<PAGE> 1
As Filed Pursuant to Rule 424(b)(2)
Registration No. 333-38387
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 30, 1997
$4,000,000,000
[BANK ONE LOGO]
BANC ONE CORPORATION
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
------------------------
BANC ONE CORPORATION (the "Company") may offer from time to time its
Medium-Term Notes due nine months or more
from date of issue, as selected by the purchaser and agreed to by the Company,
at an aggregate initial public offering price not to exceed $4,000,000,000, or
its equivalent in another currency or composite currency, subject to reduction
as a result of the sale of other Securities.
The Notes may be denominated in U.S. dollars or in such foreign currencies
or composite currencies as may be designated by the Company at the time of
offering. The specific currency or composite currency, interest rate (if any),
issue price, applicable index (if any), amortization schedule (if any) and
maturity date of any Note will be set forth in the applicable Pricing Supplement
to this Prospectus Supplement. See "Description of Notes".
Interest on the Fixed Rate Notes, unless otherwise specified in the
applicable Pricing Supplement, will be payable each June 15 and December 15 and
at maturity. Interest on the Floating Rate Notes or Indexed Notes will be
payable on the dates specified therein and in the applicable Pricing Supplement.
Floating Rate Notes will bear interest at a rate determined by reference to the
Commercial Paper Rate, Federal Funds Rate, LIBOR, Prime Rate, CD Rate, Treasury
Rate or CMT Rate, as adjusted by a Spread and/or Spread Multiplier, if any,
applicable to such Notes. Zero-Coupon Notes will not bear interest.
Unless a Redemption Commencement Date or Repayment Date is specified in the
applicable Pricing Supplement, the Notes will not be redeemable or repayable
prior to their stated maturity. If a Redemption Commencement Date or Repayment
Date is so specified, the Notes will be redeemable at the option of the Company
or repayable at the option of the holder as described herein.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued in global form in denominations of $100,000 and in integral
multiples of $1,000 in excess thereof or, in the case of Notes denominated in
foreign currencies or composite currencies, in the denominations indicated in
the applicable Pricing Supplement. A global Note representing Book-Entry Notes
will be registered in the name of The Depository Trust Company, or its nominee,
which will act as Depository. Interests in Book-Entry Notes will be shown on,
and transfers thereof will be effected only through records maintained by the
Depository (with respect to participants' interests) and its participants.
Except as described herein. owners of beneficial interests in a global Note will
not be considered the holders thereof and will not be entitled to receive
physical delivery of Notes in definitive form, and no global Note will be
exchangeable except for another global Note of like denomination and terms to be
registered in the name of the Depository or its nominee. See "Description of
Notes".
------------------------
THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY
BANK OR NONBANK
SUBSIDIARY OF BANC ONE AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
AGENTS'
PRICE TO DISCOUNTS OR PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
--------------- ------------------------- --------------------------------
<S> <C> <C> <C>
Per Note............................... 100% .125% - 1.000% 99.875% - 99.000%
Total(4)............................... $4,000,000,000 $5,000,000 - $40,000,000 $3,995,000,000 - $3,960,000,000
</TABLE>
- ---------------
(1) Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) Unless otherwise agreed, the Company will pay the Agents a commission (or
grant a discount) of from .125% to 1.000% depending upon maturity, of the
principal amount of any Note sold through them as Agents (or sold to such
Agents as principal in circumstances in which no other discount is agreed).
The Company may sell Notes to any Agent at a discount or premium for resale
to one or more investors at varying prices related to prevailing market
prices at the time of resale, as determined by such Agent, or at a fixed
public offering price. The Company has agreed to indemnify each of the
Agents against, or to make contributions relating to, certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Supplemental Plan of Distribution".
(3) Assuming Notes are issued at 100% of their principal amount and before
deducting expenses payable by the Company estimated at $2,800,000, including
expenses of the Agents to be reimbursed by the Company.
(4) Or the equivalent thereof in another currency or composite currency.
------------------------
Offers to purchase the Notes are being solicited, on a reasonable efforts
basis, from time to time by the Agents on behalf of
the Company. Notes may be sold to the Agents on their own behalf at negotiated
discounts. The Company reserves the right to sell the Notes directly on its own
behalf. No commission will be payable on any sales made directly by the Company.
The Company also reserves the right to withdraw, cancel or modify the offering
contemplated hereby without notice. The Company or an Agent may reject any order
as a whole or in part. See "Supplemental Plan of Distribution".
GOLDMAN, SACHS & CO.
BANC ONE CAPITAL CORPORATION
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
LEHMAN BROTHERS
SALOMON BROTHERS INC
UBS SECURITIES
------------------------
The date of this Prospectus Supplement is November 17, 1997.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES,
AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "SUPPLEMENTAL PLAN OF DISTRIBUTION".
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes (which
represent a series of, and are referred to in the accompanying Prospectus as,
"Debt Securities") supplements and, to the extent, if any, inconsistent
therewith, replaces the description of the general terms and provisions of the
Debt Securities set forth in the accompanying Prospectus to which reference is
hereby made. Unless different terms or additional terms are specified in the
applicable Pricing Supplement, the Notes will have the terms described below.
References to interest payments and interest-related information do not apply to
Zero-Coupon Notes (as defined below). Certain capitalized terms used herein are
defined in the accompanying Prospectus.
The Company may issue and sell additional Debt Securities in other series
pursuant to the accompanying Prospectus, and such Debt Securities, if issued and
sold, will reduce the aggregate amount of proceeds for which Notes may be issued
and sold pursuant to this Prospectus Supplement.
GENERAL
The Notes will be issued under either (i) an Indenture between the Company
and The Chase Manhattan Bank, as trustee (the "Trustee"), dated as of March 3,
1997, (the "Senior Indenture"), or (ii) an Indenture between the Company and the
Trustee dated as of March 3, 1997 (the "Subordinated Indenture") each of which
is more fully described in the accompanying Prospectus. Notes issued under the
Senior Indenture will be Senior Securities and Notes issued under the
Subordinated Indenture will be Subordinated Securities, each as more fully
described in the accompanying Prospectus. The following summaries of certain
provisions of the Indentures do not purport to be complete, are subject to, and
are qualified in their entirety by reference to, all of the provisions of each
Indenture, including the definitions therein of certain terms. The terms and
conditions set forth below will apply to each Note unless otherwise specified in
the applicable Pricing Supplement.
Neither Indenture limits the aggregate principal amount of Debt Securities
which may be issued thereunder and each Indenture provides that Debt Securities
may be issued in one or more series up to the aggregate principal amount which
may be authorized from time to time by the Company. The Company may, from time
to time, without the consent of the Holders of the Notes, provide for the
issuance of additional Notes or other Debt Securities under either Indenture. As
used herein, "Holder" includes the Depository (as hereinafter defined) with
respect to Notes issued in book-entry form.
All Senior Securities, including the Notes issued and to be issued under
the Senior Indenture, will be unsecured and will rank pari passu with all other
Senior Securities issued or to be issued under the Senior Indenture and all
other unsecured and unsubordinated indebtedness of the Company from time to time
outstanding. All Subordinated Securities, including the Notes issued and to be
issued under the Subordinated Indenture, will be unsecured and subordinated as
set forth in the accompanying Prospectus under the heading "Subordinated
Securities -- Subordination".
The Notes offered by this Prospectus Supplement will constitute a single
series of Senior Securities for purposes of the Senior Indenture and a single
series of Subordinated Securities for purposes of the Subordinated Indenture,
and both such series shall be limited to Notes issued for proceeds of up to
$4,000,000,000 or the equivalent thereof in foreign currencies or composite
currencies on a combined basis. The Notes will be offered on a continuing basis
and will mature on any Business Day (as hereinafter defined) nine months or more
from the date of issue, as selected by the purchaser and agreed to by the
Company, and may be subject to redemption or repayment prior to maturity as set
forth under "Redemption and
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Repayment". Unless otherwise specified in the applicable Pricing Supplement,
Floating Rate Notes will mature on an Interest Payment Date (as hereinafter
defined). Each Note will bear interest at either (a) a fixed rate, which may be
zero in the case of certain Notes issued at a price representing a discount from
the principal amount payable at maturity, or (b) a floating rate determined by
reference to a Base Rate (as hereinafter defined), which may be adjusted by
adding or subtracting the Spread or multiplying by the Spread Multiplier.
The Notes will be issued only in fully registered certificated or
book-entry form and, except as may be otherwise provided in the applicable
Pricing Supplement, in U.S. dollar denominations of $100,000 or any amount in
excess thereof which is an integral multiple of $1,000. If a Note is to be
issued in a foreign currency or composite currency, unless a higher minimum
denomination is required by applicable law, such Note will be issued in
denominations of the equivalent of U.S. $100,000 (rounded down to an integral
multiple of 1,000 units of such foreign currency or composite currency) or any
amount in excess thereof which is an integral multiple of 1,000 units of such
foreign currency or composite currency. Notes issued in certificated form may be
transferred or exchanged at the office or agency of the Company in New York City
designated for such purpose. If Notes are issued in book-entry form through the
facilities of The Depository Trust Company (the "Depository"), transfers or
exchanges may be similarly effected through a participating member of the
Depository. See "-- Book-Entry Notes" below. No service charge will be made for
any registration of transfer or exchange of Notes issued in certificated form,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith.
PAYMENT OF PRINCIPAL AND INTEREST
Unless otherwise specified in the applicable Pricing Supplement, payments
of principal and premium, if any, and interest on any Note will be made in the
currency or composite currency in which such Note is denominated.
A Note, including any Zero-Coupon Note, is an "Original Issue Discount
Note" if (a) it is issued at a price lower than the stated principal amount
thereof or (b) it is otherwise issued with original issue discount for United
States Federal income tax purposes. In the event of redemption or acceleration
of the maturity of an Original Issue Discount Note, the amount payable to the
Holder upon such redemption or acceleration will be determined in accordance
with the terms of such Note, and may be an amount less than the amount payable
at the Stated Maturity thereof. For a discussion of Federal income tax
considerations with respect to Original Issue Discount Notes, see "Certain
United States Federal Income Tax Considerations -- U.S. Holders -- Original
Issue Discount".
Interest will be payable on each date specified in the applicable Note on
which an installment of interest is due and payable (an "Interest Payment Date")
and at maturity (or, if applicable, upon redemption or repayment). If the
original issue date of a Note is between a Regular Record Date (as hereinafter
defined) and an Interest Payment Date, the initial interest payment will be made
on the Interest Payment Date following the next succeeding Regular Record Date
to the registered Holder on such next succeeding Regular Record Date. Interest
payments, which may be zero in the case of Zero-Coupon Notes, will be in the
amount of interest accrued during the period from and including the next
preceding Interest Payment Date in respect of which interest has been paid or
duly provided for (or from and including the date of issue, if no interest has
been paid with respect to such Note), to but excluding the applicable Interest
Payment Date (an "Interest Accrual Period"). However, in the case of Floating
Rate Notes on which the interest rate is reset daily or weekly, the interest
payments will include interest accrued only from but excluding the Regular
Record Date through which interest has been paid or duly provided for (or from
and including the date of issue, if no interest has been paid with respect to
such Note) through and including the Regular Record Date next preceding the
applicable Interest Payment Date, except that the interest payment on the
maturity date (or, if applicable, the date of redemption or repayment) will
include interest accrued to but excluding such date.
Payments on Notes issued in book-entry form will be made to the Depository.
See "-- Book-Entry Notes" below. In the case of Notes issued in certificated
form, payment of principal, premium, if any, and interest payable at maturity
(or, if applicable, upon redemption or repayment) on each Note will be paid in
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immediately available funds upon surrender of such Note at the office of the
Trustee located at 55 Water Street, Room 234, North Building, New York, New York
10041; provided that such Note is presented to the Trustee in time for the
Trustee to make such payment in such funds in accordance with its normal
procedures; provided, however, that payments of interest in U.S. dollars, other
than interest payable at maturity (or, if applicable, upon redemption or
repayment) will be made by check mailed to the address of the person in whose
name such Note is registered at the close of business on the relevant Regular
Record Date as shown on the applicable security register; provided further,
however, that a Holder of $10,000,000 or more in aggregate principal amount of
Notes issued in certificated form having the same Interest Payment Date will be
entitled to receive payments of interest (other than at maturity or, if
applicable, upon redemption or repayment) by wire transfer of immediately
available funds if appropriate wire transfer instructions have been received by
the Trustee not less than 16 days prior to the applicable Interest Payment Date.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all
amounts used in or resulting from such calculation on Floating Rate Notes will
be rounded in the case of U.S. dollars to the nearest cent (with one-half cent
being rounded upward) or, in the case of a foreign currency or composite
currency, to the nearest unit (with one-half cent or unit being rounded
upwards).
Interest rates, or interest rate formulas, are subject to change by the
Company from time to time, but no such change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Company.
REDEMPTION AND REPAYMENT
Each Note will be subject to redemption by the Company on and after the
initial redemption date, if any, fixed at the time of sale and set forth in the
applicable Pricing Supplement and in such Note (the "Initial Redemption Date").
If no Initial Redemption Date is so indicated with respect to a Note, such Note
will not be redeemable prior to maturity. On and after the Initial Redemption
Date with respect to any Note, such Note will be redeemable in whole or in part
in increments of $1,000 or, if such Note is denominated in a foreign currency or
in a composite currency, in increments of 1,000 units thereof (provided that any
remaining principal amount of such Note shall not be less than the minimum
authorized denomination of such Note), at the option of the Company at a
redemption price (the "Redemption Price") determined in accordance with the
following paragraph, together with interest thereon payable to the date of
redemption, on notice given by the Company not more than 60 nor less than 30
days prior to the date of redemption.
The Redemption Price for each Note subject to redemption shall initially be
equal to a certain percentage (the "Initial Redemption Percentage") of the
principal amount of such Note to be redeemed and shall decline at each
anniversary of the Initial Redemption Date with respect to such Note by a
percentage (the "Annual Redemption Percentage Reduction") of the principal
amount to be redeemed until the Redemption Price is 100% of such principal
amount. The Initial Redemption Percentage and any Annual Redemption Percentage
Reduction with respect to each Note subject to redemption prior to maturity will
be fixed at the time of sale and set forth in the applicable Pricing Supplement
and in such Note.
Each Note will be subject to repayment at the option of the Holder thereof
in accordance with the terms of such Note on the optional repayment dates, if
any, fixed at the time of sale and set forth in the applicable Pricing
Supplement and in such Note (the "Optional Repayment Dates"). If no Optional
Repayment Date is indicated with respect to a Note, such Note will not be
repayable at the option of the Holder prior to maturity. On any Optional
Repayment Date with respect to any Note, such Note will be repayable in whole or
in part in increments of $1,000 or, if such Note is denominated in a foreign
currency or in a composite currency, in increments of 1,000 units thereof
(provided that any remaining principal amount of such Note must not be less than
the minimum authorized denomination of such Note), at the option of the Holder
thereof at a price equal to 100% of the principal amount to be repaid, together
with interest thereon payable to the Optional Repayment Date, upon delivery by
such Holder to the Trustee of its election of repayment not more than 45 nor
less than 30 days prior to the Optional Repayment Date.
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The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company may, at its discretion, be held,
resold or surrendered to the Trustee for cancellation.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issue at the rate
per annum stated on the face thereof until the principal amount thereof is paid
or made available for payment. Unless otherwise specified in the applicable
Pricing Supplement, interest on Fixed Rate Notes will be payable semiannually in
arrears on June 15 and December 15 of each year, to the persons in whose names
the Notes are registered at the close of business on the first calendar day
(whether or not a Business Day) of the month in which such Interest Payment Date
occurs (the "Regular Record Date"). Interest is also payable at maturity (or, if
applicable, upon redemption or repayment). Interest on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months. If any Interest
Payment Date or the maturity date (or the date of redemption or repayment) of a
Fixed Rate Note falls on a day that is not a Business Day, the payment will be
made on the next Business Day as if it were made on the date such payment was
due, and no additional interest will accrue as a result of such delayed payment.
When used with respect to Fixed Rate Notes, "Business Day" means any day, other
than a Saturday or Sunday, on which banks are not required or authorized by law
to close in New York City and (i) with respect to Notes denominated in any
foreign currency, in the capital city of the country issuing such currency, (ii)
with respect to Notes denominated in ECU, in Brussels, Belgium and (iii) with
respect to Notes denominated in another composite currency, in the city
specified in the Pricing Supplement.
FLOATING RATE NOTES
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. Interest on Floating Rates Notes
will be determined by reference to a "Base Rate", which may be the "CD Rate"
("CD Rate Notes"), the "Commercial Paper Rate" ("Commercial Paper Rate Notes"),
the "Federal Funds Rate" ("Federal Funds Rate Notes"), "LIBOR" ("LIBOR Notes"),
the "Prime Rate" ("Prime Rate Notes"), the "Treasury Rate" ("Treasury Rate
Notes"), the "CMT Rate" ("CMT Rate Notes") or such other Base Rate as is set
forth in the applicable Pricing Supplement and Note, based upon the Index
Maturity and adjusted by a Spread or Spread Multiplier, if any, as specified in
the applicable Pricing Supplement. The "Index Maturity" is the period to
maturity of the instrument or obligation with respect to which the Base Rate is
calculated. The "Spread" is the number of basis points above or below the Base
Rate applicable to a Floating Rate Note, and the "Spread Multiplier" is the
percentage of the Base Rate applicable to the interest rate for such Floating
Rate Note. The Spread, Spread Multiplier, Index Maturity and other variable
terms of the Floating Rate Notes are subject to change by the Company from time
to time, but no such change will affect any Floating Rate Note theretofore
issued or as to which an offer has been accepted by the Company.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually, annually or otherwise (each, an
"Interest Reset Date"), as specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Interest
Reset Date" will be, in the case of Floating Rate Notes which reset daily, each
Business Day; in the case of Floating Rate Notes which reset weekly, the
Wednesday of each week (with the exception of weekly reset Treasury Rate Notes,
which reset on the Tuesday of each week, except as specified below); in the case
of Floating Rate Notes which reset monthly, the third Wednesday of each month;
in the case of Floating Rate Notes which reset quarterly, the third Wednesday of
March, June, September and December; in the case of Floating Rate Notes which
reset semiannually, the third Wednesday of the two months specified in the
applicable Pricing Supplement; and in the case of Floating Rate Notes which
reset annually, the third Wednesday of the month specified in the applicable
Pricing Supplement. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Reset Date shall be
postponed to the next succeeding day that is a Business Day, except that in the
case of a LIBOR Note, if such Business Day is in the
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next succeeding calendar month, such Interest Reset Date will be the next
preceding Business Day. When used with respect to Floating Rate Notes, "Business
Day" means any day, other than a Saturday or Sunday, that meets each of the
following applicable requirements: the day is (i) not a day on which banks are
authorized or required by law to close in New York City, (ii) with respect to
Notes denominated in a foreign currency, not a day on which banks are authorized
or required by law to close in the capital city of the country issuing such
currency, (iii) with respect to Notes denominated in ECU, not a day on which
banks are authorized or required by law to close in Brussels, Belgium, (iv) with
respect to Notes denominated in another composite currency, not a day on which
banks are authorized or required by law to close in the city specified in the
Pricing Supplement, and (v) with respect to LIBOR Notes, a London Banking Day.
"London Banking Day" means any day on which dealings in deposits in U.S. dollars
are transacted in the London interbank market.
The interest rate applicable to each Interest Accrual Period commencing on
an Interest Reset Date will be the rate determined by reference to the
applicable Base Rate determined as of the "Interest Determination Date". If the
Base Rate is the CD Rate, the Commercial Paper Rate, the Federal Funds Rate, the
Prime Rate or the CMT Rate, the Interest Determination Date pertaining to an
Interest Reset Date will be the second Business Day preceding the Interest Reset
Date. If the Base Rate is LIBOR, the Interest Determination Date pertaining to
an Interest Reset Date will be the second London Banking Day preceding the
Interest Reset Date. If the Base Rate is the Treasury Rate, the Interest
Determination Date pertaining to an Interest Reset Date will be the day of the
week in which the Interest Reset Date falls on which Treasury bills normally
would be auctioned. Treasury bills are usually sold at auction on the Monday of
each week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held on
the preceding Friday. If an auction falls on any Interest Reset Date, then the
Interest Reset Date will instead be the first Business Day following such
auction.
A Floating Rate Note may also have either or both of the following: (i) a
maximum limit, or ceiling, on the rate of interest which may be applicable
during any Interest Accrual Period; and (ii) a minimum limit, or floor, on the
rate of interest which may be applicable during any Interest Accrual Period. In
addition to any specified maximum interest rate which may be applicable to any
Floating Rate Note, the interest rate on the Floating Rate Notes will in no
event be higher than the maximum rate permitted by New York law, as the same may
be modified by United States law of general application. Under present New York
law, the maximum rate of interest is 25% per annum on a simple interest basis.
The limit may not apply to Floating Rate Notes in which $2,500,000 or more has
been invested.
The applicable Pricing Supplement will specify for each Floating Rate Note
the following terms: the Base Rate, Initial Interest Rate, Interest Reset Period
and Interest Reset Dates, Interest Payment Period and Interest Payment Dates,
Index Maturity, Maturity Date, Maximum Interest Rate and Minimum Interest Rate,
if any, the Spread or Spread Multiplier, if any, and, if applicable, the Initial
Redemption Date, Initial Redemption Percentage, Annual Redemption Percentage
Reduction and Optional Repayment Dates.
Each Floating Rate Note will bear interest from the date of issue at the
rates determined as described below until the principal thereof is paid or made
available for payment. Except as provided below or in the applicable Pricing
Supplement, interest will be payable, in the case of Floating Rate Notes which
reset daily, weekly or monthly, on the third Wednesday of each month or on the
third Wednesday of March, June, September and December of each year; in the case
of Floating Rate Notes which reset quarterly, on the third Wednesday of March,
June, September and December of each year; in the case of Floating Rate Notes
which reset semiannually, on the third Wednesday of the two months of each year
specified in the applicable Pricing Supplement; and in the case of Floating Rate
Notes which reset annually, on the third Wednesday of the month specified in the
applicable Pricing Supplement and, in each case, at maturity (or, if applicable,
upon redemption or repayment).
If any Interest Payment Date for any Floating Rate Note would fall on a day
that is not a Business Day with respect to such Note, such Interest Payment Date
will be the following day that is a Business Day with respect to such Note,
except that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date will be the immediately
preceding day that is a Business Day
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with respect to such LIBOR Note. If the maturity date (or date of redemption or
repayment) of any Floating Rate Note would fall on a day that is not a Business
Day, the payment of interest and principal (and premium, if any) may be made on
the next succeeding Business Day, and no interest will accrue as a result of
such delayed payment.
The "Regular Record Date" with respect to Floating Rate Notes will be the
date 15 calendar days (whether or not a Business Day) prior to the applicable
Interest Payment Date.
Accrued interest on each Floating Rate Note is calculated by multiplying
the principal amount of such Floating Rate Note by an accrued interest factor.
Such accrued interest factor is computed by adding together the interest factors
calculated for each day from and including the date of issue, or from but
excluding the last date for which interest has been paid, to and including the
date for which accrued interest is being calculated. The interest factor for
each such day is computed by dividing the interest rate applicable to such day
by 360 in the case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds
Rate Notes, LIBOR Notes and Prime Rate Notes, or by the actual number of days in
the year in the case of Treasury Rate Notes and CMT Rate Notes.
Unless otherwise provided in the applicable Pricing Supplement, The Chase
Manhattan Bank, the Trustee, will be the "Calculation Agent". Upon the request
of the Holder of any Floating Rate Note, the Trustee will provide the interest
rate then in effect and, if determined, the interest rate that will become
effective as a result of a determination made for the next Interest Reset Date
with respect to such Floating Rate Note. All calculations by the Calculation
Agent of the interest rate on any Floating Rate Note shall be final and binding
in the absence of manifest error. The "Calculation Date", where applicable,
pertaining to any Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date, or, if any such day
is not a Business Day, the next succeeding Business Day, or (ii) the Business
Day preceding the applicable Interest Payment Date, redemption date, Optional
Repayment Date or maturity.
The interest rate in effect with respect to a Floating Rate Note from the
date of issue to the first Interest Reset Date (the "Initial Interest Rate")
will be specified in the applicable Pricing Supplement. The interest rate that
will become effective on each subsequent Interest Reset Date will be determined
by the Calculation Agent as follows:
CD Rate. CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread or Spread Multiplier,
if any) specified in the CD Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note (a "CD Interest Determination Date"), the rate on such date for negotiable
certificates of deposit having the Index Maturity specified in the applicable
Pricing Supplement as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates" or any
successor publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "CDs (Secondary Market)", or, if not so
published by 9:00 a.m., New York City time, on the Calculation Date pertaining
to such CD Interest Determination Date, the CD Rate will be the rate on such CD
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified in the applicable Pricing Supplement as published by the
Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 p.m. Quotations for U.S. Government Securities" or any successor
publication of the Federal Reserve Bank of New York ("Composite Quotations")
under the heading "Certificates of Deposit". If such rate is not yet published
in either H.15(519) or the Composite Quotations by 3:00 p.m., New York City
time, on the Calculation Date, then the CD Rate on such CD Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York
City time, on such CD Interest Determination Date, of three leading nonbank
dealers in negotiable U.S. dollar certificates of deposit in New York City
selected by the Calculation Agent (after consultation with the Company) for
negotiable certificates of deposit of major United States money center banks of
the highest credit standing in the market for negotiable certificates of deposit
with a remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement in the denomination of $5,000,000; provided,
however, that if the dealers selected as
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aforesaid by the Calculation Agent are not quoting as set forth above, the CD
Rate will remain the CD Rate then in effect on such CD Interest Determination
Date.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a CD Interest Determination Date will
become effective on and as of the next succeeding Interest Reset Date; provided,
however, that the interest rate in effect for the period from the date of issue
to the first Interest Reset Date will be the Initial Interest Rate and the
interest rate in effect for the ten days immediately prior to the maturity date
(or the date of redemption or repayment) will be that in effect on the tenth day
preceding the maturity date (or the date of redemption or repayment).
Commercial Paper Rate. Commercial Paper Rate Notes will bear interest at
the interest rates (calculated with reference to the Commercial Paper Rate and
the Spread or Spread Multiplier, if any) specified in the Commercial Paper Rate
Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date
relating to a Commercial Paper Rate Note (a "Commercial Paper Interest
Determination Date"), the Money Market Yield (calculated as described below) of
the rate on such date for commercial paper having the Index Maturity specified
in the applicable Pricing Supplement, as such rate shall be published in
H.15(519) under the heading "Commercial Paper -- Nonfinancial". In the event
that such rate is not so published by 9:00 a.m., New York City time, on the
Calculation Date pertaining to such Commercial Paper Interest Determination
Date, then the Commercial Paper Rate will be the Money Market Yield of the rate
on such Commercial Paper Interest Determination Date for commercial paper of the
Index Maturity specified in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the Commercial Paper Rate for
that Commercial Paper Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates as of 11:00 a.m., New York City time, on such Commercial Paper
Interest Determination Date of three leading dealers of commercial paper in New
York City selected by the Calculation Agent (after consultation with the
Company) for commercial paper of the Index Maturity specified in the applicable
Pricing Supplement placed for an industrial issuer whose bond rating is "AA", or
the equivalent, from a nationally recognized rating agency; provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the Commercial Paper Rate with respect to
such Commercial Paper Interest Determination Date will remain the Commercial
Paper Rate then in effect on such Commercial Paper Interest Determination Date.
"Money Market Yield" will be a yield calculated in accordance with the
following formula:
<TABLE>
<S> <C> <C>
D X 360 X 100
Money Market Yield = --------------
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a Commercial Paper Interest
Determination Date will become effective on and as of the next succeeding
Interest Reset Date; provided, however, that the interest rate in effect for the
period from the date of issue to the first Interest Reset Date will be the
Initial Interest Rate and the interest rate in effect for the ten days
immediately prior to the maturity date (or the date of redemption or repayment)
will be that in effect on the tenth day preceding the maturity date (or the date
of redemption or repayment).
Federal Funds Rate. Federal Funds Rate Notes will bear interest at the
interest rates (calculated with reference to the Federal Funds Rate and the
Spread or Spread Multiplier, if any) specified in the Federal Funds Rate Notes
and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to a
Federal Funds Rate Note (a "Federal Funds Interest
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Determination Date"), the rate on that day for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)" or, if not so published
by 9:00 a.m., New York City time, on the Calculation Date pertaining to such
Federal Funds Interest Determination Date, the Federal Funds Rate will be the
rate on such Federal Funds Interest Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate". If such rate is not
yet published in either H.15(519) or Composite Quotations by 3:00 p.m., New York
City time, on the Calculation Date pertaining to such Federal Funds Interest
Determination Date, the Federal Funds Rate for such Federal Funds Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight Federal Funds
arranged by each of three leading brokers of Federal Funds transactions in New
York City selected by the Calculation Agent (after consultation with the
Company) prior to 9:00 a.m., New York City time, on such Federal Funds Interest
Determination Date; provided, however, that if the brokers selected as aforesaid
by the Calculation Agent are not quoting as mentioned in this sentence, the
Federal Funds Rate with respect to such Federal Funds Interest Determination
Date will remain the Federal Funds Rate then in effect on such Federal Funds
Interest Determination Date.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a Federal Funds Interest Determination
Date will become effective on and as of the next succeeding Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate and
the interest rate in effect for the ten days immediately prior to the maturity
date (or the date of redemption or repayment) will be that in effect on the
tenth day preceding the maturity date (or the date of redemption or repayment).
LIBOR. Notes will bear interest at the interest rates (calculated with
reference to the London interbank offered rate ("LIBOR") and the Spread or
Spread Multiplier, if any), and will be payable on the dates specified on the
face of the LIBOR Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR with
respect to any Interest Reset Date will be determined by the Calculation Agent
in accordance with the following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note (a "LIBOR Interest Determination Date") LIBOR will be either (a) if
"LIBOR Reuters" is specified in the applicable Pricing Supplement, the
arithmetic mean of the offered rates (unless the Designated LIBOR Page (as
defined below) by its terms provides only for a single rate, in which case
such single rate shall be used) for deposits in the Index Currency having
the Index Maturity specified in such Pricing Supplement, commencing on the
applicable Interest Reset Date, that appear (or, if only a single rate is
required as aforesaid, appears) on the Designated LIBOR Page as of 11:00
a.m., London time, on such LIBOR Interest Determination date, or (b) if
"LIBOR Telerate" is specified in the applicable Pricing Supplement or if
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable
Pricing Supplement as the method of calculating LIBOR, the rate for
deposits in the Index Currency having the Index Maturity specified in such
Pricing Supplement, commencing on such Interest Reset Date, that appears on
the Designated LIBOR Page as of 11:00 a.m., London time, on such LIBOR
Interest Determination Date. If fewer than two such offered rates appear,
or if no such rate appears, as applicable, LIBOR on such LIBOR Interest
Determination Date will be determined in accordance with the provisions
described in clause (ii) below.
(ii) If LIBOR with respect to a LIBOR Interest Determination Date is
to be determined pursuant to this clause (ii), the Calculation Agent will
request the principal London offices of each of four major reference banks
in the London Interbank market as selected by the Calculation Agent (after
consultation with the Company) to provide the Calculation Agent with its
offered quotation for deposits in the Index Currency for the period of the
Index Maturity designated in the applicable Pricing Supplement, commencing
on the Interest Reset Date, to prime banks in the London interbank market
at approximately 11:00 a.m., London time, on such LIBOR Interest
Determination Date and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time. If
at least two such quotations are provided, LIBOR determined on such LIBOR
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR
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determined on such LIBOR Interest Determination Date will be the arithmetic
mean of the rates quoted at approximately 11:00 a.m., or such other time
specified in the applicable Pricing Supplement, in the applicable Principal
Financial Center, on such LIBOR Interest Determination Date by three major
banks in such Principal Financial Center selected by the Calculation Agent
(after consultation with the Company) for loans in the Index Currency to
leading European banks, having the Index Maturity designated in the
applicable Pricing Supplement and in a principal amount that is
representative for a single transaction in such Index Currency in such
market at such time; provided, however, that if the banks so selected by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined on such LIBOR Interest Determination Date will be LIBOR in
effect on such LIBOR Interest Determination Date.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuters Monitor Money Rates
Service (or any successor service) for the purpose of displaying the London
Interbank rates of major banks for the applicable Index Currency, or (b) if
"LIBOR Telerate" is specified in the applicable Pricing Supplement or neither
"LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable Pricing
Supplement as the method for calculating LIBOR, the display on the Dow Jones
Telerate Service (or any successor service) for the purpose of displaying the
London Interbank rates of major banks for the applicable Index Currency.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
"Principal Financial Center" means the capital city of the country issuing
the currency or composite currency in which any payment in respect of the
relevant Notes is to be made or, solely with respect to the calculation of
LIBOR, the Index Currency, except that with respect to U.S. dollars, Deutsche
marks, Italian lira, Swiss francs, Dutch guilders and ECUs, the Principal
Financial Center shall be the City of New York, Frankfurt, Milan, Zurich,
Amsterdam and Brussels, respectively.
Prime Rate. Prime Rate Notes will bear interest at the interest rates
(calculated with reference to the Prime Rate and the Spread or Spread
Multiplier, if any) specified in the Prime Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date relating to a Prime
Rate Note (a "Prime Interest Determination Date"), the rate on such date as
published in H.15(519) under the heading "Bank Prime Loan". In the event that
such rate is not published prior to 9:00 a.m., New York City time, on the
Calculation Date pertaining to such Prime Interest Determination Date, then the
Prime Rate will be determined by the Calculation Agent and will be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen US Prime1 Page (as defined below) as such bank's
prime rate or base lending rate as in effect for that Prime Interest
Determination Date. If fewer than four such rates but more than one such rate
appear on the Reuters Screen US Prime1 Page for the Prime Interest Determination
Date, the Prime Rate will be determined by the Calculation Agent and will be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by 360 as of the close of business on such Prime
Interest Determination Date by at least two major money center banks in New York
City selected by the Calculation Agent (after consultation with the Company). If
fewer than two such rates appear on the Reuters Screen US Prime1 Page, the Prime
Rate will be determined by the Calculation Agent on the basis of the rates
furnished in New York City by three substitute banks or trust companies
organized and doing business under the laws of the United States, or any State
thereof, in each case having total equity capital of at least U.S. $500,000,000
and being subject to supervision or examination by Federal or State authority,
selected by the Calculation Agent (after consultation with the Company) to
provide such rate or rates; provided, however, that if the banks selected as
aforesaid are not quoting as mentioned in this sentence, the Prime Rate will
remain the Prime Rate in effect on such Prime Interest Determination Date.
"Reuters Screen US Prime1 Page" means the display designated as page "US Prime1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the
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<PAGE> 11
US Prime1 page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks).
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a Prime Interest Determination Date
will become effective on and as of the next succeeding Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate and
the interest rate in effect for the ten days immediately prior to the maturity
date (or the date of redemption or repayment) will be that in effect on the
tenth day preceding the maturity date (or the date of redemption or repayment).
Treasury Rate. Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any) specified in the Treasury Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note (a "Treasury Interest Determination Date"), the rate
applicable to the auction held on such date of direct obligations of the United
States ("Treasury bills") having the Index Maturity specified in the applicable
Pricing Supplement as such rate is published in H.15(519) under the heading
"Treasury Bills -- auction average (investment)" or, if not so published by 9:00
a.m., New York City time, on the Calculation Date pertaining to such Treasury
Interest Determination Date, the auction average rate on such Treasury Interest
Determination Date (expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) as otherwise announced
by the United States Department of the Treasury. Treasury bills are usually sold
at auction on Monday of each week unless that day is a legal holiday, in which
case the auction is usually held on the following Tuesday, except that such
auction may be held on the preceding Friday. In the event that the results of
the auction of Treasury bills having the Index Maturity specified in the
applicable Pricing Supplement are not published or reported as provided above by
3:00 p.m., New York City time, on such Calculation Date, or if no such auction
is held on such Treasury Interest Determination Date, then the Treasury Rate
will be calculated by the Calculation Agent and will be a yield to maturity
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City time,
on such Treasury Interest Determination Date, of three leading primary United
States government securities dealers selected by the Calculation Agent (after
consultation with the Company), for the issue of Treasury bills with a remaining
maturity closest to the Index Maturity specified in the applicable Pricing
Supplement; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Treasury
Rate with respect to such Treasury Interest Determination Date will remain the
Treasury Rate then in effect on such Treasury Interest Determination Date.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a Treasury Interest Determination Date
will become effective on and as of the next succeeding Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate and
the interest rate in effect for the ten days immediately prior to the maturity
date (or the date of redemption or repayment) will be that in effect on the
tenth day preceding the maturity date (or the date of redemption or repayment).
CMT Rate. CMT Rate Notes will bear interest at the rates (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in such CMT Rate Notes and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note (a "CMT Interest Determination Date"), the rate displayed on the Designated
CMT Telerate Page (as defined below) under the caption ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately
3:45 p.m.", under the column for the Designated CMT Maturity Index (as defined
below) for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week or the month, as applicable, ended immediately preceding the week
in which
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the related CMT Interest Determination Date occurs. If such rate is no longer
displayed on the relevant page, or if not displayed by 3:00 p.m., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published, or, if not published by 3:00 p.m., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Interest Determination Date with
respect to such Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 p.m., New York
City time, on the related Calculation Date, then the CMT Rate for the CMT
Interest Determination Date will be calculated by the Calculation Agent and will
be a yield to maturity, based on the arithmetic mean of the secondary market
closing offer side prices as of approximately 3:30 p.m., New York City time on
the CMT Interest Determination Date reported, according to their written
records, by three leading primary United States government securities dealers
(each, a "Reference Dealer") in the City of New York selected by the Calculation
Agent (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct noncallable fixed rate obligations
of the United States ("Treasury notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury notes quotations, the CMT
Rate for such CMT Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 p.m., New
York City time, on the CMT Interest Determination Date of three Reference
Dealers in the City of New York (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100,000,000. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated, provided, however,
that if fewer than three Reference Dealers selected by the Calculation Agent are
quoting as described herein, the CMT Rate will be the CMT Rate in effect on such
CMT Interest Determination Date. If two Treasury notes with an original maturity
as described in the third preceding sentence, have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor service) on the page designated in the applicable
Pricing Supplement (or any other page as may replace such page on that service
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519)), for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519). If no such page is specified in the applicable Pricing
Supplement, the Designated CMT Telerate Page shall be 7052, for the most recent
week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be 2 years.
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<PAGE> 13
ZERO-COUPON NOTES
Notes may be issued in the form of Original Issue Discount Notes that do
not provide any periodic payments of interest (the "Zero-Coupon Notes"). The
specific terms of any Zero-Coupon Notes will be set forth in the applicable
Pricing Supplement.
PAYMENTS ON AMORTIZING NOTES
Amortizing Notes are securities for which payments of principal and
interest are made in equal installments over the life of the security. Interest
on each Amortizing Note will be computed on the basis of a 360-day year of
twelve 30-day months. Payments with respect to Amortizing Notes will be applied
first to interest due and payable thereon and then to the reduction of the
unpaid principal amount thereof. A table setting forth repayment information in
respect of each Amortizing Note will be provided to the original purchaser and
will be available, upon request, to subsequent Holders.
BOOK-ENTRY NOTES
The Notes may be issued in whole or in part in the form of one or more
fully registered Notes (each, a "Book-Entry Note") which will be deposited with,
or on behalf of, the Depository and registered in the name of the Depository's
nominee. Except as set forth below, a Book-Entry Note may not be transferred
except as a whole by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the Depository
or by the Depository or any nominee to a successor of the Depository or a
nominee of such successor.
The Depository has advised the Company and the Agents that it is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934
(the "Exchange Act"). The Depository was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depository's participants
include securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations and certain other organizations, some of which
(and/or their representatives) own the Depository. Access to the Depository's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. Persons who are not participants
may beneficially own securities held by the Depository only through
participants.
Upon the issuance of Notes by the Company represented by a Book-Entry Note,
the Depository will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Notes represented by such Book-Entry
Note to the accounts of participants. The accounts to be credited shall be
designated by the Agents or by the Company if such Notes are offered and sold
directly by the Company.
Payments of principal of and interest, if any, on the Book-Entry Note
registered in the name of the Depository or its nominee will be made by the
Company through the Paying Agent to the Depository or its nominee, as the case
may be, as the registered owner of a Book-Entry Note. Neither the Company, the
Trustee, any Paying Agent nor the registrar for the Notes will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Book-Entry Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company has been advised that the Depository, upon receipt of any
payment of principal or interest in respect of a Book-Entry Note, will credit
immediately the accounts of the related participants with payments in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in such Book-Entry Note as shown on the records of the Depository. The
Company expects that payments by participants to owners of beneficial interests
in a Book-Entry Note will be governed by standing customer
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<PAGE> 14
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name".
Such payments will be the responsibility of such participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Notes in certificated form in exchange for each
Book-Entry Note. In addition, the Company may at any time determine not to have
Notes represented by one or more Book-Entry Notes, and, in such event, will
issue Notes in certificated form in exchange for the Book-Entry Note or Notes
representing such Notes. In any such instance, an owner of a beneficial interest
in a Book-Entry Note will be entitled to physical delivery in certificated form
of Notes equal in principal amount to such beneficial interest and to have such
Notes registered in its name. Notes so issued in certificated form will be
issued in denominations of $100,000 or any amount in excess thereof which is an
integral multiple of $1,000 or, in the case of Notes denominated in a Specified
Currency, unless a higher minimum denomination is required by applicable law, in
denominations of the equivalent of U.S. $100,000 (rounded down to an integral
multiple of 1,000 units of such Specified Currency) or any amount in excess
thereof which is an integral multiple of 1,000 units of such Specified Currency,
and will be issued in fully registered form only.
INDEXED NOTES
Notes also may be issued with the principal amount payable at Maturity,
premium, if any, and/or interest to be paid thereon to be determined with
reference to the price or prices of specified commodities (including baskets of
commodities or securities (including baskets of securities), interest rate
indices, interest rate or exchange rate swap indices, the exchange rate of one
or more specified currencies (including baskets of currencies or a composite
currency such as the European Currency Unit) relative to an indexed currency, or
such other price or exchange rate or other financial index or indices (each an
"Index") as may be specified in such Note ("Indexed Notes"), as set forth in a
Pricing Supplement with respect to an Indexed Note. Holders of such Notes may
receive a principal amount at Maturity that is greater than or less than the
face amount of such Notes depending upon the relative value at Maturity of the
specified Index. Information as to the method for determining the principal
payable at Maturity and, where applicable, certain historical information with
respect to the specified indexed item or items and tax considerations associated
with an investment in Indexed Notes, will be set forth in the applicable Pricing
Supplement with respect to an Indexed Note.
Notwithstanding anything to the contrary contained herein or in the
Prospectus, for purposes of determining the rights of a Holder of a Note Indexed
as to principal in respect of voting for or against amendments to the indenture
and modifications and the waiver or rights thereunder, the principal amount of
such Indexed Note shall be deemed to be equal to the face amount thereof upon
issuance. The amount of principal payable at Maturity will be specified in the
applicable Pricing Supplement.
RISKS RELATING TO INDEXED NOTES
Certain risks associated with a particular Indexed Note may be set forth
more fully in the applicable Pricing Supplement. Indexed Notes may present a
high level of risk, and investors in certain Indexed Notes may lose their entire
investment. Investors should consult their own financial and legal advisors as
to the risks entailed by an investment in Indexed Notes and the suitability of
Indexed Notes in light of their particular circumstances.
LOSS OF PRINCIPAL OR INTEREST
The direction and magnitude of the change in the value of the relevant
Index will determine either or both the principal amount of an Indexed Note
payable at maturity or the amount of interest payable on an interest payment
date. The terms of a particular Indexed Note may or may not include a guaranteed
return of a percentage of the face amount at maturity or a minimum interest
rate. Accordingly, the Holder of an Indexed Note may lose all or a portion of
the principal invested in an Indexed Note and may receive no interest thereon.
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VOLATILITY
Certain indices are highly volatile. The expected principal amount payable
at maturity of, or the interest rate on, an Indexed Note based on a volatile
Index may vary substantially from time to time. Because the principal amount
payable at the maturity of, or interest payable on, an Indexed Note is generally
calculated based on the value of the relevant Index on a specified date or over
a limited period of time, volatility in the Index increases the risk that the
return on the Indexed Notes may be adversely affected by a fluctuation in the
level of the relevant Index. Additionally, if the formula used to determine the
principal, premium or interest payable with respect to Indexed Notes contains a
multiple or leverage factor, the effect of any change in the applicable Index
may be increased. The historical experience of the relevant currencies,
commodities or interest rate indices should not be taken as an indication of
future performance of such currencies, commodities or interest rate indices
during the term of any Indexed Notes.
The volatility of an Index may be affected by political or economic events,
including governmental actions, or by the activities of participants in the
relevant markets, any of which could adversely affect the value of an Indexed
Note.
ILLIQUIDITY
The secondary market for Indexed Notes will be affected by a number of
factors, independent of the creditworthiness of the Company and the value of the
applicable index, including the volatility of the applicable Index, the time
remaining to the maturity of such Notes, the amount outstanding of such Notes
and market interest rates.
Under certain circumstances, Indexed Notes may be illiquid and investors in
Indexed Notes may not be able to sell such Notes at a particular price or at any
price.
AVAILABILITY AND COMPOSITION OF INDICES
Certain Indices reference several different currencies, commodities,
securities or other financial instruments. The compiler of such an Index
typically reserves the right to alter the composition of the Index and the
manner in which the value of the Index is calculated. Such an alteration may
result in a decrease in the value of or return on an Indexed Note which is
linked to such Index.
An Index may become unavailable due to such factors as war, natural
disasters, cessation of publication of the Index, or suspension of or disruption
in trading in the currency or currencies, commodity or commodities, security or
securities or other financial instrument or instruments comprising or underlying
such Index. If an Index becomes unavailable, the determination of principal of
or interest on an Indexed Note may be delayed or an alternative method may be
used to determine the value of the unavailable Index. Alternative methods of
valuation are generally intended to produce a value similar to the value
resulting from reference to the relevant Index. However, it is unlikely that
such alternative methods of valuation will produce values identical to those
which would be produced were the relevant Index to be used. An alternative
method of valuation may result in a decrease in the value of or return on an
Indexed Note.
Certain Indexed Notes are linked to Indices which are not commonly utilized
or have been recently developed. The lack of a trading history may make it
difficult to anticipate the volatility or other risks to which such a Note is
subject. In addition, there may be less trading in such Indices or instruments
underlying such Indices, which could increase the volatility of such Indices and
decrease the value of or return on Indexed Notes relating thereto.
FOREIGN CURRENCY RISKS
The information set forth in this Prospectus Supplement is directed to
prospective purchasers who are United States residents, and the Company
disclaims any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any matters that may
affect the
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purchase, holding or receipt of payments of principal of and interest on the
Notes. Such persons should consult their own financial and legal advisors with
regard to such matters.
THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO AND THE ATTACHED
PROSPECTUS DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN FOREIGN CURRENCY
NOTES, CURRENCY INDEXED NOTES OR DUAL CURRENCY NOTES. PROSPECTIVE INVESTORS
SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED
BY AN INVESTMENT IN SUCH NOTES. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR
INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
GOVERNING LAW AND JUDGMENTS
The Notes will be governed by and construed in accordance with the law of
the State of New York. Courts in the United States have not customarily rendered
judgments for money damages denominated or payable in any currency other than
the U.S. dollar. New York statutory law provides, however, 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 rate
of exchange prevailing on the date of the entry of the judgment or decree.
EXCHANGE RATES AND EXCHANGE CONTROLS -- RISKS
An investment in foreign currency notes entails significant risks that are
not associated with a similar investment in a security denominated and payable
in U.S. dollars. Such risks include, without limitation, the possibility of
significant market changes in rates of exchange between the U.S. dollar and the
various foreign currencies, the possibility of significant changes in rates of
exchange between the U.S. dollar and the various foreign currencies resulting
from official redenomination with respect to a specified currency and the
possibility of the imposition or modification of foreign exchange controls by
either the United States or foreign governments. Such risks generally depend on
factors over which the Company has no control, such as economic and political
events and on the supply of and demand for the relevant currencies. In recent
years, rates of exchange between the U.S. dollar and certain foreign currencies
have been volatile and such volatility may be expected in the future.
Fluctuations in any particular exchange rate that have occurred in the past are
not necessarily indicative, however, of fluctuations in the rate that may occur
during the term of any foreign currency note. Depreciation of the specified
currency of a foreign currency note against the U.S. dollar would result in a
decrease in the effective yield of such foreign currency note below its coupon
rate, and in certain circumstances could result in a loss to the investor, on a
U.S. dollar basis.
Governments have imposed from time to time, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a specified currency at an interest payment date or at maturity of a foreign
currency note. There can be no assurance that exchange controls will not
restrict or prohibit payments of principal (and premium, if any) or interest in
any specified currency other than U.S. dollars. Even if there are no actual
exchange controls, it is possible that at an interest payment date or a maturity
of any particular foreign currency note, the specified currency for such foreign
currency note would not be available to the Company due to circumstances beyond
the control of the Company. In any such event, the Company will make required
payments in U.S. dollars on the basis described herein.
Unless otherwise specified in the applicable Pricing Supplement, notes
denominated or payable in a specified currency other than U.S. dollars or ECU
will not be sold in or to residents of the country issuing the specified
currency. The information set forth in this Prospectus Supplement and the
applicable Pricing Supplement is directed to prospective purchasers who are
United States residents, and the Company disclaims any responsibility to advise
prospective purchasers who are residents of countries other than the United
States with respect to any matters that may affect the purchase, holding or
receipt of payments of principal (and premium, if any) or interest on the notes.
Such persons should consult their own financial and legal advisers with regard
to such matters.
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Pricing Supplements relating to foreign currency notes will contain
information concerning historical exchange rates for the specified currency
against the U.S. dollar and a description of the currency and any exchange
controls affecting such currency. Pricing Supplements relating to currency
indexed notes will contain information as to the relative historical value of
the applicable denominated currency against the applicable index currency and
any exchange controls applicable to such denominated currency or indexed
currency. Pricing Supplements relating to dual currency notes will contain
information as to the relative historical value of the applicable face amount
currency against the applicable optional payment currency and any exchange
controls applicable to such face amount currency or optional payment currency.
The information therein concerning exchange rates is furnished as a matter of
information only and should not be regarded as indicative of the range of or
trends in fluctuations in currency exchange rates that may occur in the future.
LIMITED FACILITIES FOR CONVERSION
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. In addition, banks
offer limited non-U.S. dollar denominated checking or savings account facilities
in the United States. Accordingly, payments on foreign currency notes will,
unless otherwise specified in the applicable Pricing Supplement, be made from an
account with a bank located in the country issuing the specified currency (or,
with respect to foreign currency notes denominated in ECUs, Brussels, Belgium).
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary deals only with Notes held as capital assets and does
not deal with persons in special tax situations, such as financial institutions,
insurance companies, regulated investment companies, dealers in securities or
currencies, persons holding Notes as a hedge against currency risks or as a
position in a "straddle" for tax purposes, or persons whose functional currency
is not the United States dollar. It also does not deal with holders other than
original purchasers that acquire Notes for the initial offering price (except
where otherwise specifically noted). This summary is based upon United States
Federal tax laws and regulations as now in effect and as currently interpreted
and does not take into account possible changes in such tax laws or
interpretations, any of which may be applied retroactively. Persons considering
the purchase of the Notes should consult their own tax advisors concerning the
application of United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the Notes arising under the laws of any other taxing
jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation created or organized under the laws of
the United States or of any political subdivision thereof, (iii) an estate or
trust the income of which is subject to United States Federal income taxation
regardless of source, (iv) a person otherwise subject to United States Federal
income taxation on its worldwide income regardless of its source or (v) any
other person whose income or gain in respect of a Note is effectively connected
with the conduct of a United States trade or business. As used herein, the term
"non-U.S. Holder" means a beneficial owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
PAYMENTS OF INTEREST
Payments of interest on a Note, including qualified stated interest as
defined below under "Original Issue Discount", generally will be taxable to a
U.S. Holder as ordinary interest income at the time such payments are accrued or
are received (in accordance with the U.S. Holder's regular method of tax
accounting).
ORIGINAL ISSUE DISCOUNT
For United States Federal income tax purposes, original issue discount
("OID") is the excess of the stated redemption price at maturity of a Note over
its issue price, if such excess equals or exceeds a de
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minimis amount (generally 1/4 of 1% of the Note's stated redemption price at
maturity multiplied by the number of complete years to maturity from its issue
date or, in the case of an Amortizing Note, by the weighted average maturity).
Generally, the issue price of a Note (or any Note that is part of an issue of
Notes) will be the first price at which a substantial amount of Notes that are
part of such issue of Notes are sold to the public. The stated redemption price
at maturity of a Note is the sum of all payments provided by the Note other than
"qualified stated interest" payments. "Qualified stated interest" generally
means stated interest that is unconditionally payable in cash or property (other
than debt instruments of the issuer) at least annually at a single fixed rate
(or at certain floating rates) that appropriately takes into account the length
of the interval between stated interest payments.
Original issue discount is includible in income as ordinary interest for
United States Federal income tax purposes as it accrues under a constant yield
method in advance of receipt of the cash payments attributable to such income,
regardless of such U.S. Holder's regular method of tax accounting. In general,
the amount of OID included in income by the initial U.S. Holder of an Original
Issue Discount Note (a "Discount Note") is the sum of the daily portions of OID
for each day during the taxable year (or portion of the taxable year) on which
such U.S. Holder held such Discount Note. The "daily portion" is determined by
allocating the OID for an accrual period equally to each day in that accrual
period. The "accrual period" for a Discount Note may be of any length and may
vary in length over the term of the Note, provided that each accrual period is
no longer than one year and each scheduled payment of principal or interest
occurs on the first or final day of an accrual period. The amount of OID for an
accrual period is generally equal to the excess of (i) the product of the
Discount Note's adjusted issue price at the beginning of such accrual period and
its yield to maturity over (ii) the amount of any qualified stated interest
payments allocable to such accrual period. The "adjusted issue price" of a
Discount Note at the beginning of any accrual period is the sum of the issue
price of the Discount Note plus the amount of OID allocable to all prior accrual
periods (determined without regard to the amortization of any acquisition or
bond premium, as discussed below) minus the amount of any prior payments on the
Discount Note that were not qualified stated interest payments. Under these
rules, U.S. Holders generally will have to include in income increasingly
greater amounts of OID in successive accrual periods.
Floating Rate Notes and Indexed Notes ("Variable Notes") are subject to
special rules. A Variable Note that provides for stated interest at one or more
qualified floating rates, a single fixed rate and one or more qualified floating
rates, a single objective rate, or a single fixed rate and a single objective
rate that is a qualified inverse floating rate throughout the term thereof
generally will qualify as a "variable rate debt instrument". In general, the
amount and accrual of OID and qualified stated interest on such a Variable Note
is calculated by converting it into a debt instrument with an appropriate fixed
rate and then applying the general OID rules.
If a Variable Note does not qualify as a "variable rate debt instrument",
then the Variable Note would be treated as a contingent payment debt obligation.
A U.S. Holder of such an instrument generally must include future contingent and
noncontingent interest payments in income as such interest accrues based upon a
projected payment schedule. Moreover, in general, any gain recognized by a U.S.
Holder on the sale, exchange, or retirement of a contingent payment debt
instrument will be treated as ordinary income and a portion of any loss realized
could be treated as ordinary loss as opposed to capital loss (depending upon the
circumstances).
The proper United States Federal income tax treatment of Variable Notes
that are treated as contingent payment debt obligations will be more fully
described in the applicable Pricing Supplement. Investors considering the
purchase of Variable Notes should consult their own tax advisors.
Certain of the Notes (i) may be redeemable at the option of the Issuers
prior to their stated maturity (a "call option") and/or (ii) may be repayable at
the option of the holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase Notes with such features
should consult their own tax advisors, since the OID consequences will depend,
in part, on the particular terms and features of the purchased Notes more fully
described in the applicable Pricing Supplement.
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U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, OID, de minimis OID, market
discount, de minimis market discount, and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium) that accrues on a debt
instrument by using the constant yield method applicable to OID obligations,
subject to certain limitations and exceptions. The election is to be made for
the taxable year in which the U.S. Holder acquired the Note, and may not be
revoked without the consent of the Internal Revenue Service (the "IRS").
The Issuer will report to holders the amount of interest paid and OID
accrued each year.
Short-Term Notes. Special rules apply with respect to OID on Notes that
mature one year or less from the date of issuance ("Short-Term Notes"). In
general, a cash basis U.S. Holder of a Short-Term Note is not required to
include OID in income as it accrues for United States Federal income tax
purposes unless it elects to do so. Accrual basis U.S. Holders and certain other
U.S. Holders, including banks, regulated investment companies, dealers in
securities, and cash basis U.S. Holders who so elect, are required to include
OID in income as it accrues on Short-Term Notes on either a straight-line basis
or under the constant yield method (based on daily compounding), at the election
of the U.S. Holder. In the case of U.S. Holders not required and not electing to
include OID on Short-Term Notes in income currently, any gain realized on the
sale or retirement of Short-Term Notes will be ordinary income to the extent of
the OID accrued on a straight-line basis (unless an election is made to accrue
the OID under the constant yield method) through the date of sale or retirement.
U.S. Holders who are not required and do not elect to include OID on Short-Term
Notes in income as it accrues will be required to defer deductions for interest
on borrowings allocable to Short-Term Notes in an amount not exceeding the
deferred income until the deferred income is realized. For purposes of
determining the amount of OID subject to these rules, no interest payments on a
Short-Term Note are qualified stated interest, but instead such interest
payments are included in the Short-Term Note's stated redemption price at
maturity.
Any U.S. Holder of a Short-Term Note can elect to apply rules in the
preceding paragraph taking into account the amount of "acquisition discount", if
any, with respect to the Note (rather than the OID with respect to such Note).
Acquisition discount is the excess of the stated redemption price at maturity of
the Short-Term Note over the U.S. Holder's purchase price therefor.
Market Discount. If a U.S. Holder purchases a Note, other than a
Short-Term Note, for an amount that is less than its issue price (or, in the
case of a subsequent purchaser, its stated redemption price at maturity) or, in
the case of a Discount Note, for an amount that is less than its adjusted issue
price as of the purchase date, such U.S. Holder will be treated as having
purchased such Note at a "market discount," unless such market discount is less
than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of a Discount Note, any payment
that does not constitute qualified stated interest) on, or any gain realized on
the sale, exchange, retirement or other disposition of, a Note as ordinary
income to the extent of the lesser of (i) the amount of such payment or realized
gain or (ii) the market discount which has not previously been included in
income and is treated as having accrued on such Note at the time of such payment
or disposition. Market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless the
U.S. Holder elects to accrue market discount on a constant yield to maturity
basis.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note or
certain earlier dispositions, because a current deduction is only allowed to the
extent the interest expense exceeds an allocable portion of market discount. A
U.S. Holder may elect to include market discount in income currently as it
accrues (on either a ratable or semiannual compounding basis), in which case the
rules described above regarding the treatment as ordinary income of gain upon
the disposition of the Note and upon the receipt of certain cash payments and
regarding the deferral of interest deductions will not apply. Generally, such
currently included market discount is treated as ordinary interest for United
States Federal income tax purposes. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or
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after the first day of the first taxable year to which such election applies and
may be revoked only with the consent of the IRS.
Premium. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of qualified stated interest, such U.S. Holder will be considered
to have purchased the Note with "amortizable bond premium" equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the Note and may offset interest
otherwise required to be included in respect of the Note during any taxable year
by the amortized amount of such excess for the taxable year. However, if the
Note may be optionally redeemed after the U.S. Holder acquires it at a price in
excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium until
later in the term of the Note. Any election to amortize bond premium applies to
all taxable debt obligations then owned and thereafter acquired by the U.S.
Holder on or after the first day of the first taxable year to which such
election applies and may be revoked only with the consent of the IRS.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the stated redemption price at maturity will be considered to have purchased the
Discount Note at an "acquisition premium". Under the acquisition premium rules,
the amount of OID which such U.S. Holder must include in its gross income with
respect to such Discount Note for any taxable year (or portion thereof in which
the U.S. Holder holds the Discount Note) will be reduced (but not below zero) by
the portion of the acquisition premium properly allocable to the period.
Disposition of a Note. Except as discussed above, upon the sale, exchange
or retirement of a Note, a U.S. Holder generally will recognize capital gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note increased by any OID included in income (and accrued market discount or
acquisition discount, if any, if the U.S. Holder has included such discount in
income) and decreased by the amount of any payments, other than qualified stated
interest payments, received and amortizable bond premium taken with respect to
such Note.
Extendible Notes, Reset Notes and Renewable Notes. Certain of the Notes
may provide that (i) the holder may extend the maturity of a Note (a "Renewable
Note"), and/or (ii) the Company may extend the maturity of a Note (an "Extension
of Maturity"), and/or (iii) the Company has the option to reset the interest
rate, the Spread, or the Spread Multiplier (a "Reset Note"). Notes containing
such features may be subject to rules that differ from the general rules
discussed above. Investors considering the purchase of Notes with such features
should consult their own tax advisors and the applicable Pricing Supplement
regarding the tax consequences of the holding and disposition of such Notes.
NOTES DENOMINATED, OR IN RESPECT OF WHICH INTEREST IS PAYABLE, IN A FOREIGN
CURRENCY
("FOREIGN CURRENCY NOTES")
As used herein, "Foreign Currency" means a currency or currency unit other
than U.S. dollars.
Payments of Interest in a Foreign Currency. The U.S. dollar value,
determined on date of receipt, of a Foreign Currency payment of interest on a
Note (other than OID or market discount) will be includible in the income of a
cash method U.S. Holder regardless of whether the payment is converted to U.S.
dollars.
The U.S. dollar value of interest income (including OID or market discount
and reduced by amortizable bond premium to the extent applicable) that has
accrued and is otherwise required to be taken into account with respect to a
Note during an accrual period will be includible in income of an accrual basis
U.S. Holder. Such U.S. dollar value will be determined by translating such
income at the average rate of exchange for the accrual period or, with respect
to an accrual period that spans two taxable years, at the average rate for the
partial period within the taxable year. A U.S. Holder may elect, however, to
translate such accrued interest income using the rate of exchange on the last
day of the accrual period or, with respect to an accrual period that spans two
taxable years, using the rate of exchange on the last day of the taxable year.
If the last day of an
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accrual period is within five business days of the date of receipt of the
accrued interest, a U.S. Holder may translate such interest using the rate of
exchange on the date of receipt. The above election will apply to other debt
obligations held by the U.S. Holder and may not be changed without the consent
of the IRS. A U.S. Holder should consult a tax advisor before making the above
election. A U.S. Holder will recognize exchange gain or loss (which will be
treated as ordinary income or loss) with respect to accrued interest income on
the date such income is received. The amount of ordinary income or loss
recognized will equal the difference, if any, between the U.S. dollar value of
the Foreign Currency payment received (determined on the date such payment is
received) in respect of such accrual period and the U.S. dollar value of
interest income that has accrued during such accrual period (as determined
above).
Sale and Retirement of Notes. A U.S. Holder's tax basis in a Foreign
Currency Note will be the U.S. dollar value of the Foreign Currency amount paid
for such Foreign Currency Note determined at the time of such purchase. To the
extent the amount realized on sale, exchange or retirement of a Foreign Currency
Note represents accrued but unpaid interest, such amounts must be taken into
account as interest income, with exchange gain or loss computed as described in
"Payments of Interest in a Foreign Currency" above. If a U.S. Holder receives
Foreign Currency on such a sale, exchange or retirement, the amount realized
will be based on the U.S. dollar value of the Foreign Currency on the date the
payment is received or the Note is disposed of (or deemed disposed of as a
result of a material change in the terms of such Note). In the case of a Note
that is denominated in Foreign Currency and is traded on an established
securities market, a cash basis U.S. Holder (or, upon election, an accrual basis
U.S. Holder) will determine the U.S. dollar value of the amount realized by
translating the Foreign Currency payment at the spot rate of exchange on the
settlement date of the sale.
Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense.
Original Issue Discount. In the case of a Foreign Currency Discount Note,
(i) OID is determined in units of the Foreign Currency, (ii) accrued OID is
translated into U.S. dollars in the same manner as interest income accrued by an
accrual basis U.S. Holder, described in "Payments of Interest in a Foreign
Currency" above, and (iii) the amount of Foreign Currency gain or loss on the
accrued OID is determined by comparing the amount of income received
attributable to the discount (either upon payment, maturity or an earlier
disposition), as translated into U.S. dollars at the rate of exchange on the
date of such receipt, with the amount of OID accrued, as translated above.
Premium and Market Discount. In the case of a Foreign Currency Note with
market discount, (i) market discount is determined in units of the Foreign
Currency, (ii) accrued market discount taken into account upon the receipt of
any partial principal payment or upon the sale, exchange, retirement or other
disposition of the Note is translated into U.S. dollars at the exchange rate on
such disposition date (and no part of such accrued market discount is treated as
exchange gain or loss) and (iii) accrued market discount currently includible in
income by a U.S. Holder for any accrual period is translated into U.S. dollars
on the basis of the average exchange rate in effect during such accrual period,
and the exchange gain or loss is determined upon the receipt of any partial
principal payment or upon the sale, exchange, retirement or other disposition of
the Note in the manner described in "Payments of Interest in a Foreign Currency"
above with respect to computation of exchange gain or loss on accrued interest
by an accrual basis U.S. Holder.
With respect to a Foreign Currency Note acquired with amortizable bond
premium, such premium is determined in the relevant Foreign Currency and reduces
interest income in units of the Foreign Currency. At the time amortized bond
premium offsets interest income, a U.S. Holder may realize ordinary income or
loss, measured by the difference between exchange rates at that time and at the
time of the acquisition of the Notes.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including OID, if any)
on a Note, unless such non-U.S. Holder is a direct or
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indirect 10% or greater shareholder of the relevant Issuer, a controlled foreign
corporation for U.S. tax purposes that is related to such Issuer (directly or
indirectly) through stock ownership or a bank receiving interest described in
section 881(c)(3)(A) of the Code. To qualify for the exemption from taxation,
the last United States payor in the chain of payment prior to payment to a
non-U.S. Holder (the "Withholding Agent") must have received in the year in
which a payment of interest or principal occurs, or in either of the two
preceding calendar years, a statement that (i) is signed by the beneficial owner
of the Note under penalties of perjury, (ii) certifies that such owner is not a
U.S. Holder and (iii) provides the name and address of the beneficial owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by the
beneficial owner to the organization or institution. Recently adopted Treasury
Regulations provide alternative methods for satisfying these certification
requirements with respect to payments made after December 31, 1998.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the
relevant Issuers or, at the time of such individual's death, payments in respect
of the Notes would have been effectively connected with the conduct by such
individual of a trade or business in the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a Note to (or through) the U.S. office of a
broker, the broker must withhold 31% of the entire purchase price, unless either
(i) the broker determines that the seller is a corporation or other exempt
recipient or (ii) the seller provides, in the required manner, certain
identifying information and, in the case of a non-U.S. Holder, certifies that
such seller is a non-U.S. Holder (and certain other conditions are met). Such a
sale must also be reported by the U.S. broker (and by a broker who is a
controlled foreign corporation for U.S. tax purposes, or a foreign person 50% or
more of whose gross income from all sources for the three-year period ending
with the close of its taxable year preceding the payment was effectively
connected with a U.S. trade or business) to the IRS, unless either (i) the
broker determines that the seller is an exempt recipient or (ii) the seller
certifies its non-U.S. status (and certain other conditions are met).
Certification of the registered owner's non-U.S. status normally would be made
on an IRS Form W-8 under penalties of perjury, although in certain cases it may
be possible to submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
S-22
<PAGE> 23
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Distribution
Agreement, the Notes are being offered on a continuing basis for sale by the
Company through Goldman, Sachs & Co., Banc One Capital Corporation, Credit
Suisse First Boston Corporation, J.P. Morgan Securities Inc., Lehman Brothers
Inc., Salomon Brothers Inc and UBS Securities LLC (each of them, an "Agent" and,
collectively, the "Agents"), each of which has agreed to use its reasonable
efforts to solicit purchasers of the Notes. Unless otherwise agreed, the Company
will pay each Agent a commission which, depending on the maturity of the Notes,
will range from .125% to 1.000% of the principal amount of any Note sold through
such Agent. The Company may also sell Notes to an Agent, as principal, at a
discount from the principal amount thereof, and the Agent may later resell such
Notes to investors and other purchasers at varying prices related to prevailing
market prices at the time of resale as determined by such Agent. The Notes may
also be sold by the Company directly to investors in those jurisdictions in
which it is permitted to do so and to or through such other agents as the
Company shall designate from time to time. No commission will be payable on
Notes sold directly to investors by the Company. The Agents may sell to or
through dealers who may resell to investors, and the Agents may pay all or part
of their discount or commission to such dealers, such dealers may be deemed
"underwriters" within the meaning of the Act.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject orders in whole or in part whether placed
directly with the Company or through one of the Agents. Each Agent will have the
right, in its discretion reasonably exercised, to reject any offer to purchase
Notes solicited by it, in whole or in part.
Unless set forth in the Pricing Supplement, payment of the purchase price
of the Notes will be required to be made in immediately available funds in New
York City on the date of settlement.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each of the Agents may from time to
time purchase and sell Notes in the secondary market but it is not obligated to
do so, and there can be no assurance that there will be a secondary market for
the Notes or liquidity in the secondary market if one develops. From time to
time, each of the Agents may make a market in the Notes, but it is not obligated
to do so and may discontinue market-making at any time without notice.
The Company has agreed to indemnify each of the Agents against, or to make
contributions relating to, certain liabilities, including liabilities under such
Act. The Company has agreed to reimburse each of the Agents for certain
expenses. Each of the Agents may engage in transactions with, or perform
services for, the Company in the ordinary course of business.
In connection with the offering, the Agents may purchase and sell the Notes
in the open market. These transactions may include overallotment and stabilizing
transactions and purchases to cover short positions created by the Agents in
connection with the offering. Stabilizing transactions consist of certain kinds
of purchases for the purpose of preventing or retarding a decline in the price
of the Notes; and short positions created by the Agents involve the sale by the
Agents of a greater aggregate principal amount of Notes than they are required
to purchase from the Company in the offering. The Agents also may impose a
penalty bid, whereby selling concessions allowed to broker-dealers in respect of
the securities sold in the offering may be reclaimed by the Agents if such Notes
are repurchased by the Agents in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Notes, which may be higher than the price that might otherwise prevail in the
open market; and these activities, if commenced, may be discontinued at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
One of the Agents, Banc One Capital Corporation ("BOCC"), is an affiliate
of the Company. The participation of BOCC in the offer and sale of the Notes as
described herein complies and will comply with Rule 2720 of the Conduct Rules of
the National Association of Securities Dealers, Inc. (the "NASD") regarding the
offer and sale of securities of an affiliate. No NASD member participating in
offers and sales of securities will execute a transaction in the Notes in a
discretionary account without the prior specific written
S-23
<PAGE> 24
approval of the member's customer. Any obligations of BOCC are the sole
obligations of BOCC and do not create any obligations on the part of the Company
or any other affiliate of BOCC.
This Prospectus Supplement and Prospectus may be used by BOCC in connection
with offers and sales related to secondary market transactions in the Notes.
BOCC may act as principal or agent in such transactions. Such sales will be made
at prices related to prevailing market prices at the time of sale.
S-24
<PAGE> 25
PROSPECTUS
[BANK ONE LOGO]
BANC ONE CORPORATION
DEBT SECURITIES AND DEBT WARRANTS
CURRENCY WARRANTS, STOCK-INDEX WARRANTS AND OTHER WARRANTS
PREFERRED STOCK, DEPOSITARY SHARES AND PREFERRED STOCK WARRANTS
COMMON STOCK AND COMMON STOCK WARRANTS
BANC ONE CORPORATION (the "Company") may issue from time to time, together
or separately, (i) in one or more series, unsecured debt securities ("Debt
Securities"), which may be either senior (the "Senior Securities") or
subordinated (the "Subordinated Securities") in priority of payment, both of
which may be convertible or exchangeable into securities or indebtedness of any
kind of the Company or any other issuer or obligor; (ii) warrants ("Debt
Warrants") to purchase Debt Securities; (iii) options, warrants or other rights
relating to the exchange of certain currencies ("Currency Warrants"); (iv)
options, warrants or other rights entitling the holder to receive an amount in
cash determined by reference to increases ("Stock-Index Call Warrants") and
decreases ("Stock-Index Put Warrants" and, collectively with Stock-Index Call
Warrants, being referred to herein as the "Stock-Index Warrants") in the level
of a specified stock-index which may be based on one or more U.S. or foreign
stocks or a combination thereof; (v) options, warrants or other rights relating
to other items or indices ("Other Warrants"); (vi) shares of the Company's Class
A Preferred Stock or Class C Preferred Stock (collectively, "Preferred Stock")
which may be convertible into shares of common stock, no par value per share, of
the Company ("Common Stock") or exchangeable for Debt Securities; (vii) shares
of Preferred Stock represented by depositary shares ("Depositary Shares");
(viii) warrants to purchase shares of Preferred Stock ("Preferred Stock
Warrants"); (ix) warrants to purchase shares of Common Stock ("Common Stock
Warrants"); and (x) Common Stock, in each case in amounts, at prices and on
terms to be determined at the time of the offering. The Debt Warrants, Currency
Warrants, Stock-Index Warrants, Other Warrants, Preferred Stock Warrants and
Common Stock Warrants are collectively referred to herein as the "Warrants"; and
the Debt Securities, Warrants, shares of Preferred Stock, Depositary Shares and
shares of Common Stock are collectively referred to herein as the "Securities".
The Company may issue Securities for proceeds up to an aggregate of
$4,000,000,000, or the equivalent thereof if any of the Securities are
denominated in a foreign currency or a foreign currency unit, including the
European Currency Unit ("ECU"). The Securities of each series will be offered on
terms determined at the time of sale. The Securities may be sold for U.S.
dollars, foreign currencies or foreign currency units, and the principal of, and
any interest on, the Securities may be payable in U.S. dollars, foreign
currencies or foreign currency units. (Continued)
------------------------------
THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY
BANK OR NONBANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER 30, 1997.
<PAGE> 26
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Securities will be
unsecured and subordinated as described under "Subordinated Securities".
Unless otherwise specified in the Prospectus Supplement relating to
Subordinated Securities, payment of the principal of Subordinated Securities may
be accelerated only in the case of certain events involving the bankruptcy or
insolvency of the Company, and no right of acceleration will exist in the case
of default in the payment of principal or interest or in the performance of any
covenant.
When a particular series of Securities, in respect of which this Prospectus
is being delivered, is offered, a supplement to this Prospectus (the "Prospectus
Supplement") setting forth certain terms of the offered Securities will be
delivered together with this Prospectus. The applicable Prospectus Supplement,
among other things and where applicable, will include: (i) with regard to Debt
Securities, the specific designation, priority, aggregate principal amount,
currency or currency unit, rate (or method of calculation) and time of payment
of any interest, authorized denominations, maturity, offering price, place or
places of payment, redemption terms, terms of any repayment at the option of the
holder, special provisions relating to Debt Securities in bearer form, terms for
sinking fund payments, terms for conversion or exchange into other securities,
provisions regarding original issue discount securities and other terms of such
Debt Securities; (ii) with regard to Warrants, where applicable, the duration,
aggregate amount, offering price, exercise price and detachability; (iii) with
regard to Debt Warrants, Preferred Stock Warrants and Common Stock Warrants, the
applicable type and amount of Securities covered thereby; (iv) with regard to
Stock-Index Warrants or Other Warrants, the applicable securities index or other
items or indices with respect to which such warrants shall apply and the method
of determining the cash value payable in connection with the exercise of such
warrants; (v) with regard to Currency Warrants, the currencies to be compared,
the method of determining the cash value payable in connection with the exercise
of such Currency Warrants, the manner in which such Currency Warrants may be
exercised and any restrictions on exercise of such Currency Warrants; (vi) with
regard to Preferred Stock, the specific number of shares, title, stated value
and liquidation preference of each share, issuance price, dividend rate or
method of calculation, dividend periods, dividend payment dates, voting rights,
any redemption or sinking fund provisions, any conversion or exchange
provisions, whether fractional interests in shares of Preferred Stock will be
offered through depositary arrangements and other specific terms of each series
of Preferred Stock; and (vii) in the case of Depositary Shares, the fraction of
a share of Preferred Stock which each such Depositary Share will represent.
The Prospectus Supplement will also contain information, where applicable,
about certain U.S. federal income tax considerations relating to, and any
listing on a securities exchange of, the Securities covered by the Prospectus
Supplement.
The Securities may be sold by the Company directly, through agents
designated from time to time, through underwriting syndicates led by one or more
managing underwriters or through one or more underwriters acting alone. If any
agent of the Company, or any underwriter, is involved in the sale of the
Securities, the name of such agent or underwriter, the principal or stated
amount to be purchased by it, any applicable commissions or discounts and the
net proceeds to the Company from such sale will be set forth in, or may be
calculated from, the Prospectus Supplement. The aggregate net proceeds to the
Company from the sale of all the Securities will be the public offering or
purchase price of the Securities sold less the aggregate of such commissions and
discounts and other expenses of issuance and distribution. An affiliate of the
Company may from time to time act as an agent or underwriter in connection with
the sale of Securities to the extent permitted by applicable law. See "Plan of
Distribution".
This Prospectus and related Prospectus Supplements may be used by an
affiliate of the Company in connection with offers and sales related to
secondary market transactions in the Securities to the extent permitted by
applicable law. Such affiliate may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing market
prices at the time of sale.
<PAGE> 27
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFERING MADE
HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANOTHER PERSON. THIS
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Information, as of particular dates, concerning
directors and executive officers, their compensation, options granted to them,
the principal holders of securities of the Company and any material interest of
such persons in transactions with the Company is disclosed in proxy statements
distributed to shareholders of the Company and filed with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the Public Reference Room of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and the Commission's Regional Offices at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center
(13th Floor), New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, such material may be
accessed electronically at the Commission's site on the World Wide Web located
at http://www.sec.gov. Such reports, proxy statements and other material
concerning the Company may also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities being offered by this Prospectus. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. For further information with respect to the Company and the
Securities, reference is made to the Registration Statement, including the
exhibits thereto. The Registration Statement may be inspected by anyone without
charge at the principal office of the Commission in Washington, D.C. and copies
of all or any part of it may be obtained from the Commission upon payment of the
prescribed fees.
2
<PAGE> 28
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to Section 13 of the Exchange Act are incorporated herein by reference:
(i) The Company's Annual Report on Form 10-K for the year ended December
31, 1996 (as amended by Form 10-K/A filed March 21, 1997 and Form 10-K/A
filed June 30, 1997);
(ii) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997; and
(iii) The Company's Current Reports on Form 8-K filed January 28, 1997,
January 29, 1997, April 17, 1997, April 24, 1997, July 14, 1997 (as
amended by Form 8-K/A filed August 13, 1997), July 15, 1997, August 29,
1997 (as amended by Form 8-K/A filed September 2, 1997) and September
25, 1997.
All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS MAY OBTAIN WITHOUT CHARGE, UPON
WRITTEN OR ORAL REQUEST, A COPY OF ANY OF THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN, EXCEPT FOR THE EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS).
REQUESTS SHOULD BE ADDRESSED TO BANC ONE CORPORATION, DEPARTMENT OH1-0251,100
EAST BROAD STREET, COLUMBUS, OHIO 43271-0251, ATTENTION: INVESTOR RELATIONS,
(614) 248-6889.
3
<PAGE> 29
BANC ONE CORPORATION
The Company is a multi-bank holding company that, at June 30, 1997,
operated banking offices in Arizona, Colorado, Illinois, Indiana, Kentucky,
Louisiana, Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin. The Company
also owns nonbank subsidiaries that engage in credit card and merchant
processing, consumer and education finance, mortgage banking, insurance, venture
capital, investment and merchant banking, trust, brokerage, investment
management, equipment leasing and data processing. At June 30, 1997, the Company
had consolidated total assets of $115.5 billion, consolidated total deposits of
$77.0 billion and consolidated total stockholders' equity of $9.8 billion. At
June 30, 1997, no single affiliate bank accounted for more than 20% of the
Company's consolidated total assets.
Since its formation in 1968, the Company has acquired over 100 banking
institutions. The Company continues to explore opportunities to acquire banks
and nonbank companies permitted by the Bank Holding Company Act of 1956, as
amended (the "BHCA"). Discussions are continually being carried on relating to
such acquisitions. It is not presently known whether, or on what terms, such
discussions will result in further acquisitions. Such acquisitions may be
pending, from time to time, during the time that the Securities are being
offered.
The Company is a legal entity separate and distinct from its affiliate
banks and its nonbanking 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 and fees from its affiliates. See "Regulatory
Matters--Dividend Restrictions" for a discussion of the restrictions on the
affiliate banks' ability to pay dividends to the Company.
The Company is incorporated in Ohio and has functioned as a multi-bank
holding company since 1968. Its executive offices are located at 100 East Broad
Street, Columbus, Ohio 43271, and its telephone number is (614) 248-5944.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
SIX MONTHS ENDED -----------------------------------------
JUNE 30, 1997 1996 1995 1994 1993 1992
---------------- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Excluding interest on deposits........ 1.86x 3.07x 3.24x 3.48x 5.82x 4.58x
Including interest on deposits........ 1.32 1.68 1.64 1.71 1.96 1.56
</TABLE>
Earnings are comprised of income before income taxes and change in
accounting principle plus fixed charges. Fixed charges include interest expense
(including the interest factor of capitalized leases, capitalized interest and
amortization of deferred debt expense) plus the portion of rental payments under
operating leases deemed to be interest.
USE OF PROCEEDS
The Company currently intends to use the net proceeds from the sale of any
Securities for general corporate purposes, which may include the reduction of
short-term indebtedness, investments at the holding company level, investments
in or extensions of credit to its affiliates and other banks and companies
engaged in other financial service activities, possible acquisitions and such
other purposes as may be stated in any Prospectus Supplement. Pending such use,
the net proceeds may be temporarily invested. The precise amounts and timing of
the application of proceeds will depend upon the funding requirements of the
Company and its affiliates and the availability of other funds. Except as may be
described in any Prospectus Supplement, specific allocations of the proceeds to
such purposes will not have been made at the date of such Prospectus Supplement.
Based upon the historical and anticipated future growth of the Company and the
financial needs of its affiliates, the Company may engage in additional
financings of a character and amount to be determined as the need arises.
4
<PAGE> 30
REGULATORY MATTERS
The following discussion sets forth certain of the material elements of the
regulatory framework applicable to bank holding companies and their subsidiaries
and provides certain specific information relevant to the Company. This
regulatory framework is intended primarily for the protection of depositors and
the federal deposit insurance funds and not for the protection of security
holders. To the extent that the following information describes statutory and
regulatory provisions, it is qualified in its entirety by reference to those
provisions. A change in the statutes, regulations or regulatory policies
applicable to the Company or its subsidiaries may have a material effect on the
business of the Company.
GENERAL
As a bank holding company, the Company is subject to regulation under the
BHCA, and 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 voting shares or substantially all the assets
of any company, including a bank, without the Federal Reserve's prior approval.
In addition, bank holding companies generally may engage, directly or
indirectly, only in banking and such other activities as are determined by the
Federal Reserve to be closely related to banking.
Various governmental requirements, including Sections 23A and 23B of the
Federal Reserve Act, limit borrowings by the Company and its nonbank
subsidiaries from the Company's affiliate banks, and 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 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. One of
the Company's affiliate banks is a federal savings bank subject to regulation by
the Office of Thrift Supervision ("OTS") and the FDIC. The Company and its
subsidiaries also are affected by the fiscal and monetary policies of the
federal government and the Federal Reserve, and by various other governmental
requirements and regulations.
LIABILITY FOR BANK SUBSIDIARIES
The Federal Reserve has a policy to the effect that a bank holding company
is expected to act as a source of financial and managerial strength to each of
its subsidiary banks and to maintain resources adequate to support each such
subsidiary bank. This support may be required at times when the Company may not
have the resources to provide it. In addition, Section 55 of the National Bank
Act permits the OCC to order the pro rata assessment of shareholders of a
national bank whose capital has become impaired. If a shareholder fails within
three months to pay such an assessment, the OCC can order the sale of the
shareholder's stock to cover the deficiency. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a subsidiary bank would be
assumed by the bankruptcy trustee and entitled to priority of payment.
Any depository institution insured by the FDIC can be held liable for any
loss incurred, or reasonably expected to be incurred, by the FDIC in connection
with (i) the default of a commonly controlled 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.
Also, in the event that
5
<PAGE> 31
such a default occurred with respect to a bank, any loans to the bank from its
parent holding company would be subordinate in right of payment to payment of
the bank's depositors and certain of its other obligations.
CAPITAL REQUIREMENTS
The Company is subject to capital requirements and guidelines imposed by
the Federal Reserve, which are substantially similar to the capital requirements
and guidelines imposed by the Federal Reserve, the OCC, the FDIC and the OTS on
the depository institutions within their respective jurisdictions. These capital
requirements establish higher capital standards for depository institutions and
bank holding companies that assume greater credit risks. For this purpose, a
depository institution's or holding company's assets and certain specified
off-balance sheet commitments are assigned to four risk categories, each
weighted differently based on the level of credit risk that is ascribed to such
assets or commitments. A depository institutions's or holding company's capital,
in turn, is divided into two tiers: core ("Tier 1") capital, which includes
common equity, non-cumulative perpetual preferred stock and related surplus
(excluding auction rate issues), and minority interests in equity accounts of
consolidated subsidiaries, less goodwill, certain identifiable intangible assets
and certain other assets; and supplementary ("Tier 2") capital, which includes,
among other items, perpetual preferred stock not meeting the Tier 1 definition,
mandatory convertible securities, subordinated debt and allowances for loan and
lease losses, subject to certain limitations, less certain required deductions.
The Company, like other bank holding companies, currently is required to
maintain Tier 1 and total capital (the sum of Tier 1 and Tier 2 capital) equal
to at least 4% and 8% of its total risk-weighted assets, respectively. At June
30, 1997, the Company met both requirements, with Tier 1 and total capital equal
to 8.19% and 12.82% of its total risk-weighted assets, respectively.
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 and meets certain other
requirements, or of 3% plus an additional cushion of at least 100 to 200 basis
points if the holding company does not meet these requirements. At June 30,
1997, the Company's leverage ratio was 7.61%.
The Federal Reserve may set capital requirements higher than the minimums
noted above for holding companies whose circumstances warrant it. For example,
holding companies experiencing or anticipating significant growth may be
expected to maintain capital ratios including tangible capital positions well
above the minimum levels. The Federal Reserve has not, however, imposed any such
special capital requirement on the Company.
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 respective Federal regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a depository institution to capital raising requirements. An
"undercapitalized" depository institution must develop a capital restoration
plan and its parent holding company must guarantee that bank's compliance with
the plan. The liability of the parent holding company under any such guarantee
is limited to the lesser of 5% of the depository institution's assets at the
time it became "undercapitalized" or the amount needed to comply with the plan.
Furthermore, in the event of the bankruptcy of the parent holding company, such
guarantee would take priority over the parent's general unsecured creditors. In
addition, FDICIA requires the various regulatory agencies to prescribe certain
non-capital standards for safety and soundness relating generally to operations
and management, asset quality and executive compensation and permits regulatory
action against a financial institution that does not meet such standards.
The Federal Reserve, the FDIC, the OCC and the OTS have adopted rules to
incorporate market and interest rate risk components into their risk-based
capital standards.
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DIVIDEND RESTRICTIONS
Various federal and state statutory provisions limit the amount of
dividends the Company's affiliate banks can pay to the Company without
regulatory approval. The approval of the appropriate bank regulator is required
for any dividend by a national bank or by a state-chartered bank that is a
member of the Federal Reserve System (a "state member bank") if the total of all
dividends declared by the bank in any calendar year would exceed the total of
its net profits, as defined by regulatory agencies, for such year combined with
its retained net profits for the preceding two years. In addition, a national
bank or a state member bank may not pay a dividend in an amount greater than its
net profits then on hand. At September 30, 1997, $1.0 billion of the total
stockholders' equity of the affiliate banks was available for payment of
dividends to the Company without approval by the applicable regulatory
authority.
In addition, federal bank regulatory authorities have authority to prohibit
the Company's affiliate banks from engaging in an unsafe or unsound practice in
conducting their business. The payment of dividends, depending upon the
financial condition of the bank in question, could be deemed to constitute such
an unsafe or unsound practice. The ability of the Company's affiliate banks to
pay dividends in the future is presently, and could be further, influenced by
bank regulatory policies and capital guidelines.
DEPOSIT INSURANCE ASSESSMENTS
The deposits of each of the Company's affiliate banks are insured up to
regulatory limits by the FDIC and, accordingly, are subject to deposit insurance
assessments to maintain the Bank Insurance Fund ("BIF") and Savings Association
Insurance Fund ("SAIF") administered by the FDIC. The FDIC has adopted
regulations establishing a permanent risk-related deposit insurance assessment
system. Under this system, the FDIC places each insured bank in one of nine risk
categories based on (a) the bank's capitalization and (b) supervisory
evaluations provided to the FDIC by the institution's primary federal regulator.
Each insured bank's insurance assessment rate is then determined by the risk
category in which it is classified by the FDIC.
Effective January 1, 1997, the annual insurance premiums on bank deposits
insured by the BIF and SAIF vary between $0.00 per $100 of deposits for banks
classified in the highest capital and supervisory evaluation categories to $0.27
per $100 of deposits for banks classified in the lowest capital and supervisory
evaluation categories.
The Deposit Insurance Funds Act of 1996 ("DIFA") provides for assessments
to be imposed on insured depository institutions with respect to deposits
insured by the BIF and the SAIF (in addition to assessments currently imposed on
depository institutions with respect to BIF- and SAIF-insured deposits) to pay
for the cost of Financing Corporation ("FICO") funding. The FDIC established the
FICO assessment rates effective January 1, 1997 at $0.013 per $100 annually for
BIF-assessable deposits and $0.0648 per $100 annually for SAIF-assessable
deposits. The Company's affiliate banks held approximately $5.5 billion of
SAIF-assessable deposits as of June 30, 1997. The FICO assessments do not vary
depending upon a depository institution's capitalization or supervisory
evaluations. The Company currently estimates its FICO assessments may amount to
up to $9.0 million after-tax in 1997 with similar assessments per year through
1999 (or earlier if no savings associations exist prior to December 31, 1999) in
connection with such funding.
DEPOSITOR PREFERENCE STATUTE
Federal legislation has been enacted providing that deposits and certain
claims for administrative expenses and employee compensation against an insured
depository institution would be afforded a priority over other general unsecured
claims against such institution, including federal funds and letters of credit,
in the "liquidation or other resolution" of the institution by any receiver.
BROKERED DEPOSITS
Under FDIC regulations, no FDIC-insured depository institution can accept
brokered deposits unless it (a) is well capitalized, or (b) is adequately
capitalized and receives a waiver from the FDIC. In addition, these regulations
prohibit any depository institution that is not well capitalized from (i) paying
an interest rate
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on deposits in excess of 75 basis points over certain prevailing market rates or
(ii) offering "pass through" deposit insurance on certain employee benefit plan
accounts unless it provides certain notice to affected depositors.
INTERSTATE BANKING
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 ("Riegle-Neal"), subject to certain concentration limits, (a) bank holding
companies such as the Company are permitted, beginning September 29, 1995, 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, again beginning
September 29, 1995, 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, beginning June
1, 1997, to acquire branch offices outside their home states by merging with
out-of-state banks, purchasing branches in other states, and establishing de
novo branch offices in other states; provided that, in the case of any such
purchase or opening of individual branches, the host state has adopted
legislation "opting in" to those provisions of Riegle-Neal; and provided that,
in the case of a merger with a bank located in another state, the host state has
not adopted legislation "opting out" of that provision of Riegle-Neal. The
Company might use Riegle-Neal to acquire banks in additional states and to
consolidate its affiliate banks under a smaller number of separate charters.
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DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities will constitute either Senior Securities or
Subordinated Securities. The Senior Securities will be issued under an Indenture
dated as of March 3, 1997 (the "Senior Indenture") between the Company and The
Chase Manhattan Bank ("Chase"), as Trustee. The Subordinated Securities will be
issued under an Indenture dated as of March 3, 1997 (the "Subordinated
Indenture") between the Company and Chase, as Trustee. The Senior Indenture and
the Subordinated Indenture are collectively referred to herein as the
"Indentures". References to the "Trustee" shall mean Chase in its capacity as
trustee under the Senior Indenture or the Subordinated Indenture, as applicable.
The statements under this caption are brief summaries of certain provisions
contained in the Indentures, do not purport to be complete and are qualified in
their entirety by reference to the applicable Indenture, copies of which are
exhibits to the Registration Statement. Whenever defined terms are used but not
defined herein, such terms shall have the meanings ascribed to them in the
applicable Indenture, it being intended that such defined terms shall be
incorporated herein by reference.
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of any Debt Securities
and the extent, if any, to which such general provisions may apply to such Debt
Securities will be described in the Prospectus Supplement relating to such Debt
Securities.
Neither of the Indentures limits the aggregate principal amount of Debt
Securities which may be issued thereunder, and each Indenture provides that Debt
Securities of any series may be issued thereunder up to the aggregate principal
amount which may be authorized from time to time by the Company and may be
denominated in any currency or currency unit designated by the Company. Neither
the Indentures nor the Debt Securities will limit or otherwise restrict the
amount of other indebtedness which may be incurred or the other securities which
may be issued by the Company or any of its subsidiaries.
Debt Securities of a series may be issuable in registered form without
coupons ("Registered Securities"), in bearer form with or without coupons
attached ("Bearer Securities") or in the form of one or more global securities
in registered or bearer form (each a "Global Security"). Bearer Securities, if
any, will be offered only to non-United States persons and to offices located
outside the United States of certain United States financial institutions.
Reference is made to the Prospectus Supplement for a description of the
following terms, where applicable, of each series of Debt Securities in respect
of which this Prospectus is being delivered: (1) the title of such Debt
Securities; (2) the limit, if any, on the aggregate principal amount or
aggregate initial public offering price of such Debt Securities; (3) the
priority of payment of such Debt Securities; (4) the price or prices (which may
be expressed as a percentage of the aggregate principal amount thereof) at which
the Debt Securities will be issued; (5) the date or dates on which the principal
of the Debt Securities will be payable; (6) the rate or rates (which may be
fixed or variable) per annum at which such Debt Securities will bear interest,
if any, or the method of determining the same; (7) the date or dates from which
such interest, if any, on the Debt Securities will accrue, the date or dates on
which such interest, if any, will be payable, the date or dates on which payment
of such interest, if any, will commence and the Regular Record Dates for such
Interest Payment Dates; (8) 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;
(9) each office or agency where, subject to the terms of the applicable
Indenture, the Debt Securities may be presented for registration of transfer or
exchange; (10) the place or places where the principal of (and premium, if any)
and interest, if any, on the Debt Securities will be payable; (11) the date or
dates, if any, after which such Debt Securities may be redeemed or purchased in
whole or in part, at the option of the Company or mandatorily pursuant to any
sinking, purchase or analogous fund or may be required to be purchased or
redeemed at the option of the holder, and the redemption or repayment price or
prices thereof; (12) the terms, if any, upon which the Debt Securities may be
convertible into or exchanged for securities or indebtedness of any kind of the
Company or of any other issuer or obligor and the terms and conditions upon
which such conversion or exchange shall be effected, including the initial
conversion or exchange price or rate, the conversion period and any other
additional provisions; (13) the
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denomination or denominations in which such Debt Securities are authorized to be
issued; (14) the currency, currencies or units (including ECU) based on or
related to currencies for which the Debt Securities may be purchased and the
currency, currencies or currency units (including ECU) in which the principal
of, premium, if any, and any interest on such Debt Securities may be payable;
(15) any index used to determine the amount of payments of principal of,
premium, if any, and interest on the Debt Securities; (16) whether any of the
Debt Securities are to be issuable as Bearer Securities and/or Registered
Securities, and if issuable as Bearer Securities, any limitations on issuance of
such Bearer Securities and any provisions regarding the transfer or exchange of
such Bearer Securities (including exchange for registered Debt Securities of the
same series); (17) the payment of any additional amounts with respect to the
Debt Securities; (18) whether any of the Debt Securities will be issued as
Original Issue Discount Securities (as defined below); (19) information with
respect to book-entry procedures, if any; (20) any additional covenants or
Events of Default not currently set forth in the applicable Indenture; and (21)
any other terms of such Debt Securities not inconsistent with the provisions of
the applicable Indenture.
If any of the Debt Securities are sold for one or more foreign currencies
or foreign currency units or if the principal of, premium, if any, or interest
on any series of Debt Securities is payable in one or more foreign currencies or
foreign currency units, the restrictions, elections, tax consequences, specific
terms and other information with respect to such issue of Debt Securities and
such currencies or currency units will be set forth in the Prospectus Supplement
relating thereto. 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
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) ("Original Issue Discount Securities"), to be sold at a
substantial discount below the stated principal amount thereof due at the stated
maturity of such Debt Securities. There may not be any periodic payments of
interest on Original Issue Discount Securities as defined herein. In the event
of an acceleration of the maturity of any Original Issue Discount Security, the
amount payable to the holder of such Original Issue Discount Security upon such
acceleration will be determined in accordance with the Prospectus Supplement,
the terms of such security and the Indenture, but will be an amount less than
the amount payable at the maturity of the principal of such Original Issue
Discount Security. Federal income tax considerations with respect to Original
Issue Discount Securities will be set forth in the Prospectus Supplement
relating thereto.
REGISTRATION AND TRANSFER
Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities will be issued only as Registered Securities. If Bearer Securities
are issued, the United States Federal income tax consequences and other special
considerations, procedures and limitations applicable to such Bearer Securities
will be described in the Prospectus Supplement relating thereto.
Debt Securities issued as Registered Securities will be without coupons.
Debt Securities issued as Bearer Securities shall have interest coupons
attached, unless issued as zero coupon securities.
Registered Securities (other than a Global Security) may be presented for
transfer (with the form of transfer endorsed thereon duly executed) or exchanged
for other Debt Securities of the same series at the office of the Note Registrar
specified according to the terms of the applicable Indenture. The Company has
agreed in each of the Indentures that, with respect to Registered Securities
having The City of New York as a place of payment, the Company will appoint a
Note Registrar or Co-Note Registrar located in The City of New York for such
transfer or exchange. Such transfer or exchange shall be made without service
charge, but the Company may require payment of any taxes or other governmental
charges as described in the applicable Indenture. Provisions relating to the
exchange of Bearer Securities for other Debt Securities of the same series
(including, if applicable, Registered Securities) will be described in the
applicable Prospectus Supplement. In no event, however, will Registered
Securities be exchangeable for Bearer Securities.
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GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the Prospectus Supplement
relating to such series. Global Securities may be issued in either registered or
bearer form and in either temporary or permanent form. Unless and until it is
exchanged in whole or in part for the individual Debt Securities represented
thereby, a Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities and certain limitations and restrictions relating to a series
of Bearer Securities in the form of one or more Global Securities will be
described in the Prospectus Supplement relating to such series. The Company
anticipates that the following provisions will generally apply to depositary
arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary. Such accounts shall be designated by the
underwriters or agents with respect to such Debt Securities. Ownership of
beneficial interests in a Global Security will be limited to persons that have
accounts with the applicable Depositary ("participants") or persons that may
hold interests through participants. Ownership of beneficial interests in such
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants). The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Debt Securities of such series in definitive form and will
not be considered the owners or holders thereof under the Indenture governing
such Debt Securities.
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. Neither the Company, the Trustee for such
Debt Securities, any Paying Agent, nor the Note Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Subject to certain restrictions relating to Bearer Securities, the Company
expects that the Depositary for a series of Debt Securities or its nominee, upon
receipt of any payment of principal, premium or interest in respect of a
permanent Global Security representing any of such Debt Securities will credit
participants' accounts immediately with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security for such Debt Securities as shown on the records of such Depositary or
its nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name". Such payments will be the responsibility of such participants.
With respect to owners of
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beneficial interests in a temporary Global Security representing Bearer
Securities, receipt by such beneficial owners of payments of principal, premium
or interest in respect thereof will be subject to additional restrictions.
If the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue individual Debt
Securities of such series in definitive form in exchange for the Global Security
representing such series of Debt Securities. In addition, the Company may at any
time and in its sole discretion, subject to any limitations described in the
Prospectus Supplement relating to such Debt Securities, determine not to have
any Debt Securities of a series represented by one or more Global Securities
and, in such event, will issue individual Debt Securities of such series in
definitive form in exchange for the Global Security or Securities representing
such series of Debt Securities. Further, if the Company so specifies with
respect to the Debt Securities of a series, an owner of a beneficial interest in
a Global Security representing Debt Securities of such series may, on terms
acceptable to the Company, the Trustee and the Depositary for such Global
Security, receive Debt Securities of such series in definitive form in exchange
for such beneficial interests, subject to any limitations described in the
Prospectus Supplement relating to such Debt Securities. In any such instance, an
owner of a beneficial interest in a Global Security will be entitled to physical
delivery in definitive form of Debt Securities of the series represented by such
Global Security equal in principal amount to such beneficial interest and to
have such Debt Securities registered in its name (if the Debt Securities of such
series are issuable as Registered Securities). Debt Securities of such series so
issued in definitive form will be issued (a) as Registered Securities in
denominations, unless otherwise specified by the Company, of $1,000 and integral
multiples thereof if the Debt Securities of such series are issuable as
Registered Securities, (b) as Bearer Securities in the denomination, unless
otherwise specified by the Company, of $5,000 if the Debt Securities of such
series are issuable as Bearer Securities or (c) as either Registered or Bearer
Securities, if the Debt Securities of such series are issuable in either form.
Certain restrictions may apply, however, on the issuance of a Bearer Security in
definitive form in exchange for an interest in a Global Security.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, premium, if any, and any interest on Registered Securities will
be made at the office of such Paying Agent or Paying Agents as the Company may
designate from time to time, except that, at the option of the Company, payment
of any interest may be made (i) by check mailed to the address of the person
entitled thereto as such address shall appear in the applicable Note Register or
(ii) by wire transfer to an account maintained by the person entitled thereto as
specified in the applicable Note Register. Unless otherwise indicated in an
applicable Prospectus Supplement, payment of any installment of interest on
Registered Securities will be made to the person in whose name such Debt
Security is registered at the close of business on the Regular Record Date for
such payment.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, premium, if any, and any interest on Bearer Securities will be
payable, subject to any applicable laws and regulations, at the offices of such
Paying Agents outside the United States as the Company may designate from time
to time, at the option of the Holder, by check or by transfer to an account
maintained by the payee with a bank located outside the United States. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of interest
on Bearer Securities will be made only against surrender of the coupon relating
to such Interest Payment Date. No payment with respect to any Bearer Security
will be made at any office or agency of the Company in the United States or by
check mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States.
CONSOLIDATION, MERGER OR SALE OF ASSETS
Each Indenture provides that the Company may, without the consent of the
holders of any of the Debt Securities outstanding under the applicable
Indenture, consolidate with, merge into or transfer its assets substantially as
an entirety to any person, provided that (i) any such successor assumes the
Company's
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obligations on the applicable Debt Securities and under the applicable
Indenture, (ii) after giving effect thereto, no Event of Default (as defined in
the Senior Indenture) in the case of the Senior Securities, or Default (as
defined in the Subordinated Indenture) in the case of the Subordinated
Securities, shall have happened and be continuing and (iii) certain other
conditions under the applicable Indenture are met. Accordingly, any such
consolidation, merger or transfer of assets substantially as an entirety, which
meets the conditions described above, would not create any Event of Default or
Default which would entitle holders of the Debt Securities, or the Trustee on
their behalf, to take any of the actions described below under "Senior
Securities--Events of Default, Waivers, etc." or "Subordinated
Securities--Events of Default, Waivers, etc."
LEVERAGED AND OTHER TRANSACTIONS
Each Indenture and the Debt Securities do not contain, among other things,
provisions which would afford holders of the Debt Securities protection in the
event of a highly leveraged or other transaction involving the Company which
could adversely affect the holders of Debt Securities.
MODIFICATION OF THE INDENTURE; WAIVER OF COVENANTS
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Debt Securities
of each affected series, modifications and alterations of such Indenture may be
made which affect the rights of the holders of such Debt Securities; provided,
however, that no such modification or alteration may be made without the consent
of the holder of each Debt Security so affected which would, among other things,
(i) change the maturity of the principal of, or of any installment of interest
(or premium, if any) on, any Debt Security issued pursuant to such Indenture, or
reduce the principal amount thereof or any premium thereon, or change the method
of calculation of interest or the currency of payment of principal or interest
(or premium, if any) on, or reduce the minimum rate of interest thereon, or
impair the right to institute suit for the enforcement of any such payment on or
with respect to any such Debt Security, or reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon an
acceleration of the maturity thereof; or (ii) reduce the above-stated percentage
in principal amount of outstanding Debt Securities required to modify or alter
such Indenture.
REGARDING CHASE
Chase is the Trustee under both the Senior Indenture and the Subordinated
Indenture. Chase Manhattan Bank Delaware, an affiliate of Chase, serves as
trustee under the indenture with the Company relating to the Company's 9.875%
Subordinated Notes due March 1, 2009. In addition, the Company maintains other
banking relationships with Chase.
SENIOR SECURITIES
The Senior Securities will be direct, unsecured obligations of the Company
and will rank pari passu with all outstanding unsecured senior indebtedness of
the Company.
EVENTS OF DEFAULT, WAIVERS, ETC.
An Event of Default with respect to Senior Securities of any series is
defined in the Senior Indenture as (i) default in the payment of principal of or
premium, if any, on any of the Senior Securities of that series outstanding
under the Senior Indenture when due; (ii) default in the payment of interest on
any of the Senior Securities of that series outstanding under the Senior
Indenture when due and continuance of such default for 30 days; (iii) default in
the performance of any other covenant of the Company in the Senior Indenture
with respect to Senior Securities of such series and continuance of such default
for 90 days after written notice; (iv) certain events of bankruptcy, insolvency
or reorganization of the Company and (v) any other event that may be specified
in a Prospectus Supplement with respect to any series of Senior Securities.
If an Event of Default with respect to any series of Senior Securities for
which there are Senior Securities outstanding under the Senior Indenture occurs
and is continuing, either the applicable Trustee or the holders
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of not less than 25% in aggregate principal amount of the Senior Securities of
such series outstanding may declare the principal amount (or if such Senior
Securities are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all Senior Securities
of that series to be immediately due and payable. The holders of a majority in
aggregate principal amount of the Senior Securities of any series outstanding
under the Senior Indenture may waive an Event of Default resulting in
acceleration of such Senior Securities, but only if all Events of Default with
respect to Senior Securities of such series have been remedied and all payments
due (other than those due as a result of acceleration) have been made. If an
Event of Default occurs and is continuing, the applicable Trustee may, in its
discretion, and at the written request of holders of not less than a majority in
aggregate principal amount of the Senior Securities of any series outstanding
under the Senior Indenture and upon reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request and
subject to certain other conditions set forth in the Senior Indenture shall,
proceed to protect the rights of the holders of all the Senior Securities of
such series. Prior to acceleration of maturity of the Senior Securities of any
series outstanding under the Senior Indenture, the holders of a majority in
aggregate principal amount of such Senior Securities may waive any past default
under the Senior Indenture except a default in the payment of principal of,
premium, if any, or interest on the Senior Securities of such series.
The Senior Indenture provides that upon the occurrence of an Event of
Default specified in clauses (i) or (ii) of the first paragraph under "--Events
of Defaults, Waivers, etc.", the Company will, upon demand of the applicable
Trustee, pay to it, for the benefit of the holder of any such Senior Security,
the whole amount then due and payable on such Senior Securities for principal,
premium, if any, and interest. The Senior Indenture further provides that if the
Company fails to pay such amount forthwith upon such demand, such Trustee may,
among other things, institute a judicial proceeding for the collection thereof.
The Senior Indenture also provides that notwithstanding any other provision
of the Senior Indenture, the holder of any Senior Security of any series shall
have the right to institute suit for the enforcement of any payment of principal
of, premium, if any, and interest on such Senior Securities when due and that
such right shall not be impaired without the consent of such holder.
The Company is required to file annually with the applicable Trustee a
written statement of officers as to the existence or non-existence of defaults
under the Senior Indenture or the Senior Securities.
SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured obligations of the
Company and, unless otherwise specified in the Prospectus Supplement relating to
a particular series of Subordinated Securities offered thereby, will be subject
to the subordination provisions described below.
SUBORDINATION
It is the intent of the Company that Subordinated Securities issued by the
Company be treated as capital for calculation of regulatory capital ratios. The
Federal Reserve has issued interpretations of its capital regulations
indicating, among other things, that subordinated debt of bank holding companies
issued on or after September 4, 1992 is includable in capital for calculation of
regulatory capital ratios only if the subordination of the debt meets certain
criteria and if the debt may be accelerated only for bankruptcy, insolvency and
similar matters (the "Subordination Interpretations"). Accordingly, the
Subordinated Indenture contains subordination and acceleration provisions for
the Subordinated Securities which are intended to be consistent with the
Subordination Interpretations. Subordinated debt of the Company issued after
September 4, 1992, which meets the Subordination Interpretations are referred to
herein as "New Subordinated Securities". Unless otherwise specified in the
Prospectus Supplement relating to a particular series of Subordinated Securities
offered thereby, Subordinated Securities offered pursuant to this Prospectus
will constitute New Subordinated Securities. See "Events of Default, Defaults,
Waivers, etc." below.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization, the payment of the principal of,
premium, if any, and interest on the Subordinated Securities is
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to be subordinated in right of payment, to the extent provided in the
Subordinated Indenture, to the prior payment in full of all Senior Indebtedness.
In certain events of bankruptcy or insolvency, the payment of the principal of
and interest on the Subordinated Securities (and other New Subordinated
Securities) will, to the extent provided in the Subordinated Indenture, also be
effectively subordinated in right of payment to the prior payment in full of all
General Obligations (as defined below).
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization, the holders of Senior Indebtedness
will first be entitled to receive payment in full of all amounts due or to
become due before the holders of the Subordinated Securities will be entitled to
receive any payment in respect of the principal of, premium, if any, or interest
on the Subordinated Securities. If upon any such payment or distribution of
assets there remain, after giving effect to such subordination provisions in
favor of the holders of Senior Indebtedness, any amounts of cash, property or
securities available for payment or distribution in respect of the New
Subordinated Securities ("Excess Proceeds") and if, at such time, any creditors
in respect of General Obligations have not received payment in full of all
amounts due or to become due on or in respect of such General Obligations, then
such Excess Proceeds shall first be applied to pay or provide for the payment in
full of such General Obligations before any payment or distribution may be made
in respect of the New Subordinated Securities.
In addition, no payment may be made of the principal of, premium, if any,
or interest on the Subordinated Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Subordinated Securities,
at any time when (i) there is a default in the payment of the principal of,
premium, if any, interest on or otherwise in respect of any Senior Indebtedness
or (ii) any event of default with respect to any Senior Indebtedness has
occurred and is continuing, or would occur as a result of such payment on the
Subordinated Securities or any redemption, retirement, purchase or other
acquisition of any of the Subordinated Securities, permitting the holders of
such Senior Indebtedness to accelerate the maturity thereof. Except as described
above, the obligation of the Company to make payment of the principal of,
premium, if any, or interest on the Subordinated Securities will not be
affected.
By reason of such subordination in favor of the holders of Senior
Indebtedness, in the event of a distribution of assets upon any dissolution,
winding up, liquidation or reorganization, certain creditors of the Company who
are not holders of Senior Indebtedness or of the Subordinated Securities may
recover less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than holders of the Subordinated Securities. By reason of the
obligation of the holders of New Subordinated Securities to pay over any Excess
Proceeds to creditors in respect of General Obligations, in the event of a
distribution of assets upon any dissolution, winding up, liquidation or
reorganization, holders of Old Subordinated Securities (as defined herein) may
recover less, ratably, than creditors in respect of General Obligations and may
recover more, ratably, than the holders of New Subordinated Securities.
Subject to payment in full of all Senior Indebtedness, the holders of
Subordinated Securities will be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to Senior Indebtedness. Subject to payment in full of all General
Obligations, the holders of the New Subordinated Securities will be subrogated
to the rights of the creditors in respect of General Obligations to receive
payments or distributions of cash, property or securities of the Company
applicable to such creditors in respect of General Obligations.
Senior Indebtedness is defined in the Subordinated Indenture as the
principal of, premium, if any, and interest on (i) all of the Company's
indebtedness for money borrowed, other than the Subordinated Securities issued
under the Subordinated Indenture, the Company's 7.25% Subordinated Notes Due
August 1, 2002, the Company's 8.74% Subordinated Notes Due September 15, 2003,
the Company's 7.00% Subordinated Notes due July 15, 2005 (the "July 2005
Notes"), the Company's 9.875% Subordinated Notes Due March 1, 2009, the
Company's 10.00% Subordinated Notes Due August 15, 2010, the Company's 7.75%
Subordinated Debentures due on July 15, 2025 (the "July 2025 Debentures") and
the Company's 7.625% Subordinated Debentures due October 15, 2026 (the "October
2026 Debentures") (collectively, all of the foregoing notes and debentures are
hereinafter referred to as the "Existing Subordinated Indebtedness"), whether
outstanding on the date of execution of the Subordinated Indenture or thereafter
created, assumed or incurred, except such
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indebtedness as is by its terms expressly stated to be not superior in right of
payment to the subordinated securities issued under the Subordinated Indenture
or the Existing Subordinated Indebtedness or to rank pari passu with the
subordinated securities issued under the Subordinated Indenture or the Existing
Subordinated Indebtedness; and (ii) any deferrals, renewals or extensions of any
such Senior Indebtedness. The term "indebtedness for money borrowed" as used in
the prior sentence includes, without limitation, any obligation of, or any
obligation guaranteed by, the Company for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligation for the payment of the purchase price
of property or assets. There is no limitation on the issuance of additional
Senior Indebtedness of the Company.
The Subordinated Securities issued under the Subordinated Indenture, the
July 2005 Notes, the July 2025 Debentures and the October 2026 Debentures all
constitute New Subordinated Securities; all other Existing Subordinated
Indebtedness constitutes Old Subordinated Securities.
The Subordinated Securities rank and will rank pari passu with the Existing
Subordinated Indebtedness, subject to the obligations of the holders of
Subordinated Securities (and holders of other New Subordinated Securities) to
pay over any Excess Proceeds to creditors in respect of General Obligations.
Thus, in the event of a distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization, the holders of the New
Subordinated Securities (including holders of the Subordinated Securities
offered hereby) may receive less, ratably, than holders of Old Subordinated
Securities.
Unless otherwise specified in the Prospectus Supplement relating to a
particular series of Subordinated Securities offered thereby, "General
Obligations" means all obligations of the Company to make payment on account of
claims in respect of derivative products such as interest and foreign exchange
rate contracts, commodity contracts and similar arrangements, other than (i)
obligations on account of Senior Indebtedness, (ii) obligations on account of
indebtedness for money borrowed ranking pari passu with or subordinate to the
Subordinated Securities and (iii) obligations which by their terms are expressly
stated not to be superior in right of payment to the Subordinated Securities or
to rank on parity with the Subordinated Securities; provided, however, that
notwithstanding the foregoing, in the event that any rule, guideline or
interpretation promulgated or issued by the Federal Reserve (or other competent
regulatory agency or authority), as from time to time in effect, establishes or
specifies criteria for the inclusion in regulatory capital of subordinated debt
of a bank holding company requiring that such subordinated debt be subordinated
to obligations to creditors in addition to those set forth above, then the term
"General Obligations" shall also include such additional obligations to
creditors, as from time to time in effect pursuant to such rules, guidelines or
interpretations. For purposes of this definition, "claim" shall have the meaning
assigned thereto in Section 101(4) of the Bankruptcy Code of 1978, as amended to
the date of the Subordinated Indenture.
LIMITED RIGHTS OF ACCELERATION
Unless otherwise specified in the Prospectus Supplement relating to any
series of Subordinated Securities, payment of principal of the Subordinated
Securities may be accelerated only in case of the bankruptcy, insolvency or
reorganization of the Company. There is no right of acceleration in the case of
a default in the payment of principal of, premium, if any, or interest on the
Subordinated Securities or the performance of any other covenant of the Company
in the Subordinated Indenture. Payment of principal of the Old Subordinated
Securities may be accelerated in the case of the bankruptcy, insolvency or
reorganization of the Company.
EVENTS OF DEFAULT, DEFAULTS, WAIVERS, ETC.
An Event of Default with respect to Subordinated Securities of any series
is defined in the Subordinated Indenture as certain events involving the
bankruptcy, insolvency or reorganization of the Company and any other Event of
Default provided with respect to Subordinated Securities of that series. A
Default with respect to Subordinated Securities of any series is defined in the
Subordinated Indenture as (i) an Event of Default with respect to such series,
(ii) default in the payment of the principal of or premium, if any, on any
Subordinated Security of such series when due, (iii) default in the payment of
interest upon any Subordinated
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Security of such series when due and the continuance of such default for a
period of 30 days, (iv) default in the performance of any other covenant or
agreement of the Company in the Subordinated Indenture with respect to
Subordinated Securities of such series and continuance of such default for 90
days after written notice or (v) any other Default provided with respect to
Subordinated Securities of any series. If an Event of Default with respect to
any series of Subordinated Securities for which there are Subordinated
Securities outstanding under the Subordinated Indenture occurs and is
continuing, either the applicable Trustee or the holders of not less than 25% in
aggregate principal amount of the Subordinated Securities of such series may
declare the principal amount (or if such Subordinated Securities are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of that series) of all Subordinated Securities of that
series to be immediately due and payable. The holders of a majority in aggregate
principal amount of the Subordinated Securities of any series outstanding under
the Subordinated Indenture may waive an Event of Default resulting in
acceleration of such Subordinated Securities, but only if all Defaults have been
remedied and all payments due (other than those due as a result of acceleration)
have been made. If a Default occurs and is continuing, the Trustee may in its
discretion, and at the written request of holders of not less than a majority in
aggregate principal amount of the Subordinated Securities of any series
outstanding under the Subordinated Indenture and upon reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with
such request and subject to certain other conditions set forth in the
Subordinated Indenture shall, proceed to protect the rights of the holders of
all the Subordinated Securities of such series. Prior to acceleration of
maturity of the Subordinated Securities of any series outstanding under the
Subordinated Indenture, the holders of a majority in aggregate principal amount
of such Subordinated Securities may waive any past default under the
Subordinated Indenture except a default in the payment of principal of, premium,
if any, or interest on the Subordinated Securities of such series.
The Subordinated Indenture provides that in the event of a Default
specified in clauses (ii) or (iii) of the immediately preceding paragraph in
payment of principal of, premium, if any, or interest on any Subordinated
Security of any series, the Company will, upon demand of the applicable Trustee,
pay to it, for the benefit of the holder of any such Subordinated Security, the
whole amount then due and payable on such Subordinated Security for principal,
premium, if any, and interest. The Subordinated Indenture further provides that
if the Company fails to pay such amount forthwith upon such demand, the
applicable Trustee may, among other things, institute a judicial proceeding for
the collection thereof.
The Subordinated Indenture also provides that notwithstanding any other
provision of the Subordinated Indenture, the holder of any Subordinated Security
of any series shall have the right to institute suit for the enforcement of any
payment of principal of, premium, if any, and interest on such Subordinated
Security on the respective Stated Maturities (as defined in the Subordinated
Indenture) expressed in such Subordinated Security and that such right shall not
be impaired without the consent of such holder.
The Company is required to file annually with the applicable Trustee a
written statement of officers as to the existence or non-existence of defaults
under the Subordinated Indenture or the Subordinated Securities.
DESCRIPTION OF DEBT WARRANTS
The Company may issue Debt Warrants for the purchase of Debt Securities.
Debt Warrants may be issued independently or together with any Securities
offered by any Prospectus Supplement and may be attached to or separate from
such Securities. The Debt Warrants are to be issued under warrant agreements
(each a "Debt Warrant Agreement") to be entered into between the Company and a
warrant agent which will be designated in the applicable Prospectus Supplement
(the "Debt Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of Debt Warrants (the "Offered Debt Warrants").
The Debt Warrant Agent will act solely as an agent of the Company in connection
with the Debt Warrants and will not assume any obligation or relationship of
agency or trust for or with any holders or beneficial owners of Debt Warrants.
The following summaries of certain provisions of the form of Debt Warrant
Agreement and form of certificate, if any, representing the Debt Warrants (the
"Debt Warrant Certificates"), do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Debt Warrant Agreement and the Debt Warrant Certificates, respectively,
including the definitions therein of
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certain terms, which Agreement and Certificate, if any, will be filed as
exhibits to or incorporated by reference in the Registration Statement of which
this Prospectus forms a part.
If Debt Warrants are offered, the Prospectus Supplement will describe the
terms of the Offered Debt Warrants, the Debt Warrant Agreement relating to the
Offered Debt Warrants and, if applicable, the Debt Warrant Certificates,
including the following: (1) the offering price; (2) the currency or currency
unit in which the price for the Offered Debt Warrants may be payable; (3) the
designation, aggregate principal amount and terms of the Debt Securities
purchasable upon exercise of the Offered Debt Warrants; (4) if applicable, the
designation and terms of the Securities with which the Offered Debt Warrants are
issued and the number of Offered Debt Warrants issued with each such Security;
(5) if the Debt Securities purchasable upon exercise of Offered Debt Warrants
are denominated in a currency or currency unit other than U.S. dollars, the
denomination of such Debt Securities and the currency or units based on or
relating to currencies (including ECU) in which the principal of, premium, if
any, and interest on such Debt Securities will be payable; (6) if applicable,
the date on and after which the Offered Debt Warrants and the related Securities
will be separately transferable; (7) the principal amount of Debt Securities
purchasable upon exercise of an Offered Debt Warrant and the price at which, and
currency or currency units based on or relating to currencies (including ECU) in
which, such principal amount of Debt Securities may be purchased upon such
exercise; (8) the date on which the right to exercise the Offered Debt Warrants
shall commence and the date on which such right shall expire; (9) if applicable,
a discussion of certain Federal income tax, accounting and other special
considerations, procedures and limitations; (10) whether the Debt Warrants will
be represented by certificates or issued in book-entry form; and (11) any other
terms of the Offered Debt Warrants, including terms, procedures and limitations
relating to the exchange and exercise of the Offered Debt Warrants.
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DESCRIPTION OF CURRENCY WARRANTS
The Company may issue Currency Warrants which, upon exercise at a permitted
time or times in the future, entitle any holder thereof to receive the Cash
Settlement Value (as defined below) of two designated currencies. Currency
Warrants may be issued independently or together with any Securities offered by
any Prospectus Supplement and may be attached to or separate from such
Securities. The Currency Warrants are to be issued under warrant agreements
(each a "Currency Warrant Agreement") to be entered into between the Company and
a warrant agent which will be designated in the applicable Prospectus Supplement
(the "Currency Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of Currency Warrants (the "Offered Currency
Warrants"). The Currency Warrant Agent will act solely as an agent of the
Company in connection with the Currency Warrants and will not assume any
obligation or relationship of agency or trust for or with any holder or
beneficial owners of Currency Warrants. The following summaries of certain
provisions of the form of Currency Warrant Agreement and the form of
certificate, if any, representing the Currency Warrants (the "Currency Warrant
Certificates") do not purport to be complete and are subject to and are
qualified in their entirety by reference to all the provisions of the Currency
Warrant Agreement and the Currency Warrant Certificates, respectively, including
the definitions therein of certain terms, which Agreement and Certificate, if
any, will be filed as an exhibit to or incorporated by reference in the
Registration Statement of which this Prospectus forms a part.
The Currency Warrants will not require, or entitle, any holder thereof to
sell any foreign currency to the Company. The Company will make only a U.S.
dollar cash settlement upon exercise of a Currency Warrant and will not be
obligated to purchase or take delivery of any foreign currency from any holder
of a Currency Warrant.
The "Cash Settlement Value" of an exercised Currency Warrant will be an
amount stated in U.S. dollars which is the greater of (i) zero and (ii) an
amount equal to (a) the nominal amount of such Currency Warrant, minus (b) an
amount equal to the nominal amount of such Currency Warrant times a fraction,
the numerator of which is the Strike Price of such Currency Warrant and the
denominator of which is the Spot Rate of such Currency Warrant on the Exercise
Date. The "nominal amount" of a Currency Warrant refers to the principal amount,
expressed in U.S. dollars, of a currency (the "Base Currency") which is to be
compared to another currency (the "Second Currency") upon exercise of such
Currency Warrant. Unless otherwise specified in the applicable Prospectus
Supplement, the Base Currency shall be U.S. dollars. The "Strike Price" is the
designated rate of exchange of the Base Currency for the Second Currency which
the Company will specify in the Prospectus Supplement relating to the Offered
Currency Warrants. The "Spot Rate" refers to the floating rate of exchange of
the Base Currency for the Second Currency on any given date, as quoted by a
reference bank or banks or other institution at a designated time of day, such
source of quotations and time to be specified in the applicable Prospectus
Supplement. The "Exercise Date" refers to the effective date on which the holder
of a Currency Warrant exercises such Currency Warrant.
If Currency Warrants are offered, the Prospectus Supplement will describe
the terms of the Offered Currency Warrants, the Currency Warrant Agreement
relating to the Offered Currency Warrants and, if applicable, the Currency
Warrant Certificates, including the following: (1) the aggregate number of
Offered Currency Warrants; (2) the nominal amount of each Offered Currency
Warrant; (3) the price of the Offered Currency Warrants; (4) the Base Currency
and the Second Currency; (5) the Strike Price for the Offered Currency Warrants;
(6) the reference bank or banks or other institution and time of day to be used
to determine the Spot Rate; (7) the date on which the right to exercise the
Offered Currency Warrants shall begin and the date on which such right shall
terminate; (8) if applicable, the minimum or maximum amount of Offered Currency
Warrants which may be exercised at any one time; (9) the place or places at
which payment of the Cash Settlement Value is to be made by the Company; (10)
whether the Offered Currency Warrants will be represented by certificates or
issued in book-entry form; (11) the method by which the Offered Currency
Warrants are to be exercised; (12) the Federal income tax consequences and other
special considerations, procedures and limitations applicable to such Offered
Currency Warrants; and (13) any other terms of the Offered Currency Warrants,
including risk factors specifically relating to the Base Currency or Second
Currency and Currency Warrants relating to such currencies.
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DESCRIPTION OF STOCK-INDEX WARRANTS
The Company may issue Stock-Index Warrants which, upon exercise at a
permitted time or times in the future, entitle any holder thereof to receive an
amount of cash determined by references to increases and/or decreases in the
level of a specified stock index. Stock-Index Warrants may be issued
independently or together with other Securities offered by any Prospectus
Supplement and may be attached to or separate from such other Securities. The
Stock-Index Warrants are to be issued under one or more warrant agreements (each
a "Stock-Index Warrant Agreement") to be entered into between the Company and a
bank or trust company, as stock-index warrant agent which will be designated in
the applicable Prospectus Supplement (the "Stock-Index Warrant Agent"), all as
set forth in the Prospectus Supplement relating to the particular issue of
Stock-Index Warrants (the "Offered Stock-Index Warrants"). The Stock-Index
Warrant Agent will act solely as an agent of the Company in connection with the
Stock-Index Warrants and will not assume any obligation or relationship of
agency or trust for or with any holder or beneficial owners of Stock-Index
Warrants. The following summaries of certain provisions of the form of
Stock-Index Warrant Agreement and form of certificate, if any, representing the
Stock-Index Warrants (the "Stock-Index Warrant Certificates") do not purport to
be complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Stock-Index Warrant Agreement and the Stock-Index
Warrant Certificates, respectively, including the definitions therein of certain
terms, which Agreement and Certificate, if any, will be filed as an exhibit to
or incorporated by reference in the Registration Statement of which this
Prospectus forms a part.
The Company may issue Stock -Index Warrants either in the form of
Stock-Index Put Warrants entitling the holders thereof to receive from the
Company the Stock-Index Cash Settlement Value (as described in the applicable
Prospectus Supplement) in U.S. dollars, which amount will be determined by
reference to the amount, if any, by which the Stock-Index Exercise Price (as
described in the applicable Prospectus Supplement) exceeds the closing value of
the Index on the valuation date (the "Index Value") at the time of exercise, or
in the form of Stock-Index Call Warrants entitling the holders thereof to
receive from the Company the Stock-Index Cash Settlement Value in U.S. dollars,
which amount will be determined by reference to the amount, if any, by which the
Index Value at the time of exercise exceeds the Stock-Index Exercise Price.
The Prospectus Supplement for the Offered Stock-Index Warrants will set
forth the formula pursuant to which the Stock-Index Cash Settlement Value will
be determined. In addition, if so specified in the applicable Prospectus
Supplement, following the occurrence of a Market Disruption Event (as defined
therein), the Stock-Index Cash Settlement Value may be determined on a different
basis than under normal exercise of a Stock-Index Warrant.
Unless otherwise indicated in the Prospectus Supplement, a Stock-Index
Warrant will be settled only in cash and, accordingly, will not require or
entitle a holder thereof to sell, deliver, purchase or take delivery of any
shares of any underlying stock or any other securities. The holders will not be
entitled to any of the rights of the holders of any underlying stock.
If Stock-Index Warrants are offered, the Prospectus Supplement will
describe the terms of the Offered Stock-Index Warrants, the Stock-Index Warrant
Agreement relating to the Offered Stock-Index Warrants and, if applicable, the
Stock-Index Warrant Certificates, including the following: (1) whether such
Stock-Index Warrants are Stock-Index Put Warrants, Stock-Index Call Warrants or
both; (2) the aggregate number of Offered Stock-Index Warrants; (3) the offering
price; (4) the stock index for the Offered Stock-Index Warrants, which may be
based on one or more U.S. or foreign stocks or a combination thereof and may be
a preexisting U.S. or foreign stock index compiled and published by a third
party or an index based on one or more underlying stock or stocks selected by
the Company solely in connection with the issuance of the Offered Stock-Index
Warrants, and certain information regarding such stock index and the underlying
stock or stocks; (5) the date on which the right to exercise the Offered
Stock-Index Warrants commences and the date on which such right expires; (6) the
procedures and conditions relating to exercise; (7) the circumstances, if any,
which will cause the Offered Stock-Index Warrants to be deemed to be
automatically exercised; (8) the minimum number, if any, of Stock-Index Warrants
to be exercised at any one time other than upon automatic exercise and any other
restrictions on exercise; (9) the maximum number, if any, of the
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Offered Stock-Index Warrants that may, subject to the Company's election, be
exercised by all owners (or by any person or entity) on any day; (10) the method
of providing for a substitute index or otherwise determining the amount payable
in connection with the exercise of the Offered Stock-Index Warrants if the stock
index changes or ceases to be made available by its publisher, which
determination will be made by an independent expert; (11) the national
securities exchange on which the Offered Stock-Index Warrants will be listed, if
any; (12) whether the Offered Stock-Index Warrants will be issued in
certificated or book-entry form; (13) the place or places at which payment of
the Stock-Index Cash Settlement Value is to be made by the Company; (14)
information with respect to book-entry procedures, if any; (15) the plan of
distribution of the Offered Stock-Index Warrants; (16) the identity of the
Stock-Index Warrant Agent; (17) any provisions permitting a holder of a
Stock-Index Warrant to condition a stock-index exercise notice on the absence of
certain specified changes in the Index Value after the Stock-Index Warrant
exercise date; and (18) any other terms of the Offered Stock-Index Warrants,
including risk factors specifically relating to fluctuations in the applicable
stock index and possible illiquidity in the secondary market.
Prospective purchasers of Stock-Index Warrants should be aware that special
U.S. Federal income tax, accounting and other considerations may be applicable
to instruments such as Stock-Index Warrants. The Prospectus Supplement relating
to any issue of Stock-Index Warrants will describe such considerations.
DESCRIPTION OF OTHER WARRANTS
The Company may issue Other Warrants, if permitted under applicable law, to
buy or sell debt securities of or guaranteed by the United States, to buy or
sell a commodity or a unit of a commodity index or to buy or sell some other
item or unit of an index other than indices covered by Stock-Index Warrants
(collectively, "Exercise Items"). Owners of Other Warrants will be entitled to
receive from the Company the cash settlement value in U.S. dollars of the right
to buy or sell the Exercise Items (the "Other Warrant Cash Settlement Value").
An Owner of Other Warrants will receive a cash payment upon exercise only if the
Other Warrants have an Other Warrant Cash Settlement Value in excess of zero at
that time.
Other Warrants may be issued independently or together with other
Securities offered by any Prospectus Supplement and may be attached to or
separate from such other Securities. The Other Warrants are to be issued under
one or more other warrant agreements (the "Other Warrant Agreements") to be
entered into between the Company and a bank or trust company, as warrant agent
which will be designated in the applicable Prospectus Supplement (the "Other
Warrant Agent"), all as set forth in the Prospectus Supplement relating to the
particular issue of Other Warrants. The Other Warrant Agent will act solely as
an agent of the Company in connection with the Other Warrants and will not
assume any obligation or relationship of agency or trust for or with any holder
or beneficial owners of the Other Warrants. The following summaries of certain
provisions of the form of Other Warrant Agreement and form of certificate, if
any, representing the Other Warrants (the "Other Warrant Certificates") do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Other Warrant Agreement and the Other
Warrant Certificates, respectively, including the definitions therein of certain
terms which Agreement and Certificate, if any, will be filed as an exhibit to or
incorporated by reference in the Registration Statement of which this Prospectus
forms a part.
Unless otherwise indicated in the Prospectus Supplement, an Other Warrant
will be settled only in cash, in U.S. dollars, and accordingly, will not require
or entitle an owner thereof to sell, deliver, purchase or take delivery of any
Exercise Items.
If Other Warrants are offered, the applicable Prospectus Supplement will
describe the terms of such Other Warrants, including, where applicable, the
following: (1) the title and aggregate number of such Other Warrants; (2) the
offering price; (3) the Exercise Items that such Other Warrants represent the
right to buy or sell; (4) the procedures and conditions relating to exercise;
(5) the date on which the right to exercise the Other Warrants shall commence
and the date such right shall expire (the "Other Warrant Expiration Date"); (6)
the method of determining the Other Warrant Cash Settlement Value; (7) whether
such Other Warrants will be issued in certificated or book-entry form; (8)
whether such Other Warrants will be listed on a national securities exchange;
(9) information with respect to book-entry procedures, if any; (10) the identity
of the
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Other Warrant Agent; and (11) any other terms of such Other Warrants, including
risk factors relating to significant fluctuations in the market for the
applicable Exercise Item, the potential illiquidity of the secondary market and
the risk that the Other Warrants may expire worthless.
Prospective purchasers of Other Warrants should be aware that special U.S.
Federal income tax, accounting and other considerations may be applicable to
instruments such as Other Warrants. The Prospectus Supplement relating to any
issue of Other Warrants will describe such considerations.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Company's Class A Preferred
Stock and Class C Preferred Stock (collectively, the "Preferred Stock") sets
forth certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of Preferred
Stock offered by any Prospectus Supplement will be specified in the applicable
Prospectus Supplement. If so specified in the applicable Prospectus Supplement,
the terms of any series of Preferred Stock may differ from the terms set forth
below. The description of the terms of the Preferred Stock set forth below and
in any Prospectus Supplement does not purport to be complete and is subject to
and qualified in its entirety by reference to the terms and conditions of the
applicable series of Preferred Stock as described in an amendment to the
Company's Amended Articles of Incorporation (the "Articles of Incorporation"),
which will be filed as an exhibit to or incorporated by reference in the
Registration Statement of which this Prospectus forms a part.
As described under "Description of Depositary Shares" below, the Company
may, at its option, elect to offer depositary shares ("Depositary Shares")
evidenced by depositary receipts, each representing a fraction (to be specified
in the Prospectus Supplement relating to the particular series of Preferred
Stock) of a share of the particular series of the Preferred Stock issued and
deposited with a depositary, in lieu of offering full shares of such series of
the Preferred Stock.
Under interpretations adopted by the Federal Reserve, if the holders of
Preferred Stock of any series become entitled to vote for the election of
directors because dividends on such series are in arrears, such series may then
be deemed a "class of voting securities" and a holder of 25% or more of such
series (or a holder of 5% or more if it otherwise exercises a "controlling
influence" over the Company) may then be subject to regulation as a bank holding
company in accordance with the BHCA. In addition, at such time as such series is
deemed a class of voting securities, any other bank holding company may be
required to obtain the prior approval of the Federal Reserve to acquire 5% or
more of such series, and any person other than a bank holding company may be
required to obtain the prior approval of the Federal Reserve to acquire 10% or
more of such series.
CLASS A PREFERRED STOCK
Pursuant to the Articles of Incorporation, the Board of Directors of the
Company has the authority, without further shareholder action, to issue a
maximum of 10,000,000 shares of Class A Preferred Stock which are preferred
shares without par value. As of September 30, 1997, there were no shares of
Class A Preferred Stock issued and outstanding.
The shares of Class A Preferred Stock may be issued from time to time in
one or more series. All shares of Class A Preferred Stock shall be of equal rank
and shall be identical, except in respect of the matters that may be fixed by
the Board of Directors, and each share of each series shall be identical with
all other shares of such series, except as to the date from which dividends are
cumulative.
Reference is made to the Prospectus Supplement relating to the particular
series of Class A Preferred Stock offered thereby for specific terms, including:
(1) the designation of the series, which may be by distinguishing number, letter
or title; (2) the number of shares of the series; (3) the initial public
offering price at which such shares will be issued; (4) the dividend rate or
rates (or method of calculation), the dividend periods, the date on which
dividends shall be payable and whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence
to cumulate; (5) the redemption rights and price or prices for shares of the
series; (6) sinking fund requirements, if any, for the
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<PAGE> 48
purchase or redemption of shares of the series; (7) the liquidation price
payable on shares of the series in the event of any liquidation, dissolution or
winding up of the affairs of the Company; (8) whether the shares of the series
shall be convertible into Common Stock or exchangeable for Debt Securities, and,
if so, the conversion or exchange price or prices, any adjustments thereof, and
all other terms and conditions upon which such conversion or exchange may be
made; (9) restrictions on the issuance of any Class or series; (10) whether the
Company has elected to offer Depositary Shares as described below under
"Description of Depositary Shares"; and (11) any additional dividend,
liquidation, redemption, sinking fund and other rights, preferences, privileges,
limitations and restrictions of such series of Class A Preferred Stock.
Except as otherwise required by law or the Articles of Incorporation, the
holders of the Class A Preferred Stock, voting together as a class with the
holders of the Common Stock and the holders of any other class or series of the
Company's preferred stock who are similarly entitled to vote, shall be entitled
to vote for the election of directors and all other matters.
During any period in which dividends on the Class A Preferred Stock are
cumulatively in arrears in the amount of six or more full quarterly dividends,
the holders of the Class A Preferred Stock, voting together as a class with the
holders of any other class or series of the Company's preferred stock who are
similarly entitled to vote, will have the right to elect two directors which two
directorships shall be in addition to that number of directors then determined
as constituting the number of members of the Board of Directors pursuant to the
Company's Code of Regulations.
The approval of a majority of the outstanding shares of Class A Preferred
Stock voting together as a single class shall be required in order to amend the
Articles of Incorporation to affect adversely the rights of the holders of the
Class A Preferred Stock or to take any action that would result in the creation
of or an increase in the number of authorized shares senior or superior with
respect to dividends or upon liquidation to the Class A Preferred Stock.
CLASS B PREFERRED STOCK
Pursuant to the Articles of Incorporation, the Board of Directors of the
Company has the authority, without further shareholder action, to issue a
maximum of 1,000,000 shares of Class B Preferred Stock which are preferred
shares without par value. As of June 30, 1997, there were no shares of Class B
Preferred Stock issued and outstanding. No shares of the Company's Class B
Preferred Stock are registered under or will be offered for sale pursuant to the
Registration Statement of which this Prospectus is a part.
CLASS C PREFERRED STOCK
Pursuant to the Articles of Incorporation, the Board of Directors of the
Company has the authority, without further shareholder action, to issue a
maximum of 24,000,000 shares of Class C Preferred Stock which are preferred
shares without par value. As of June 30, 1997, there were issued and outstanding
3,683,614 shares of a series of Class C Preferred Stock designated as the
"Series C $3.50 Cumulative Convertible Preferred Stock". See "--Description of
Existing Preferred Stock" herein.
The shares of Class C Preferred Stock may be issued from time to time in
one or more series. All shares of Class C Preferred Stock shall be of equal rank
and shall be identical, except in respect of the matters that may be fixed by
the Board of Directors, and each share of each series shall be identical with
all other shares of such series, except as to the date from which dividends are
cumulative.
Reference is made to the Prospectus Supplement relating to the particular
series of Class C Preferred Stock offered thereby for specific terms, including:
(1) the designation of the series, which may be by distinguishing number, letter
or title; (2) the number of shares of the series; (3) the initial public
offering price at which such shares will be issued; (4) the dividend rate or
rates (or method of calculation), the dividend periods, the date on which
dividends shall be payable and whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence
to cumulate; (5) the redemption rights and price or prices for shares of the
series; (6) sinking fund requirements, if any, for the purchase or redemption of
shares of the series; (7) the liquidation price payable on shares of the series
in the
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<PAGE> 49
event of any liquidation, dissolution or winding up of the affairs of the
Company; (8) whether the shares of the series shall be convertible into Common
Stock or exchangeable for Debt Securities, and, if so, the conversion or
exchange price or prices, any adjustments thereof, and all other terms and
conditions upon which such conversion or exchange may be made; (9) restrictions
on the issuance of any class or series; (10) whether the Company has elected to
offer Depositary Shares as described below under "Description of Depositary
Shares"; and (11) any additional dividend, liquidation, redemption, sinking fund
and other rights, preferences, privileges, limitations and restrictions of such
series of Class C Preferred Stock.
The holders of the Class C Preferred Stock shall not be entitled to voting
rights except to the extent described below.
During any period in which dividends on the Class C Preferred Stock are
cumulatively in arrears in the amount of six or more full quarterly dividends,
the holders of the Class C Preferred Stock, voting together as a class with the
holders of any other class or series of the Company's preferred stock who are
similarly entitled to vote, will have the right to elect two directors which two
directorships shall be in addition to that number of directors then determined
as constituting the number of members of the Board of Directors pursuant to the
Company's Code of Regulations.
The approval of a majority of the outstanding shares of Class C Preferred
Stock voting together as a single class shall be required in order to amend the
Articles of Incorporation to affect adversely the rights of the holders of the
Class C Preferred Stock or to take any action that would result in the creation
of or an increase in the number of authorized shares senior or superior with
respect to dividends or upon liquidation to the Class C Preferred Stock.
ISSUED AND OUTSTANDING PREFERRED STOCK
Currently, the only series of Preferred Stock issued and outstanding is a
series of Class C Preferred Stock designated as the "Series C $3.50 Cumulative
Convertible Preferred Stock" ("Series C Preferred Stock"). Holders of Series C
Preferred Stock are entitled to receive out of funds legally available therefor
cumulative cash dividends at the annual rate of $3.50 per share payable
quarterly on the last day of March, June, September and December in each year.
If full cumulative dividends on outstanding shares of Series C Preferred Stock
have not been paid, no dividends may be declared or paid on, and no amounts may
be set aside or applied to the redemption or purchase of, any shares of Common
Stock or any other shares of capital stock of ranking junior to shares of Series
C Preferred Stock. Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Company, holders of Series C Preferred Stock are entitled to
receive a preferential distribution of $50 per share plus accrued and unpaid
dividends, if any. The Series C Preferred Stock ranks on a parity as to payment
of dividends and with respect to distributions upon liquidation with the Class B
Preferred Stock.
At the option of the holder of any shares of Series C Preferred Stock, such
shares may be converted into shares of Common Stock at the conversion rate then
in effect. The present conversion rate is 1.928982 shares of Common Stock for
each share of Series C Preferred Stock and is subject to adjustment for stock
dividends, subdivisions, splits and combinations and for any distribution of
rights or warrants to purchase Common Stock at a price per share less than the
Common Stock's then-current market value.
The issued shares of Series C Preferred Stock may be redeemed, in whole or
in part, by the Company at its election at any time after April 15, 1995, at a
redemption price of $52.10 per share during the period from April 15, 1995, to
but not including March 31, 1996, and thereafter at the redemption prices during
the 12-month periods beginning on March 31 of the years shown below, plus
accrued and unpaid dividends, if any.
24
<PAGE> 50
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
----------------------------------------------------- ----------------
<S> <C>
1996................................................. $51.75
1997................................................. $51.40
1998................................................. $51.05
1999................................................. $50.70
2000................................................. $50.35
2001 and thereafter.................................. $50.00
</TABLE>
The Series C Preferred Stock is not subject to the operation of a sinking
fund.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. If such option is
exercised, the Company will issue to the public receipts for Depositary Shares,
each of which will represent a fraction (to be set forth in the Prospectus
Supplement relating to a particular series of Preferred Stock) of a share of a
particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and a bank or trust company selected by the Company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Preferred Stock Depositary"). Subject to
the terms of the Deposit Agreement, each owner of a Depositary Share will be
entitled, in proportion to the applicable fraction of a share of Preferred Stock
represented by such Depositary Share, to all the rights and preferences of the
Preferred Stock represented thereby (including dividend, voting, redemption,
conversion and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. Copies of the
forms of Deposit Agreement and Depositary Receipt will be filed as exhibits to,
or incorporated by reference in, the Registration Statement of which this
Prospectus is a part, and the following summary is qualified in its entirety by
reference to such exhibits.
Pending the preparation of definitive engraved Depositary Receipts, the
Preferred Stock Depositary may, upon the written order of the Company, issue
temporary Depositary Receipts substantially identical to (and entitling the
holders thereof to all the rights pertaining to) the definitive Depositary
Receipts but not in definitive form. Definitive Depositary Receipts will be
prepared thereafter without unreasonable delay, and temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts at the
Company's expense.
Upon surrender of Depositary Receipts at the principal office of the
Preferred Stock Depositary (unless the related Depositary Shares have previously
been called for redemption), the owner of the Depositary Shares evidenced
thereby is entitled to delivery at such office, to or upon his order, of the
number of whole shares of Preferred Stock and any money or other property
represented by such Depositary Shares. Partial shares of Preferred Stock will
not be issued. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the number of Depositary Shares
representing a number of whole shares of Preferred Stock to be withdrawn, the
Preferred Stock Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares. Holders
of shares of Preferred Stock thus withdrawn will not thereafter be entitled to
deposit such shares under the Deposit Agreement or to receive Depositary Shares
therefor. The Company does not expect that there will be any public trading
market for withdrawn shares of Preferred Stock.
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<PAGE> 51
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Stock to the record
holders of Depositary Shares relating to such Preferred Stock in proportion to
the numbers of such Depositary Shares owned by such holders. The Preferred Stock
Depositary shall distribute only such amount, however, as can be distributed
without attributing to any holder of Depositary Shares a fraction of one cent,
and any balance not so distributed shall be added to and treated as part of the
next sum received by the Preferred Stock Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto, unless the Preferred Stock Depositary
determines that it is not feasible to make such distribution, in which case the
Preferred Stock Depositary may, with the approval of the Company, sell such
property and distribute the net proceeds from such sale to such holders.
REDEMPTION OF DEPOSITARY SHARES
If a series of Preferred Stock represented by Depositary Shares is subject
to redemption, the Depositary Shares will be redeemed from the proceeds received
by the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of such series of Preferred Stock held by the Preferred Stock Depositary.
The Preferred Stock Depositary shall mail notice of redemption not less than 30
nor more than 60 days prior to the date fixed for redemption to the record
holders of the Depositary Shares to be so redeemed at their respective addresses
appearing in the Preferred Stock Depositary's books. The redemption price per
Depositary Share will be equal to the applicable fraction of the redemption
price per share payable with respect to such series of Preferred Stock. Whenever
the Company redeems shares of Preferred Stock held by the Preferred Stock
Depositary, the Preferred Stock Depositary will redeem as of the same redemption
date the number of Depositary Shares representing shares of Preferred Stock so
redeemed. If less than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by lot or pro rata as may be
determined by the Preferred Stock Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Preferred Stock Depositary of the Depositary Receipts
evidencing such Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Preferred Stock Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Stock) will be entitled to instruct the Preferred Stock
Depositary as to the exercise of the voting rights pertaining to the amount of
the Preferred Stock represented by such holder's Depositary Shares. The
Preferred Stock Depositary will endeavor, insofar as practicable, to vote the
amount of the Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all action
which may be deemed necessary by the Preferred Stock Depositary in order to
enable the Preferred Stock Depositary to do so. The Preferred Stock Depositary
will abstain from voting shares of the Preferred Stock to the extent it does not
receive specific instructions from the holders of Depositary Shares representing
such Preferred Stock.
TAXATION
Owners of the Depositary Shares will be treated for Federal income tax
purposes as if they were owners of the series of Preferred Stock represented by
such Depositary Shares and, accordingly, will be entitled to take into account
for Federal income tax purposes income and deductions to which they would be
entitled if they
26
<PAGE> 52
were holders of such series of Preferred Stock. In addition, (i) no gain or loss
will be recognized for Federal income tax purposes upon the withdrawal of
Preferred Stock in exchange for Depositary Shares as provided in the Deposit
Agreement, (ii) the tax basis of each share of Preferred Stock to an exchanging
owner of Depositary Shares will, upon such exchange, be the same as the
aggregate tax basis of the Depositary Shares exchanged therefor and (iii) the
holding period for shares of the Preferred Stock in the hands of an exchanging
owner of Depositary Shares who held such Depositary Shares as a capital asset at
the time of the exchange thereof for Preferred Stock will include the period
during which such person owned such Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Preferred Stock Depositary. However, any amendment
which materially and adversely alters the rights of the holders of Depositary
Shares will not be effective unless such amendment has been approved by the
holders of at least a majority of the Depositary Shares then outstanding. The
Deposit Agreement may be terminated by the Company or the Preferred Stock
Depositary only if (i) all outstanding Depositary Shares have been redeemed or
(ii) there has been a final distribution in respect of the Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company and
such distribution has been distributed to the holders of Depositary Receipts.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Preferred Stock Depositary in connection with the
initial deposit of the Preferred Stock and any redemption of the Preferred
Stock. Holders of Depositary Receipts will pay other transfer and other taxes
and governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Preferred Stock Depositary will forward to the holders of Depositary
Shares all reports and communications from the Company which are delivered to
the Preferred Stock Depositary and which the Company is required to furnish to
the holders of the Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under the Deposit Agreement will be
limited to performance in good faith of their duties thereunder and they will
not be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is furnished.
They may rely upon written advice of counsel or accountants, or information
provided by persons presenting Preferred Stock for deposit, holders of
Depositary Receipts or other persons believed to be competent and on documents
believed to be genuine.
RESIGNATION AND REMOVAL OF PREFERRED STOCK DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary and its
acceptance of such appointment. Such successor Preferred Stock Depositary must
be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
27
<PAGE> 53
DESCRIPTION OF PREFERRED STOCK WARRANTS
The Company may issue Preferred Stock Warrants for the purchase of
Preferred Stock. Preferred Stock Warrants may be issued independently or
together with other Securities offered by any Prospectus Supplement and may be
attached to or separate from such other Securities. Each series of Preferred
Stock Warrants will be issued under one or more warrant agreements (each a
"Preferred Stock Warrant Agreement") to be entered into between the Company and
a bank or trust company, as preferred stock warrant agent which will be
designated in the applicable Prospectus Supplement (the "Preferred Stock Warrant
Agent"), all as set forth in the Prospectus Supplement relating to the
particular issue of Preferred Stock Warrants. The Preferred Stock Warrant Agent
will act solely as an agent of the Company in connection with the Preferred
Stock Warrants and will not assume any obligation or relationship of agency or
trust for or with any holders of Preferred Stock Warrant Certificates or
beneficial owners of Preferred Stock Warrants. The following summaries of
certain provisions of the form of Preferred Stock Warrant Agreement and form of
certificate, if any, representing the Preferred Stock Warrants (the "Preferred
Stock Warrant Certificates") do not purport to be complete and are subject to
and are qualified in their entirety by reference to, all the provisions of the
Preferred Stock Warrant Agreement and the Preferred Stock Warrant Certificates
which Agreement and Certificate will be filed as an exhibit to or incorporated
by reference in the Registration Statement of which this Prospectus forms a
part.
If Preferred Stock Warrants are offered, the applicable Prospectus
Supplement will describe the terms of such Preferred Stock Warrants, the
Preferred Stock Warrant Agreement and, if applicable, the Preferred Stock
Warrant Certificates, including the following, where applicable: (1) the
offering price; (2) the designation, aggregate number and terms of the series of
Preferred Stock purchasable upon exercise of such Preferred Stock Warrants and
minimum number of Preferred Stock Warrants that are exercisable; (3) if
applicable, the designation and terms of the Securities with which such
Preferred Stock Warrants are being offered and the number of such Preferred
Stock Warrants being offered with each such Security; (4) if applicable, the
date on and after which such Preferred Stock Warrants and the related Securities
will be transferable separately; (5) the number and stated values of the series
of Preferred Stock purchasable upon exercise of each such Preferred Stock
Warrant and the price at which such number of shares of Preferred Stock of such
series may be purchased upon such exercise; (6) the date on which the right to
exercise such Preferred Stock Warrants shall commence and the date on which such
right shall expire ; (7) whether the Preferred Stock Warrants represented by the
Preferred Stock Warrant Certificates will be issued in registered or bearer
form; (8) information with respect to book-entry procedures, if any; and (9) any
other terms of such Preferred Stock Warrants for the purchase of shares of
Preferred Stock.
Preferred Stock Warrant Certificates may be exchanged for new Preferred
Stock Warrant Certificates of different denominations, may (if in registered
form) be presented for registration of transfer, and may be exercised at the
corporate trust office of the Preferred Stock Warrant Agent or any other office
indicated in the applicable Prospectus Supplement. Prior to the exercise of any
Preferred Stock Warrant, a holder thereof shall have no rights of a holder of
shares of the Preferred Stock purchasable upon such exercise, including the
right to receive payment of dividends, if any, on the underlying Preferred Stock
or the right to vote such underlying Preferred Stock.
Prospective purchasers of Preferred Stock Warrants should be aware that
special U.S. Federal income tax, accounting and other considerations may be
applicable to instruments such as Preferred Stock Warrants. The Prospectus
Supplement relating to any issue of Preferred Stock Warrants will describe such
considerations.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of Common
Stock. Common Stock Warrants may be issued independently or together with other
Securities offered by any Prospectus Supplement and may be attached to or
separate from such Securities. Each series of Common Stock Warrants will be
issued under one or more warrant agreements (each a "Common Stock Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as common stock warrant agent which will
28
<PAGE> 54
be designated in the applicable Prospectus Supplement (the "Common Stock Warrant
Agent"), all as set forth in the Prospectus Supplement relating to the
particular issue of Common Stock Warrants. The Common Stock Warrant Agent will
act solely as an agent of the Company in connection with the Common Stock
Warrants and will not assume any obligation or relationship of agency or trust
for or with any holders or beneficial owners of Common Stock Warrants. The
following summaries of certain provisions of the form of Common Stock Warrant
Agreement and certificate , if any, representing Common Stock Warrants (the
"Common Stock Warrant Certificates") do not purport to be complete and are
subject to and are qualified in their entirety by reference to, all the
provisions of the Common Stock Warrant Agreement and the Common Stock Warrant
Certificate which Agreement and Certificate will be filed as an exhibit to or
incorporated by reference in the Registration Statement which this Prospectus
forms a part of.
If Common Stock Warrants are offered, the related Prospectus Supplement
will describe the terms of such Common Stock Warrants, the Common Stock Warrant
Agreement and, if applicable, the Common Stock Warrant Certificates, including
the following, where applicable: (1) the offering price; (2) the aggregate
number of shares of Common Stock purchasable upon exercise of such Common Stock
Warrants and minimum number of Common Stock Warrants that are exercisable; (3)
if applicable, the designation and terms of the Securities with which such
Common Stock Warrants are being offered and the number of such Common Stock
Warrants being offered with each such Security; (4) if applicable, the date on
and after which such Common Stock Warrants and the related Securities will be
transferable separately; (5) the number of shares of Common Stock purchasable
upon exercise of each such Common Stock Warrant and the price at which such
number of shares of Common Stock may be purchased upon such exercise; (6) the
date on which the right to exercise such Common Stock Warrants shall commence
and the date on which such right shall expire; (7) whether the Common Stock
Warrants represented by the Common Stock Warrant Certificates will be issued in
registered or bearer form; (8) information with respect to book-entry
procedures, if any; and (9) any other terms of such Common Stock Warrants for
the purchase of shares of Common Stock.
Common Stock Warrant Certificates may be exchanged for new Common Stock
Warrant Certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Common Stock Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Common Stock
Warrant a holder thereof shall have no rights of a holder of shares of the
Common Stock purchasable upon such exercise, including the right to receive
payments of dividends, if any, on the Common Stock purchasable upon such
exercise or to exercise any applicable right to vote.
Prospective purchasers of Common Stock Warrants should be aware that
special U.S. Federal income tax, accounting and other considerations may be
applicable to instruments such as Common Stock Warrants. The Prospectus
Supplement relating to any issue of Common Stock Warrants will describe such
considerations.
DESCRIPTION OF COMMON STOCK
GENERAL
Pursuant to the Articles of Incorporation, the Board of Directors of the
Company has the authority, without further shareholder action, to issue a
maximum of 950,000,000 shares of Common Stock. As of June 30, 1997, there were
581,522,935 shares of Common Stock issued and outstanding.
Holders of Common Stock are entitled to receive dividends out of funds
legally available therefor as and if declared by the Board of Directors provided
that, so long as any shares of Preferred Stock are outstanding, no dividends
(other than dividends payable in Common Stock) or other distributions (including
redemptions and purchases) may be made with respect to the Common Stock unless
full cumulative dividends on the shares of Class A Preferred Stock, Class B
Preferred Stock and Class C Preferred Stock have been paid.
Holders of shares of Common Stock are entitled to one vote for each share
for the election of directors and on all other matters. Holders of Common Stock
vote together as a class with holders of Class A Preferred Stock and Class B
Preferred Stock. Generally, holders of Class C Preferred Stock have no voting
rights.
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<PAGE> 55
The issued and outstanding shares of Common Stock are fully paid and
nonassessable. The holders of Common Stock are not entitled to preemptive rights
or conversion or redemption rights. The holders of Common Stock do not have
cumulative voting rights in the election of directors.
In the event of the voluntary or involuntary dissolution, liquidation or
winding up of the Company, holders of Common Stock will be entitled to receive,
pro rata, after satisfaction in full of the prior rights of creditors (including
holders of the Company's indebtedness) and holders of Preferred Stock, all the
remaining assets of the Company available for distribution.
The Company's Common Stock is listed on the New York Stock Exchange. Harris
Trust and Savings Bank, Chicago, Illinois, is the transfer agent and registrar
for the Common Stock.
SPECIAL VOTING REQUIREMENTS FOR CERTAIN TRANSACTIONS
Under Ohio law, a merger or consolidation by an Ohio corporation generally
requires the affirmative vote of holders of shares representing at least
two-thirds of the shareholder voting power of the corporation, unless the
corporation's articles of incorporation provide for approval by a different
proportion not less than a majority. The Articles of Incorporation generally
require only approval of holders of a majority of the outstanding shares for
such transactions.
Article Eleventh of the Articles of Incorporation incorporates, to a large
extent, the provisions of the Ohio control share acquisition statute (the "Ohio
Control Share Statute"), as set forth in Section 1701.831 of the Ohio Revised
Code. Article Eleventh sets forth procedures for obtaining shareholder consent
of "control share acquisitions" subject to the right of the Board of Directors
to screen out proposals that do not meet certain standards set forth in Article
Eleventh. Article Eleventh defines a "control share acquisition" as any
acquisition, directly or indirectly, of shares of the Company which, when added
to all other shares of the Company owned or controlled by the acquiror, would
entitle the acquiror, alone or with others, to exercise or direct the exercise
of voting power in the Company in the election of directors within any of the
following ranges of voting power: (i) one-fifth or more but less than one-third;
(ii) one-third or more but less than a majority; and (iii) a majority or more. A
bank, broker, nominee, trustee or other person who acquires shares in the
ordinary course of business for the benefit of others in good faith and not for
the purpose of circumventing Article Eleventh shall be deemed to have voting
power only of shares in respect of which such person would be able to exercise
or direct the exercise of votes without further instruction from others at a
meeting of shareholders called under Article Eleventh. A control share
acquisition which meets certain criteria set forth in Article Eleventh as
determined by the Board of Directors must be presented to a meeting of the
shareholders of the Company and approved by the affirmative vote of the holders
of both (a) a majority of the voting power represented at the meeting and (b) a
majority of that portion of such voting power excluding any "interested shares";
that is, those shares held by the acquiring person, executive officers of the
Company and employees of the Company who are also directors. Article Eleventh
may be amended by a vote of 85% of the votes entitled to be cast by all holders
of voting stock.
The Company's Articles also include a "fair price" provision that is
designed to provide reasonable assurances to shareholders that in the event any
shareholder or group of shareholders acquires 20% or more of the Company's
voting stock (the "Acquiror") and then seeks to acquire all or part of the
remaining voting stock through a merger or other transaction which would force a
change or termination of the other shareholders' ownership interests (a
"Business Combination"), such other shareholders must receive consideration at
least equivalent to the highest price paid by the Acquiror in acquiring its 20%
stock interest, unless the Business Combination is approved either (i) by a
majority of directors who are unrelated to the Acquiror or (ii) by the
affirmative vote of 75% of all the votes entitled to be cast by all holders of
voting stock and 67% of the votes entitled to be cast by all holders of voting
stock held by shareholders other than the Acquiror ("Special Shareholder Vote").
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This provision operates by requiring that after an Acquiror emerges, any
Business Combination which has the effect of requiring shareholders to surrender
their shares must satisfy one of the following conditions:
(i) Fair Consideration to Shareholders. The terms of the Business
Combination must provide for payment of consideration which is at least
equivalent to the highest price paid to other shareholders by the
Acquiror in acquiring its 20% stock position and must be approved by
shareholders as otherwise required by applicable law; or
(ii) Unrelated Director Approval. The Business Combination must be
approved as fair to shareholders by a majority of the directors who are
not affiliated with the Acquiror and who were directors before the
Acquiror acquired its 20% stock position or who were nominated or
elected to succeed such directors by the other unaffiliated directors
("Unrelated Directors") and must be approved by shareholders as
otherwise required by applicable law; or
(iii) Special Shareholder Vote. The Business Combination must be approved
by a Special Shareholder Vote.
Article Tenth of the Articles of Incorporation, which contains this
provision, may be amended only by a vote of 85% of the votes entitled to be cast
by all holders of voting stock, unless the amendment is approved unanimously by
the Unrelated Directors, in which case only majority shareholder approval would
be required.
Chapter 1704 of the Ohio Revised Code (the "Ohio Statute") is similar to
the "fair price" provision contained in the Articles of Incorporation. The Ohio
Statute prohibits an "Issuing Public Corporation" from engaging in a "Chapter
1704 Transaction" with an "Interested Shareholder" for a period of three years
following the date on which the person becomes an Interested Shareholder unless,
prior to such date, the directors of the Issuing Public Corporation approve
either the Chapter 1704 Transaction or the acquisition of shares pursuant to
which such person became an Interested Shareholder. After the initial three-year
moratorium has expired, an Issuing Public Corporation may engage in a Chapter
1704 Transaction if (i) the acquisition of shares pursuant to which the person
became an Interested Shareholder received the prior approval of the board of
directors of the Issuing Public Corporation, (ii) the Chapter 1704 Transaction
is approved by the affirmative vote of the holders of shares representing at
least two-thirds of the voting power of the Issuing Public Corporation and by
the holders of at least a majority of voting shares which are not beneficially
owned by an Interested Shareholder or an affiliate or associate of an Interested
Shareholder, or (iii) the Chapter 1704 Transaction meets certain statutory tests
designed to ensure that it be economically fair to all shareholders.
For this purpose, an "Issuing Public Corporation" is any Ohio corporation
with 50 or more shareholders that has its principal place of business, principal
executive offices or substantial assets within the State of Ohio. The Company
currently is an Issuing Public Corporation. An "Interested Shareholder" is any
person who is the beneficial owner of a sufficient number of shares to allow
such person, directly or indirectly, alone or with others, including affiliates
and associates, to exercise or direct the exercise of 10% of the voting power of
the Issuing Public Corporation. A "Chapter 1704 Transaction" includes any
merger, consolidation, combination or majority share acquisition between or
involving an Issuing Public Corporation and an Interested Shareholder or an
affiliate or associate of an Interested Shareholder. A Chapter 1704 Transaction
also includes certain transfers of property, dividends and issuance or transfers
of shares, from or by an Issuing Public Corporation or a subsidiary of an
Issuing Public Corporation to, with or for the benefit of an Interested
Shareholder or an affiliate or associate of an Interested Shareholder unless
such transaction is in the ordinary course of business of the Issuing Public
Corporation on terms no more favorable to the Interested Shareholder than those
acceptable to third parties as demonstrated by contemporaneous transactions.
Finally, Chapter 1704 Transactions include certain transactions which (i)
increase the proportionate share ownership of an Interested Shareholder, (ii)
result in the adoption of a plan or proposal for the dissolution, winding up of
the affairs or liquidation of the Issuing Public Corporation if such plan is
proposed by or on behalf of the Interested Shareholder or (iii) pledge or extend
the credit or financial resources of the Issuing Public Corporation to or for
the benefit of the Interested Shareholder.
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<PAGE> 57
PLAN OF DISTRIBUTION
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each Prospectus
Supplement will describe the method of distribution of the Securities offered
therein.
The Company may sell Securities directly, through agents designated from
time to time, through underwriting syndicates led by one or more managing
underwriters or through one or more underwriters acting alone. Each Prospectus
Supplement will set forth the terms of the Securities to which such Prospectus
Supplement relates, including the name or names of any underwriters or agents
with whom the Company has entered into arrangements with respect to the sale of
such Securities, the public offering or purchase price of such Securities and
the net proceeds to the Company from such sale, any underwriting discounts and
other items constituting underwriters' compensation, any discounts and
commissions allowed or paid to dealers, if any, any commissions allowed or paid
to agents, and the securities exchange or exchanges, if any, on which such
Securities will be listed. Dealer trading may take place in certain of the
Securities, including Securities not listed on any securities exchange.
Securities may be purchased to be reoffered to the public through
underwriting syndicates led by one or more managing underwriters, or through one
or more underwriters acting alone. The underwriter or underwriters with respect
to each underwritten offering of Securities will be named in the Prospectus
Supplement relating to such offering and, if an underwriting syndicate is used,
the managing underwriter or underwriters will be set forth on the cover page of
such Prospectus Supplement. Unless otherwise set forth in the applicable
Prospectus Supplement, the obligations of the underwriters to purchase the
Securities will be subject to certain conditions precedent and each of the
underwriters with respect to a sale of Securities will be obligated to purchase
all of its Securities if any are purchased. Any initial public offering price
and any discounts or concession allowed or reallowed or paid to dealers may be
changed from time to time.
Securities may be offered and sold by the Company through agents designated
by the Company from time to time. Any agent involved in the offer and sale of
any Securities will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement relating to such offering.
Unless otherwise indicated in such Prospectus Supplement, any such agent will be
acting on a reasonable efforts basis for the period of its appointment.
Offers to purchase Securities may be solicited directly by the Company and
sales thereof may be made by the Company directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the Securities
Act with respect to any resale thereof. The terms of any such sales will be
described in the Prospectus Supplement relating thereto. The Company may also
issue contracts under which the counterparty may be required to purchase
Securities. Such contracts would be issued with Securities in amounts, at prices
and on terms to be set forth in a Prospectus Supplement.
The anticipated place and time of delivery of Securities will be set forth
in the applicable Prospectus Supplement.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or agents to solicit offers by certain institutions to
purchase Securities from the Company pursuant to delayed delivery contracts
providing for payment and delivery at a future date. Institutions with which
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. Unless otherwise set forth in the applicable Prospectus Supplement,
the obligations of any purchaser under any such contract will not be subject to
any conditions except that (i) the purchase of the Securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject, and (ii) if the Securities are also being sold to
underwriters acting as principals for their own account, the underwriters shall
have purchased such Securities not sold for delayed delivery. The underwriters
and such other persons will not have any responsibility in respect of the
validity or performance of such contracts.
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Any underwriter or agent participating in the distribution of the
Securities may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the Securities so offered and sold and any discounts or
commissions received by them from the Company and any profit realized by them on
the sale or resale of the Securities may be deemed to be underwriting discounts
and commissions under the Securities Act.
Underwriters and agents may be entitled, under agreements entered into with
the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such underwriters or agents may be required to
make in respect thereof. Certain of any such underwriters and agents including
their associates, may be customers of, engage in transactions with and perform
services for, the Company and its subsidiaries in the ordinary course of
business. An affiliate of the Company may from time to time act as an agent or
underwriter in connection with the sale of the Securities to the extent
permitted by applicable law. The participation of such affiliate in the offer
and sale of the Securities will comply with Rule 2720 of the Conduct Rules of
the National Association of Securities Dealers, Inc. regarding the offer and
sale of securities of an affiliate.
This Prospectus and related Prospectus Supplements may be used by an
affiliate of the Company in connection with offers and sales related to
secondary market transactions in the Securities to the extent permitted by
applicable law. Such affiliate may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing market
prices at the time of sale.
LEGAL OPINIONS
Certain legal matters relating to the Securities offered hereby will be
passed upon for the Company by Steven Alan Bennett, Senior Vice President and
General Counsel of the Company, and for any underwriters, selling agents and
certain other purchasers by Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Avenue, New York, New York 10019. Mr. Bennett owns a number of shares of Common
Stock and holds options to purchase additional shares of Common Stock. Cravath,
Swaine & Moore performs legal services for the Company from time to time.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries,
included in the Annual Report on Form 10-K of the Company for the fiscal year
ended December 31, 1996, as amended by Form 10-K/A filed March 21, 1997 and Form
10-K/A filed June 30, 1997, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as set forth in their report dated February 21, 1997
accompanying such financial statements, and are incorporated herein by reference
in reliance upon the report of such firm, which report is given upon their
authority as experts in accounting and auditing.
The supplemental consolidated balance sheets of the Company and its
subsidiaries as of December 31, 1996 and 1995, and the related supplemental
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996,
included in the Current Report on Form 8-K of the Company filed August 29, 1997,
as amended by Form 8-K/A filed September 2, 1997, have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their report dated
August 28, 1997 accompanying such supplemental financial statements, and are
incorporated herein by reference in reliance upon the report of such firm, which
report is given upon their authority as experts in accounting and auditing.
Any financial statements and schedules hereafter incorporated by reference
in the registration statement of which this prospectus is a part that have been
audited and are the subject of a report by independent accountants will be so
incorporated by reference in reliance upon such reports and upon the authority
of such firms as experts in accounting and auditing to the extent covered by
consents filed with the Commission.
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======================================================
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE PROSPECTUS SUPPLEMENT OR ANY
PRICING SUPPLEMENT IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR BY ANY AGENT. THIS PROSPECTUS, THE PROSPECTUS
SUPPLEMENT AND ANY PRICING SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED
BY THIS PROSPECTUS, THE PROSPECTUS SUPPLEMENT AND ANY PRICING SUPPLEMENT OR AN
OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY SUCH SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS, THE
PROSPECTUS SUPPLEMENT OR ANY PRICING SUPPLEMENT NOR ANY SALE MADE THEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROSPECTUS, THE
PROSPECTUS SUPPLEMENT OR ANY PRICING SUPPLEMENT, OR THAT THE INFORMATION HEREIN
OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Description of Notes...................... S-2
Risks Relating to Indexed Notes........... S-14
Foreign Currency Risks.................... S-15
Certain United States Federal Income Tax
Considerations.......................... S-17
Supplemental Plan of Distribution......... S-23
PROSPECTUS
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 3
BANC ONE CORPORATION...................... 4
Ratio of Earnings to Fixed Charges........ 4
Use Of Proceeds........................... 4
Regulatory Matters........................ 5
Description of Debt Securities............ 9
Senior Securities......................... 13
Subordinated Securities................... 14
Description of Debt Warrants.............. 17
Description of Currency Warrants.......... 19
Description of Stock-Index Warrants....... 20
Description of Other Warrants............. 21
Description of Preferred Stock............ 22
Description of Depositary Shares.......... 25
Description of Preferred Stock Warrants... 28
Description of Common Stock Warrants...... 28
Description of Common Stock............... 29
Plan of Distribution...................... 32
Legal Opinions............................ 33
Experts................................... 33
</TABLE>
======================================================
======================================================
$4,000,000,000
BANC ONE CORPORATION
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM
DATE OF ISSUE
------------------
PROSPECTUS SUPPLEMENT
------------------
GOLDMAN, SACHS & CO.
BANC ONE CAPITAL CORPORATION
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
LEHMAN BROTHERS
SALOMON BROTHERS INC
UBS SECURITIES
======================================================
