section entitled "Description of Junior Subordinated Debt Securities")
with respect to junior subordinated debentures of the Company purchased by
such trusts and is the also the guarantee trustee under each of three
guarantee agreements dated as of December 3, 1996, December 5, 1996 and
January 31, 1997, from the Company to the applicable trust guaranteeing
certain payments to such trust.
As described under "Description of Junior Subordinated Debt Securities--The
Debt Trustee", Chase will be the Debt Trustee under the Junior Indenture,
Chase also serves as the Institutional Trustee for each BANK ONE Capital Trust
and will be the Preferred Guarantee Trustee under each Preferred Securities
Guarantee issued with respect to a series of Preferred Securities offered
under this prospectus.
Chase has its principal corporate trust office at 450 West 33rd Street, New
York, New York 10001.
Chase Manhattan Bank Delaware ("Chase Delaware"), an affiliate of Chase,
will serve as the Delaware Trustee for each BANK ONE Capital Trust. The office
of the Delaware Trustee for each BANK ONE Capital Trust is 1201 Market Street,
Wilmington, Delaware 19801. Chase Delaware also serves as trustee for
subordinated debt securities issued by the Company under an indenture
originally dated March 1, 1989. Chase Delaware is also the Delaware trustee
for the three Delaware business trusts described in the second paragraph of
this section.
The Company and its affiliates have normal banking relationships with Chase,
Chase Delaware and their affiliates in the ordinary course of business.
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SENIOR SECURITIES
The Senior Securities will be direct, unsecured obligations of the Company
and will rank on a parity with all outstanding unsecured senior indebtedness of
the Company.
Events of Default, Waivers, Etc.
An Event of Default with respect to Senior Securities of any series is
defined in the Senior Indenture as
(1) default in the payment of principal of or premium, if any, on any
of the outstanding Senior Securities of that series when due;
(2) default in the payment of interest on any of the outstanding Senior
Securities of that series when due and continuance of such default for 30
days;
(3) default in the performance of any other covenant of the Company in
the Senior Indenture with respect to Senior Securities of such series and
continuance of such default for 90 days after written notice;
(4) certain events of bankruptcy, insolvency or reorganization of the
Company; and
(5) any other event that may be specified in a prospectus supplement
with respect to any series of Senior Securities.
If an Event of Default with respect to any series of outstanding Senior
Securities occurs and is continuing, either the Senior Trustee or the holders
of not less than 25% in aggregate principal amount of the outstanding Senior
Securities of such series may declare the principal amount (or if such Senior
Securities are Original Issue Discount Securities, the portion of the principal
amount as may be specified in the terms of that series) of all Senior
Securities of that series to be immediately due and payable. The holders of a
majority in aggregate principal amount of the outstanding Senior Securities of
any series may waive an Event of Default resulting in acceleration of such
Senior Securities, but only if all Events of Default with respect to Senior
Securities of such series have been remedied and all payments due, other than
those due as a result of acceleration, have been made.
If an Event of Default occurs and is continuing, the Senior Trustee may, in
its discretion, and at the written request of holders of not less than a
majority in aggregate principal amount of the outstanding Senior Securities of
any series and upon reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request and subject to
certain other conditions set forth in the Senior Indenture will, proceed to
protect the rights of the holders of all the Senior Securities of such series.
Prior to acceleration of maturity of the outstanding Senior Securities of any
series, the holders of a majority in aggregate principal amount of the Senior
Securities may waive any past default under the Senior Indenture except a
default in the payment of principal of, premium, if any, or interest on the
Senior Securities of that series.
The Senior Indenture provides that upon the occurrence of an Event of
Default specified in clauses (1) or (2) of the first paragraph in this
subsection, the Company will, upon demand of the Senior Trustee, pay to it, for
the benefit of the holder of any such Senior Security, the whole amount then
due and payable on the affected Senior Securities for principal, premium, if
any, and interest. The Senior Indenture further provides that if the Company
fails to pay such amount upon such demand, the Senior Trustee may, among other
things, institute a judicial proceeding for the collection of such amounts.
The Senior Indenture also provides that notwithstanding any of its other
provisions, the holder of any Senior Security of any series will have the right
to institute suit for the enforcement of any payment of principal of, premium,
if any, and interest on the Senior Securities when due and that such right will
not be impaired without the consent of such holder.
The Company is required to file annually with the Senior Trustee a written
statement of officers as to the existence or non-existence of defaults under
the Senior Indenture or the Senior Securities.
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SENIOR SUBORDINATED SECURITIES
The Senior Subordinated Securities will be direct, unsecured obligations of
the Company and, unless otherwise specified in the prospectus supplement
relating to a particular series of Senior Subordinated Securities, will be
subject to the subordination provisions described below.
Subordination
The Company intends that the Senior Subordinated Securities it issues be
treated as capital for calculation of regulatory capital ratios. The Federal
Reserve has issued interpretations of its capital regulations indicating, among
other things, that subordinated debt of bank holding companies issued on or
after September 4, 1992 is includable in capital for calculation of regulatory
capital ratios only if the subordination of the debt meets certain criteria and
if the debt may be accelerated only for bankruptcy, insolvency and similar
matters (the "Subordination Interpretations"). Accordingly, the Senior
Subordinated Indenture contains subordination and acceleration provisions for
the Senior Subordinated Securities which are intended to be consistent with the
Subordination Interpretations. Subordinated debt of the Company (including any
of its predecessor corporations) issued after September 4, 1992, which meets
the Subordination Interpretations are referred to in this prospectus as "New
Subordinated Securities".
Senior Subordinated Securities offered under this prospectus will constitute
New Subordinated Securities unless otherwise specified in the applicable
prospectus supplement. See "--Events of Default, Defaults, Waivers, Etc."
below.
. Upon any distribution of its assets following any dissolution,
winding up, liquidation or reorganization of the Company, the
payment of the principal of, premium, if any, and interest on the
Senior Subordinated Securities is to be subordinated in right of
payment, to the extent provided in the Senior Subordinated
Indenture, to the prior payment in full of all Senior Indebtedness
(as defined below).
. In certain events of bankruptcy or insolvency of the Company, the
payment of the principal of and interest on the Senior Subordinated
Securities will, to the extent provided in the Senior Subordinated
Indenture, also be effectively subordinated in right of payment to
the prior payment in full of all General Obligations (as defined
below).
. Upon any distribution of its assets following any dissolution,
winding up, liquidation or reorganization of the Company, the
holders of Senior Indebtedness will first be entitled to receive
payment in full of all amounts due or to become due before the
holders of the Senior Subordinated Securities will be entitled to
receive any payment in respect of the principal of, premium, if any,
or interest on the Senior Subordinated Securities.
. If upon any such payment or distribution of assets there remain,
after giving effect to such subordination provisions in favor of the
holders of Senior Indebtedness, any amounts of cash, property or
securities available for payment or distribution on the Senior
Subordinated Securities ("Excess Proceeds") and if, at the time, any
creditors in respect of General Obligations have not received
payment in full of all amounts due or to become due on or in respect
of the General Obligations, then the Excess Proceeds will first be
applied to pay or provide for the payment in full of the General
Obligations before any payment or distribution may be made on the
Senior Subordinated Securities.
. The Company's other New Subordinated Securities issued prior to the
date of this prospectus contain similar provisions subordinating any
payment or distribution on such New Subordinated Securities to the
payment of amounts due or to become due on or in respect of general
obligations of the Company.
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. In addition, no payment may be made of the principal of, premium, if
any, or interest on the Senior Subordinated Securities, or for any
redemption, retirement, purchase or other acquisition of any of the
Senior Subordinated Securities, at any time when
(1) there is a default in the payment of the principal of, premium,
if any, interest on or otherwise in respect of any Senior
Indebtedness or
(2) any event of default with respect to any Senior Indebtedness has
occurred and is continuing, or would occur as a result of such
payment on the Senior Subordinated Securities or any redemption,
retirement, purchase or other acquisition of any of the Senior
Subordinated Securities, permitting the holders of such Senior
Indebtedness to accelerate the maturity of the Senior
Indebtedness.
. By reason of the subordination in favor of the holders of Senior
Indebtedness, in the event of a distribution of its assets following
any dissolution, winding up, liquidation or reorganization of the
Company, certain creditors of the Company who are not holders of
Senior Indebtedness or of Senior Subordinated Securities may recover
less, ratably, than holders of Senior Indebtedness and may recover
more, ratably, than holders of the Senior Subordinated Securities.
. By reason of the subordination of payments and distributions on the
New Subordinated Securities to creditors in respect of general
obligations, in the event of a distribution of its assets following
any dissolution, winding up, liquidation or reorganization of the
Company, holders of Old Subordinated Securities (as defined below)
may recover less, ratably, than creditors in respect of general
obligations and may recover more, ratably, than the holders of New
Subordinated Securities.
. Subject to payment in full of all Senior Indebtedness, the holders
of Senior Subordinated Securities will be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company
applicable to Senior Indebtedness.
. Subject to payment in full of all General Obligations, the holders
of the New Subordinated Securities will be subrogated to the rights
of the creditors in respect of General Obligations to receive
payments or distributions of cash, property or securities of the
Company applicable to such creditors in respect of General
Obligations.
. The Senior Subordinated Securities rank and will rank on a parity
with the Existing Subordinated Indebtedness (as defined below)
subject to the obligations of the holders of Senior Subordinated
Securities (and, generally, holders of other New Subordinated
Securities) to pay over to creditors in respect of general
obligations any proceeds remaining after payments and distributions
to holders of Senior Indebtedness.
. In the event of a distribution of its assets upon any dissolution,
winding up, liquidation or reorganization of the Company, the
holders of the New Subordinated Securities (including holders of the
Senior Subordinated Securities) may receive less, ratably, than
holders of Old Subordinated Securities.
. The Senior Subordinated Securities rank and will rank senior to
Junior Subordinated Indebtedness (as defined below) of the Company.
"Senior Indebtedness" is the principal of, premium, if any, and interest on
(i) all of the Company's indebtedness for money borrowed, other than
subordinated securities (including the Senior Subordinated Securities) issued
under the Senior Subordinated Indenture and the Company's Existing Subordinated
Indebtedness, whether outstanding on the date of execution of the Senior
Subordinated Indenture or created afterward, assumed or incurred, except such
indebtedness that by its terms is expressly stated to be not superior in right
of payment to the subordinated securities issued under the Senior Subordinated
Indenture or the
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Existing Subordinated Indebtedness or to rank on a parity with the subordinated
securities issued under the Senior Subordinated Indenture or the Existing
Subordinated Indebtedness; and (ii) any deferrals, renewals or extensions of
any such Senior Indebtedness. The term "indebtedness for money borrowed" as
used in the prior sentence includes, without limitation, any obligation of, or
any obligation guaranteed by, the Company for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligation for the payment of the purchase price
of property or assets.
There is no limitation on the issuance of additional Senior Indebtedness of
the Company.
The Company's "Existing Subordinated Indebtedness" is comprised of the
Company's 7.25% Subordinated Notes Due August 1, 2002, the Company's 8.74%
Subordinated Notes Due September 15, 2003, the Company's 7.00% Subordinated
Notes due July 15, 2005 (the "July 2005 Notes"), the Company's 9.875%
Subordinated Notes Due March 1, 2009, the Company's 10.00% Subordinated Notes
Due August 15, 2010, the Company's 7.75% Subordinated Debentures due on July
15, 2025 (the "July 2025 Debentures"), the Company's 7.625% Subordinated
Debentures due October 15, 2026 (the "October 2026 Debentures"), the Company's
9 7/8% Subordinated Notes Due July 1999, the Company's 9% Subordinated Notes
Due June 15, 1999, the Company's 9 7/8% Subordinated Notes Due August 15, 2000,
the Company's 11 1/4% Subordinated Notes Due February 20, 2001, the Company's
10 1/4% Subordinated Notes Due May 1, 2001, the Company's 9 1/4% Subordinated
Notes Due November 15, 2001, the Company's 8 7/8% Subordinated Notes Due March
15, 2002, the Company's 8 1/4% Subordinated Notes Due June 15, 2002, the
Company's 9 1/5% Subordinated Notes Due December 17, 2001, the Company's 7 5/8%
Subordinated Notes Due January 15, 2003 (the "January 2003 Notes"), the
Company's 6 7/8% Subordinated Notes Due June 15, 2003 (the "June 2003 Notes"),
the Company's Floating Rate Subordinated Notes Due July 28, 2003 (the "July
2003 Notes"), the Company's 6 3/8% Subordinated Notes Due January 30, 2009 (the
"January 2009 Notes"), the Company's 7 1/8% Subordinated Notes Due 2007 (the
"2007 Notes"), the Company's 7 1/4% Subordinated Debentures Due 2004 (the "2004
Notes"), the Company's 8.10% Subordinated Notes Due 2002, the Company's 7.40%
Subordinated Debenture due May 10, 2023 (the "2023 Debentures"), the Company's
Floating Rate Subordinated Notes Due 2005, the Company's 6 1/8% Subordinated
Notes Due February 15, 2006 (the "February 2006 Notes"), the subordinated notes
issued pursuant to First Chicago NBD's Medium-Term Note Program, Series G (the
"FCN MTN Notes") and the subordinated notes issued pursuant to the Company's
Medium-Term Note Programs, Series A and Series B (the "Series A and Series B
MTN Notes").
New Subordinated Securities are comprised of subordinated securities
(including the Senior Subordinated Securities) issued under the Senior
Subordinated Indenture, the January 2003 Notes, the June 2003 Notes, the July
2003 Notes, the July 2005 Notes, the February 2006 Notes, the January 2009
Notes, the 2007 Notes, the 2023 Debentures, the July 2025 Debentures, the
October 2026 Debentures, the FCN MTN Notes and the Series A and Series B MTN
Notes.
All other Existing Subordinated Indebtedness constitutes "Old Subordinated
Securities".
Unless otherwise specified in the prospectus supplement relating to a series
of Senior Subordinated Securities, "General Obligations" means all obligations
of the Company to make payment on account of claims in respect of derivative
products such as interest and foreign exchange rate contracts, commodity
contracts and similar arrangements, other than (i) obligations on account of
Senior Indebtedness, (ii) obligations on account of indebtedness for money
borrowed ranking on a parity with or subordinate to the Senior Subordinated
Securities and (iii) obligations which by their terms are expressly stated not
to be superior in right of payment to the Senior Subordinated Securities or to
rank on a parity with the Senior Subordinated Securities.
Notwithstanding the previous paragraph, in the event that any rule,
guideline or interpretation promulgated or issued by the Federal Reserve (or
other competent regulatory agency or authority), as from time to time in
effect, establishes or specifies criteria for the inclusion in regulatory
capital of subordinated debt of a bank holding company requiring that such
subordinated debt be subordinated to obligations to creditors in addition to
those set forth above, then the term "General Obligations" will also include
such additional obligations to
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creditors, as from time to time in effect pursuant to such rules, guidelines or
interpretations. For purposes of this definition, "claim" has the meaning found
in Section 101(4) of the Bankruptcy Code of 1978, as amended to the date of the
Senior Subordinated Indenture.
Unless otherwise specified in the prospectus supplement relating to a series
of Senior Subordinated Securities, "Junior Subordinated Indebtedness", means
the principal of, premium, if any, and interest on all of the Company's
indebtedness for money borrowed (but excluding trade accounts payable arising
in the ordinary course of business) whether outstanding on the date of
execution of the Senior Subordinated Indenture or thereafter created, assumed
or incurred and any deferrals, renewals or extensions of such debt, provided
such debt (i) is by its terms subordinated to the Senior Subordinated
Securities, (ii) is between or among the Company and certain affiliated
financing entities including all debt securities and guarantees in respect of
those debt securities issued to certain financing entities or a trustee of a
financing entity sponsored by the Company, (iii) is evidenced by securities
issued under either the indentures dated as of November 15, 1996 or the Junior
Indenture, each between the Company and Chase, as trustee (unless such
securities are by their terms senior in right of payment to the securities
heretofore issued under said indentures), or (iv) is a guarantee of the Company
on a subordinated basis under certain guarantee agreements dated December 3,
1996, December 5, 1996 or January 31, 1997, relating to securities issued by
certain financing entities affiliated with the Company. The term "indebtedness
for money borrowed" as used in the prior sentence includes, without limitation,
any obligation of, or any obligation guaranteed by, the Company for the
repayment of borrowed money, whether or not evidenced by bonds, debentures,
notes or other written instruments, and any deferred obligation for the payment
of the purchase price of property or assets.
The Junior Subordinated Debt Securities and the Preferred Securities
Guarantees, if issued, will constitute Junior Subordinated Indebtedness.
As of March 31, 1999, the aggregate amount of Senior Indebtedness and
General Obligations of the Company was approximately $13.7 billion.
Limited Rights of Acceleration
Unless otherwise specified in the prospectus supplement relating to a series
of Senior Subordinated Securities, payment of principal of the Senior
Subordinated Securities may be accelerated only in case of the bankruptcy,
insolvency or reorganization of the Company. There is no right of acceleration
in the case of a default in the payment of principal of, premium, if any, or
interest on the Senior Subordinated Securities or the performance of any other
covenant of the Company in the Senior Subordinated Indenture.
Payment of principal of the Old Subordinated Securities may also be
accelerated in the case of the bankruptcy, insolvency or reorganization of the
Company. For certain Old Subordinated Securities, payment of principal also may
be accelerated in the case of insolvency or receivership of The First National
Bank of Chicago or Bank One, Michigan (formerly, NBD Bank, Detroit, Michigan).
Events of Default, Defaults, Waivers, Etc.
An Event of Default with respect to Senior Subordinated Securities of any
series is defined in the Senior Subordinated Indenture to include certain
events involving the bankruptcy, insolvency or reorganization of the Company
and any other Event of Default provided for Senior Subordinated Securities of
that series. A "Default" with respect to Senior Subordinated Securities of any
series is defined in the Senior Subordinated Indenture as:
(1) an Event of Default with respect to such series;
(2) default in the payment of the principal of or premium, if any, on
any Senior Subordinated Security of the series when due;
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(3) default in the payment of interest upon any Senior Subordinated
Security of the series when due and the continuance of such default for a
period of 30 days;
(4) default in the performance of any other covenant or agreement of
the Company in the Senior Subordinated Indenture with respect to Senior
Subordinated Securities of the series and continuance of the default for 90
days after written notice; or
(5) any other Default provided with respect to Senior Subordinated
Securities of any series.
If an Event of Default with respect to any series of outstanding Senior
Subordinated Securities occurs and is continuing, either the Senior Trustee or
the holders of not less than 25% in aggregate principal amount of the Senior
Subordinated Securities of the series may declare the principal amount (or if
such Senior Subordinated Securities are Original Issue Discount Securities, the
portion of the principal amount as may be specified in the terms of that
series) of all Senior Subordinated Securities of that series to be immediately
due and payable.
The holders of a majority in aggregate principal amount of the Senior
Subordinated Securities of any series outstanding under the Senior Subordinated
Indenture may waive an Event of Default resulting in acceleration of such
Senior Subordinated Securities, but only if all Defaults have been remedied and
all payments due (other than those due as a result of acceleration) have been
made.
If a Default occurs and is continuing, the Senior Trustee may, in its
discretion, and at the written request of holders of not less than a majority
in aggregate principal amount of the outstanding Senior Subordinated Securities
of any series and upon reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request and subject to
certain other conditions described in the Senior Subordinated Indenture will,
proceed to protect the rights of the holders of all the Senior Subordinated
Securities of the series.
Prior to acceleration of maturity of the outstanding Senior Subordinated
Securities of any series, the holders of a majority in aggregate principal
amount of such Senior Subordinated Securities may waive any past default under
the Senior Subordinated Indenture except a default in the payment of principal
of, premium, if any, or interest on the Senior Subordinated Securities of the
series.
The Senior Subordinated Indenture provides that in the event of a Default
specified in clauses (2) or (3) of the first paragraph in this subsection, the
Company will, upon demand of the Senior Trustee, pay to it, for the benefit of
the holder of any Senior Subordinated Security, the whole amount then due and
payable on the Senior Subordinated Security for principal, premium, if any, and
interest. The Senior Subordinated Indenture further provides that if the
Company fails to pay the amount upon such demand, the Senior Trustee may, among
other things, institute a judicial proceeding for the collection of the amount.
The Senior Subordinated Indenture also provides that notwithstanding any
other provision of the Senior Subordinated Indenture, the holder of any Senior
Subordinated Security of any series will have the right to institute suit for
the enforcement of any payment of principal of, premium, if any, and interest
on the Senior Subordinated Security on the stated maturities and that such
right will not be impaired without the consent of such holder.
The Company is required to file annually with the Senior Trustee a written
statement of officers as to the existence or non-existence of defaults under
the Senior Subordinated Indenture or the Senior Subordinated Securities.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
Junior subordinated debt securities (the "Junior Subordinated Debt
Securities") may be issued from time to time in one or more series under an
Indenture dated as of January 1, 1997 (the "Junior Indenture"), between the
Company and Chase, as trustee (the "Debt Trustee"). The terms of the Junior
Subordinated Debt Securities will include those stated in the Junior Indenture
and those made part of the Junior Indenture by reference to the Trust Indenture
Act. The following summary of certain provisions contained in the Junior
Indenture is not complete and is subject to the provisions of, and is qualified
in its entirety by, the Junior Indenture, which is filed or incorporated by
reference as an exhibit to the registration statement of which this prospectus
forms a part, and the Trust Indenture Act. Whenever particular provisions or
defined terms in the Junior Indenture are referred to herein, such provisions
or defined terms are incorporated by reference herein.
General
The Junior Subordinated Debt Securities will be unsecured, subordinated
obligations of the Company. The Junior Indenture does not limit the aggregate
principal amount of Junior Subordinated Debt Securities which may be issued
under it. The Junior Subordinated Debt Securities are issuable in one or more
series pursuant to an indenture supplemental to the Junior Indenture or a
resolution of the Company's Board of Directors or a committee appointed by the
Board.
In the event Junior Subordinated Debt Securities are issued to a BANK ONE
Capital Trust or a trustee of such trust in connection with the issuance of
Trust Securities by the BANK ONE Capital Trust, such Corresponding Junior
Subordinated Debt Securities subsequently may be distributed pro rata to the
holders of the Trust Securities in connection with the dissolution of the BANK
ONE Capital Trust, as described in the prospectus supplement relating to the
Trust Securities. Only one series of Corresponding Junior Subordinated Debt
Securities will be issued to a BANK ONE Capital Trust or a trustee of such
trust in connection with the issuance of Trust Securities by the BANK ONE
Capital Trust.
You must review the prospectus supplement relating to the particular Junior
Subordinated Debt Securities for the following terms:
. the specific designation of the Junior Subordinated Debt Securities;
. the aggregate principal amount of the Junior Subordinated Debt
Securities;
. the percentage of their principal amount at which the Junior
Subordinated Debt Securities will be issued;
. the date or dates on which the principal of and premium, if any, on
the Junior Subordinated Debt Securities will be payable and the
right, if any, to extend such date or dates;
. the interest rate or rates, which may be fixed or variable, if any,
of the Junior Subordinated Debt Securities, or the method of
determination of such rate or rates;
. the date or dates from which such interest will accrue, the interest
payment dates on which such interest will be payable or the manner
of determination of such interest payment dates and the record dates
for the determination of holders to whom interest is payable on any
the interest payment dates;
. the right, if any, to extend the interest payment periods and the
duration of an extension;
. the period or periods, if any, within which, the price or prices of
which, and the terms and conditions upon which the Junior
Subordinated Debt Securities may be redeemed, in whole or in part;
. the right and/or obligation, if any, of the Company to redeem or
purchase the Junior Subordinated Debt Securities pursuant to any
sinking fund or similar provisions or at the option
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at the holder of the security and the period or periods for which,
the price or prices at which, and the terms and conditions upon
which, the Junior Subordinated Debt Securities will be redeemed or
repurchased, in whole or in part, pursuant to such right and/or
obligation;
. the terms and conditions, if any, upon which the Junior Subordinated
Debt Securities may be converted into shares of the common stock of
BANK ONE, including the conversion price and the circumstances, if
any, under which such conversion right will expire;
. the terms of subordination;
. the form of the Junior Subordinated Debt Securities; and
. any other specific terms of the Junior Subordinated Debt Securities.
If a prospectus supplement specifies that a series of Junior Subordinated
Debt Securities is denominated in a currency or currency unit other than United
States dollars, the prospectus supplement will also specify the denomination in
which the Junior Subordinated Debt Securities will be issued and the coin or
currency in which the principal, premium, if any, and interest, if any, on the
Junior Subordinated Debt Securities will be payable.
The Junior Indenture does not contain provisions that protect holders of the
Junior Subordinated Debt Securities in the event of a highly leveraged
transaction or other similar transaction involving BANK ONE that may adversely
affect such holders.
Form, Exchange, Registration, Transfer and Payment
Unless otherwise specified in the applicable prospectus supplement, the
Junior Subordinated Debt Securities will be issued in fully registered form
without coupons and in denominations of $1,000 and multiples of $1,000. No
service charge will be made for any transfer or exchange of the Junior
Subordinated Debt Securities, but the Company or the Debt Trustee may require
payment of a sum sufficient to cover any tax or other government charge payable
in connection with such transfer or exchange.
Unless otherwise provided in the applicable prospectus supplement, principal
and premium, if any, or interest, if any, will be payable and the Junior
Subordinated Debt Securities may be surrendered for payment or transferred at
the offices of the Debt Trustee as paying and authenticating agent, provided
that payment of interest, if any, may be made at the option of the Company (i)
by check mailed to the address of the person entitled to such payment as it
appears in the security register or (ii) by wire transfer to an account
maintained by the person entitled to such payment as specified in the
applicable security register.
Book-Entry Junior Subordinated Debt Securities
The Junior Subordinated Debt Securities of a series may be issued in whole
or in part in the form of one or more Global Securities that will be deposited
with, or on behalf of, a Depositary, or its nominee, which will be identified
in the prospectus supplement relating to such series. In such a case, one or
more Global Securities will be issued in a denomination or aggregate
denomination equal to the portion of the aggregate principal amount of
outstanding Junior Subordinated Debt Securities of the series to be represented
by such Global Security or Securities. Until it is exchanged in whole or in
part for Junior Subordinated Debt Securities in definitive registered form, a
Global Security may not be registered for transfer or exchange except as a
whole by the Depositary for the Global Security to a nominee for the Depositary
and except in the circumstances described in the applicable prospectus
supplement.
The specific terms of the depositary arrangement for any portion of a series
of Junior Subordinated Debt Securities to be represented by a Global Security
and a description of the Depositary will be provided in the applicable
prospectus supplement. See also "Global Securities" in this prospectus.
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Subordination
The Junior Subordinated Debt Securities will be subordinated and junior in
right of payment to certain other indebtedness of the Company (which may
include both senior and subordinated indebtedness for money borrowed) to the
extent described in the applicable prospectus supplement.
Certain Covenants of the Company
The Company has covenanted, that it will not, and will not permit any
subsidiary of the Company to,
. declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any
of BANK ONE's capital stock or
. make any payment of principal of or interest or premium, if any, on
or repay, repurchase or redeem any debt securities of the Company
that rank on a parity in all respects with or junior in interest to
the Junior Subordinated Debt Securities or make any guarantee
payments with respect to any guarantee by the Company of the Senior
Debt Securities of any subsidiary of the Company if such guarantee
ranks on a parity with or junior in interest to the Junior
Subordinated Debt Securities, other than:
(1) dividends or distributions in common stock of BANK ONE,
(2) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of
stock under any such plan in the future, or the redemption or
repurchase of any rights under such plan,
(3) payments under the Preferred Securities Guarantee or Common
Securities Guarantee relating to Trust Securities issued by the BANK
ONE Capital Trust holding the Corresponding Junior Subordinated Debt
Securities,
(4) purchases of common stock related to the issuance of common
stock or rights under any of the Company's benefit plans for its
directors, officers or employees, and
(5) obligations under any dividend reinvestment and stock purchase
plan,
if at the time (i) there has occurred any event of which the Company has
actual knowledge that (a) with the giving of notice or the lapse of time, or
both, would constitute an "Event of Default" under the Junior Indenture with
respect to the Junior Subordinated Debt Securities of such series and (b) in
respect of which the Company will not have taken reasonable steps to cure,
(ii) if the Junior Subordinated Debt Securities are held by a BANK ONE Capital
Trust, the Company is in default with respect to its payment of any
obligations under the Preferred Securities Guarantee or Common Securities
Guarantee relating to the BANK ONE Capital Trust or (iii) the Company has
given notice of its election to defer payments of interest on the Junior
Subordinated Debt Securities by extending the interest payment period as
provided in the Junior Indenture with respect to the Junior Subordinated Debt
Securities and has not rescinded such notice, or such period, or any extension
of such period is continuing.
In the event Corresponding Junior Subordinated Debt Securities are issued
to a BANK ONE Capital Trust or its trustee in connection with the issuance of
Trust Securities of the BANK ONE Capital Trust, for so long as the Trust
Securities remain outstanding, the Company will covenant:
. to maintain directly or indirectly 100% ownership of the Common
Securities of the BANK ONE Capital Trust, provided that certain
successors which are permitted under the Junior Indenture may succeed
to the Company's ownership of the Common Securities;
. as holder of the Common Securities, not to voluntarily terminate,
wind-up or liquidate the BANK ONE Capital Trust, except upon prior
approval of the Federal Reserve if then required under applicable
capital guidelines or policies of the Federal Reserve and (a) in
connection with
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a distribution of Corresponding Junior Subordinated Debt Securities
to the holders of the Trust Securities in liquidation of the BANK ONE
Capital Trust or (b) in connection with certain mergers
consolidations or amalgamations permitted by the Declaration of the
BANK ONE Capital Trust; and
. to use its reasonable efforts, consistent with the terms and
provisions of the Declaration of the BANK ONE Capital Trust, to cause
the BANK ONE Capital Trust to remain classified as a grantor trust
and not as an association taxable as a corporation for United States
federal income tax purposes.
Limitation on Mergers and Sales of Assets
The Company will not consolidate with, or merge into, any corporation or
convey or transfer its properties and assets substantially as an entirety to
any person unless
. the successor entity expressly assumes the obligations of the Company
under the Junior Indenture, and
. after giving effect thereto, no Event of Default, and no event which,
after notice or lapse of time, or both, would become an Event of
Default, will have occurred and be continuing under the Junior
Indenture.
Events of Default, Waiver and Notice
The Junior Indenture provides that any one or more of the following events
which has occurred and is continuing constitutes an "Event of Default" with
respect to each series of Junior Subordinated Debt Securities:
(1) default for 30 days in payment of any interest on the Junior
Subordinated Debt Securities of that series, when due; provided, however,
that a valid extension of the interest payment period by the Company will
not constitute a default in the payment of interest for this purpose; or
(2) default in payment of principal and premium, if any, on the Junior
Subordinated Debt Securities of that series when due either at maturity,
upon redemption, by declaration or otherwise; provided, however, that a
valid extension of the maturity of such Junior Subordinated Debt Securities
will not constitute a default for this purpose; or
(3) default by the Company in the performance, or breach, in any
material respect of any other of the covenants or agreements in the Junior
Indenture which will not have been remedied for a period of 90 days after
notice; or
(4) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(5) any other Event of Default provided with respect to a particular
series of Junior Subordinated Debt Securities as described in the related
prospectus supplement.
The Junior Indenture provides that the Debt Trustee may withhold notice to
the holders of a series of Junior Subordinated Debt Securities, except in
payment of principal or of interest or premium on the Junior Subordinated Debt
Securities, if the Debt Trustee considers it in the interest of such holders
to do so.
The Junior Indenture provides that if an Event of Default with respect to
any series of Junior Subordinated Debt Securities has occurred and is
continuing, either the Debt Trustee or the holders of 25 percent in principal
amount of the outstanding Junior Subordinated Debt Securities of such affected
series may declare the principal of all Junior Subordinated Debt Securities of
the series to be due and payable immediately, but upon certain conditions such
declaration may be annulled and past defaults may be waived, except defaults
in payment of principal of or interest or premium, if any, on the Junior
Subordinated Debt Securities, by the holders of a majority in principal amount
of the outstanding Junior Subordinated Debt Securities of the series.
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The holders of a majority in principal amount of the outstanding Junior
Subordinated Debt Securities of any affected series will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debt Trustee under the Junior Indenture with respect to the
series, provided that the holders of the Junior Subordinated Debt Securities
will have offered to the Debt Trustee reasonable indemnity against expenses and
liabilities.
The Junior Indenture also provides that notwithstanding any of its other
provisions, the holder of any Junior Subordinated Debt Security of any series,
will have the right to institute suit for the enforcement of any payment of
principal of, premium, if any, and interest on the Junior Subordinated Debt
Security on the stated maturity or upon repayment or redemption of such Junior
Subordinated Debt Security and that this right will not be impaired without the
consent of such holder.
The Junior Indenture requires the annual filing by the Company with the Debt
Trustee of a certificate as to the absence of certain defaults under the Junior
Indenture.
Modification of the Junior Indenture
The Junior Indenture contains provisions permitting the Company and the Debt
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Debt Securities of all series
affected by the modification at the time outstanding, to modify the Indenture
or the rights of the holders of the Junior Subordinated Debt Securities.
However, no such modification will
(1) modify the terms of payment of principal, premium, if any, or
interest on any Junior Subordinated Senior Debt Securities, or impair or
affect the right of any holder of Junior Subordinated Debt Securities to
institute suit for the payment of the security or the right of prepayment,
if any, at the option of the holder, without the consent of the holder of
each Junior Subordinated Debt Security so affected, or
(2) reduce the percentage of holders of Junior Subordinated Debt
Securities whose consent is required for any such modification, unless the
consent of the holders of each Junior Subordinated Debt Security affected
is obtained.
If Junior Subordinated Debt Securities of a series are held by a BANK ONE
Capital Trust or a trustee of such trust, a supplemental indenture requiring
such consent will not be effective until the holders of a majority in
liquidation amount of the Trust Securities of the applicable BANK ONE Capital
Trust consent to such supplemental indenture. If the consent of the holders of
each outstanding Junior Subordinated Debt Security of a series is required,
such supplemental indenture will not be effective until each holder of the
Trust Securities of the applicable BANK ONE Capital Trust consents to such
supplemental indenture.
As a result of these pass through voting rights with respect to
modifications to the Junior Indenture, no modification to such indenture will
be effective until the holders of a majority in liquidation amount of the Trust
Securities consent to such modification and no modification described in
clauses (1) and (2) above will be effective without the consent of each holder
of Preferred Securities and each holder of Common Securities of the applicable
BANK ONE Capital Trust.
Satisfaction and Discharge
The Junior Indenture provides among other things, that when all Junior
Subordinated Debt Securities not previously delivered to the Debt Trustee for
cancellation (i) have become due and payable or (ii) will become due and
payable at their stated maturity within one year, the Company may deposit or
cause to be deposited with the Debt Trustee funds, in trust, for the purpose
and in an amount sufficient to pay and discharge the entire indebtedness on the
Junior Subordinated Debt Securities not previously delivered to the Debt
Trustee for cancellation, for the principal, premium, if any, and interest to
the date of the deposit or to the stated maturity, as the case may be. Upon
such deposit, the Junior Indenture will cease to be of further effect except as
to the
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Company's obligations to pay all other sums due pursuant to the Junior
Indenture and to provide the officers' certificates and opinions of counsel
required under the Junior Indenture, and the Company will be deemed to have
satisfied and discharged the Indenture.
Governing Law
The Junior Indenture and the Junior Subordinated Debt Securities will be
governed by, and construed in accordance with, the laws of the State of New
York.
The Debt Trustee
Chase serves as the Debt Trustee under the Junior Indenture, as well as the
Institutional Trustee and the Preferred Guarantee Trustee. Chase also will
serve as Senior Trustee for the Debt Securities offered pursuant to this
prospectus. For a description of the Company's other relationships with Chase,
see "Description of Debt Securities--Regarding Chase" in this prospectus.
DESCRIPTION OF THE PREFERRED SECURITIES
Each BANK ONE Capital Trust may issue only one series of Preferred
Securities and such series will have the terms described in the applicable
prospectus supplement. The Declaration of each BANK ONE Capital Trust
authorizes the Regular Trustees of that BANK ONE Capital Trust to issue on
behalf of the BANK ONE Capital Trust one series of Preferred Securities. The
Declaration will be qualified as an indenture under the Trust Indenture Act.
The Preferred Securities will have terms, including with respect to
distributions, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as described in the
Declaration or made part of the Declaration by the Trust Indenture Act and
which will mirror the terms of the Corresponding Junior Subordinated Debt
Securities held by the BANK ONE Capital Trust and described in the applicable
prospectus supplement.
You must review the prospectus supplement relating to the Preferred
Securities of the BANK ONE Capital Trust for specific terms, including:
. the distinctive designation of the Preferred Securities;
. the number and the initial public offering price of Preferred
Securities issued by the BANK ONE Capital Trust;
. the annual distribution rate (or method of determining such rate)
for the Preferred Securities, the date or dates upon which the
distributions will be payable and the date or dates from which
distributions will accrue;
. whether distributions on the Preferred Securities will be
cumulative, and, in the case of Preferred Securities having
cumulative distribution rights, the date or dates or method of
determining the date or dates from which the distributions on the
Preferred Securities will be cumulative;
. the amount or amounts which will be paid out of the assets of the
BANK ONE Capital Trust to the holders of Preferred Securities of the
BANK ONE Capital Trust upon voluntary or involuntary dissolution,
winding-up or termination of the BANK ONE Capital Trust;
. the obligation, if any, of the BANK ONE Capital Trust to purchase or
redeem Preferred Securities issued by the BANK ONE Capital Trust and
the price or prices at which, the period or periods within which,
and the terms and conditions upon which, the Preferred Securities
will be purchased or redeemed, in whole or in part, pursuant to such
obligation;
. the voting rights, if any, of the Preferred Securities in addition
to those required by law, including the number of votes per
Preferred Security and any requirement for the approval by
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the holders of Preferred Securities, or of Preferred Securities
issued by one or more BANK ONE Capital Trusts, or of both, as a
condition to specified action or amendments to the Declaration of the
BANK ONE Capital Trust;
. the terms and conditions, if any, upon which the Corresponding Junior
Subordinated Debt Securities may be distributed to holders of
Preferred Securities;
. the right and/or obligation, if any, of BANK ONE to redeem or
purchase the Preferred Securities pursuant to any sinking fund or
similar provisions or at the option at the holder of the Preferred
Securities and the period or periods for which, the price or prices
at which, and the terms and conditions upon which, the Preferred
Securities will be redeemed or repurchased, in whole or in part,
pursuant to such right and/or obligation;
. the terms and conditions, if any, upon which the Preferred Securities
may be converted into shares of the common stock of BANK ONE,
including the conversion price and the circumstances, if any, under
which the conversion right will expire;
. if applicable, any securities exchange upon which the Preferred
Securities will be listed; and
. any other relevant rights, preferences, privileges, limitations or
restrictions of Preferred Securities issued by the BANK ONE Capital
Trust not inconsistent with the Declaration of the BANK ONE Capital
Trust or with applicable law.
All Preferred Securities will be guaranteed by the Company to the extent
described below under "Description of the Preferred Securities Guarantees".
Certain United States federal income tax considerations applicable to any
offering of Preferred Securities will be described in the applicable
prospectus supplement.
In connection with the issuance of Preferred Securities, each BANK ONE
Capital Trust will issue one series of Common Securities. The Declaration of
each BANK ONE Capital Trust authorizes the Regular Trustees of the trust to
issue on behalf of such BANK ONE Capital Trust one series of Common
Securities. The Common Securities will have the terms relating to
distributions, redemption, voting, liquidation rights or such restrictions as
are described in the Declaration. Except for voting rights, the terms of the
Common Securities issued by a BANK ONE Capital Trust will be substantially
identical to the terms of the Preferred Securities issued by the trust. The
Common Securities will rank on a parity, and payments will be made on the
Common Securities pro rata, with the Preferred Securities except that, upon an
Event of Default under the Declaration, the rights of the holders of the
Common Securities to payment for distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. Except in certain limited circumstances, the Common
Securities will also carry the right to vote to appoint, remove or replace any
of the BANK ONE Capital Trustees of a BANK ONE Capital Trust. All of the
Common Securities of each BANK ONE Capital Trust will be directly or
indirectly owned by the Company.
Enforcement of Certain Rights by Holders of Trust Preferred Securities
If an Event of Default under the Declaration of a BANK ONE Capital Trust
occurs and is continuing, then the holders of Preferred Securities of the BANK
ONE Capital Trust will rely on the enforcement by the Institutional Trustee of
its rights as a holder of the applicable series of Junior Subordinated Debt
Securities against the Company. In addition, the holders of a majority in
liquidation amount of the Preferred Securities of the BANK ONE Capital Trust
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Institutional Trustee or to direct
the exercise of any trust or power conferred upon the Institutional Trustee
under the applicable Declaration, including the right to direct the
Institutional Trustee to exercise the remedies available to it as a holder of
the Junior Subordinated Debt Securities.
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If the Institutional Trustee fails to enforce its rights under the
applicable series of Junior Subordinated Debt Securities, a holder of Preferred
Securities of such BANK ONE Capital Trust may institute a legal proceeding
directly against the Company to enforce the Institutional Trustee's rights
without first instituting any legal proceeding against the Institutional
Trustee or any other person or entity. However, if an Event of Default under
the applicable Declaration has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
applicable series of Junior Subordinated Debt Securities on the date such
interest or principal is otherwise payable (or in the case of redemption, on
the redemption date), then a holder of Preferred Securities of the BANK ONE
Capital Trust may directly institute a proceeding for enforcement of payment to
the holder of the principal of or interest on the applicable series of Junior
Subordinated Debt Securities having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder (a "Direct
Action") on or after the respective due date. In connection with a Direct
Action, the Company will be subrogated to the rights of such holder of
Preferred Securities under the applicable Declaration to the extent of any
payment made by the Company to a holder of Preferred Securities in a Direct
Action. This means that the Company will be entitled to payment of amounts that
a holder of Preferred Securities receives in respect of an unpaid distribution
that resulted in the bringing of the Direct Action to the extent that such
holder receives or has already received full payment relating to such unpaid
distribution from the applicable BANK ONE Capital Trust.
Information Concerning the Institutional Trustee
For information concerning the relationship between Chase, the Institutional
Trustee, and the Company, see "Description of the Junior Subordinated Debt
Securities--The Debt Trustee" and "Description of the Debt Securities--
Regarding Chase" in this prospectus.
Information Concerning the Delaware Trustee
For information concerning the relationship between Chase Delaware, the
Delaware Trustee, and the Company, see "Description of the Debt Securities--
Regarding Chase" in this prospectus.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
The guarantees with respect to the Preferred Securities ( the "Preferred
Securities Guarantees") will be executed and delivered by BANK ONE for the
benefit of the holders from time to time of Preferred Securities. Each
Preferred Securities Guarantee will be qualified as an indenture under the
Trust Indenture Act. Chase will act as indenture trustee under each Preferred
Securities Guarantee for purposes of the Trust Indenture Act (the "Preferred
Guarantee Trustee"). The terms of each Preferred Securities Guarantee will be
those in such Preferred Securities Guarantee and those made part of such
Preferred Securities Guarantee by the Trust Indenture Act. The summary of the
terms and provisions of the Preferred Securities Guarantees in this section
does not claim to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the form of Preferred
Securities Guarantee, which is filed as an exhibit to the registration
statement of which this prospectus forms a part, and the Trust Indenture Act.
Each Preferred Securities Guarantee will be held by the Preferred Guarantee
Trustee for the benefit of the holders of the Preferred Securities of the
applicable BANK ONE Capital Trust.
General
Under each Preferred Securities Guarantee, the Company will irrevocably and
unconditionally agree, to the extent set forth in the guarantee, to pay in
full, to the holders of the Preferred Securities issued by a BANK ONE Capital
Trust, the Guarantee Payments (as defined below), except to the extent paid by
the BANK ONE Capital Trust, as and when due, regardless of any defense, right
of set-off or counterclaim which the BANK ONE Capital Trust may have or claim
to have.
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The following payments with respect to Preferred Securities issued by a BANK
ONE Capital Trust, to the extent not paid by the BANK ONE Capital Trust (the
"Guarantee Payments"), will be subject to the applicable Preferred Securities
Guarantee (without duplication):
(1) any accrued and unpaid distributions which are required to be paid
on the Preferred Securities, to the extent the BANK ONE Capital Trust has
funds available for such payments;
(2) the redemption price, including all accrued and unpaid
distributions to the date of payment (the "Redemption Price"), to the
extent the BANK ONE Capital Trust has funds available for such payments
with respect to any Preferred Securities called for redemption by the BANK
ONE Capital Trust; and
(3) upon a voluntary or involuntary dissolution, winding-up or
termination of the BANK ONE Capital Trust, other than in connection with
the distribution of Corresponding Junior Subordinated Debt Securities to
the holders of Preferred Securities or the redemption of all of the
Preferred Securities, the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid distributions on the Preferred Securities
to the date of payment to the extent the BANK ONE Capital Trust has funds
available for the payment and (b) the amount of assets of the BANK ONE
Capital Trust remaining available for distribution to holders of the
Preferred Securities in liquidation of the BANK ONE Capital Trust.
The redemption price and liquidation amount will be fixed at the time the
Preferred Securities are issued.
The Company's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of
Preferred Securities or by causing the applicable BANK ONE Capital Trust to pay
such amounts to the holders.
Each Preferred Securities Guarantee will not apply to any payment of
distributions except to the extent the BANK ONE Capital Trust has funds
available for the payments. If the Company does not make interest payments on
the Junior Subordinated Debt Securities purchased by a BANK ONE Capital Trust,
the BANK ONE Capital Trust will not pay distributions on the Preferred
Securities issued by the BANK ONE Capital Trust and will not have funds
available for such a payment. See "Description of Junior Subordinated Debt
Securities--Certain Covenants of the Company". The Preferred Securities
Guarantee, when taken together with the Company's obligations under the Junior
Subordinated Debt Securities, the Junior Indenture and the Declaration,
including its obligations to pay costs, expenses, debts and liabilities of the
BANK ONE Capital Trust, other than with respect to the Trust Securities, will
provide a full and unconditional guarantee on a subordinated basis by the
Company of payments due on the Preferred Securities.
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the BANK ONE Capital Trusts with respect to the
Common Securities (the "Common Securities Guarantees") to the same extent as
the Preferred Securities Guarantees, except that upon an Event of Default under
the Junior Indenture, holders of Preferred Securities will have priority over
holders of Common Securities with respect to distributions and payments on
liquidation, redemption or otherwise.
Modification of the Preferred Securities Guarantees; Assignment
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities issued by the applicable BANK ONE Capital
Trust. The manner of obtaining the approval of holders of the Preferred
Securities will be described in the applicable prospectus supplement. All
guarantees and agreements contained in a Preferred Securities Guarantee will
bind the successors, assigns, receivers, trustees and representatives of the
Company and will benefit the holders of the outstanding Preferred Securities of
the applicable BANK ONE Capital Trust.
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Termination
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable BANK ONE Capital Trust
.upon full payment of the Redemption Price of all Preferred Securities
of the BANK ONE Capital Trust;
.upon distribution of the Corresponding Junior Subordinated Debt
Securities held by the BANK ONE Capital Trust to the holders of the
Preferred Securities of that BANK ONE Capital Trust; or
.upon full payment of the amounts payable under the Declaration of the
BANK ONE Capital Trust upon liquidation of the BANK ONE Capital
Trust.
Each Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Preferred
Securities issued by the applicable BANK ONE Capital Trust must restore payment
of any sums paid under the Preferred Securities or the Preferred Securities
Guarantee.
Events of Default
An event of default under a Preferred Securities Guarantee will occur upon
the failure of the Company to perform any of its payment or other obligations
under the guarantee.
The holders of a majority in liquidation amount of the Preferred Securities
relating to a Preferred Securities Guarantee have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Preferred Guarantee Trustee in respect of the Preferred Securities Guarantee or
to direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under such Preferred Securities. If the Preferred Guarantee
Trustee fails to enforce the Preferred Securities Guarantee, any holder of
Preferred Securities relating to the Preferred Securities Guarantee may
institute a legal proceeding directly against the Company to enforce the
Preferred Guarantee Trustee's rights under the Preferred Securities Guarantee,
without first instituting a legal proceeding against the relevant BANK ONE
Capital Trust, the Preferred Guarantee Trustee or any other person or entity.
However, if the Company has failed to make a Guarantee Payment, a holder of
Preferred Securities may directly institute a proceeding against the Company
for enforcement of the Preferred Securities Guarantee for the payment. The
Company waives any right or remedy to require that any action be brought first
against the BANK ONE Capital Trust or any other person or entity before
proceeding directly against the Company.
Status of the Preferred Securities Guarantees
Unless otherwise provided in the applicable prospectus supplement, the
Preferred Securities Guarantees with respect to the Preferred Securities of any
BANK ONE Capital Trust will constitute unsecured obligations of the Company and
will rank (i) subordinate and junior in right of payment to certain other
liabilities of the Company, as described in the prospectus supplement and (ii)
on a parity with any guarantee now or hereafter entered into by BANK ONE in
respect of any other BANK ONE Capital Trust or any other similar financing
vehicle sponsored by BANK ONE.
The terms of the Preferred Securities provide that each holder of Preferred
Securities issued by the applicable BANK ONE Capital Trust by acceptance of the
Preferred Securities agrees to the subordination provisions and other terms of
the Preferred Securities Guarantee as described in the applicable prospectus
supplement.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection, meaning that the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
Preferred Securities Guarantee without instituting a legal proceeding against
any other person or entity.
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Information Concerning the Preferred Guarantee Trustee
Prior to the occurrence of a default with respect to a Preferred Securities
Guarantee, the Preferred Guarantee Trustee will undertake to perform only the
duties that are specifically described in the Preferred Securities Guarantee
and, after default, will exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provisions, the Preferred Guarantee Trustee will be under no obligation to
exercise any of the powers given it by a Preferred Securities Guarantee at the
request of any holder of Preferred Securities, unless the Preferred Guarantee
Trustee is offered reasonable indemnity against the costs, expenses and
liabilities which it might incur in exercising the powers.
For information concerning the relationship between the Preferred Guarantee
Trustee and the Company, see "Description of Junior Subordinated Debt
Securities--The Debt Trustee" and "Description of the Debt Securities--
Regarding Chase" in this prospectus.
Governing Law
The Preferred Securities Guarantees will be governed by and construed in
accordance with the laws of the State of New York.
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EFFECT OF OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBT SECURITIES
AND THE PREFERRED SECURITIES GUARANTEE
The sole purpose of each of the BANK ONE Capital Trusts is to issue the
Trust Securities evidencing undivided beneficial ownership interests in the
assets of the BANK ONE Capital Trust, and to invest the proceeds from the
issuance and sale in the Corresponding Junior Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debt Securities, the payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors:
. the aggregate principal amount of Junior Subordinated Debt Securities
will be equal to the sum of the aggregate stated liquidation amount of the
Trust Securities;
. the interest rate and the interest and other payment dates on the
Junior Subordinated Debt Securities will match the distribution rate and
distribution and other payment dates for the Preferred Securities;
. BANK ONE will pay, and the applicable BANK ONE Capital Trust will not
be obligated to pay, directly or indirectly, all costs, expenses, debt, and
obligations of the applicable BANK ONE Capital Trust, other than with
respect to the Trust Securities; and
. the Declaration provides that the BANK ONE Capital Trustees will not
take or cause or permit the applicable BANK ONE Capital Trust to, among
other things, engage in any activity that is not consistent with the
purposes of the applicable BANK ONE Capital Trust.
Payments of distributions, to the extent funds are available, and other
payments due on the Preferred Securities, to the extent funds are available,
are guaranteed by BANK ONE as and to the extent described under "Description of
the Preferred Securities Guarantees". If BANK ONE does not make interest
payments on the Corresponding Junior Subordinated Debt Securities purchased by
the applicable BANK ONE Capital Trust, it is expected that the applicable BANK
ONE Capital Trust will not have sufficient funds to pay distributions on the
Preferred Securities. The Preferred Securities Guarantee does not apply to any
payment of distributions unless and until the applicable BANK ONE Capital Trust
has sufficient funds for the payment of such distributions.
The Preferred Securities Guarantee covers the payment of distributions and
other payments on the Preferred Securities only if and to the extent that BANK
ONE has made a payment of interest or principal on the Junior Subordinated Debt
Securities held by the applicable BANK ONE Capital Trust as its sole asset. The
Preferred Securities Guarantee, when taken together with BANK ONE's obligations
under the Junior Subordinated Debt Securities and the Junior Indenture and its
obligations under the Declaration, including its obligations to pay costs,
expenses, debts and liabilities of the applicable BANK ONE Capital Trust (other
than with respect to the Trust Securities), provide a full and unconditional
guarantee on a subordinated basis of amounts due on the Preferred Securities.
If BANK ONE fails to make interest or other payments on the Junior
Subordinated Debt Securities when due, taking account of any extension period,
the Declaration provides a mechanism whereby the holders of the Preferred
Securities may direct the Institutional Trustee to enforce its rights under the
Junior Subordinated Debt Securities. If the Institutional Trustee fails to
enforce its rights under the Junior Subordinated Debt Securities, a holder of
Preferred Securities may institute a legal proceeding against BANK ONE to
enforce the Institutional Trustee's rights under the Junior Subordinated Debt
Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. However, if a Event of
Default under the Declaration has occurred and is continuing and such event is
due to the failure of BANK ONE to pay interest or principal on the Junior
Subordinated Debt Securities on the date such interest or principal is
otherwise payable (or in the case of redemption on the redemption date), then a
holder of Preferred Securities may institute a Direct Action for payment on or
after the respective due date.
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In connection with a Direct Action, BANK ONE will be subrogated to the
rights of such holder of Preferred Securities under the Declaration to the
extent of any payment made by BANK ONE to such holder of Preferred Securities
in a Direct Action. BANK ONE, under the Preferred Securities Guarantee,
acknowledges that the Guarantee Trustee will enforce the Preferred Securities
Guarantee on behalf of the holders of the Preferred Securities. If BANK ONE
fails to make payments under the Preferred Securities Guarantee, the Preferred
Securities Guarantee provides a mechanism whereby the holders of the Preferred
Securities may direct the Guarantee Trustee to enforce its rights under the
guarantee. Any holder of Preferred Securities may institute a legal proceeding
directly against BANK ONE to enforce the Preferred Guarantee Trustee's rights
under the Preferred Securities Guarantee without first instituting a legal
proceeding against the applicable BANK ONE Capital Trust, the Guarantee
Trustee, or any other person or entity.
BANK ONE and each of the BANK ONE Capital Trusts believe that the mechanisms
and obligations described above, taken together, provide a full and
unconditional guarantee by BANK ONE on a subordinated basis of payments due on
the Preferred Securities. See "Description of the Preferred Securities
Guarantees--General".
GLOBAL SECURITIES
Debt Securities and Junior Subordinated Debt Securities issued by the
Company (for purposes of this section, collectively, "debt securities") of a
series and Preferred Securities issued by a BANK ONE Capital Trust may be
issued in whole or in part in the form of one or more Global Securities. Each
Global Security will be deposited with, or on behalf of, a Depositary
identified in the applicable prospectus supplement. Global Securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Until it is exchanged in whole or in part for the individual securities
which it represents, a Global Security may not be transferred except as a whole
(i) by the Depositary for the Global Security to a nominee of the Depositary or
(ii) by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or (iii) by the Depositary or any nominee to a successor Depositary
or any nominee of the successor.
The specific terms of the depositary arrangement for a series of Debt
Securities or Junior Subordinated Debt Securities issued by the Company or the
Preferred Securities issued by a BANK ONE Capital Trust and certain limitations
and restrictions relating to a series of Bearer Securities in the form of one
or more Global Securities will be described in the applicable prospectus
supplement. The Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for the Global
Security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts or liquidation amounts, as
applicable, of the individual securities represented by the Global Security to
the accounts of persons that have accounts with the Depositary. The
underwriters or agents for the securities will designate such accounts.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with the applicable Depositary ("participants") or
persons that may hold interests through participants. Ownership of beneficial
interests in the Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of participants) and the
records of participants (with respect to interests of persons other than
participants).
The laws of some states require that certain purchasers of securities take
physical delivery of securities in definitive form. Such limits and such laws
may impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of the Global Security, the Depositary or the nominee, as the
case may be, will be considered the sole owner or holder of the securities
represented by the Global Security for all purposes under the applicable
indenture or Declaration
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governing the securities. Except as provided below, owners of beneficial
interests in a Global Security (i) will not be entitled to have any of the
individual securities represented by the Global Security registered in their
names, (ii) will not receive or be entitled to receive physical delivery of any
such securities in definitive form and (iii) will not be considered the owners
or holders of the securities under the applicable indenture or Declaration
governing the securities.
Payments of principal of, premium, if any, and interest, if any, on
individual debt securities or distributions on Preferred Securities represented
by a Global Security registered in the name of a Depositary or its nominee will
be made to the Depositary or its nominee, as applicable, as the registered
owner of the Global Security representing the securities. None of the Company,
any BANK ONE Capital Trust, the relevant trustee for such debt securities or
Preferred Securities, any paying agent or any security registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global
Security for the debt securities or Preferred Securities, as applicable, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Subject to certain restrictions relating to Bearer Securities, the Company
expects that the Depositary for a series of debt securities or Preferred
Securities or its nominee, upon receipt of any payment of principal, premium or
interest or distributions in respect of a permanent Global Security
representing any of the securities will credit the accounts of participants
immediately with payments in amounts proportionate to their respective
beneficial interests in the principal amount or liquidation amount, as
applicable, of the Global Security for the securities as shown on the records
of such Depositary or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in the Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name". These payments will
be the responsibility of such participants. With respect to owners of
beneficial interests in a temporary Global Security representing Bearer
Securities, receipt by the beneficial owners of payments of principal, premium
or interest or distributions on the securities will be subject to additional
restrictions.
A Global Security is exchangeable for definitive securities registered in
the name of, and a transfer of a Global Security may be registered to, any
person other than the Depositary or its nominee, only if:
. the Depositary for a series of debt securities or Preferred
Securities, as applicable, is at any time unwilling, unable or ineligible
to continue as depositary and a successor depositary is not appointed by
the Company within 90 days, or
. the Company at any time and in its sole discretion, subject to any
limitations described in the prospectus supplement relating to such debt
securities or Preferred Securities, as applicable, determines not to have
any debt securities of a series or Preferred Securities, as applicable,
represented by one or more Global Securities or the Company, in its
discretion, specifies with respect to the debt securities of a series, or
Preferred Securities, as applicable, that an owner of a beneficial interest
in a Global Security representing, debt securities of the series or
Preferred Securities, as applicable, may, on terms acceptable to the
Company, the applicable trustee and the Depositary for such Global
Security, receive debt securities of the series or Preferred Securities, as
applicable, in definitive form in exchange for such beneficial interests,
subject to any limitations described in the applicable prospectus
supplement.
In any such instance, an owner of a beneficial interest in a Global Security
will be entitled to physical delivery in definitive form of debt securities of
the series or Preferred Securities, as applicable, represented by such Global
Security equal in principal amount or liquidation amount, as applicable, to
such beneficial interest and to have the debt securities or Preferred
Securities, as applicable, registered in its name (if the securities are
issuable as Registered Securities).
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Debt securities of a series or Preferred Securities, as applicable, issued
in definitive form will be issued
. as Registered Securities in denominations, unless otherwise specified
by the Company, of $1,000 and multiples of $1,000 if the debt
securities of the series or Preferred Securities, as applicable, are
issuable as Registered Securities,
. as Bearer Securities in denominations, unless otherwise specified by
the Company, of $5,000 if the debt securities of the series or
Preferred Securities, as applicable, are issuable as Bearer
Securities or
. as either Registered or Bearer Securities, if the debt securities of
the series or Preferred Securities, as applicable, are issuable in
either form.
Certain restrictions may apply on the issuance of a Bearer Security in
definitive form in exchange for an interest in a Global Security.
PLAN OF DISTRIBUTION
The securities offered under this prospectus may be sold in a public
offering to or through agents, underwriters or dealers designated from time to
time or directly to purchasers. The Company and each BANK ONE Capital Trust
may sell its securities as soon as practicable after effectiveness of the
registration statement of which this prospectus forms a part. The names of any
underwriters or dealers involved in the sale of the securities in respect of
which this prospectus is delivered, the amount or number of securities to be
purchased by any such underwriters and any applicable commissions or discounts
will be described in the applicable prospectus supplement.
Underwriters may offer and sell securities at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. In connection with the sale of the securities, underwriters
may be deemed to have received compensation from the Company and/or the
applicable BANK ONE Capital Trust in the form of underwriting discounts or
commissions and may also receive commissions. Underwriters may sell securities
to or through dealers, and such dealers may receive compensation in the form
of discounts, concessions or commissions from the underwriters.
Any underwriters may engage in stabilizing transactions and syndicate
covering transactions in accordance with Rule 104 under the Exchange Act.
Stabilizing transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum. Syndicate
covering transactions involve purchases of the securities in the open market
after the distribution has been completed in order to cover syndicate short
positions. Such stabilizing transactions and syndicate covering transactions
may cause the price of the securities to be higher than it would otherwise be
in the absence of such transactions.
Any underwriting compensation paid by the Company and/or the applicable
BANK ONE Capital Trust to underwriters in connection with the offering of
securities, and any discounts, concessions or commissions allowed by such
underwriters to participating dealers, will be described in an accompanying
prospectus supplement. Underwriters and dealers participating in the
distribution of securities may be deemed to be underwriters, and any discounts
and commissions received by them and any profit realized by them on resale of
such securities may be deemed to be underwriting discounts and commissions,
under the Securities Act. Underwriters and dealers may be entitled under
agreements with the Company and a BANK ONE Capital Trust, to indemnification
against and contribution toward certain civil liabilities, including
liabilities under the Securities Act, and to reimbursement by the Company for
certain expenses.
In connection with the offering of the securities of the Company or any
BANK ONE Capital Trust, the Company or such BANK ONE Capital Trust may grant
to the underwriters an option to purchase additional securities to cover over-
allotments, if any, at the initial public offering price (with an additional
underwriting commission), as may be described in the accompanying prospectus
supplement. If the Company or such BANK ONE Capital Trust grants any over-
allotment option, the terms of such over-allotment option will be described in
the prospectus supplement for such securities.
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Underwriters and dealers may engage in transactions with, or perform
services for, the Company and/or the applicable BANK ONE Capital Trust and/or
any of their affiliates in the ordinary course of business. Certain of the
underwriters and their associates may be customers of, including borrowers
from, engage in transactions with, and perform services for, the Company, the
Banks and other subsidiaries of the Company in the ordinary course of business.
Securities will be new issues of securities and will have no established
trading market. Any underwriters to whom such securities are sold for public
offering and sale may make a market in such securities, but such underwriters
will not be obligated to do so and may discontinue any market making at any
time without notice. Such securities may or may not be listed on a national
securities exchange or the Nasdaq National Market. No assurance can be given as
to the liquidity of or the existence of trading markets for any securities.
One or more direct or indirect subsidiaries of BANK ONE may from time to
time act as an agent or underwriter in connection with the sale of the
securities to the extent permitted by law. The participation of any such
subsidiary will comply with Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD"). The offer and sale of the
securities will comply with Rule 2810 of the Rules of Conduct of the NASD. In
addition, no NASD member participating in offers and sales of securities will
execute a transaction in the securities in a discretionary account without the
prior specific written approval of the member's customer.
This prospectus and the related prospectus supplement may be used by direct
or indirect subsidiaries of BANK ONE in connection with offers and sales
related to secondary market transactions. Such subsidiaries may act as
principal or agent in such transactions. Such sales may be made at prices
related to prevailing market prices at the time of sale.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplement, certain
matters of Delaware law relating to the validity of the Preferred Securities
will be passed upon on behalf of the BANK ONE Capital Trusts by Skadden, Arps,
Slate, Meagher & Flom LLP, special Delaware counsel to BANK ONE and the BANK
ONE Capital Trusts. Unless otherwise indicated in the applicable prospectus
supplement, the validity of the Senior Debt Securities, the Junior Subordinated
Debt Securities and the Preferred Securities Guarantee and certain matters
relating thereto will be passed upon for BANK ONE by Sherman I. Goldberg, Esq.,
Executive Vice President, General Counsel and Secretary of BANK ONE. Unless
otherwise indicated in the applicable prospectus supplement, certain United
States federal income taxation matters will be passed upon for BANK ONE and the
BANK ONE Capital Trusts by Skadden, Arps, Slate, Meagher & Flom LLP, special
tax counsel to BANK ONE and the BANK ONE Capital Trusts.
As of July 31, 1999, Sherman I. Goldberg was the record and beneficial owner
of 396,008 shares of common stock of BANK ONE and held options to purchase
245,817 shares of common stock of BANK ONE.
EXPERTS
The consolidated financial statements of BANK ONE included in the Annual
Report on Form 10-K for the year ended December 31, 1998, 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
experts in accounting and auditing in giving said report.
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Securities
BANK ONE CAPITAL I
% Preferred Securities
$25 liquidation amount
fully and unconditionally guaranteed, on a subordinated basis, as described
herein by
BANK ONE CORPORATION
[LOGO OF BANK ONE CORPORATION]
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PROSPECTUS SUPPLEMENT
September , 1999
(Including Prospectus dated September 7, 1999)
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Salomon Smith Barney Banc One Capital Markets, Inc.
Merrill Lynch & Co.
Morgan Stanley Dean Witter
A.G. Edwards & Sons, Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
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