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Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
------------------------
BANC ONE CORPORATION
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
Ohio 6711 31-0738296
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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100 East Broad Street, Columbus, Ohio 43271, (614) 248-5944
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------
Steven Alan Bennett
Senior Vice President and General Counsel
BANC ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271-0158
(614) 248-7590
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
With Copies to:
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Kenneth L. Wagner, Michael M. Stewart, Esq.
Esq. Crowe & Dunlevy, A Professional Corporation
BANC ONE CORPORATION 1800 Mid America Tower
100 East Broad Street 20 North Broadway
Columbus, Ohio Oklahoma City, Oklahoma 73102
43271-0158
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement and all
other conditions to the merger of Liberty Bancorp, Inc. with and into a wholly
owned subsidiary of the Registrant pursuant to the Merger Agreement described in
the enclosed Prospectus and Proxy Statement have been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE FEE(3)
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Common Stock.......... 12,157,039 $43.351 $527,019,797.69 $159,702.97
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on an estimate of the maximum number of shares of common stock of the
Registrant to be issued in connection with the merger (the "Merger") of
Liberty Bancorp, Inc. ("Liberty") with and into a wholly owned subsidiary of
the Registrant.
(2) Calculated in accordance with Rule 457(f)(1) based on the aggregate market
value on February 13, 1997 of the shares of Liberty common stock expected to
be canceled in connection with the Merger and computed by dividing (i) the
product of (A) the average of the high and low prices of Liberty common
stock as reported by The Nasdaq Stock Market National Market System on
February 13, 1997 ($50.938) and (B) 10,346,416, representing the maximum
number of shares of Liberty common stock expected to be canceled in
connection with the Merger, by (ii) 12,157,039, representing the maximum
number of shares of common stock of the Registrant to be issued in
connection with the Merger.
(3) In accordance with Rule 457(b), $110,476.96 previously paid in connection
with filing of the Proxy Statement and Prospectus included herewith as
preliminary proxy material has been credited against the registration fee of
$159,702.97, leaving $49,226.01 payable in connection with the filing of
this Registration Statement.
------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
LIBERTY BANCORP, INC.
100 NORTH BROADWAY
OKLAHOMA CITY, OKLAHOMA 73102
February 24, 1997
Dear Shareholder:
You are cordially invited to attend the special meeting of shareholders
(the "Special Meeting") of Liberty Bancorp, Inc. ("LIBERTY") to be held on March
31, 1997 at the Board Room, Third Floor, Liberty Tower, 100 N. Broadway,
Oklahoma City, Oklahoma, commencing at 1:00 p.m. local time.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve a Merger Agreement dated as of December 28, 1996 among
LIBERTY, BANC ONE CORPORATION ("BANC ONE") and Banc One Oklahoma Corporation, a
wholly owned subsidiary of BANC ONE ("BOOC"), pursuant to which LIBERTY will
merge (the "Merger") with and into BOOC. It is anticipated that approval of the
proposed Merger will be the only matter presented at the Special Meeting.
If the Merger is approved and consummated, each issued and outstanding
share of LIBERTY common stock will be converted into the right to receive 1.175
shares of BANC ONE common stock (the "Exchange Rate"). Based on the closing
price of BANC ONE common stock on February , 1997, the Exchange Rate results
in $ of value in BANC ONE common stock for each share of LIBERTY common
stock. However, the Exchange Rate is fixed and the value of the consideration to
be received by LIBERTY shareholders upon consummation of the Merger will vary
based on the market value of BANC ONE common stock.
Your Board of Directors submits the proposed Merger to you after careful
review and consideration. We believe that the proposed Merger will enable
shareholders of LIBERTY to participate in the expanded opportunities for growth
that association with a larger, more geographically diversified, regional
financial organization makes possible. We are confident that the combined
organization and its shareholders will be well positioned to take advantage of
future opportunities as the financial institution industry continues to
consolidate and restructure.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT HOLDERS OF LIBERTY COMMON STOCK
VOTE IN FAVOR OF THE MERGER AT THE SPECIAL MEETING.
Shareholders are urged to read carefully the accompanying Prospectus and
Proxy Statement which contains detailed information concerning the matters to be
considered at the Special Meeting.
Please mark, sign and date the enclosed proxy card and return it as soon as
possible in the enclosed postage paid envelope. If you attend the Special
Meeting, you may vote in person if you wish, even if you have previously mailed
your proxy card.
Sincerely,
Charles E. Nelson
Chairman of the Board and
Chief Executive Officer
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LIBERTY BANCORP, INC.
100 NORTH BROADWAY
OKLAHOMA CITY, OKLAHOMA 73102
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 31, 1997
To the Shareholders of Liberty Bancorp, Inc.:
Notice is hereby given that a special meeting of shareholders of Liberty
Bancorp, Inc. ("LIBERTY") will be held on March 31, 1997 at 1:00 p.m. local time
in the Board Room, 3rd Floor, Liberty Tower, 100 North Broadway, Oklahoma City,
Oklahoma, to consider and vote upon the following matters:
(i) A proposal to approve a Merger Agreement between LIBERTY, BANC ONE
CORPORATION ("BANC ONE") and Banc One Oklahoma Corporation, a wholly owned
subsidiary of BANC ONE ("BOOC"), pursuant to which LIBERTY will merge (the
"Merger") with and into BOOC and each outstanding share of LIBERTY common
stock will be converted into 1.175 shares of BANC ONE common stock.
(ii) Such other business as may properly come before the meeting or
any reconvention thereof.
Only shareholders of record at the close of business on February 10, 1997
are entitled to notice of and to vote at the meeting.
Your vote is important regardless of the number of shares you own. Whether
or not you plan to attend the meeting, PLEASE MARK, DATE AND SIGN THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE.
Oklahoma City, Oklahoma BY ORDER OF THE BOARD OF DIRECTORS
February 24, 1997
Kenneth R. Brown
Secretary
<PAGE> 4
PROSPECTUS
12,157,039 SHARES
BANC ONE CORPORATION
COMMON STOCK
------------------------
LIBERTY BANCORP, INC.
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
MARCH 31, 1997
------------------------
This Prospectus and Proxy Statement (the "Prospectus" or "Prospectus and
Proxy Statement") relates to a special meeting of shareholders (the "Special
Meeting") of Liberty Bancorp, Inc. ("LIBERTY"). At the Special Meeting,
shareholders will consider the proposed merger of LIBERTY with and into Banc One
Oklahoma Corporation ("BOOC"), a wholly owned subsidiary of BANC ONE CORPORATION
("BANC ONE"). If the proposed merger (the "Merger") is consummated, each
outstanding share of LIBERTY common stock, par value $0.01 per share ("LIBERTY
Common Stock"), will be converted into shares of BANC ONE common stock, no par
value ($5 stated value) per share ("BANC ONE Common Stock"), at the rate of
1.175 shares of BANC ONE Common Stock for each share of LIBERTY Common Stock.
The Merger is subject to the approval of the holders of a majority of the
outstanding shares of LIBERTY Common Stock entitled to vote thereon and to the
satisfaction of certain other conditions, including obtaining the approval of
the Board of Governors of the Federal Reserve System.
This Prospectus and Proxy Statement does not cover any resales of BANC ONE
Common Stock received by affiliates of LIBERTY upon consummation of the Merger
and no person is authorized to make use of this Prospectus and Proxy Statement
in connection with any such resale.
The outstanding shares of BANC ONE Common Stock are, and the shares of BANC
ONE Common Stock offered hereby will be, listed and traded on the New York Stock
Exchange. The closing price of BANC ONE Common Stock on the New York Stock
Exchange on February , 1997 was $ . .
THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY
BANK OR NONBANK SUBSIDIARY OF BANC ONE CORPORATION 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.
------------------------
A Special Meeting of Shareholders of LIBERTY will be held on March 31, 1997
at 1:00 pm. local time in the Board Room, 3rd Floor, Liberty Tower, 100 North
Broadway, Oklahoma City, Oklahoma, to consider a proposal to approve the Merger
Agreement (as hereinafter defined).
------------------------
THE DATE OF THIS PROSPECTUS AND PROXY STATEMENT IS FEBRUARY 20, 1997.
<PAGE> 5
TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION................................................................. 4
INCORPORATION BY REFERENCE............................................................ 4
SUMMARY............................................................................... 6
Introduction..................................................................... 6
Parties to the Merger............................................................ 6
Terms of the Merger Agreement and Exchange Rate.................................. 6
Federal Income Tax Consequences.................................................. 6
Vote Required.................................................................... 7
Opinion of LIBERTY's Financial Advisor........................................... 7
No Appraisal Rights.............................................................. 7
Comparative Rights of Shareholders............................................... 7
Regulatory Approval.............................................................. 7
Conditions; Termination.......................................................... 8
Option........................................................................... 8
Accounting Treatment............................................................. 8
Selected Financial Data.......................................................... 9
Comparative Per Share Data....................................................... 10
THE SPECIAL MEETING................................................................... 11
Purpose of the Special Meeting................................................... 11
Record Date and Voting Rights.................................................... 11
Proxies.......................................................................... 11
MERGER................................................................................ 11
General.......................................................................... 11
Conduct of Business Pending the Merger........................................... 12
Operations After the Merger...................................................... 12
Effect of the Merger on LIBERTY Employee Benefit Plans and Options............... 12
Background of and LIBERTY Reasons for the Merger................................. 13
Opinion of LIBERTY's Financial Advisor........................................... 16
BANC ONE Reasons for the Merger.................................................. 20
Conditions to the Merger; Amendment; Termination................................. 20
Federal Income Tax Consequences.................................................. 23
Conversion of Shares and Exchange of Certificates................................ 24
Fractional Shares................................................................ 24
Interests of Certain Persons in the Merger....................................... 25
Resales by Affiliates............................................................ 27
Option........................................................................... 28
Accounting Treatment............................................................. 29
Transfer and Exchange Agents..................................................... 29
COMPARATIVE RIGHTS OF SHAREHOLDERS.................................................... 30
Description of BANC ONE Stock.................................................... 30
Comparison of BANC ONE Common Stock and LIBERTY Common Stock..................... 33
INFORMATION ABOUT BANC ONE CORPORATION................................................ 36
General.......................................................................... 36
Recent Developments.............................................................. 36
Market Prices of and Cash Dividends Declared on BANC ONE Common Stock............ 38
Certain Regulatory Matters....................................................... 38
Management and Additional Information............................................ 42
</TABLE>
2
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PAGE
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INC...................................43General.................................. 43
1996 Financial Results........................................................... 43
Market Prices of and Cash Dividends Declared on LIBERTY Common Stock............. 43
Management and Additional Information............................................ 44
EXPERTS............................................................................... 44
LEGAL MATTERS......................................................................... 44
FUTURE SHAREHOLDER PROPOSALS.......................................................... 44
APPENDIX A--Fairness Opinion of Morgan Stanley & Co. Incorporated..................... A-1
</TABLE>
3
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND PROXY
STATEMENT IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND PROXY
STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY BANC ONE OR LIBERTY. NEITHER THE
DELIVERY OF THIS PROSPECTUS AND PROXY STATEMENT NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF BANC ONE OR LIBERTY SINCE THE DATE HEREOF. THIS
PROSPECTUS AND PROXY STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO PURCHASE ANY SECURITY, OR THE SOLICITATION OF A PROXY, IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF AN
OFFER OR PROXY SOLICITATION.
All information contained herein with respect to LIBERTY has been provided
by LIBERTY, and BANC ONE is relying upon the accuracy of that information. All
information contained herein with respect to BANC ONE has been provided by BANC
ONE, and LIBERTY is relying upon the accuracy of that information.
AVAILABLE INFORMATION
Each of BANC ONE and LIBERTY is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (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.
BANC ONE Common Stock is listed on the New York Stock Exchange and such
reports, proxy statements and other information concerning BANC ONE can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York. LIBERTY Common Stock is included for quotation on The Nasdaq
Stock Market National Market System ("NASDAQ-NMS") and such reports, proxy
statements and other information concerning LIBERTY can be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
BANC ONE has filed with the Commission a Registration Statement on Form S-4
(together with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
BANC ONE Common Stock to be issued pursuant to the Merger. This Prospectus and
Proxy Statement does not contain all information set forth in the Registration
Statement and exhibits thereto. Such additional information may be inspected and
copied as set forth above. Statements contained in this Prospectus and Proxy
Statement or in any document incorporated into this Prospectus and Proxy
Statement by reference as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement or such other document, each such statement being
qualified in all respects by such reference.
INCORPORATION BY REFERENCE
THIS PROSPECTUS AND PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE
THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH
DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS THAT ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE THEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON,
INCLUDING ANY LIBERTY SHAREHOLDER, TO WHOM THIS PROSPECTUS AND PROXY STATEMENT
IS DELIVERED UPON ORAL OR WRITTEN REQUEST, IN THE CASE OF DOCUMENTS RELATING TO
BANC ONE, TO BANC ONE CORPORATION, OH1-0251, 100 EAST BROAD STREET, COLUMBUS,
OHIO 43271-0251, ATTENTION: INVESTOR RELATIONS, TELEPHONE NUMBER
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614/248-6889, AND, IN THE CASE OF DOCUMENTS RELATING TO LIBERTY, TO LIBERTY
BANCORP, INC., 100 NORTH BROADWAY, OKLAHOMA CITY, OKLAHOMA 73102, ATTENTION:
KENNETH R. BROWN, TELEPHONE NUMBER 405/231-6454. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MARCH 24, 1997.
The following documents filed by BANC ONE with the Commission under the
Exchange Act are incorporated herein by reference:
1. Annual Report on Form 10-K for the fiscal year ended December 31,
1995 (as amended by Form 10-K/A filed June 27, 1996).
2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996, June 30, 1996 and September 30, 1996.
3. Current Reports on Form 8-K filed January 28, 1997 and January 29,
1997.
4. The description of BANC ONE Common Stock set forth in BANC ONE's
Registration Statement on Form 8-B dated May 1, 1989, including any
amendment or report filed for the purpose of updating such description.
The following documents filed by LIBERTY with the Commission under the
Exchange Act are incorporated herein by reference:
1. Annual Report on Form 10-K for the fiscal year ended December 31,
1995 (as amended by Form 10-K/A filed June 28, 1996).
2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996, June 30, 1996 and September 30, 1996.
3. Current Report on Form 8-K filed January 6, 1997.
4. The description of LIBERTY Common Stock set forth in LIBERTY's
Registration Statement on Form 8-B dated May 26, 1992, including any
amendment or report filed for the purpose of updating such description.
All documents filed by BANC ONE or LIBERTY pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
Special Meeting of Shareholders of LIBERTY shall be deemed to be incorporated by
reference in this Prospectus and Proxy Statement and to be a part hereof from
the respective dates 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 and Proxy
Statement to the extent that such statement is modified or superseded by a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus and Proxy Statement.
5
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SUMMARY
THE FOLLOWING SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE
IN THIS PROSPECTUS AND PROXY STATEMENT AND THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN.
INTRODUCTION
This Prospectus and Proxy Statement is being furnished in connection with
the solicitation of proxies by the Board of Directors of Liberty Bancorp, Inc.
("LIBERTY"), a multi-bank holding company headquartered in Oklahoma City,
Oklahoma, to be voted at a Special Meeting of Shareholders of LIBERTY to be held
on March 31, 1997 at 1:00 p.m. local time and at any reconvention thereof (the
"Special Meeting") for the purpose of approving a Merger Agreement dated as of
December 28, 1996 (the "Merger Agreement") between LIBERTY, BANC ONE CORPORATION
("BANC ONE"), a multi-bank holding company headquartered in Columbus, Ohio, and
Banc One Oklahoma Corporation, a wholly owned subsidiary of BANC ONE ("BOOC").
This Prospectus and Proxy Statement and the proxy card are being mailed to
the shareholders of LIBERTY for the first time on or about February 24, 1997.
PARTIES TO THE MERGER
LIBERTY is a multi-bank holding company incorporated under the laws of the
State of Oklahoma. As such, it holds all of the shares of its two major banking
subsidiaries, Liberty Bank and Trust Company of Oklahoma City, N.A. and Liberty
Bank and Trust Company of Tulsa, N.A. as well as several other subsidiaries. At
December 31, 1996, LIBERTY had consolidated assets of $2.9 billion, consolidated
total deposits of $2.4 billion and consolidated total stockholders' equity of
$280.3 million. See "INFORMATION ABOUT LIBERTY BANCORP, INC." LIBERTY's
principal executive offices are at 100 North Broadway, Oklahoma City, Oklahoma
73102, and its telephone number is 405/231-6000.
BANC ONE is a multi-bank holding company incorporated under the laws of the
State of Ohio that, at December 31, 1996, operated approximately 1,500 banking
offices in Arizona, Colorado, Illinois, Indiana, Kentucky, Louisiana, Ohio,
Oklahoma, Texas, Utah, West Virginia and Wisconsin. At December 31, 1996, BANC
ONE had consolidated total assets of $101.8 billion, consolidated total deposits
of $72.4 billion and consolidated total stockholders' equity of $8.6 billion.
BOOC is a wholly owned subsidiary of BANC ONE formed under the laws of the State
of Oklahoma. See "INFORMATION ABOUT BANC ONE CORPORATION." The principal office
of BANC ONE is located at 100 East Broad Street, Columbus, Ohio 43271 and its
telephone number is 614/248-5944.
TERMS OF THE MERGER AGREEMENT AND EXCHANGE RATE
Upon the consummation of the Merger (the "Effective Time"), each of the
outstanding shares of LIBERTY Common Stock shall be converted into 1.175 shares
of BANC ONE Common Stock (the "Exchange Rate"). Upon the consummation of the
Merger, LIBERTY will be merged with and into BOOC and the separate corporate
existence of LIBERTY will cease. BOOC, as the surviving corporation in the
Merger and a wholly owned subsidiary of BANC ONE, will continue operations under
the name "Banc One Oklahoma Corporation." It is expected that LIBERTY's current
officers, directors and employees will serve as the officers, directors and
employees of the surviving corporation following the Merger.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Merger is conditioned upon receipt by LIBERTY and BANC
ONE of an opinion dated as of the Effective Time from Wachtell, Lipton, Rosen &
Katz to the effect that, among other things, no gain or loss will be recognized
by LIBERTY's shareholders for Federal income tax purposes as a result of the
exchange of their LIBERTY Common Stock for BANC ONE Common Stock in the Merger,
disregarding for
6
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purposes of the opinion any cash received pursuant to the Merger in connection
with fractional share interests. The tax consequences of the proposed
transaction to shareholders of LIBERTY are summarized under "MERGER -- Federal
Income Tax Consequences."
VOTE REQUIRED
Holders of not less than a majority of the outstanding shares of LIBERTY
Common Stock entitled to vote thereon must vote in favor of the approval of the
Merger Agreement in order for the transaction to be approved. The directors and
executive officers of LIBERTY, together with their affiliates, are entitled to
vote approximately 41.5% of the outstanding shares of LIBERTY Common Stock.
LIBERTY believes that all of the directors' and executive officers' and their
respective affiliates' shares will be voted in favor of the Merger. It is not
necessary for the shareholders of BANC ONE to approve the Merger Agreement.
However, BANC ONE, as the sole shareholder of BOOC, has approved or will approve
the Merger Agreement. For information concerning voting by shareholders of
LIBERTY on the proposed Merger, see "MERGER -- Background of and LIBERTY Reasons
for the Merger."
OPINION OF LIBERTY'S FINANCIAL ADVISOR
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), LIBERTY's financial
advisor, delivered its oral opinion to the LIBERTY Board of Directors (the
"LIBERTY Board") on December 27, 1996, which was confirmed in written opinions
dated December 28, 1996 and the date of this Prospectus and Proxy Statement, to
the effect that, as of the respective dates of the opinions and based upon the
procedures and subject to the assumptions made, matters considered and
limitations described therein, the Exchange Rate pursuant to the Merger
Agreement is fair from a financial point of view to the holders of shares of
LIBERTY Common Stock (other than BANC ONE and its affiliates). The full text of
the written opinion of Morgan Stanley dated the date of this Prospectus and
Proxy Statement is attached as Appendix A hereto and holders of LIBERTY Common
Stock are urged to read carefully the opinion in its entirety. See "MERGER --
Opinion of LIBERTY's Financial Advisor" and Appendix A to this Prospectus and
Proxy Statement.
NO APPRAISAL RIGHTS
The appraisal rights of LIBERTY shareholders are governed by the Oklahoma
General Corporation Act ("Oklahoma Law"). Because LIBERTY had more than 2,000
shareholders of record as of the record date for the Special Meeting and the
shares of BANC ONE Common Stock issuable in the Merger will be listed on a
national securities exchange as of the Effective Time, Oklahoma Law provides
that there are no appraisal rights available to LIBERTY shareholders in
connection with the Merger.
COMPARATIVE RIGHTS OF SHAREHOLDERS
The rights of BANC ONE shareholders are governed by BANC ONE's articles of
incorporation and code of regulations and the applicable provisions of the Ohio
Business Corporations Law ("Ohio Law"), while the rights of LIBERTY shareholders
are governed by LIBERTY's certificate of incorporation and bylaws and the
applicable provisions of Oklahoma Law. If the shareholders of LIBERTY approve
the Merger Agreement and the Merger is subsequently consummated, holders of
LIBERTY Common Stock will become holders of BANC ONE Common Stock. See
"COMPARATIVE RIGHTS OF SHAREHOLDERS" for a discussion of the material
differences in the rights of the holders of LIBERTY Common Stock and BANC ONE
Common Stock.
REGULATORY APPROVAL
In order for the proposed transaction to be completed, approval must be
obtained from the Board of Governors of the Federal Reserve System (the "Federal
Reserve") and the Oklahoma Insurance Commissioner with respect to the
acquisition by BANC ONE of control of an Oklahoma credit life insurance company
now owned by LIBERTY. Regulatory applications seeking such approvals will be
filed with the Federal Reserve and the Oklahoma Insurance Commissioner in
February 1997. In addition, a copy of the
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Federal Reserve application will be provided for informational purposes to the
Oklahoma State Banking Board. It is anticipated, although no assurance can be
given, that each of the Federal Reserve and the Oklahoma Insurance Commissioner
will grant its approval prior to the end of the second quarter of 1997.
CONDITIONS; TERMINATION
Consummation of the Merger is subject to satisfaction or waiver of various
conditions, including compliance by each party with its respective covenants and
confirmation by each party of its respective representations and warranties, the
absence of any material adverse change in the financial condition or business of
LIBERTY or BANC ONE, the fulfillment of certain earnings tests and other
matters. The Merger Agreement may also be terminated by LIBERTY by majority vote
of the LIBERTY Board at any time during the 10 day period commencing two days
after the date on which the approval of the Federal Reserve shall be received
(the "Determination Date"), if the per share price of BANC ONE Common Stock
falls below certain specified levels, as described under "MERGER -- Conditions
to the Merger; Amendment; Termination." If such a termination notice is given by
LIBERTY, BANC ONE may at its option make certain adjustments to the Exchange
Rate, whereupon no termination shall have occurred and the Merger Agreement
shall remain in effect in accordance with its terms.
The Merger Agreement also provides that either party may abandon the Merger
if it is not consummated on or before December 29, 1997. See
"MERGER -- Conditions to the Merger; Amendment; Termination" for a more complete
discussion of the conditions to the Merger.
OPTION
Concurrently with and as a condition to BANC ONE's execution and delivery
of the Merger Agreement, LIBERTY and BANC ONE entered into an Option Agreement
dated as of December 28, 1996 pursuant to which BANC ONE was granted an
irrevocable option (the "Option") to purchase, under certain conditions, up to
1,879,570 shares of LIBERTY Common Stock at a purchase price of $50.25 per
share. The per share purchase price is the closing trade price of a share of
Liberty Common Stock on the NASDAQ-NMS on December 30, 1996, the date the Merger
was announced. The Option becomes exercisable following the occurrence of both a
"Purchase Event" and an "Initial Triggering Event", as those terms are defined
below under "MERGER -- Option." The Option might have the effect of discouraging
other persons interested in acquiring LIBERTY from making acquisition proposals.
As of the date of this Prospectus and Proxy Statement, no Purchase Event or
Initial Triggering Event has occurred and, therefore, the Option is not
presently exercisable.
INTEREST OF CERTAIN PERSONS IN THE MERGER
Directors of LIBERTY and certain members of LIBERTY's management have
interests in the Merger in addition to any interests they may have as
shareholders of LIBERTY generally. These interests include, among others,
certain bonus, potential severance and other employee benefits as described
herein and indemnification rights of LIBERTY directors and officers under the
Merger Agreement. The LIBERTY Board was aware of the interests of all of such
persons at the time it approved the Merger Agreement. See "MERGER -- Interest of
Certain Persons in the Merger."
ACCOUNTING TREATMENT
BANC ONE expects to account for the acquisition of LIBERTY as a purchase
under generally accepted accounting principles. See "MERGER -- Accounting
Treatment."
8
<PAGE> 12
SELECTED FINANCIAL DATA
The following table presents on a historical basis selected consolidated
financial data for BANC ONE and LIBERTY for the nine months ended September 30,
1996 and 1995 and for each of the years in the five year period ended December
31, 1995. This financial data is based on the consolidated financial statements
of BANC ONE and LIBERTY, respectively, incorporated herein by reference.
SELECTED FINANCIAL DATA
(THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------------- -----------------------------------------------------------------------
(unaudited)
1996 1995 1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income
and other income:
BANC ONE........... $ 7,550,728 $ 6,641,701 $ 8,970,888 $ 7,777,941 $ 7,547,130 $ 7,740,657 $ 7,223,889
LIBERTY............ 182,810 179,160 240,083 200,401 185,117 172,762 188,445
Income (loss) from
continuing
operations:
BANC ONE........... $ 1,056,736 $ 941,017 $ 1,277,863 $ 1,005,109 $ 1,172,103 $ 922,227 $ 703,386
LIBERTY............ 20,424 19,515 26,193 25,876 36,532 18,118 5,791
Income (loss) from
continuing
operations per
common share:
BANC ONE........... $ 2.38 $ 2.14 $ 2.91 $ 2.20 $ 2.62 $ 2.06 $ 1.65
LIBERTY............ 2.06 1.98 2.66 2.64 3.74 2.01 0.66
Historical cash
dividends declared
per common share:
BANC ONE........... $ 1.02 $ 0.93 $ 1.24 $ 1.13 $ 0.97 $ 0.81 $ 0.69
LIBERTY............ 0.75 0.60 0.80 0.60 0.30 --(1) --(1)
Total assets (end of
period):
BANC ONE........... $98,562,000 $88,353,313 $90,453,963 $88,922,586 $84,834,656 $81,304,864 $78,178,604
LIBERTY............ 2,905,361 2,704,750 2,922,544 2,883,699 2,659,776 2,428,160 2,489,541
Long-term borrowings
(end of period):
BANC ONE........... $ 3,022,835 $ 2,677,205 $ 2,720,373 $ 1,866,448 $ 1,805,272 $ 1,396,797 $ 983,077
LIBERTY............ 12,299 30,239 40,231 43,086 22,000 20,545 9,828
Total stockholders'
equity (end of
period):
BANC ONE........... $ 8,439,391 $ 8,002,152 $ 8,197,478 $ 7,564,860 $ 7,433,170 $ 6,594,813 $ 5,879,957
LIBERTY............ 273,297 257,547 268,894 234,380 227,245 178,841 159,776
</TABLE>
- ---------------
(1) LIBERTY did not declare any dividends on LIBERTY Common Stock in the periods
noted.
9
<PAGE> 13
COMPARATIVE PER SHARE DATA
The following table sets forth historical per common share income from
continuing operations, cash dividends, book value and market value of: (i) BANC
ONE; (ii) LIBERTY; and (iii) pro forma equivalent per share data of LIBERTY,
calculated by multiplying the historical per share data of BANC ONE by the
Exchange Rate.
<TABLE>
<CAPTION>
PRO FORMA
BANC ONE LIBERTY EQUIVALENT
-------- ------- ----------
<S> <C> <C> <C>
Income from continuing operations per common share:
Year ended December 31, 1995......................... $ 2.91 $ 2.66 $ 3.42
Nine months ended September 30, 1996................. 2.38 2.06 2.80
Cash dividends declared per common share:
Year ended December 31, 1995......................... 1.24 0.80 1.46
Nine months ended September 30, 1996................. 1.02 0.75 1.20
Book value per common share as of:
December 31, 1995.................................... 18.58 28.40 21.83
September 30, 1996................................... 19.24 28.92 22.61
Market value per common share as of December 27,
1996(1).............................................. 44.88(2) 41.75 (3) 52.73
Market value per common share as of February ,
1997(4).............................................. (2) (3)
</TABLE>
- ---------------
(1) The trading day immediately preceding public announcement of the proposed
merger.
(2) Based on the closing price of BANC ONE Common Stock as reported on the New
York Stock Exchange.
(3) Based on the closing price of LIBERTY Common Stock as reported on the
NASDAQ-NMS.
(4) A recent business day preceding the date of this Prospectus and Proxy
Statement.
10
<PAGE> 14
THE SPECIAL MEETING
This Prospectus and Proxy Statement is being furnished to the shareholders
of LIBERTY in connection with the solicitation of proxies by the LIBERTY Board
of Directors to be voted at the Special Meeting. The Special Meeting will be
held on March 31, 1997, at 1:00 p.m. local time in the Board Room, 3rd Floor,
Liberty Tower, 100 North Broadway, Oklahoma City, Oklahoma.
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, the holders of LIBERTY Common Stock will vote on a
proposal to approve the Merger Agreement.
RECORD DATE AND VOTING RIGHTS
The LIBERTY Board has fixed the close of business on February 10, 1997 as
the Record Date for determination of shareholders entitled to notice of and to
vote at the Special Meeting. As of the Record Date, 9,534,042 shares of LIBERTY
Common Stock were outstanding, each of which entitles its holder to one vote on
each matter submitted to the vote of shareholders at the Special Meeting. The
presence in person or by proxy of the holders of a majority of the shares of
LIBERTY Common Stock outstanding is required to constitute a quorum for the
Special Meeting. Approval of the Merger Agreement requires the affirmative vote
of holders of not less than a majority of the outstanding shares of LIBERTY
Common Stock entitled to vote thereon.
Votes, whether in person or by proxy, will be counted and tabulated by
inspectors appointed by LIBERTY. The inspectors will treat shares of LIBERTY
Common Stock represented by a properly executed and returned proxy as present at
the Special Meeting for purposes of determining a quorum. An abstention or
broker non-vote will have the same effect as a vote against the proposal to
approve the Merger Agreement.
PROXIES
The form of proxy for use at the Special Meeting accompanies this
Prospectus and Proxy Statement. A shareholder may use a proxy whether or not he
or she intends to attend the Special Meeting in person. The proxy may be revoked
in writing by the person giving it at any time before it is exercised by notice
to the Secretary of LIBERTY, by executing and submitting a later dated proxy or
by attending and voting in person at the Special Meeting. All proxies validly
submitted and not revoked will be voted in the manner specified therein. IF NO
SPECIFICATION IS MADE, THE PROXIES WILL BE VOTED IN FAVOR OF APPROVAL OF THE
MERGER AGREEMENT. The LIBERTY Board is not aware of any other matters that may
be presented for action at the Special Meeting, but if other matters do properly
come before the meeting it is intended that the shares represented by the
accompanying proxy will be voted by the persons named in the proxy in accordance
with the recommendation of the LIBERTY Board.
Solicitation of proxies will be made in person, by mail or by telephone or
telegraph by present directors, officers and employees of LIBERTY for which no
additional compensation will be paid. LIBERTY will bear the cost of solicitation
of proxies from its shareholders and may reimburse brokers and others for their
expenses in forwarding solicitation material to beneficial owners of its voting
stock.
MERGER
The information in this Prospectus and Proxy Statement concerning the terms
of the Merger is a summary only and is qualified in its entirety by reference to
the Merger Agreement, which agreement is filed as an exhibit to the Registration
Statement and incorporated by reference herein.
GENERAL
The Merger Agreement provides for the merger of LIBERTY with and into BOOC.
At the Effective Time each of the outstanding shares of LIBERTY Common Stock
will be converted into 1.175 shares of
11
<PAGE> 15
BANC ONE Common Stock (subject to anti-dilution adjustments in certain
circumstances such as stock dividends or stock splits), which shares of BANC ONE
Common Stock will be issued as a result of the Merger. An increase or decrease
in the market price of BANC ONE Common Stock will not affect the Exchange Rate
or the number of shares of BANC ONE Common Stock issuable in the Merger;
therefore, the value of the consideration to be received by LIBERTY's
shareholders in the Merger will increase if the market price of BANC ONE Common
Stock increases as of the Effective Time or decrease if the market price of BANC
ONE Common Stock decreases as of the Effective Time. However, LIBERTY has the
right to terminate the Merger Agreement if the market price of BANC ONE Common
Stock is below certain thresholds and BANC ONE does not elect to increase the
Exchange Rate, as discussed under " -- Conditions to the Merger; Amendment;
Termination".
Holders of not less than a majority of the outstanding shares of LIBERTY
Common Stock entitled to vote thereon must vote in favor of the approval of the
Merger Agreement in order for the transaction to be completed. Subject to such
shareholder approval and the satisfaction of certain conditions and receipt of
all requisite regulatory approvals, the Merger will become effective as soon as
possible thereafter in accordance with Oklahoma Law on the later to occur of (x)
the filing with the Secretary of State of the State of Oklahoma of a certificate
of merger and (y) that time, if any, subsequent to the time of such filing
designated in the certificate of merger as the time the Merger shall become
effective.
The Boards of Directors of BANC ONE, BOOC and LIBERTY have approved the
Merger Agreement. BANC ONE, as the sole shareholder of BOOC, has approved or
will approve the Merger Agreement. Approval of the Merger Agreement by the
shareholders of BANC ONE is not required for consummation of the Merger.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, LIBERTY has agreed to carry on its
business in substantially the same manner as conducted prior to the execution of
the Merger Agreement. The Merger Agreement permits LIBERTY to declare and pay
quarterly dividends at the rate of $0.25 per share for the fourth quarter of
1996 and not more than $0.30 per share beginning with the first calendar quarter
of 1997 and until but not including the quarter in which the holders of LIBERTY
Common Stock become entitled to receive regular quarterly dividends on the
shares of BANC ONE Common Stock into which the shares of LIBERTY Common Stock
will be converted by virtue of the Merger.
OPERATIONS AFTER THE MERGER
Upon the consummation of the Merger, LIBERTY will be merged with and into
BOOC and the separate corporate existence of LIBERTY will cease. BOOC, as the
surviving corporation in the Merger and a wholly owned subsidiary of BANC ONE,
will continue operations under the name "Banc One Oklahoma Corporation." It is
expected that LIBERTY's current officers, directors and employees will serve as
the officers, directors and employees of the surviving corporation following the
Merger.
EFFECT OF THE MERGER ON LIBERTY EMPLOYEE BENEFIT PLANS AND OPTIONS
Under the terms of a separate benefits agreement between LIBERTY and BANC
ONE, each employee of LIBERTY or its subsidiaries who continues as an employee
following the Effective Time will be entitled, as a new employee of BANC ONE or
a subsidiary of BANC ONE, to participate in such employee benefit plans or
deferred compensation, stock option, bonus or incentive plans or other employee
benefit or fringe benefit programs that may be in effect generally for employees
of all BANC ONE subsidiaries, on the same basis as similarly situated employees
of other BANC ONE subsidiaries if such employee is eligible and, if required,
selected for participation therein under the terms thereof, subject to the right
of BANC ONE to amend, modify or terminate any such plans or programs and
provided that such employee shall not be participating in a similar plan which
is maintained by LIBERTY after the Effective Time. BANC ONE will, for purposes
of recognizing vesting and any age or period of service requirements for
commencement of participation with respect to any plans or programs in which
former employees of LIBERTY may participate, credit each such
12
<PAGE> 16
employee with his or her term of service with LIBERTY and its subsidiaries.
Notwithstanding the foregoing, employees of LIBERTY will not initially
participate in the BANC ONE 401(k) Plan. Rather, the LIBERTY Profit Sharing,
Salary Deferral and Employee Stock Ownership Plan will remain in effect until
January 1, 1999, at which time it will merge into the BANC ONE 401(k) Plan,
unless LIBERTY and BANC ONE otherwise agree to an earlier merger date.
As of February 10, 1997 there were outstanding and unexercised stock
options for 812,374 shares of LIBERTY Common Stock held by current or former
directors, officers and employees of LIBERTY and its subsidiaries. Immediately
following the Effective Time, all unexercised stock options for shares of
LIBERTY Common Stock issued to and held by such persons immediately prior to the
Effective Time shall be assumed by BANC ONE and converted into options to
purchase that number of shares of BANC ONE Common Stock equal to the number of
shares of LIBERTY Common Stock subject to such unexercised options immediately
prior to the Effective Time multiplied by the Exchange Rate. The per share
exercise price of such options for shares of BANC ONE Common Stock shall be the
exercise price applicable to the options for shares of LIBERTY Common Stock
converted into options for BANC ONE Common Stock divided by the Exchange Rate.
BACKGROUND OF AND LIBERTY REASONS FOR THE MERGER
In the 1980's, LIBERTY experienced operating losses and loan charge offs
resulting primarily from the adverse economic conditions in Oklahoma and the
Southwest. In 1988, in order to improve LIBERTY'S financial condition and to
avoid a possible default on outstanding indebtedness, LIBERTY completed a
private recapitalization which resulted in the elimination of substantially all
of LIBERTY'S long-term debt, the conversion of all then existing preferred stock
into common stock and an increase in capital through a $75 million offering of
newly issued common stock. Subsequent to such recapitalization, in 1990, Charles
E. Nelson was appointed Chief Executive Officer of LIBERTY and management
developed a five-year plan designed to restore asset quality, invest in the
franchise and improve profitability. As a result of such plan and improving
economic conditions: (i) LIBERTY'S nonperforming assets decreased from $116
million at the beginning of 1990 to $17.3 million at the end of 1995; (ii)
LIBERTY increased its eleven banking locations at the beginning of 1990 to
thirty-two banking locations at the end of 1995, which were added principally
through the acquisition of five community banks in key strategic locations
within the Oklahoma City and Tulsa metropolitan areas; and (iii) LIBERTY'S
profitability improved from a net income before extraordinary items of $2.1
million in 1990 to $26.2 million in 1995. Dividends were resumed in 1993
beginning at a rate of $.10 per share per quarter, growing to $.25 per share per
quarter in 1996. LIBERTY'S total assets grew from $2.4 billion at year end 1990
to $2.9 billion at year end 1995.
In the early 1990's, consistent with national banking industry trends,
significant banking consolidation began to occur in Oklahoma. Out-of-state bank
holding companies began to make significant investments in the state through
acquisition, which included the 1993 acquisition by BANC ONE of Central Banking
Group, Inc., which then owned Central Bank of Oklahoma City and Friendly Bank of
Oklahoma City. During this time period, LIBERTY received numerous inquiries from
various out of state bank holding companies concerning the possible interest of
LIBERTY in business combinations, but none of these inquiries were accepted
because management was continuing to implement the five year plan adopted in
1990 and LIBERTY believed that this strategy was in the best interests of
shareholders.
In June, 1995, the LIBERTY Board established an Executive Committee to
assist management in evaluating LIBERTY'S strategic alternatives. As of the date
of this Prospectus and Proxy Statement, members of the Executive Committee
collectively beneficially own approximately 38% of the outstanding LIBERTY
Common Stock. In light of consolidation activity in the banking industry, the
opportunities available to LIBERTY and the pending development of a new long
term plan, the Executive Committee authorized management to retain Morgan
Stanley as a financial advisor to assist management in the evaluation process.
In September, 1995, the Executive Committee met with representatives of Morgan
Stanley, at which time Morgan Stanley made a presentation to the Executive
Committee concerning the current operating environment for banks, an analysis of
the general consolidation and acquisition activity occurring in the banking
industry and an overview of the strategic alternatives available to banks in
general.
13
<PAGE> 17
The Executive Committee determined that a review of the strategic alternatives
specifically available to LIBERTY should be considered in light of the then
current conditions in the banking industry nationally, regionally and locally.
In September, 1995, the full LIBERTY Board authorized the Executive Committee to
undertake such a review and to make appropriate recommendations to the LIBERTY
Board at such time as the Executive Committee determined to be appropriate.
In October, 1995, the Executive Committee again met with representatives of
Morgan Stanley to review LIBERTY'S current plan and strategic alternatives.
Management of LIBERTY presented a draft of LIBERTY'S 1996 to 2000 strategic plan
based on the assumption that LIBERTY would remain independent. Morgan Stanley
discussed the various strategic alternatives available to LIBERTY including: (i)
remaining independent and growing internally or through acquisitions; (ii)
seeking a merger of equals to achieve consolidation in LIBERTY'S existing
markets or for purposes of extending its markets; or (iii) entering into a
business combination with a larger bank. Management and Morgan Stanley also
presented information concerning institutions which might be potential business
combination partners. At such meeting, BANC ONE was identified as one of the
most attractive candidates for a potential business combination and the
Executive Committee authorized management to determine the possible interest of
BANC ONE in a business combination with LIBERTY before the Executive Committee
made a final recommendation on LIBERTY'S future direction.
Subsequent to such meeting, Mr. Nelson met on several occasions with senior
executive officers of BANC ONE to explore possible mutual interest in a business
combination. Several additional meetings were held between representatives of
BANC ONE and LIBERTY to discuss in general terms LIBERTY'S financial condition
and future prospects and the possible interest of BANC ONE in a business
combination. However, no specific business combination was proposed by BANC ONE
or LIBERTY. In light of the absence of any specific proposal, the Executive
Committee subsequently determined in the Spring of 1996 that LIBERTY should
continue to remain independent, but to also consider opportunities as they
arose, including business combinations with larger bank holding companies in
stock transactions offering enhanced liquidity and risk diversification. Given
the Executive Committee's view that Morgan Stanley had been retained to assist
in a transaction and a transaction was not imminent, the Executive Committee
authorized management to terminate the formal financial advisory agreement with
Morgan Stanley pending further developments.
In October, 1996, Mr. Nelson reported to the Executive Committee that the
recently proposed acquisition of Boatmen's Bancshares, Inc. by NationsBank
Corporation (announced in August, 1996) suggested an increased value that
LIBERTY shareholders might receive in a business combination transaction. Mr.
Nelson indicated to the Committee that a number of larger regional bank holding
companies were continuing to express interest in a business combination with
LIBERTY and that representatives of BANC ONE had recently contacted him to
request a renewal of discussions concerning a possible business combination. The
Executive Committee authorized Mr. Nelson to pursue such discussions.
At a December 18, 1996 meeting of the Executive Committee, Mr. Nelson
reported to the Executive Committee that several meetings had been held with
representatives of BANC ONE since the October, 1996 contact. Mr. Nelson also
reported that, given the recent developments, Morgan Stanley again had been
retained as financial advisor and had provided preliminary information to
LIBERTY suggesting that, based on a number of factors, as a result of the
NationsBank/Boatmen's transaction, LIBERTY'S potential value had increased. Mr.
Nelson indicated that BANC ONE had proposed a business combination with LIBERTY
on terms which, in his opinion, after consultation with Morgan Stanley and some
of the members of the Executive Committee, were not acceptable. Mr. Nelson
outlined the issues and risks facing LIBERTY in connection with the strategy of
remaining independent. Given the alternatives available to LIBERTY and the
potential value and other benefits, such as enhanced liquidity and risk
diversification, to shareholders from a business combination transaction in the
current market, the Executive Committee authorized Mr. Nelson first to pursue
further negotiations with BANC ONE, but if an acceptable transaction could not
be negotiated, then to pursue a potential business combination with other
potentially interested partners.
Mr. Nelson and two members of the Executive Committee, Mr. Torray and Mr.
Paul, met with representatives of BANC ONE on December 19, 1996 to determine
whether mutual agreement could be
14
<PAGE> 18
reached on an acceptable exchange rate. As a result of such meeting, BANC ONE
proposed an exchange rate of 1.175 shares of BANC ONE Common Stock for each
share of LIBERTY Common Stock, which, based on the then current market price of
BANC ONE Common Stock, represented approximately $51.85 per share of LIBERTY
Common Stock. This proposal was reported to the Executive Committee, which
authorized management to proceed with the negotiation of a definitive agreement
with BANC ONE on such terms for possible recommendation to the full LIBERTY
Board. Between December 20 and December 27, 1996, representatives of LIBERTY,
Morgan Stanley and LIBERTY'S legal counsel engaged in negotiations with BANC ONE
with respect to a definitive agreement. During such period, representatives of
BANC ONE also conducted preliminary due diligence with respect to LIBERTY and
representatives of LIBERTY conducted preliminary due diligence with respect to
BANC ONE.
On December 27, 1996, the Executive Committee met to receive a report on
the status of the negotiations, a summary of the terms of the proposed merger
agreement and the preliminary opinion of Morgan Stanley concerning the fairness
of the transaction. The LIBERTY Board met immediately following the Executive
Committee meeting, on December 27, 1996, to consider the proposed transaction.
Mr. Nelson reviewed the events leading up to the meeting, including the
deliberations of the Executive Committee since the fall of 1995 and the reasons
for his recommendation that a business combination with BANC ONE on the terms
proposed be considered. Morgan Stanley made a presentation to the LIBERTY Board
summarizing the proposed transaction with BANC ONE, the current bank merger and
acquisition environment and the results of various financial analyses it had
prepared in connection with the proposed transaction. Morgan Stanley reported
its preliminary view that, subject to the assumptions made, matters considered
and limitations on the review undertaken, the Exchange Rate was fair from a
financial point of view to the holders of shares of LIBERTY Common Stock.
Representatives of Wachtell, Lipton, Rosen & Katz, special legal counsel to the
LIBERTY Board, reviewed the fiduciary obligations of directors in considering
the proposed transaction and a representative of Crowe & Dunlevy, legal counsel
to LIBERTY, reviewed and summarized the terms of the proposed Merger Agreement
and Stock Option Agreement that had been negotiated with BANC ONE. Members of
the LIBERTY Board asked questions concerning the proposed transaction of Mr.
Nelson, Morgan Stanley, Wachtell, Lipton, Rosen & Katz and Crowe & Dunlevy.
Following extensive discussion, the LIBERTY Board concluded that the Merger
Agreement was in the best interest of LIBERTY and its shareholders, and, by
unanimous vote of the directors participating in the meeting, the LIBERTY Board
approved the Merger and related Stock Option and directed that management be
authorized to execute the Merger Agreement and Stock Option Agreement and that
the Merger Agreement be submitted to a vote of the shareholders of LIBERTY.
On December 28, 1996, LIBERTY and BANC ONE executed the Merger Agreement
and the Stock Option Agreement. On December 30, 1996, the parties issued a press
release announcing the proposed Merger.
In reaching its decision to recommend approval of the Merger, the LIBERTY
Board considered a variety of factors. Among other factors, the LIBERTY Board
considered:
(i) The competitive and technological challenges facing LIBERTY and
the banking and financial services industry, including the likelihood of
continuing consolidation and increasing competition, the growing importance
of financial resources and economies of scale to a banking institution's
ability to compete successfully in the changing environment and the
increasing cost of technology; the risk involved in attempting to achieve
growth through internal means or through acquisition; the value being
offered by BANC ONE in the Merger compared to the present value of
LIBERTY'S shares on a basis assuming the reasonable implementation of
LIBERTY'S own business strategies; and the probability that a business
combination with BANC ONE would likely result in both greater short term
and long term value to LIBERTY shareholders than other alternatives
reasonably available to LIBERTY, including remaining independent.
(ii) The financial terms of the Merger, including the Exchange Rate,
the estimated current value of LIBERTY in freely negotiated market
transactions, and the value of the consideration to be received by
15
<PAGE> 19
LIBERTY shareholders resulting from the Exchange Rate in relation to
LIBERTY'S book value, earnings and market value.
(iii) The business and financial condition of BANC ONE, the nature of
its franchise, its historic profitability, its business and operating
philosophy, its business mix and its stock price performance.
(iv) The treatment of a Merger as a tax free exchange of LIBERTY
Common Stock for BANC ONE Common Stock for federal income tax purposes.
(v) The opinion of Morgan Stanley, based upon the procedures and
subject to the assumptions made, matters considered and limitations set
forth in its opinion, as to the fairness, from a financial point of view,
of the Exchange Rate to the holders of LIBERTY Common Stock;
(vi) The prior experience of BANC ONE in implementing and closing bank
acquisitions and the likelihood that the required regulatory approvals
could be obtained to consummate the Merger.
(vii) The likelihood that the Merger with BANC ONE would make LIBERTY
a stronger entity, better able to serve the convenience and needs of its
community and customers as a result of being affiliated with a
substantially larger banking institution, thereby affording access to
greater financial and managerial resources and a broader array of potential
products, services and technologies.
(viii) The diversification of investment risk available to holders of
LIBERTY Common Stock who would own shares in a larger financial institution
operating in numerous product and geographic markets in the United States.
(ix) The substantially increased investment liquidity available to
holders of BANC ONE Common Stock as a result of the larger market
capitalization of BANC ONE and the greater trading volume in BANC ONE
Common Stock.
The foregoing discussion of the information and factors considered by the
LIBERTY Board is not intended to be exhaustive but is believed to include the
material factors considered by the LIBERTY Board. In reaching its determination
to approve and recommend the Merger, the LIBERTY Board did not assign any
relative or specific weights to the foregoing factors, and the individual
directors may have given differing weights to different factors.
As of February 10, 1997, the directors and executive officers of LIBERTY
together with their affiliates, as a group, were entitled to vote approximately
3,952,458 shares of LIBERTY Common Stock representing approximately 41.5% of the
shares outstanding. These persons will be entitled to receive the same
consideration for their shares as other LIBERTY shareholders upon consummation
of the Merger. LIBERTY believes that all of the directors' and executive
officers' and their respective affiliates' shares will be voted in favor of the
Merger. After the Merger, LIBERTY's directors and executive officers as a group
will own less than 1% of the outstanding shares of BANC ONE Common Stock.
OPINION OF LIBERTY'S FINANCIAL ADVISOR
LIBERTY retained Morgan Stanley to act as its financial advisor in
connection with the Merger. Morgan Stanley was selected by the Executive
Committee of LIBERTY to act as LIBERTY'S financial advisor based on Morgan
Stanley's qualifications, expertise and reputation. At the December 27, 1996
meeting of the LIBERTY Board, Morgan Stanley delivered its oral opinion to the
LIBERTY Board (which was formalized in written form on December 28, 1996) that
as of such date and subject to the various considerations set forth in the
written opinion, the Exchange Rate pursuant to the Merger Agreement was fair
from a financial point of view to the holders of shares of LIBERTY Common Stock
(other than BANC ONE and its affiliates). Morgan Stanley subsequently confirmed
its opinion by delivering a written opinion dated the date of this Prospectus
and Proxy Statement.
THE FULL TEXT OF THE MORGAN STANLEY OPINION DATED THE DATE OF THIS
PROSPECTUS AND PROXY STATEMENT WHICH SETS FORTH, AMONG OTHER THINGS, THE
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED, AND LIMITATIONS ON
THE REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX A TO THIS PROSPECTUS AND PROXY
STATEMENT.
16
<PAGE> 20
LIBERTY SHAREHOLDERS ARE URGED TO, AND SHOULD, READ THIS OPINION CAREFULLY AND
IN ITS ENTIRETY. MORGAN STANLEY'S OPINION IS DIRECTED TO THE LIBERTY BOARD AND
THE FAIRNESS OF THE EXCHANGE RATE IN THE MERGER AGREEMENT FROM A FINANCIAL POINT
OF VIEW TO THE HOLDERS OF SHARES OF LIBERTY COMMON STOCK, AND IT DOES NOT
ADDRESS ANY OTHER ASPECT OF THE MERGER, NOR DOES IT CONSTITUTE A RECOMMENDATION
TO ANY HOLDER OF LIBERTY COMMON STOCK AS TO HOW TO VOTE WITH RESPECT TO THE
MERGER. THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET FORTH IN THIS
PROSPECTUS AND PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF SUCH OPINION.
In connection with rendering its written opinion dated December 28, 1996,
Morgan Stanley, among other things: (i) reviewed certain publicly available
financial statements and other information of LIBERTY and BANC ONE,
respectively; (ii) reviewed certain internal financial statements and other
financial and operating data concerning LIBERTY and BANC ONE prepared by the
managements of LIBERTY and BANC ONE, respectively; (iii) reviewed certain
financial projections of LIBERTY and BANC ONE prepared by the managements of
LIBERTY and BANC ONE, respectively; (iv) discussed the past and current
operations and financial condition and the prospects of LIBERTY and BANC ONE
with senior executives of LIBERTY and BANC ONE, respectively; (v) analyzed the
pro forma impact of the Merger on the combined company's earnings per share,
consolidated capitalization and financial ratios; (vi) reviewed the reported
prices and trading activity for LIBERTY Common Stock and BANC ONE Common Stock;
(vii) compared the financial performance of LIBERTY and BANC ONE and the prices
and trading activity of LIBERTY Common Stock and BANC ONE Common Stock with that
of certain other comparable publicly traded companies and their securities;
(viii) discussed the results of regulatory examinations of LIBERTY and BANC ONE
with the senior managements of LIBERTY and BANC ONE, respectively; (ix)
discussed the strategic objectives of the Merger and the plan for the combined
company with the senior executives of LIBERTY and BANC ONE; (x) reviewed and
discussed with the senior managements of LIBERTY and BANC ONE certain estimates
of the cost savings projected by LIBERTY and BANC ONE for the combined company
and compared such amounts to those estimates in certain precedent transactions;
(xi) reviewed the financial terms, to the extent publicly available, of certain
comparable precedent transactions; (xii) participated in discussions and
negotiations among representatives of LIBERTY and BANC ONE and their financial
and legal advisors; (xiii) reviewed the draft Merger Agreement, the draft Stock
Option Agreement between LIBERTY and BANC ONE, and certain related documents;
and (xiv) considered such other factors as it deemed appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
supplied or otherwise made available to Morgan Stanley by LIBERTY and BANC ONE
for the purposes of the opinion. With respect to the financial projections,
including the estimates of cost savings expected to result from the Merger,
Morgan Stanley assumed that they had been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the future
financial performance of LIBERTY and BANC ONE. Morgan Stanley did not make any
independent valuation or appraisal of the assets or liabilities of LIBERTY and
BANC ONE, nor was Morgan Stanley furnished with any such appraisals. Morgan
Stanley did not examine any individual loan credit files of LIBERTY or BANC ONE.
In addition, Morgan Stanley assumed the Merger would be consummated in
accordance with the terms set forth in the Merger Agreement. Morgan Stanley's
opinion was necessarily based on economic, market and other conditions as in
effect on, and the information made available to Morgan Stanley as of, the date
of the opinion.
The following is a brief summary of the financial analyses performed by
Morgan Stanley and reviewed with the LIBERTY Board in connection with rendering
Morgan Stanley's opinion on December 28, 1996.
Comparable Company Analysis. As part of its analysis, Morgan Stanley
compared certain financial information of LIBERTY with corresponding publicly
available information of (i) a group of ten publicly traded bank holding
companies that Morgan Stanley considered comparable in certain respects with
LIBERTY (the "Peer Group"), and (ii) 35 regional bank holding companies (the
"Morgan Stanley Bank Index" and together with the Peer Group, the
"Comparables"). Historical financial information used in connection with the
ratios provided below with respect to the Comparables is as of September 30,
1996.
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Morgan Stanley analyzed the relative performance and value of LIBERTY by
comparing certain market trading statistics for LIBERTY with the Comparables.
Market information used in ratios provided below is as of December 26, 1996. The
market trading information used in the valuation analysis was market price to
book value (which was 1.4x in the case of LIBERTY; 2.0x in the case of the
average of the Peer Group; and 2.4x in the case of the average of the Morgan
Stanley Bank Index) and market price to estimated earnings per share for 1997
(which was 14.2x in the case of LIBERTY; 12.7x in the case of the average of the
Peer Group; and 12.9x in the case of the average of the Morgan Stanley Bank
Index). Earnings per share estimates for LIBERTY, the Morgan Stanley Bank Index
and the Peer Group were based on the most recent available First Call estimates.
First Call is a data service that monitors and publishes compilations of
earnings estimates produced by selected research analysts regarding companies of
interest to institutional shareholders. The implied range of values for LIBERTY
Common Stock derived from the analysis of the Comparables' market price to book
value and market price to 1997 estimated earnings per share ranged from
approximately $29 to $52 per share.
Dividend Discount Analysis. Morgan Stanley performed a dividend discount
analysis to determine a range of present values per share of LIBERTY Common
Stock assuming LIBERTY continued to operate as a stand-alone entity. This range
was determined by adding (i) the present value of the estimated future dividend
stream that LIBERTY could generate and (ii) the present value of the "terminal
value" of LIBERTY Common Stock at the end of the year 2002. To determine a
projected dividend stream, Morgan Stanley assumed a constant equity/assets ratio
of 7%. The earnings projections which formed the basis for the dividends were
adapted from First Call estimates for 1996 and 1997 as of December 26, 1996, and
earnings and asset growth rates ranging from 6% to 10% for estimating earnings
for 1998 through 2002. The "terminal value" of LIBERTY Common Stock at the end
of the period was determined by applying two price-to-earnings multiples (10x
and 12x) to year 2002 projected earnings. The dividend stream and terminal
values were discounted to present values using discount rates of 12% and 14%,
which Morgan Stanley viewed as the appropriate discount rate range for a company
with LIBERTY'S risk characteristics. Based on the above assumptions, the fully
diluted stand-alone value of LIBERTY Common Stock ranged from approximately $31
to $40 per share.
Implied Acquisition Value. As part of its analysis of the acquisition
valuation, Morgan Stanley assumed that the net present value of estimated cost
savings was added to the stand-alone value of LIBERTY Common Stock calculated
using First Call estimates as described above (see "Dividend Discount Analysis"
above). Based on cost savings ranging from $23 to $34 million (20%-30% of
LIBERTY'S non-interest expense base), discount rates of 12% and 14%, a phase-in
of cost savings over two years and an expense growth rate of 2% per year, merger
and reorganization charges equal to fully phased-in pre-tax cost savings
incurred in the first year following the Merger and price-to-earnings terminal
multiples of 10x and 12x in the year 2002, Morgan Stanley estimated the implied
acquisition value of LIBERTY Common Stock to range from approximately $37 to $48
and approximately $40 to $53, assuming allocation of 50% and 75% of the value of
the estimated cost savings to LIBERTY, respectively.
Precedent Transaction Analysis. Morgan Stanley performed an analysis of
fourteen precedent transactions ("Precedent Transactions") by selecting holding
companies of commercial banks that Morgan Stanley deemed comparable to the
Merger in order to calculate a valuation range for the LIBERTY Common Stock.
Multiples of book value and earnings implied by the consideration paid in
Precedent Transactions were applied to book value and 1997 estimated earnings
per share of LIBERTY to yield a range of values for LIBERTY Common Stock.
Multiples of estimated earnings (based on Institutional Brokers' Estimate
System estimates prior to announcement for the Precedent Transactions) and of
book value per share ranging from 14x - 17x and from 2.0x - 2.4x, respectively,
derived from the comparable transactions were applied to the 1997 estimated
earnings (based on First Call estimates as of December 26, 1996 per share of
LIBERTY) and book value to yield an implied range of values for LIBERTY Common
Stock ranging from approximately $41 to $69 per share.
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Implied Premium Analysis. Morgan Stanley analyzed the ratio of closing
prices per share of LIBERTY Common Stock and BANC ONE Common Stock during the
twelve-month period ending December 26, 1996. Morgan Stanley observed that the
implied premium over the Exchange Rate during such period was 18%, 24% over the
six-month period, 28% over the three-month period, 28% over the one-month
period, and 27% over the one-week period, in each case, prior to December 26,
1996. Morgan Stanley also observed that the implied premium over the Exchange
Rate based on the closing market prices of LIBERTY Common Stock and BANC ONE
Common Stock on December 26, 1996 of $41.25 and $45.00, respectively, was
approximately 28%.
Contribution Analysis. Morgan Stanley reviewed the pro forma effects of
the Merger and computed the contribution to the combined company's pro forma
financial results attributable to each of LIBERTY and BANC ONE. The computation
showed, among other things, that LIBERTY and BANC ONE would contribute to the
combined company approximately 3.3% and 96.7%, respectively, of book value as of
September 30, 1996, 1.8% and 98.2%, respectively, of 1997 estimated earnings
based on First Call estimates, and 2.0% and 98.0%, respectively, of market value
as of December 26, 1996. Morgan Stanley calculated that the Exchange Rate would
result in an allocation between the holders of LIBERTY Common Stock and BANC ONE
Common Stock of pro forma ownership of the combined company equal to
approximately 2.5% and 97.5%, respectively.
In connection with its written opinion dated as of the date of this
Prospectus and Proxy Statement, Morgan Stanley confirmed the appropriateness of
its reliance on the analyses used to render its December 28, 1996 opinion by
performing procedures to update certain of such analyses and by reviewing the
assumptions upon which such analyses were based and the factors considered in
connection therewith.
No company or transaction used in the comparable company and comparable
transaction analyses is identical to LIBERTY or the Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning financial and operating characteristics
of LIBERTY and other factors that could affect the public trading value of the
companies to which they are being compared. Mathematical analysis (such as
determining the average or median) is not in itself a meaningful method of using
comparable transaction data or comparable company data.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all its
analysis as a whole and did not attribute any particular weight to any analysis
or factor considered by it. Morgan Stanley believes that selecting any portion
of its analyses, without considering all analyses, would create an incomplete
view of the process underlying its opinion. In addition, Morgan Stanley may have
deemed various assumptions more or less probable than other assumptions, so that
the ranges of valuations resulting from any particular analysis described above
should not be taken to be Morgan Stanley's view of the actual value of LIBERTY.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of LIBERTY and BANC ONE. The
analyses performed by Morgan Stanley are not necessarily indicative of actual
value, which may be significantly more or less favorable than suggested by such
analyses. Such analyses were prepared solely as a part of Morgan Stanley's
analysis of the fairness from a financial point of view of the Exchange Rate
pursuant to the Merger Agreement to the holders of shares of LIBERTY Common
Stock and were conducted in connection with the delivery of Morgan Stanley's
opinion. The analyses do not purport to be appraisals or to reflect the prices
at which LIBERTY might actually be sold.
As described above, Morgan Stanley's opinion and the information provided
by Morgan Stanley to the LIBERTY Board were factors in making its determination
to recommend approval of the Merger Agreement and the transactions contemplated
thereby. Consequently, the Morgan Stanley analyses described above should not be
viewed as determinative of the opinion of the entire LIBERTY Board or the view
of the management with respect to the value of LIBERTY. The Exchange Rate
pursuant to the Agreement was
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determined through negotiations between LIBERTY and BANC ONE and was approved by
all of the members of the LIBERTY Board participating in the meeting at which it
was approved.
Morgan Stanley is an internationally recognized investment banking and
advisory firm. As part of its investment banking business, Morgan Stanley is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuation for estate, corporate and other purposes. In the course of its
business, Morgan Stanley and its affiliates may actively trade the debt and
equity securities of LIBERTY and BANC ONE for their own account and for the
accounts of customers and accordingly may at times hold a long or short position
in such securities. In the past, Morgan Stanley has provided financial advisory
and financing services to LIBERTY for which services Morgan Stanley received
customary fees.
Pursuant to a letter dated December 12, 1996, LIBERTY has agreed to pay
Morgan Stanley (i) an advisory fee estimated to be $50,000 to $100,000 which is
payable if the Merger is not consummated and (ii) a transaction fee, calculated
as a percentage of the aggregate value of the transaction determined at the time
of consummation, estimated to be approximately $3.5 million which is payable
upon the consummation of the Merger. Any advisory fee paid will be credited
against the transaction fee. In addition, LIBERTY has agreed, among other
things, to reimburse Morgan Stanley for all expenses incurred in connection with
the services provided by Morgan Stanley, and to indemnify and hold harmless
Morgan Stanley and certain related parties from and against certain liabilities
and expenses, which may include certain liabilities under the federal securities
laws, in connection with its engagement.
BANC ONE REASONS FOR THE MERGER
BANC ONE believes that the affiliation of LIBERTY with BANC ONE will
provide BANC ONE with a meaningful expansion of BANC ONE's customer base and
assets. Such expansion will provide BANC ONE with greater geographic diversity
and the opportunity to realize increased economies of scale while serving new
customers with the expertise and assistance of the capable and experienced staff
of LIBERTY.
CONDITIONS TO THE MERGER; AMENDMENT; TERMINATION
Consummation of the Merger is subject to satisfaction of a number of
conditions, including:
(1) the receipt of all necessary approvals of the transactions
contemplated by the Merger Agreement by governmental agencies and
authorities, including the Federal Reserve and the Oklahoma Insurance
Commissioner, and each of such approvals shall remain in full force and
effect at the Effective Time;
(2) there being no change in the consolidated financial condition,
aggregate net assets, shareholders' equity, business or operating results
of LIBERTY and its subsidiaries, taken as a whole, or BANC ONE and its
subsidiaries, taken as a whole, from September 30, 1996 to the Effective
Time, that has had a material adverse effect on the business, operations,
financial condition or results of operations of BANC ONE and its
subsidiaries, taken as a whole, or LIBERTY and its subsidiaries, taken as a
whole, or on the ability of BANC ONE or BOOC, on the one hand, or LIBERTY
to consummate the transactions contemplated by the Merger Agreement (a
"BANC ONE Material Adverse Effect" or a "LIBERTY Material Adverse Effect,"
as the case may be);
(3) compliance by LIBERTY, BANC ONE and BOOC with their respective
covenants and confirmation of their respective representations and
warranties as set forth in the Merger Agreement, including the agreement of
LIBERTY that, except with the approval of BANC ONE or as otherwise
permitted by the Merger Agreement, it will not:
(a) pay dividends, except the dividends described above under the
caption "--Conduct of Business Pending the Merger";
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(b) effect any changes in connection with its equity
capitalization, except as related to certain outstanding stock options;
or
(c) except as may be directed by any regulatory agency, conduct its
banking operations other than in the ordinary course of business;
(4) approval of the Merger Agreement and the Merger by the requisite
affirmative vote of shareholders of LIBERTY and BOOC (See -- General");
(5) receipt by LIBERTY and BANC ONE of the opinion, dated as of the
Effective Time, relative to the Federal income tax consequences of the
Merger referred to under the caption "Federal Income Tax Consequences";
(6) receipt by BANC ONE of an opinion from LIBERTY's counsel and
receipt by LIBERTY of an opinion from counsel for BANC ONE and BOOC, which
opinions are to be in the general form of those annexed to the Merger
Agreement;
(7) the shares of BANC ONE Common Stock to be issued in exchange for
LIBERTY Common Stock shall have been approved for listing on the New York
Stock Exchange ("NYSE");
(8) the total number of shares of LIBERTY Common Stock issued and
outstanding (not including treasury shares held by LIBERTY), together with
the total number of shares of LIBERTY Common Stock related to outstanding
stock options shall not be more than 10,350,474 shares;
(9) the fractional share interests of BANC ONE Common Stock to be
paid in cash in the Merger (see "-- Fractional Shares") shall not be more
than 10% of the maximum aggregate number of shares of BANC ONE Common Stock
which could be issued as a result of the Merger.
(10) the opinion of Morgan Stanley attached as Appendix A shall not
have been withdrawn prior to the Effective Time.
It is a condition to BANC ONE's and BOOC's obligations to consummate the
Merger that cumulative earnings per share on LIBERTY Common Stock reported by
LIBERTY for calendar quarters beginning with the fourth quarter of 1996 through
the most recent quarter preceding the quarter in which the Effective Time shall
occur (or if the Effective Time occurs within 20 days following the close of a
calendar quarter, then the next preceding calendar quarter) shall be greater
than or equal to the amount calculated by multiplying (x) $0.55 by (y) the
number of full calendar quarters which have passed since September 30, 1996 and
for which earnings of LIBERTY Common Stock have been reported as of such date,
times (z) 0.9. To determine if this earnings test is met, LIBERTY's reported
earnings per share are adjusted to add back or deduct, net of any related income
tax savings or costs, (i) outside legal, investment banking, accounting and
other fees and expenses associated with or resulting from the Merger, (ii) gains
or losses on sales of assets outside the ordinary course of business, (iii)
losses on sales of securities sold after consultation with BANC ONE pursuant to
the Merger Agreement, (iv) any other expenses upon which BANC ONE and LIBERTY
may mutually agree and (v) the effect of any changes in accounting principles
required to be adopted by LIBERTY by any regulatory authority or under generally
accepted accounting principles. Earnings per share reported by LIBERTY for the
quarter ended December 31, 1996 were $0.73, and no adjustments were required
pursuant to the earnings test.
It is a condition to LIBERTY's obligation to consummate the Merger that
cumulative earnings per share of BANC ONE Common Stock reported by BANC ONE for
calendar quarters beginning with the fourth quarter of 1996 through the most
recent quarter preceding the quarter in which the Effective Time shall occur (or
if the Effective Time occurs within 20 days following the close of a calendar
quarter, then the next preceding calendar quarter) shall be greater than or
equal to the amount calculated by multiplying (x) $0.81 by (y) the number of
full calendar quarters which have passed since September 30, 1996 and for which
earnings per share of BANC ONE Common Stock have been reported as of such date,
times (z) 0.9. To determine if this earnings test is met, BANC ONE's reported
earnings per share are adjusted to eliminate the effect of any changes in
accounting principles required to be adopted by BANC ONE by any regulatory
authority or under generally accepted accounting principles. Earnings per share
reported by BANC ONE for
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the quarter ended December 31, 1996 were $0.85, and no adjustments were required
pursuant to the earnings test.
Any of the provisions of the Merger Agreement, including the foregoing
conditions, may be waived at any time by the party which is, or the shareholders
of which are, entitled to the benefits thereof. The Merger Agreement may be
amended or modified in whole or in part by a duly authorized written agreement
of the parties. However, after the shareholders of LIBERTY have approved the
Merger Agreement, LIBERTY may only amend or modify the Merger Agreement if, in
the opinion of LIBERTY's Board, such amendment or modification will not have any
material adverse effect on the benefits intended under the Merger Agreement for
the shareholders of LIBERTY, and will not require resolicitation of any proxies
from such shareholders.
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval by the shareholders of LIBERTY, by
written notice from BANC ONE to LIBERTY, or from LIBERTY to BANC ONE, as the
case may be, upon the occurrence of any of the following: (i) if any material
condition to either party's obligations under the Merger Agreement is not
substantially satisfied or waived at the time or times contemplated thereby
(each party's right to terminate under this clause (i) relates only to
conditions to that party's obligations); (ii) in the event of a material breach
by a party of any representation, warranty, condition or agreement contained in
the Merger Agreement that is not cured within 30 days of the time that written
notice of such breach is received by such party from the other party; or (iii)
if the Merger shall not have been consummated on or before December 29, 1997.
The Merger Agreement may also be terminated by LIBERTY by majority vote of
the entire LIBERTY Board at any time during the 10 day period commencing two
days after the date on which the approval of the Federal Reserve shall be
received (the "Determination Date"), if either: (x) both of the following
conditions are satisfied: (i) the average of the daily last sale prices of a
share of BANC ONE Common Stock (the "Average Closing Price"), as reported on the
NYSE Composite Transactions reporting system for the 10 consecutive full trading
days in which such shares are traded on the NYSE ending at the close of business
on the Determination Date shall be less than $35.90; and (ii) (A) the number
obtained by dividing the Average Closing Price by the Starting Price (such
number being referred to herein as the "BANC ONE Ratio") shall be less than (B)
the number obtained by dividing the Average Index Price (as defined below) by
the Index Price (as defined below) as of the Starting Date (as defined below)
and subtracting 0.20 from the quotient (such number being referred to herein as
the "Index Ratio"); or (y) the Average Closing Price shall be less than $33.656.
If LIBERTY elects to exercise its termination rights as described in the
preceding sentence, it shall give prompt written notice to BANC ONE which notice
shall specify which of the clauses (x) or (y) is applicable (or if both would be
applicable, which clause is being invoked); provided that such notice or
election to terminate may be withdrawn at any time within the aforementioned
ten-day period. During the five-day period commencing with its receipt of such
notice, BANC ONE shall have the option in the case of a failure to satisfy the
condition in clause (x), of adjusting the Exchange Rate to equal the lesser of
(i) a number equal to a quotient (rounded to the nearest one-thousandth), the
numerator of which is the product of $35.90 and the Exchange Rate (as then in
effect) and the denominator of which is the Average Closing Price, and (ii) a
number equal to a quotient (rounded to the nearest one-thousandth), the
numerator of which is the Index Ratio multiplied by the Exchange Rate (as then
in effect) and the denominator of which is the BANC ONE Ratio. During such
five-day period, BANC ONE shall have the option, in the case of a failure to
satisfy the condition in clause (y), to elect to increase the Exchange Rate to
equal a number equal to a quotient (rounded to the nearest one-thousandth), the
numerator of which is the product of $33.656 and the Exchange Rate (as then in
effect) and the denominator of which is the Average Closing Price. If BANC ONE
makes an election contemplated by either of the two preceding sentences within
such five-day period, it shall give prompt written notice to LIBERTY of such
election and the revised Exchange Rate, whereupon no termination shall have
occurred and the Merger Agreement shall remain in effect in accordance with its
terms (except as the Exchange Rate shall have been so modified), and any
references in the Merger Agreement to "Exchange Rate" shall thereafter be deemed
to refer to the Exchange Rate as adjusted.
For purposes of the preceding paragraph, the term: (a) "Average Index
Price" means the average of the Index Prices for the ten consecutive full NYSE
trading days ending at the close of trading on the Determination Date; (b)
"Index Group" means the group of each of the 14 bank holding companies listed in
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Section 26(e) of the Merger Agreement the common stock of all of which shall be
publicly traded and as to which there shall not have been since the Starting
Date and before the Determination Date, any public announcement of a proposal
for such company to be acquired or for such company to acquire another company
or companies in transactions with a value exceeding 25% of the acquiror's market
capitalization (if the common stock of any such company ceases to be publicly
traded or such an announcement is made, such company will be removed from the
Index Group, and the weights redistributed proportionately for purposes of
determining the Index Price); (c) "Index Price" on a given date means the
weighted average (weighted in accordance with the factors specified in the
definition of "Index Group") of the closing prices on such date of the common
stock of the bank holding companies comprising the Index Group; (d) "Starting
Date" means December 27, 1996, the last full day on which the NYSE was open for
trading prior to the execution of the Merger Agreement; and (e) "Starting Price"
means the last sale price per share of BANC ONE Common Stock on the Starting
Date, as reported by the NYSE Composite Transactions reporting system.
The Merger Agreement also may be terminated, and the Merger thereby
abandoned (whether before or after approval of the merger by the shareholder of
BOOC or by LIBERTY's shareholders), by the mutual written consent of the Boards
of Directors of LIBERTY, BANC ONE and BOOC at any time prior to the Effective
Time.
If the Merger Agreement is terminated otherwise than by a willful breach of
any party to the Merger Agreement or pursuant to, LIBERTY, BANC ONE and BOOC
will each pay all of its own expenses incurred incident to such transaction,
except for printing expenses which will be paid by BANC ONE.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain material United States Federal income
tax consequences of the Merger, including certain consequences to holders of
LIBERTY Common Stock who are citizens or residents of the United States and who
hold their shares as capital assets. It does not discuss all tax consequences
that may be relevant to LIBERTY shareholders subject to special Federal income
tax treatment (such as insurance companies, dealers in securities, certain
retirement plans, financial institutions, tax exempt organizations or foreign
persons) or to LIBERTY shareholders who acquired their shares of LIBERTY Common
Stock pursuant to the exercise of employee stock options or otherwise as
compensation. The summary does not address the state, local or foreign tax
consequences of the Merger, if any.
Pursuant to the terms of the Merger Agreement, LIBERTY and BANC ONE have
received an opinion from Wachtell, Lipton, Rosen & Katz to the effect that,
based upon the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), the regulations thereunder and rulings issued by the Internal Revenue
Service in transactions similar to those contemplated by the Merger Agreement
and assuming the Merger occurs in accordance with the Merger Agreement and
conditioned on the accuracy of certain representations made by LIBERTY, BOOC and
BANC ONE, for Federal income tax purposes:
(1) The Merger will constitute a reorganization within the meaning of
Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code;
(2) No gain or loss will be recognized by LIBERTY, BOOC or BANC ONE as
a consequence of the transactions contemplated by the Merger Agreement;
(3) No gain or loss will be recognized to the shareholders of LIBERTY
on the exchange of their shares of LIBERTY Common Stock for shares of BANC
ONE Common Stock, except as described below with respect to cash received
for fractional share interests to which they may be entitled;
(4) The Federal income tax basis of the BANC ONE Common Stock received
by holders of LIBERTY Common Stock for their shares of LIBERTY Common Stock
will be the same as the Federal income tax basis of the LIBERTY Common
Stock surrendered in exchange therefor (reduced by any amount allocated to
fractional share interests for which cash is received); and
(5) The holding period of the BANC ONE Common Stock received by a
holder of LIBERTY Common Stock will include the period for which the
LIBERTY Common Stock exchanged therefor was
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held, provided the exchanged LIBERTY Common Stock was held as a capital
asset by such holder on the date of the exchange.
A LIBERTY shareholder who receives cash in lieu of a fractional share
interest in BANC ONE Common Stock will be treated as having received the cash in
redemption of the fractional share interest. The receipt of cash in lieu of a
fractional share interest should generally result in capital gain or loss to the
holder equal to the difference between the amount of cash received and the
portion of the holder's Federal income tax basis in the LIBERTY Common Stock
allocable to the fractional share interest. Such capital gain or loss will be
long-term capital gain or loss if the holder's holding period for the BANC ONE
Common Stock received, determined as set forth above, is longer than one year.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED ON THE INTERNAL REVENUE CODE (AND AUTHORITIES
THEREUNDER) AS IN EFFECT ON THE DATE OF THIS PROSPECTUS AND PROXY STATEMENT,
WITHOUT CONSIDERATION OF THE PARTICULAR FACTS OR CIRCUMSTANCES OF ANY
SHAREHOLDER. SHAREHOLDERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS WITH
RESPECT TO THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER IN THEIR PARTICULAR
SITUATIONS, AS WELL AS CONSEQUENCES UNDER ANY APPLICABLE STATE, LOCAL OR FOREIGN
TAX LAWS.
CONVERSION OF SHARES AND EXCHANGE OF CERTIFICATES
Upon consummation of the Merger, the outstanding shares of LIBERTY Common
Stock will be converted into shares of BANC ONE Common Stock at the Exchange
Rate. Except in the event that LIBERTY or BANC ONE shall declare a stock
dividend or distribution upon or subdivide, split up, reclassify or combine
their respective Common Stock or declare a dividend, or make a distribution, on
their respective Common Stock in any security convertible into such Common Stock
prior to the time the Merger becomes effective, no further adjustments will be
made in the Exchange Rate. However, in the event of such a transaction,
appropriate adjustment will be made in the Exchange Rate.
As soon as practicable after the Merger becomes effective, instructions and
forms will be furnished to the shareholders of LIBERTY for use in exchanging
their certificates representing shares of LIBERTY Common Stock for certificates
of BANC ONE Common Stock. If any certificate for shares of BANC ONE Common Stock
is to be issued in a name other than that in which the certificate for shares of
LIBERTY Common Stock surrendered for exchange is registered, the certificate so
surrendered must be properly endorsed or otherwise be in proper form for
transfer and the person requesting such exchange must pay to BANC ONE or its
transfer agent any applicable transfer or other taxes required by reason of the
issuance of the certificate.
Until so surrendered, certificates formerly representing shares of LIBERTY
Common Stock will be deemed for all purposes to evidence ownership of the number
of shares of BANC ONE Common Stock into which such shares have been converted.
Dividends and other distributions, if any, that become payable on BANC ONE
Common Stock pending exchange of certificates representing shares of LIBERTY
Common Stock will be retained by BANC ONE until surrender of such certificates,
at which time such dividends and distributions will be paid, without interest.
In addition, after the Effective Time the holders of certificates formerly
representing shares of LIBERTY Common Stock shall cease to have rights with
respect to such shares, and, except as aforesaid, their sole right shall be to
exchange such certificates for shares of BANC ONE Common Stock and any
fractional share payment in accordance with the Merger Agreement.
FRACTIONAL SHARES
No fractional shares of BANC ONE Common Stock will be exchanged for shares
of LIBERTY Common Stock. In lieu thereof, each shareholder of LIBERTY having a
fractional interest resulting from the exchange of LIBERTY Common Stock for BANC
ONE Common Stock will be paid by BANC ONE an amount in cash equal to the value
of such fractional interest based upon the average of the closing prices of BANC
ONE Common Stock on the NYSE during the Valuation Period (as defined below) as
reported in The Wall Street Journal for NYSE Composite Transactions. As used
herein, "Valuation Period" means the
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ten consecutive NYSE trading days ending on the sixth NYSE trading day
immediately prior to the Effective Time.
INTEREST OF CERTAIN PERSONS IN THE MERGER.
General. As described below, directors of LIBERTY and certain members of
LIBERTY's management have interests in the Merger in addition to any interest
they may have as shareholders of LIBERTY generally. These interests include,
among others, certain bonus, potential severance and other employee benefits as
described below and indemnification rights of LIBERTY directors and officers
under the Merger Agreement. The LIBERTY Board was aware of the interests of all
of such persons at the time it approved the Merger Agreement.
Change in Control Bonus Pool. In connection with its approval of the
Merger, on December 27, 1996, the LIBERTY Board approved a bonus pool equal to
3% of the market capitalization of LIBERTY (based on the value of the
consideration to be received in the Merger determined by the Exchange Rate and
the closing price of BANC ONE Common Stock on the date immediately preceding the
date of the Merger Agreement) in excess of the capitalization of LIBERTY at
$40.00 per share. Based on such formula, the total bonus pool is $3.6 million.
Of this amount, $1.5 million is payable to Mr. Nelson, $1.25 million is payable
to LIBERTY's Chief Financial Officer, Mischa Gorkuscha, and the remainder of
$850,000 is payable to such executive officers of LIBERTY and in such amounts as
the Board of Directors or Executive Committee of LIBERTY shall specify from time
to time prior to the Effective Time. As of the date of this Prospectus and Proxy
Statement, no additional executive officers of LIBERTY have been selected as
recipients of such bonuses. The bonuses are payable upon consummation of the
Merger. The change in control bonuses are intended to reward executive officers
for their skills and efforts in negotiating the terms of the Merger and
obtaining superior value for the LIBERTY shareholders.
Employment Agreements. In connection with its approval of the Merger on
December 27, 1996, the LIBERTY Board also approved employment agreements (the
"Employment Agreements") between LIBERTY and each of Mr. Nelson and Mr.
Gorkuscha (the "Executives"). The Employment Agreements become effective at the
Effective Time and are intended to mitigate the uncertainties of future
employment prospects for the Executives in connection with the Merger. If the
Merger is consummated, the Employment Agreements will supersede the existing
severance agreements with each of Messrs. Nelson and Gorkuscha as described
below under "-- Severance Plan." Under the terms of the Employment Agreements,
LIBERTY agrees to employ the Executives for a period of three years following
the Effective Time. During this period, the Executive's position, authority,
status and responsibilities will be at least commensurate with those which the
Executive had during the 120-day period preceding the Effective Time. The
Employment Agreements provide for each Executive to receive a monthly base
salary equal to or greater than his highest monthly base salary during the year
prior to the Effective Time, an annual bonus in cash at least equal to the
highest bonus paid to the Executive in any of the three years immediately
preceding the consummation of the Merger (the "Highest Annual Bonus") and
incentive, savings, welfare benefit, fringe benefit and retirement plan
participation at least equal to the most favorable which were in effect during
the 120 day period prior to the Effective Time. The Employment Agreements are
terminable upon the death or disability of the Executive, by LIBERTY for cause
(as defined in the Employment Agreements), by the Executive for good reason (as
defined in the Employment Agreements) or by either LIBERTY or the Executive for
any reason other than death, disability or cause, including voluntarily by the
Executive, for a period of 30 days after the first anniversary of the Effective
Time (the "Window Period"). In the event of the termination of employment by
LIBERTY other than for cause, by the Executive for good reason or by LIBERTY or
the Executive during the Window Period, the Executive will receive a severance
payment equal to three times the sum of the Executive's annual base salary and
Highest Annual Bonus and continuation of health and welfare benefits for three
years after the date of termination, and, in Mr. Nelson's case, credit for age
and service under the LIBERTY Supplemental Executive Retirement Plan (described
below) to age 62.
If severance payments were required to be made to the Executives (assuming
a termination of service as of April 1, 1997), the amount of the severance
payments are estimated to be approximately $1,740,000 to
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<PAGE> 29
Mr. Nelson and approximately $777,000 to Mr. Gorkuscha. Pursuant to the
Employment Agreements, each Executive is also entitled to receive a gross-up
payment which, net of all taxes, is sufficient to put the Executive in the same
after-tax position as if no excise tax had been imposed under Section 4999 of
the Internal Revenue Code on any payments received by the Executive under his
Employment Agreement.
Severance Plan. LIBERTY has a Severance Compensation Plan adopted in 1993
(the "Severance Plan") in which seven executive officers of LIBERTY or its
subsidiaries, excluding Messrs. Nelson and Gorkuscha, participate. Messrs.
Nelson and Gorkuscha are participants in the Severance Plan, but their
participation will cease upon consummation of the Merger when the Change in
Control Employment Agreements (described above) become effective. The other
executive officers who participate in the Severance Plan are the remaining
members of LIBERTY's Managing Committee, Messrs. William M. Bell, Kenneth R.
Brown, Edward F. Keller, W. Jeffrey Pickryl, Stephen D. Plunk, Douglas L. Ruhl
and W. H. Thompson, Jr. The Severance Plan provides for a severance payment to
the participating executives if their employment with LIBERTY or a successor is
terminated within two years following a change in control (as defined in the
Plan). The termination of employment must be involuntary for reasons other than
death, disability or cause (as defined in the Plan) or voluntarily with good
reason (as defined in the Plan, which includes reduction in compensation,
relocation or demotions). The amount of severance payments payable under this
Plan is equal to two times a participant's average cash compensation for the two
years immediately preceding the termination and may in no event be greater than
the amount that would be deductible by LIBERTY under applicable Internal Revenue
Code (golden parachute) payment limitations after taking into consideration all
payments to a participant covered by such limitations (such as payments deemed
to have been received due to any acceleration of vesting of stock options,
restricted stock, grants or other benefits). In connection with the approval of
the Merger on December 27, 1996, the LIBERTY Board approved a modification to
the severance arrangements with W. H. Thompson, Jr. to eliminate the
deductibility limitation on payments to him and to provide further that LIBERTY
would pay Mr. Thompson a gross-up payment calculated in the same manner as the
gross-up payment for Mr. Nelson and Mr. Gorkuscha. BANC ONE has agreed to honor
LIBERTY's obligations under the Severance Plan.
The consummation of the Merger will constitute a change in control under
the Severance Plan. A severance payment will be made to a participant in the
Severance Plan only if a qualifying termination occurs with respect to such
participant. If, pursuant to the existing Severance Plan, severance payments
were required to be made to each of the participants under the Severance Plan
(assuming a termination of service on April 1, 1997), the amount of such
severance payments would be approximately $ 668,000, $505,000 and $462,000 for
Messrs. W. H. Thompson, Jr., William M. Bell and Kenneth R. Brown, respectively,
and $3,266,000 for all participating executive officers as a group (consisting
of seven persons). It is anticipated that some of the participants in the
Severance Plan will not continue in the employment of BANC ONE following the
consummation of the Merger and will, therefore, receive severance payments under
the Severance Plan and that other participants in the Severance Plan will
continue in their current positions or accept other positions with BANC ONE
following the consummation of the Merger and, in connection therewith, may waive
their respective rights under the Severance Plan.
Executive Officer Stock Options. LIBERTY has granted stock options to
executive and other officers under a pre-existing stock option plan. As
described above under "-- Effects of the Merger on LIBERTY Employee Benefits
Plans and Options," each LIBERTY stock option which is outstanding and
unexercised as of the Effective Time will be converted automatically into
options to purchase BANC ONE Common Stock with adjustments in terms to reflect
the Exchange Rate. Options granted under the LIBERTY stock option plan which are
not exercisable become exercisable upon a "change in control" which for purposes
of the plan will occur when the LIBERTY shareholders approve the Merger
Agreement.
Supplemental Retirement Benefits. Executive officers of LIBERTY are
participants in the LIBERTY Supplemental Executive Retirement Plan ("SERP"),
which provides for certain supplemental retirement benefits in order to provide
a guaranteed minimum retirement benefit if the executive's retirement benefit
under LIBERTY's Profit Sharing, Salary Deferral and Employee Stock Ownership
Plan (the "Retirement Plan") does not reach such minimum benefit level. Benefits
under the SERP which have not previously vested
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<PAGE> 30
become vested in the event of a change in control. A change of control will
occur if the Merger Agreement is approved by the LIBERTY shareholders and,
accordingly, previously unvested benefits under the SERP will be accelerated.
Restricted Stock. Certain executive officers of LIBERTY hold shares of
restricted LIBERTY Common Stock originally awarded in 1992 in connection with
LIBERTY's Management Incentive Bonus Plan. The vesting of these shares, to the
extent not previously vested, accelerates on a change in control which will
occur if the Merger Agreement is approved by the LIBERTY shareholders.
Indemnification and Insurance. The Merger Agreement provides that BANC ONE
shall insure that all rights to indemnification and defense and all limitations
of liability existing in favor of any person who was or is, or who becomes prior
to the Effective Time, a director, officer, employee, fiduciary or agent of
LIBERTY or any of its subsidiaries (an "Indemnified Party"), as provided in
LIBERTY's certificate of incorporation and bylaws and similar governing
documents of any of its subsidiaries or indemnification agreements, as in effect
as of December 1, 1996, or as otherwise provided for or allowed by applicable
law as in effect as of December 28, 1996 or as such law is amended prior to the
Effective Time, with respect to claims or liabilities arising from facts or
events existing or occurring prior to the Effective Time, shall survive the
Merger and shall continue in full force and effect for a period of six years
from the Effective Time.
The Merger Agreement further provides that, in the event of any threatened
or actual claim, action, suit, proceeding or investigation based in whole or in
part on, or arising in whole or in part out of, or pertaining to, the Merger
Agreement or any of the transactions contemplated thereby, BANC ONE will,
subject to the conditions set forth in the Merger Agreement, indemnify any
Indemnified Party against any and all losses, claims, damages, liabilities,
costs, expenses (including attorneys' fees and expenses), judgments and fines,
and amounts paid in settlement, in connection with any such threatened or actual
claim, action, suit, proceeding or investigation.
LIBERTY and its subsidiaries maintain in effect policies providing
insurance coverage for their directors and officers. Pursuant to the Merger
Agreement, LIBERTY and its subsidiaries may not contract for or acquire a policy
or policies providing for any such insurance coverage for any period after the
Effective Time for events occurring before or after the Effective Time;
provided, however, that LIBERTY may renew, extend or replace existing policies
in the ordinary course consistent with past practices for periods of not greater
than one year.
RESALES BY AFFILIATES
The shares of BANC ONE Common Stock issuable to LIBERTY shareholders upon
consummation of the Merger have been registered under the Securities Act, but
such registration does not cover resales by any person who, directly or
indirectly, controls, or is controlled by, or is under common control with,
LIBERTY ("Affiliates") at the time the Merger Agreement is submitted for
approval by a vote of the LIBERTY shareholders. BANC ONE Common Stock received
and beneficially owned by those LIBERTY shareholders who are deemed to be
Affiliates may be resold without registration as provided for by Rule 145 under
the Securities Act, or as otherwise permitted. Each Affiliate who desires to
resell the BANC ONE Common Stock received in the Merger must sell such BANC ONE
Common Stock either (i) pursuant to an effective registration statement under
the Securities Act, (ii) in accordance with the applicable provisions of Rule
145 under the Securities Act or (iii) in a transaction which, in the opinion of
counsel for such Affiliate or as described in a "no-action" or interpretive
letter from the Staff of the Commission, in each case reasonably satisfactory in
form and substance to BANC ONE, is exempt from the registration requirements of
the Securities Act.
Rule 145(d) requires that persons deemed to be Affiliates resell their BANC
ONE Common Stock pursuant to certain of the requirements of Rule 144 under the
Securities Act if such BANC ONE Common Stock is sold within the first two years
after the receipt thereof. After two years, if such person is not an affiliate
of BANC ONE and BANC ONE is current in the filing of its periodic securities law
reports, a former Affiliate of LIBERTY may freely resell the BANC ONE Common
Stock received in the Merger without
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<PAGE> 31
limitation. After three years from the issuance of the BANC ONE Common Stock, if
such person is not an affiliate of BANC ONE at the time of sale or for at least
three months prior to such sale, such person may freely resell such BANC ONE
Common Stock, without limitation, regardless of the status of BANC ONE's
periodic securities law reports.
LIBERTY has agreed to use reasonable best efforts to cause each person who
is at the Effective Time or was, at the time of the Special Meeting, an
Affiliate to execute and deliver to BANC ONE a written undertaking to the effect
that no sale will be made of any shares of BANC ONE Common Stock received in the
Merger by such Affiliate except in accordance with the Securities Act. The BANC
ONE Common Stock certificates issued to Affiliates of LIBERTY in the Merger may
contain an appropriate restrictive legend, and appropriate stop transfer orders
may be given to the transfer agent for such certificates.
OPTION
Concurrently with and as a condition to BANC ONE's execution and delivery
of the Merger Agreement, LIBERTY and BANC ONE entered into an Option Agreement,
dated as of December 28, 1996 (the "Option Agreement"), pursuant to which BANC
ONE was granted the Option to purchase, under certain conditions, up to
1,879,570 shares of LIBERTY Common Stock at a purchase price of $50.25 per
share. The purchase price is the closing trade price of a share of LIBERTY
Common Stock on the NASDAQ-NMS on December 30, 1996, the date the Merger was
announced. The Option becomes exercisable following the occurrence of both a
"Purchase Event" and an "Initial Triggering Event", as those terms are defined
below. The Option might have the effect of discouraging other persons interested
in acquiring LIBERTY from making acquisition proposals. As of the date of this
Prospectus and Proxy Statement, no Purchase Event or Initial Triggering Event
has occurred and, therefore, the Option is not presently exercisable.
The Option expires (such event being referred to as the "Option Termination
Event") if not exercised as permitted under the Option Agreement prior to the
earlier of (i) the Effective Time, (ii) BANC ONE or LIBERTY receiving written
notice from the Federal Reserve or its staff to the effect that the exercise of
the Option pursuant to the terms of the Option Agreement is not consistent with
Section 3 of the Bank Holding Company Act of 1956, as amended, (iii) termination
of the Merger Agreement by BANC ONE in accordance with its provisions if such
termination occurs prior to the occurrence of an Initial Triggering Event (as
defined below), (iv) the first business day after the 548th calendar day
following termination of the Merger Agreement by BANC ONE in accordance with its
provisions, if such termination follows the occurrence of an Initial Triggering
Event, provided that the Option shall in all events expire not later than 24
months after such Initial Triggering Event, (v) termination of the Merger
Agreement by LIBERTY in accordance with the terms thereof or (vi) termination of
the Merger Agreement by the mutual consent of the parties. If, in the case of
(iv), the Option is otherwise exercisable but cannot be exercised on such day
solely because of any injunction, order or similar restraint issued by a court
of competent jurisdiction, the Option shall expire on the 20th business day
after such injunction, order or restraint shall have been dissolved or when such
injunction, order or restraint shall have become permanent and no longer subject
to appeal, as the case may be.
Provided that (i) no preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the United
States prohibiting the exercise of the Option or the delivery of the shares of
LIBERTY Common Stock subject to the Option shall be in effect, (ii) any such
exercise shall otherwise be subject to compliance with applicable law and (iii)
BANC ONE is not then in material breach of the Merger Agreement, BANC ONE may
exercise the Option in whole or in part at any time or from time to time after
the occurrence of both an Initial Triggering Event and a Purchase Event (as
defined below) if, but only if, both the Initial Triggering Event and the
Purchase Event shall have occurred prior to the occurrence of an Option
Termination Event. If BANC ONE wishes to exercise the Option, written notice of
such exercise shall be given to LIBERTY within 30 days following such Purchase
Event specifying the number of shares of LIBERTY Common Stock BANC ONE will
purchase pursuant to such exercise and a place and date for the closing of the
purchase which date shall be within 45 days following the receipt of the last of
any required regulatory approvals, but in any event within 365 days of the
Purchase Event, subject to reasonable extensions in order for BANC ONE to obtain
required regulatory approvals.
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<PAGE> 32
For purposes of the Option Agreement, an "Initial Triggering Event" shall
have occurred at such time as one of the following events shall have occurred
and BANC ONE shall have determined in good faith (and shall have notified
LIBERTY in writing of such determination) that there is a reasonable likelihood
that, as a result of the occurrence of any of the following events, consummation
of the Merger pursuant to the terms of the Merger Agreement is jeopardized: (i)
any person (other than BANC ONE or any BANC ONE subsidiary or affiliate) shall
have commenced a bona fide offer to purchase shares of LIBERTY Common Stock such
that upon consummation of the offer such person would own or control 10% or more
of the outstanding shares of LIBERTY Common Stock or shall have entered into an
agreement with LIBERTY, or shall have filed an application or notice with the
Federal Reserve or any other federal or state regulatory agency for clearance or
approval to (A) merge or consolidate or enter into any similar transaction with
LIBERTY, (B) purchase, lease or otherwise acquire all or substantially all of
the assets of LIBERTY or (C) purchase or otherwise acquire securities
representing 10% or more of the voting power of LIBERTY; (ii) any person (other
than BANC ONE, BOOC, any BANC ONE subsidiary or affiliate, any subsidiary of
LIBERTY in a fiduciary capacity) or any current shareholder of LIBERTY which has
beneficial ownership of 10% or more of the outstanding shares of LIBERTY Common
Stock (a "Current 10% Shareholder") shall have acquired beneficial ownership or
the right to acquire beneficial ownership of 10% or more of the outstanding
shares of LIBERTY Common Stock or, in the case of a Current 10% Shareholder,
said Current 10% Shareholder shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the outstanding shares
of LIBERTY Common Stock in addition to those beneficially owned as of December
28, 1996; (iii) any person (other than BANC ONE or any BANC ONE subsidiary or
affiliate) shall have made a bona fide proposal to LIBERTY after the date of the
Merger Agreement by public announcement or written communication that is the
subject of public disclosure or regulatory report or filing to (A) acquire
LIBERTY by merger, consolidation, purchase of all or substantially all of its
assets or any other similar transaction, or (B) make an offer described in
clause (i) above; (iv) any person shall have solicited proxies in a proxy
solicitation subject to Regulation 14A under the Exchange Act in opposition to
approval of the Merger Agreement by LIBERTY's shareholders; or (v) LIBERTY shall
have willfully breached any provision of the Merger Agreement which breach would
entitle BANC ONE to terminate the Merger Agreement and such breach is not cured
pursuant to the terms of the Merger Agreement.
For purposes of the Option Agreement, a "Purchase Event" shall have
occurred at such time as (i) any person (other than BANC ONE or any BANC ONE
subsidiary or affiliate) acquires beneficial ownership of 50% or more of the
then-outstanding shares of LIBERTY Common Stock or (ii) LIBERTY enters into an
agreement with another person (other than BANC ONE or any BANC ONE subsidiary)
pursuant to which such person is entitled to acquire 50% or more of the
then-outstanding shares of LIBERTY Common Stock.
ACCOUNTING TREATMENT
BANC ONE expects to account for the acquisition of LIBERTY as a purchase
under generally accepted accounting principles. Accordingly, all of the assets
and liabilities of LIBERTY would be recorded in BANC ONE's consolidated
financial statements at their fair value at the Effective Time, and the amount,
if any, by which the purchase price paid by BANC ONE exceeds the fair value of
the assets acquired by BANC ONE through the Merger would be recorded as
goodwill. BANC ONE's consolidated financial statements would include the
operations of LIBERTY after the Effective Time.
TRANSFER AND EXCHANGE AGENTS
Harris Trust and Savings Bank, Chicago, Illinois, serves as Transfer Agent
and as Registrar for BANC ONE Common Stock. Harris Trust and Savings Bank will
act as Exchange Agent in connection with the Merger. Liberty Bank and Trust
Company of Oklahoma City, N.A. acts as Transfer Agent and Registrar for LIBERTY
Common Stock.
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<PAGE> 33
COMPARATIVE RIGHTS OF SHAREHOLDERS
DESCRIPTION OF BANC ONE STOCK
General. The authorized capital stock of BANC ONE consists of 600,000,000
shares of BANC ONE Common Stock and 35,000,000 shares of preferred stock,
without par value ("Preferred Stock"), divided into 10,000,000 shares of Class A
Preferred Stock, 1,000,000 shares of Class B Convertible Preferred Stock ("Class
B Preferred Stock") and 24,000,000 shares of Class C Preferred Stock of which
the Series C $3.50 Cumulative Convertible Preferred Stock, consisting of
5,000,000 authorized shares, has been designated ("Class C Preferred Stock"). As
of September 30, 1996, there were issued and outstanding 4,801,546 shares of
Class C Preferred Stock and there were issued 431,805,662 shares of BANC ONE
Common Stock (including 5,622,100 shares of treasury stock).
The following summary of the terms of BANC ONE's capital stock does not
purport to be complete and is qualified in its entirety by reference to the
applicable provisions of Ohio Law and BANC ONE's articles of incorporation
("BANC ONE's Articles").
Common Stock. Holders of BANC ONE Common Stock are entitled to receive
dividends out of funds legally available therefor as and if declared by the BANC
ONE Board of Directors (the "BANC ONE Board") provided that, so long as any
shares of Preferred Stock are outstanding, no dividends (other than dividends
payable in BANC ONE Common Stock) or other distributions (including redemptions
and purchases) may be made with respect to the BANC ONE Common Stock unless full
cumulative dividends on the shares of Preferred Stock have been paid.
Holders of shares of BANC ONE Common Stock are entitled to one vote for
each share for the election of directors and on all other matters. Holders of
BANC ONE 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.
The issued and outstanding shares of BANC ONE Common Stock are fully paid
and nonassessable. The holders of BANC ONE Common Stock are not entitled to
preemptive rights or conversion or redemption rights. The holders of BANC ONE
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 BANC ONE, holders of BANC ONE Common Stock will be entitled to
receive, pro rata, after satisfaction in full of the prior rights of creditors
(including holders of BANC ONE's indebtedness) and holders of Preferred Stock,
all the remaining assets of BANC ONE available for distribution.
Preferred Stock. BANC ONE's Board has the authority to issue shares of
Class A and Class C Preferred Stock in one or more series and to fix the
designations, number of shares, dividends, redemption rights, sinking fund
requirements, liquidation prices, conversion rights and other rights,
qualifications, limitations or restrictions thereon (except voting rights) as
the BANC ONE Board may from time to time be permitted by law to fix or change.
Currently, no shares of Preferred Stock except shares of Class C Preferred
Stock are outstanding. Holders of Class 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 Class 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 BANC ONE Common Stock or any other
shares of capital stock of BANC ONE ranking junior to shares of Class C
Preferred Stock. Upon the voluntary or involuntary dissolution, liquidation or
winding up of BANC ONE, holders of Class C Preferred Stock are entitled to
receive a preferential distribution of $50 per share plus accrued and unpaid
dividends, if any. The Class 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.
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Generally, holders of shares of Class C Preferred Stock have no voting
rights. However, the approval of holders of a majority of the outstanding shares
of Class C Preferred Stock voting together as a class is required in order to
amend BANC ONE's Articles 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. Holders
of Class C Preferred Stock also have the right to elect two additional directors
during any period in which dividends on Class C Preferred Stock are cumulatively
in arrears in the amount of six or more full quarterly dividends. At the option
of the holder of any shares of Class C Preferred Stock, such shares may be
converted into shares of BANC ONE Common Stock at the conversion rate then in
effect. The present conversion rate is 1.928982 shares of BANC ONE Common Stock
for each share of Class 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 BANC ONE Common Stock at a price per share less
than the BANC ONE Common Stock's then-current market value.
The issued shares of Class C Preferred Stock may be redeemed, in whole or
in part, by BANC ONE 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.
<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 Class C Preferred Stock is not subject to the operation of a sinking fund.
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. BANC ONE's Articles generally require only approval of holders of a
majority of the outstanding shares for such transactions.
Article Eleventh of BANC ONE's Articles 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 BANC ONE which, when added to
all other shares of BANC ONE owned or controlled by the acquiror, would entitle
the acquiror, alone or with others, to exercise or direct the exercise of voting
power in BANC ONE in the election of directors within any of the following
ranges of voting power: (i) one-fifth or more but less than one-third; (ii)
one-third or more but less than a majority; and (iii) a majority or more. A
bank, broker, nominee, trustee or other person who acquires shares in the
ordinary course of business for the benefit of others in good faith and not for
the purpose of circumventing Article Eleventh shall be deemed to have voting
power only of shares in respect of which such person would be able to exercise
or direct the exercise of votes without further instruction from others at a
meeting of shareholders called under Article Eleventh. A control share
acquisition 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 BANC ONE 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 BANC
ONE and
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employees of BANC ONE who are also directors. Article Eleventh may be amended by
a vote of 85% of the votes entitled to be cast by all holders of voting stock.
BANC ONE'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 BANC ONE'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").
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 BANC ONE's Articles, 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 BANC ONE's Articles. 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. BANC ONE
currently is an Issuing Public Corporation. An "Interested Shareholder" is any
person who is the beneficial owner of a sufficient number of shares to allow
such person, directly or indirectly, alone or with others, including affiliates
and associates, to exercise or direct the exercise of 10% of the voting power of
the Issuing Public Corporation. A "Chapter 1704 Transaction" includes any
merger, consolidation, combination or majority share acquisition between or
involving an Issuing Public Corporation and an Interested
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<PAGE> 36
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.
COMPARISON OF BANC ONE COMMON STOCK AND LIBERTY COMMON STOCK
The rights of BANC ONE shareholders are governed by BANC ONE's Articles and
Code of Regulations and the applicable provisions of Ohio Law, while the rights
of LIBERTY shareholders are governed by LIBERTY's certificate of incorporation
and bylaws and the applicable provisions of Oklahoma Law. If the shareholders of
LIBERTY approve the Merger Agreement and the Merger is subsequently consummated,
holders of LIBERTY Common Stock will become holders of BANC ONE Common Stock.
The following comparison of the rights of holders of BANC ONE Common Stock and
LIBERTY Common Stock is based on current terms of the governing documents of the
respective companies and on the current provisions of applicable state law.
The rights of holders of LIBERTY Common Stock and holders of BANC ONE
Common Stock are similar in several respects: each shareholder is entitled to
one vote for each share held on all matters submitted to a vote of shareholders
and neither is entitled to cumulative voting rights in connection with the
election of directors, each shareholder is entitled to receive pro rata any
assets distributed to shareholders upon liquidation, dissolution or winding up
of the affairs of the company (after all creditors have been satisfied and
requisite preferential amounts are paid to the holders of outstanding preferred
stock), and shareholders are not entitled to preemptive rights to subscribe for
or purchase any stock or other securities in proportion to their respective
holdings upon the offering or sale by BANC ONE or LIBERTY of such securities to
others. Although it is impracticable to note all the differences between Ohio
Law and Oklahoma Law generally and all of the differences between the applicable
governing documents of BANC ONE and LIBERTY, the following is intended to be a
summary of certain significant differences between the rights of holders of BANC
ONE Common Stock and the rights of holders of LIBERTY Common Stock.
Dividends. Under Ohio Law, dividends may be paid out of surplus, including
both earned surplus and capital surplus, in cash, property or shares of the
corporation, provided that such dividend payments are not in violation of the
rights of any other class of securities and are not made when the corporation is
insolvent or there is reasonable ground to believe that by such payment it will
be rendered insolvent. Oklahoma Law permits the payment of dividends out of
surplus or, in case there shall be no surplus, out of the corporation's net
profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year; provided, if the capital of the corporation has been
diminished to an amount less than the aggregate amount of the capital
represented by the stock of all classes having a preference on the distribution
of assets, if any, dividends may not be declared and paid out of any such net
profits until the deficiency in the amount of the capital represented by the
preferred stock has been repaired. The payment of dividends by bank holding
companies also is subject to certain regulatory constraints.
Dissenters' or Appraisal Rights. Under Ohio Law, the shareholders of an
Ohio corporation that is being merged into a surviving or new corporation, and
the shareholders of an Ohio corporation that is the surviving corporation of a
merger on which such shareholders are entitled to vote, have the right to
dissent from the merger and, if certain procedural requirements are satisfied,
to receive, in lieu of the merger consideration, a payment equal to the fair
cash value of such shareholders' shares as of the day preceding the shareholder
vote. Shareholders of an Ohio Corporation are also entitled to exercise
dissenters' rights in connection with the
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<PAGE> 37
lease, sale, exchange, transfer or other disposition of all or substantially all
of the assets of such corporation and in connection with certain amendments to
such corporation's articles of incorporation.
Oklahoma Law grants to shareholders appraisal rights in the case of a
merger or consolidation of the corporation, other than a merger in which the
corporation is the surviving corporation and with respect to which a vote of the
shareholders is not necessary to authorize such merger. Notwithstanding the
foregoing, unless the corporation's certificate of incorporation otherwise
provides, the holders of shares of a corporation, the shares of which are listed
on a national securities exchange or held of record by more than 2,000
shareholders as of the record date fixed to determine the shareholders entitled
to receive notice of and vote at the meeting of shareholders to act upon the
agreement of merger or consolidation, do not have the right to dissent from such
corporate action unless such shareholders are required to accept for their
shares anything except (i) shares of stock of the surviving corporation, (ii)
shares of stock of any other corporation which as of the effective date of such
merger or consolidation will be either listed on a national securities exchange
or held of record by more than 2,000 shareholders, (iii) cash in lieu of
fractional shares or (iv) any combination of shares of stock and cash in lieu of
fractional shares described in (i), (ii) and (iii) above. Oklahoma Law does not
provide for appraisal rights in connection with the lease, sale, exchange,
transfer or other disposition of all or substantially all of the assets of a
corporation or in connection with amendments to an Oklahoma corporation's
certificate of incorporation.
Directors. LIBERTY's Board is divided into three classes, as nearly equal
in number as possible, with members of each class elected to serve for three
years, and with one class being elected each year. BANC ONE does not have a
classified board, with the result that directors serve for one year terms and
the entire BANC ONE Board is elected annually. To qualify for election to BANC
ONE's Board, an individual must own a substantial number of shares of BANC ONE's
capital stock, and must not also serve as a director or officer of or in any
other management relationship for any financial institution that is in
competition with BANC ONE or any of its subsidiaries. Neither Oklahoma Law nor
LIBERTY's governing documents impose any similar requirements on LIBERTY
directors.
Any LIBERTY director may be removed from office only for cause and only by
the affirmative vote of at least 66 2/3% of the outstanding shares of stock of
LIBERTY entitled to vote on the election of directors. Directors of BANC ONE may
be removed, with or without cause, by the affirmative vote of the holders of a
majority of the voting power present at a meeting of BANC ONE shareholders.
Special Voting Requirements for Certain Transactions. BANC ONE's Articles
generally require only approval of the holders of a majority of the outstanding
shares for mergers or consolidations. Oklahoma Law imposes a similar requirement
with respect to such transactions.
Oklahoma Law, like the Ohio Statute, prohibits a business combination
between a corporation and an "interested shareholder" (which is defined under
the Oklahoma Law to include a person beneficially owning outstanding stock of
the corporation having 15% or more of all voting power of the corporation) for
three years following the date the person becomes an interested shareholder
unless certain conditions are met. Unlike the Ohio Statute, however, the
Oklahoma Law does not contain any restrictions on such transactions following
the initial three year restricted period. See "-- Description of BANC ONE
Stock -- Special Voting Requirements for Certain Transactions."
Oklahoma Law contains a "control share acquisition" statute that is
generally similar to the Ohio Control Share Statute. However, the LIBERTY's
certificate of incorporation expressly provides that such statutory provisions
shall not apply to LIBERTY.
In addition to being subject to the laws of Oklahoma and Ohio,
respectively, LIBERTY and BANC ONE, as bank holding companies, are subject to
various provisions of federal law with respect to mergers, consolidations and
certain other corporate transactions.
Amendment of Governing Documents. Generally, the affirmative vote of the
holders of at least a majority of the voting power of the corporation is
required to amend LIBERTY's certificate of incorporation. BANC ONE's Articles
may be amended by the affirmative vote of the holders of a majority of the
voting
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<PAGE> 38
power of BANC ONE, except that amendments to the "control share acquisition" and
"fair price" provisions require the affirmative vote of 85% of the total voting
power. See "-- Description of BANC ONE Capital Stock -- Special Voting
Requirements for Certain Transactions."
The LIBERTY Bylaws may be amended from time to time by the affirmative vote
of a majority of the board of directors present at a meeting or by the
affirmative vote of the holders of a majority of the outstanding shares of
LIBERTY entitled to vote thereon and present at any meeting; provided, however,
that no amendment which would be inconsistent with certain provisions of the
LIBERTY Bylaws relating to the election and removal of directors (see
"-- Directors") may be made without the approval of holders of at least 66 2/3%
of the outstanding shares of LIBERTY entitled to vote on the election of
directors. The Code of Regulations of BANC ONE may only be amended by the
affirmative vote of a majority of the voting power represented by the
outstanding voting stock of BANC ONE present in person or by proxy at an annual
or special meeting called for such purpose.
Liability of Officers and Directors. Under both Ohio and Oklahoma Law,
shareholders are entitled to bring suit, generally in an action on behalf of the
corporation, to recover damages caused by breaches of the duty of care and the
duty of loyalty owed to a corporation and its shareholders by directors and, to
a certain extent, officers. Ohio Law has codified the traditional business
judgment rule. Ohio Law provides that the business judgment presumption of good
faith may only be overcome by clear and convincing evidence, rather than the
preponderance of the evidence standard applicable in most states.
Further, Ohio Law provides specific statutory authority for directors to
consider, in addition to the interests of the corporation's shareholders, other
factors such as the interests of the corporation's employees, suppliers,
creditors and customers; the economy of the state and nation; community and
societal considerations; the long-term and short-term interests of the
corporation and its shareholders; and the possibility that these interests may
be best served by the continued independence of the corporation. Neither
Oklahoma Law nor LIBERTY's governing documents contain a similar provision.
Oklahoma Law permits corporations to include provisions in their
certificates of incorporation that limit liability for monetary damages
resulting from breaches of fiduciary duty as a director, subject to certain
exceptions, and both Ohio and Oklahoma Law permits corporations to indemnify
officers and directors in certain circumstances for their expenses and
liabilities incurred in connection with defending pending or threatened suits,
as more fully described below.
Indemnification and Insurance. Under Ohio and Oklahoma Law, corporations
are permitted, and in some circumstances required, to indemnify, among others,
current and prior officers, directors, employees or agents of the corporation
for expenses and liabilities incurred by such parties in connection with
defending pending or threatened suits instituted against them in their corporate
capacities, provided certain specified standards of conduct are determined to
have been met. Both Ohio and Oklahoma Law further permit corporations to grant
indemnification rights more expansive than those permitted by statute and to
purchase insurance for indemnifiable parties against any liability asserted
against or incurred by such parties in their corporate capacities. In addition,
Ohio Law contains an express authorization for corporations to establish trust
funds, insurance subsidiaries or other forms of self-insurance for the benefit
of their officers, directors, employees and agents.
The LIBERTY Bylaws provide that LIBERTY shall indemnify such persons and to
such extent as may be legally permitted under the laws of the State of Oklahoma
in effect from time to time. The BANC ONE Code of Regulations provide that BANC
ONE may indemnify directors, officers, employees and agents to the fullest
extent permitted by law against costs incurred in connection with any
threatened, pending or completed claim, action, suit or proceeding because of
such person's service as a director, officer, employee or agent of BANC ONE.
BANC ONE has entered into indemnification contracts with its directors and
certain of its officers that, among other things, provide the contracting
director or officer with certain procedural and substantive rights to
indemnification. Such indemnification rights apply to acts or omissions of such
persons, whether such acts or omissions occurred before or after the effective
date of the contract. LIBERTY has entered into similar indemnification contracts
with its directors. See "MERGER -- Interests of Certain Persons in the Merger."
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<PAGE> 39
INFORMATION ABOUT BANC ONE CORPORATION
GENERAL
BANC ONE is a multi-bank holding company which provides a full range of
consumer and commercial banking and related financial services. At December 31,
1996, BANC ONE operated approximately 1,500 banking offices in Arizona,
Colorado, Illinois, Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Texas, Utah,
West Virginia and Wisconsin. At December 31, 1996, BANC ONE had consolidated
total assets of $101.8 billion, consolidated total deposits of $72.4 billion and
consolidated total stockholders' equity of $8.6 billion. At September 30, 1996,
BANC ONE ranked 10th among the nation's publicly owned bank holding companies in
terms of consolidated average total assets and 9th in terms of consolidated
average common equity.
At December 31, 1995 BANC ONE's bank subsidiaries (the "affiliate banks")
held the largest statewide share of total bank deposits in Arizona and Kentucky,
the second largest share of such deposits in Indiana, Ohio and West Virginia,
and the third largest share of such deposits in Colorado, Wisconsin and Texas.
BANC ONE has smaller statewide market shares in the other states in which BANC
ONE operates banks. At December 31, 1996, except for Bank One, Texas, N.A., no
single BANC ONE affiliate bank accounted for more than 20% of BANC ONE's
consolidated total assets. BANC ONE also owns nonbank subsidiaries that engage
in credit card and merchant processing, consumer and education finance, mortgage
banking, insurance, venture capital, investment and merchant banking, trust,
brokerage, investment management, equipment leasing and data processing.
Since its formation in 1968, BANC ONE has acquired over 100 banking
institutions and the number of banking offices of its affiliate banks has
increased from 24 to approximately 1,500. BANC ONE 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.
BANC ONE is a legal entity separate and distinct from its affiliate banks
and its nonbanking subsidiaries (collectively, the "affiliates"). Accordingly,
the right of BANC ONE, and thus the right of BANC ONE's creditors and
shareholders, to participate in any distribution of the assets or earnings of
any affiliate is necessarily subject to the prior claims of creditors of the
affiliate except to the extent that claims of BANC ONE in its capacity as a
creditor may be recognized. The principal sources of BANC ONE's revenues are
dividends and fees from its affiliates. See "--Certain Regulatory
Matters--Dividend Restrictions" for a discussion of the restrictions on the
affiliate banks' ability to pay dividends to BANC ONE.
BANC ONE is incorporated in Ohio and has functioned as a multi-bank holding
company since 1968. Its executive offices are located at 100 East Broad Street,
Columbus, Ohio 43271, and its telephone number is (614) 248-5944.
RECENT DEVELOPMENTS
1996 Financial Results. On January 20, 1997, BANC ONE announced results of
its operations for the fourth quarter and year ended December 31, 1996.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest income......................... $2,099,322 $1,837,980 $8,044,852 $7,100,918
Income before income tax................ 535,317 477,789 2,110,712 1,910,282
Net income.............................. 369,797 336,846 1,426,533 1,277,863
Net income per common share............. $ .85 $ .77 $ 3.23 $ 2.91
Weighted average common shares
outstanding (000)..................... 430,992 431,746 436,927 433,323
</TABLE>
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<PAGE> 40
Proposed Merger with First USA, Inc. On January 19, 1997, BANC ONE and
First USA, Inc. ("First USA") jointly announced that an agreement had been
reached for First USA to merge with and into BANC ONE (the "First USA Merger").
Terms of the agreement call for First USA shareholders to receive 1.1659 shares
of BANC ONE Common Stock for each outstanding share of First USA common stock.
First USA is a financial services company specializing in the credit card
business with $22.4 billion in managed credit card receivables and approximately
16 million card holders at December 31, 1996. First USA had total assets of
$10.2 billion and stockholders' equity of $1.2 billion at December 31, 1996.
Even though First USA has traditionally produced high growth in earnings, BANC
ONE management estimates that this transaction will be dilutive to BANC ONE's
earnings per common share in 1997, neutral in 1998 and accretive to earnings per
common share thereafter. Further, given the operational overlap of credit card
operations between BANC ONE and First USA, and the incurrence of certain costs
resulting from the First USA Merger, BANC ONE management estimates a charge to
earnings of $150 million; however, the actual charge could be substantially
greater. Consummation of the FIRST USA Merger is subject to the receipt of
regulatory approvals and the approvals of the shareholders of BANC ONE and First
USA, as well as other conditions set forth in the First USA merger agreement. It
is expected that the transaction will be completed in the second quarter of
1997. The First USA Merger will be accounted for as a pooling of interests.
Strategic Initiatives. In 1995, BANC ONE launched a series of strategic
initiatives collectively referred to as "Project One." These initiatives are
designed to enhance the effectiveness and efficiency of certain operations by,
among other things, decreasing the number of legal entities, combining
operations and systems, and centralizing many staff and line functions. During
1996, BANC ONE incurred Project One expenses of $150 million. It is management's
view that Project One will continue to result in higher expense levels during
the first half of 1997, with anticipated expense reduction benefits realized
thereafter. In addition, BANC ONE has initiated a review of certain of its lines
of business activities. This review is anticipated to be completed during the
second quarter of 1997. While the exact impact of the review is not yet known,
the outcome may include a variety of initiatives, possibly including
consolidation of functions, installations or operations. These initiatives could
result in a charge to earnings, the magnitude of which cannot presently be
determined.
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<PAGE> 41
MARKET PRICES OF AND CASH DIVIDENDS DECLARED ON BANC ONE COMMON STOCK
BANC ONE Common Stock is, and the shares offered hereby will be, listed on
the NYSE and traded under the symbol "ONE." The following table sets forth, for
the periods indicated, the high and low reported closing sale prices per share
of BANC ONE Common Stock on the NYSE Composite Tape and cash dividends declared
per share of BANC ONE Common Stock. The cash dividend and stock price
information has been adjusted to reflect all stock dividends and stock splits on
BANC ONE Common Stock, including the 10% stock dividend on BANC ONE Common Stock
paid on March 6, 1996 to shareholders of record on February 21, 1996.
<TABLE>
<CAPTION>
PRICE RANGE OF COMMON
STOCK
------------------------- DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1995
First Quarter............................... $27.39 $22.85 $ .31
Second Quarter.............................. 31.94 26.03 .31
Third Quarter............................... 33.41 27.95 .31
Fourth Quarter.............................. 36.48 30.35 .31
1996
First Quarter............................... $38.50 $31.94 $ .34
Second Quarter.............................. 37.75 32.88 .34
Third Quarter............................... 41.38 31.25 .34
Fourth Quarter.............................. 47.88 40.38 .34
1997
First Quarter............................... $ $ $
(through February , 1997)
</TABLE>
The timing and amount of future dividends will depend upon earnings, cash
requirements, the financial condition of BANC ONE and its subsidiaries,
applicable government regulations and other factors deemed relevant by the BANC
ONE Board. As described under "-- Certain Regulatory Matters -- Dividend
Restrictions," various state and federal laws limit the ability of affiliate
banks to pay dividends to BANC ONE.
The First USA merger agreement provides that, during the time period from
January 28, 1996 to the effective time of the First USA merger, BANC ONE shall
not, and shall not permit any of its subsidiaries to: (i) adjust, split, combine
or reclassify any capital stock; or (ii) make, declare or pay any dividend
(except (A) for regular quarterly cash dividends at a rate not in excess of
$0.38 per share of BANC ONE Common Stock, (B) for regular quarterly cash
dividends at a rate not in excess of $0.875 per share of BANC ONE Class C
Preferred Stock and (C) except for dividends paid in the ordinary course of
business by any subsidiary (whether or not wholly owned) of BANC ONE) or make
any extraordinary distribution on any shares of its capital stock. See
"-- Recent Developments -- Proposed Merger with First USA, Inc."
CERTAIN 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 BANC ONE. This regulatory
framework is intended primarily for the protection of depositors and the federal
deposit insurance funds and not for the protection of security holders. To the
extent that the following information describes statutory and regulatory
provisions, it is qualified in its entirety by reference to those provisions. A
change in the statutes, regulations or regulatory policies applicable to BANC
ONE or its subsidiaries may have a material effect on the business of BANC ONE.
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<PAGE> 42
General. As a bank holding company, BANC ONE 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 BANC ONE and its nonbank subsidiaries
from BANC ONE's affiliate banks, and also limit various other transactions
between BANC ONE and its nonbank subsidiaries, on the one hand, and BANC ONE'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 BANC ONE'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. BANC ONE's state-chartered banks
also are subject to regulation by the FDIC and the Federal Reserve and, in
addition, by their respective state banking departments. BANC ONE 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 BANC ONE 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 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. BANC ONE is subject to capital ratios, requirements
and guidelines imposed by the Federal Reserve, which are substantially similar
to the ratios, requirements and guidelines imposed by the Federal Reserve, the
OCC and the FDIC on the banks within their respective jurisdictions. These
capital requirements establish higher capital standards for banks and bank
holding companies that assume greater credit risks. For this purpose, a bank'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 bank'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
39
<PAGE> 43
definition, mandatory convertible securities, subordinated debt and allowances
for loan and lease losses, subject to certain limitations, less certain required
deductions.
BANC ONE, 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
December 31, 1996 BANC ONE met both requirements, with Tier 1 and total capital
equal to 9.03% and 13.12% 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 December 31,
1996 BANC ONE's leverage ratio was 8.24%.
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 BANC ONE.
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 banking institution to capital raising requirements. An
"undercapitalized" bank 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 bank'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 and the OCC have adopted rules to incorporate
market and interest rate risk components into their risk-based capital
standards.
Dividend Restrictions. Various federal and state statutory provisions
limit the amount of dividends BANC ONE's affiliate banks can pay to BANC ONE
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 December 31, 1996, $0.6 billion of
the total stockholders' equity of the affiliate banks was available for payment
of dividends to BANC ONE without approval by the applicable regulatory
authority.
In addition, federal bank regulatory authorities have authority to prohibit
BANC ONE's affiliate banks from engaging in an unsafe or unsound practice in
conducting their business. The payment of dividends, depending upon the
financial condition of the bank in question, could be deemed to constitute such
an unsafe or unsound practice. The ability of BANC ONE's affiliate banks to pay
dividends in the future is presently, and could be further, influenced by bank
regulatory policies and capital guidelines.
40
<PAGE> 44
Deposit Insurance Assessments. The deposits of each of BANC ONE'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. BANC ONE's affiliate banks held approximately $5.4 billion of
SAIF-assessable deposits as of January 1, 1997. The FICO assessments do not vary
depending upon a depository institution's capitalization or supervisory
evaluations. BANC ONE currently estimates its FICO assessments may amount to up
to $8 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 bank or savings
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 bank or savings institution that is not well
capitalized from (i) paying an interest rate on deposits in excess of 75 basis
points over certain prevailing market rates or (ii) offering "pass through"
deposit insurance on certain employee benefit plan accounts unless it provides
certain notice to affected depositors. At September 30, 1996, BANC ONE's
affiliate banks had aggregate total brokered deposits of approximately $32.6
million.
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 BANC ONE 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. BANC ONE
might use Riegle-Neal to acquire banks in additional states and to consolidate
its affiliate banks under a smaller number of separate charters.
41
<PAGE> 45
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities and the principal
holders thereof, certain relationships and related transactions and other
related matters as to BANC ONE is incorporated by reference or set forth in BANC
ONE's Annual Report on Form 10-K for the year ended December 31, 1995 (as
amended by Form 10-K/A filed June 27, 1996), incorporated herein by reference.
Shareholders of LIBERTY desiring copies of such documents may contact BANC ONE
at its address or telephone number indicated under "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
42
<PAGE> 46
INFORMATION ABOUT LIBERTY BANCORP, INC.
GENERAL
LIBERTY is incorporated under the laws of the State of Oklahoma and is
registered as a bank holding company under the BHCA. As such, it holds all of
the shares of its two major banking subsidiaries, Liberty Bank and Trust Company
of Oklahoma City, N.A. ("Liberty Oklahoma City") and Liberty Bank and Trust
Company of Tulsa, N.A. ("Liberty Tulsa"), as well as several other subsidiaries.
Both Liberty Oklahoma City and Liberty Tulsa provide a broad range of
financial services to individuals, business enterprises, financial institutions
and governmental authorities. Liberty Oklahoma City, which has twenty banking
centers in Oklahoma City and the surrounding communities of Choctow, Edmond,
Harrah, Midwest City and Norman, is LIBERTY's largest subsidiary, having assets
of $1.9 billion and deposits of $1.5 billion at December 31, 1996. Liberty Tulsa
has twelve banking centers in Tulsa and the surrounding communities of Broken
Arrow and Jenks, and is the second largest LIBERTY subsidiary with assets of
$1.1 billion and deposits of $0.9 billion at December 31, 1996.
Liberty Mortgage Company, a subsidiary of Liberty Oklahoma City, engages in
mortgage banking activities. Liberty Real Estate Company, a nonbank subsidiary
of LIBERTY, owns and operates Liberty Tower, in which LIBERTY and Liberty
Oklahoma City maintain principal offices. Liberty Trust Company is a state
chartered trust company that provides operational support service for the trust
departments of Liberty Oklahoma City and Liberty Tulsa. Other subsidiaries are
involved in insurance activities.
1996 FINANCIAL RESULTS
For the year ended December 31, 1996, LIBERTY reported net income of $27.7
million or $2.79 per common share compared to $26.2 million or $2.66 per common
share for the year ended December 31, 1995. Total stockholders' equity at
December 31, 1996 was $280.3 million compared with $268.9 million at year end
1995.
MARKET PRICES OF AND CASH DIVIDENDS DECLARED ON LIBERTY COMMON STOCK
LIBERTY Common Stock is traded on the NASDAQ-NMS under the symbol "LBNA."
The following table sets forth, for the periods indicated, the high and low
reported closing sale prices per share of LIBERTY Common Stock as reported on
the NASDAQ-NMS and cash dividends declared per share of LIBERTY Common Stock.
LIBERTY's ability to pay dividends in the future is subject to the Merger
Agreement. See "MERGER -- Conduct of Business Pending the Merger."
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
----------------- DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1995
First Quarter................................................. $31.75 $29.25 $ .20
Second Quarter................................................ 35.75 29.75 .20
Third Quarter................................................. 37.25 32.25 .20
Fourth Quarter................................................ 38.88 36.25 .20
1996
First Quarter................................................. $38.75 $35.75 $ .25
Second Quarter................................................ 37.25 35.25 .25
Third Quarter................................................. 38.50 34.75 .25
Fourth Quarter................................................ 50.25 38.00 .25
1997
First Quarter................................................. $ $ $ .30
(through February , 1997)
</TABLE>
43
<PAGE> 47
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities and the principal
holders thereof, certain relationships and related transactions and other
related matters as to LIBERTY is incorporated by reference or set forth in
LIBERTY's Annual Report on Form 10-K for the year ended December 31, 1995 (as
amended by Form 10-K/A filed June 28, 1996), incorporated herein by reference.
Shareholders of LIBERTY desiring copies of such documents may contact LIBERTY at
its address or telephone number indicated under "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
EXPERTS
The consolidated financial statements of BANC ONE and its subsidiaries,
included in the Annual Report on Form 10-K of BANC ONE for the fiscal year ended
December 31, 1995, as amended by Form 10-K/A filed June 27, 1996, have been
audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in
their report dated February 21, 1996 accompanying such financial statements, and
are incorporated herein by reference in reliance upon the report of such firm,
which report is given upon their authority as experts in accounting and
auditing.
The consolidated financial statements of LIBERTY and its subsidiaries,
included in the Annual Report on Form 10-K of LIBERTY for the fiscal year ended
December 31, 1995, as amended by Form 10-K/A filed June 28, 1996, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto and have been incorporated herein by reference
in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report.
Any financial statements and schedules hereinafter incorporated by
reference in the Registration Statement of which this Prospectus and Proxy
Statement 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 given upon the authority of such firms as experts in accounting and
auditing to the extent covered by consents filed with the Commission.
LEGAL MATTERS
The validity of the BANC ONE Common Stock offered hereby has been passed
upon by Steven Alan Bennett, Senior Vice President and General Counsel of BANC
ONE. Mr. Bennett owns a number of shares of BANC ONE Common Stock and holds
options to purchase additional shares of BANC ONE Common Stock.
Certain legal matters will be passed upon for LIBERTY by counsel to
LIBERTY, Crowe & Dunlevy, A Professional Corporation, Oklahoma City, Oklahoma.
Two shareholders in the law firm of Crowe & Dunlevy are directors of LIBERTY and
the Firm and such shareholders own a number of shares of LIBERTY Common Stock.
An opinion on the federal income tax consequences of the proposed transaction
will be issued by special counsel to LIBERTY, Wachtell, Lipton, Rosen & Katz,
New York, New York.
FUTURE SHAREHOLDER PROPOSALS
If the Merger is not consummated, the only shareholder proposals eligible
to be considered for inclusion in the proxy materials for the 1997 annual
meeting of LIBERTY will be those which have been duly submitted to the Secretary
of LIBERTY by January 15, 1997, as provided in LIBERTY's 1996 annual meeting
proxy statement.
44
<PAGE> 48
APPENDIX A
[letterhead of Morgan Stanley & Co. Incorporated]
February 20, 1997
Board of Directors
Liberty Bancorp, Inc.
100 N. Broadway
Oklahoma City, OK 73102
Members of the Board:
We understand that Liberty Bancorp, Inc. ("Liberty"), Banc One Corporation
("Banc One") and Banc One Oklahoma Corporation ("Banc One Oklahoma"), a wholly
owned subsidiary of Banc One, have entered into an Agreement and Plan of Merger
dated December 28, 1996 (the "Merger Agreement") which provides, among other
things, for the merger of Liberty with and into Banc One Oklahoma (the
"Merger"). Pursuant to the Merger, Liberty will become a wholly owned subsidiary
of Banc One and each outstanding share of common stock, par value $0.01 per
share (the "Liberty Common Stock"), other than shares held in treasury or held
by Banc One or any affiliate of Banc One, will be converted into 1.175 shares
(the "Exchange Ratio") of common stock, no par value, of Banc One (the "Banc One
Common Stock"). The terms and conditions of the Merger are more fully set forth
in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to the holders of
shares of Liberty Common Stock (other than Banc One and its affiliates).
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of Liberty and Banc One, respectively;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning Liberty and Banc One prepared by
the managements of Liberty and Banc One, respectively;
(iii) reviewed certain financial projections of Liberty and Banc One
prepared by the managements of Liberty and Banc One, respectively;
(iv) discussed the past and current operations and financial condition
and the prospects of Liberty and Banc One with senior executives of Liberty
and Banc One, respectively;
(v) analyzed the pro forma impact of the Merger on the combined
company's earnings per share, consolidated capitalization and financial
ratios;
(vi) reviewed the reported prices and trading activity for the Liberty
Common Stock and the Banc One Common Stock;
(vii) compared the financial performance of Liberty and Banc One and
the prices and trading activity of the Liberty Common Stock and the Banc
One Common Stock with that of certain other comparable publicly traded
companies and their securities;
(viii) discussed the results of regulatory examinations of Liberty and
Banc One with the senior managements of the respective companies;
A-1
<PAGE> 49
(ix) discussed the strategic objectives of the Merger and the plan for
the combined company with senior executives of Liberty and Banc One;
(x) reviewed and discussed with the senior managements of Liberty and
Banc One certain estimates of the cost savings projected by Liberty and
Banc One for the combined company and compared such amounts to those
estimates in certain precedent transactions;
(xi) reviewed the financial terms, to the extent publicly available,
of certain comparable precedent transactions;
(xii) participated in discussions and negotiations among
representatives of Liberty and Banc One and their financial and legal
advisors;
(xiii) reviewed the draft Merger Agreement, the draft Stock Option
Agreement between Liberty and Banc One and certain related documents;
(xiv) considered such other factors as we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information supplied or otherwise made
available to us by Liberty and Banc One for the purposes of this opinion. With
respect to the financial projections, including the estimates of cost savings
expected to result from the Merger, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of Liberty and Banc One. We
have not made any independent valuation or appraisal of the assets or
liabilities of Liberty and Banc One, nor have we been furnished with any such
appraisals. Morgan Stanley has not examined any individual loan credit files of
Liberty or Banc One. In addition, we have assumed the Merger will be consummated
in accordance with the terms set forth in the Merger Agreement. Our opinion is
necessarily based on economic, market and other conditions as in effect on, and
the information made available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of Liberty or
any of its assets.
We have acted as financial advisor to the Board of Directors of Liberty in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for Liberty and have received fees for
the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of Liberty and may not be used for any other purpose without our prior
written consent, except that this opinion may be included in its entirety in any
filing with the Securities and Exchange Commission in connection with the
Merger. In addition, we express no opinion or recommendation as to how the
holders of shares of Liberty Common Stock should vote at the shareholders
meeting held in connection with the Merger.
Based on the foregoing, we are of the opinion on the date hereof that the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to the holders of shares of Liberty Common Stock (other than Banc One
and its affiliates).
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ WILLIAM M. WEIANT
------------------------------------
William M. Weiant
Managing Director
A-2
<PAGE> 50
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 1701.13(E) of the Ohio General Corporation Law sets forth
provisions which define the extent to which a corporation may indemnify
directors, officers and employees. Those provisions have been adopted by the
Registrant in Article V of the Registrant's Code of Regulations. Article V
provides for the indemnification or the purchase of insurance for the benefit of
the directors, officers, employees and agents of the Registrant in the event
such persons are subject to legal action as a result of actions in their
capacities as directors, officers, employees or agents of the Registrant. The
Registrant has entered into indemnification agreements with its directors and
executive officers that provide for indemnification unless the indemnitee's
conduct is finally adjudged by a court to be knowingly fraudulent, deliberately
dishonest or willful misconduct. The Registrant indemnifies other officers,
employees or agents provided such persons acted in good faith and in a manner
which they reasonably believed to be in or not opposed to the best interest of
the Registrant or, with respect to criminal actions, had no reason to believe
was unlawful.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed herewith except those indicated which have
been filed previously as shown below and which are incorporated herein by
reference.
<TABLE>
<S> <C>
2.1 Merger Agreement dated as of December 28, 1996 between Liberty Bancorp, Inc. and Banc
One Oklahoma Corporation and joined in by the Registrant (incorporated by reference
from Exhibit 1 to the Schedule 13D relating to Liberty Bancorp, Inc. filed by the
Registrant on January 7, 1997).
2.2 Option Agreement dated as of December 28, 1996 between Liberty Bancorp, Inc. and the
Registrant (incorporated by reference from Exhibit 2 to the Schedule 13D relating to
Liberty Bancorp, Inc. filed by the Registrant on January 7, 1997).
3.1 Amended Articles of Incorporation of the Registrant (incorporated by reference from
Exhibit 3.1 of the Annual Report of the Registrant on Form 10-K for the year ended
December 31, 1991).
3.2 Code of Regulations of the Registrant (incorporated by reference from Exhibit 3.2 of
the Annual Report of the Registrant on Form 10-K for the year ended December 31,
1991).
4.1 Form of Common Stock Certificate of the Registrant (incorporated by reference from
Exhibit 4.1 to the Annual Report of the Registrant on Form 10-K for the year ended
December 31, 1989).
5 Opinion of Steven Alan Bennett, Esq., Senior Vice President and General Counsel for
the Registrant, regarding the legality of securities being offered, including consent.
8 Opinion of Wachtell, Lipton, Rosen & Katz regarding the Federal income tax
consequences of the Merger, including consent.
23.1 Consent of Coopers & Lybrand L.L.P. relating to the audited financial statements of
the Registrant.
23.2 Consent of Arthur Andersen LLP relating to the audited financial statements of Liberty
Bancorp, Inc.
23.3 Consent of Ernst & Young LLP relating to the audited financial statements of a
subsidiary of Liberty Bancorp, Inc.
23.4 Consent of Steven Alan Bennett, Esq., Senior Vice President and General Counsel for
the Registrant (included in Exhibit 5 hereto).
23.5 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8 hereto).
23.6 Consent of Morgan Stanley & Co. Incorporated.
24 Powers of Attorney (included elsewhere in Part II of this Registration Statement).
99.1 Form of Proxy to be used by Liberty Bancorp, Inc.
</TABLE>
II-1
<PAGE> 51
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement (notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement); and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the registrant undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(6) That every prospectus (i) that is filed pursuant to paragraph (5)
above, or (ii) that purports to meet the requirements of Section 10(a)(3) of the
Securities Act of 1933 and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to this
registration statement and will not be used until such amendment has become
effective, and that for the purpose of determining liabilities under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE> 52
(8) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in this registration statement when it
became effective.
II-3
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Registration Statement and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Columbus, State of Ohio, on February 18, 1997.
BANC ONE CORPORATION
By: /s/ ROMAN J. GERBER
----------------------------------------
Roman J. Gerber
Executive Vice President
II-4
<PAGE> 54
POWER OF ATTORNEY
We, the undersigned officers and directors of BANC ONE CORPORATION, hereby
severally constitute and appoint William P. Boardman, Roman J. Gerber, William
C. Leiter, George R. L. Meiling or Michael J. McMennamin and each of them our
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for us and in our stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and any subsequent
registration statement filed by BANC ONE CORPORATION pursuant to Rule 462(b) of
the Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
necessary or advisable to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
WITNESS our hands and common seal on the dates set forth below.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------- ---------------------
<S> <C> <C>
/s/ JOHN B. MCCOY Chairman of the Board February 18, 1997
- ------------------------------------- (Principal Executive
John B. McCoy Officer
and Director)
/s/ RICHARD J. LEHMANN President and Director February 18, 1997
- -------------------------------------
Richard J. Lehmann
/s/ MICHAEL J. MCMENNAMIN Executive Vice President February 18, 1997
- ------------------------------------- (Principal Financial
Michael J. McMennamin Officer)
/s/ BOBBY L. DOXEY Controller (Principal February 18, 1997
- ------------------------------------- Accounting Officer)
Bobby L. Doxey
/s/ CHARLES E. EXLEY Director February 18, 1997
- -------------------------------------
Charles E. Exley
/s/ E. GORDON GEE Director February 18, 1997
- -------------------------------------
E. Gordon Gee
/s/ JOHN R. HALL Director February 18, 1997
- -------------------------------------
John R. Hall
/s/ LABAN P. JACKSON, JR. Director February 18, 1997
- -------------------------------------
Laban P. Jackson, Jr.
</TABLE>
II-5
<PAGE> 55
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------- ---------------------
<S> <C> <C>
/s/ JOHN G. MCCOY Director February 18, 1997
- -------------------------------------
John G. McCoy
/s/ THEKLA R. SHACKELFORD Director February 18, 1997
- -------------------------------------
Thekla R. Shackelford
/s/ ALEX SHUMATE Director February 18, 1997
- -------------------------------------
Alex Shumate
/s/ FREDERICK P. STRATTON, JR. Director February 18, 1997
- -------------------------------------
Frederick P. Stratton, Jr.
/s/ ROBERT D. WALTER Director February 18, 1997
- -------------------------------------
Robert D. Walter
Director
- -------------------------------------
Bennett Dorrance
</TABLE>
II-6
<PAGE> 56
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit 5 Opinion of Steven Alan Bennett, Esq., Senior Vice President and General
Counsel for the Registrant, regarding the legality of securities being
offered, including consent.
Exhibit 8 Opinion of Wachtell, Lipton, Rosen & Katz regarding the Federal income tax
consequences of the Merger, including consent.
Exhibit 23.1 Consent of Coopers & Lybrand L.L.P. relating to the audited financial
statements of the Registrant.
Exhibit 23.2 Consent of Arthur Andersen LLP relating to the audited financial statements of
Liberty Bancorp, Inc.
Exhibit 23.3 Consent of Ernst & Young LLP relating to the audited financial statements of a
subsidiary of Liberty Bancorp, Inc.
Exhibit 23.6 Consent of Morgan Stanley & Co. Incorporated.
Exhibit 99.1 Form of Proxy to be used by Liberty Bancorp, Inc.
</TABLE>
II-7
<PAGE> 1
Exhibit 5.1
February 18, 1997
To: The Board of Directors of
BANC ONE CORPORATION
This opinion is being provided by the undersigned, as General Counsel of
BANC ONE CORPORATION ("BANC ONE"). In such capacity I, or attorneys under my
supervision, have represented BANC ONE in connection with the Registration
Statement on Form S-4 (the "Registration Statement") to be filed by BANC ONE
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended. The Registration Statement relates to the issuance of up to 12,157,039
shares of the common stock, no par value ($5 stated value) per share, of BANC
ONE (the "Shares") in connection with the proposed merger (the "Merger") of
Liberty Bancorp, Inc. ("Liberty") with and into Banc One Oklahoma Corporation
("BOOC"), a wholly owned subsidiary of BANC ONE, pursuant to the terms of the
Merger Agreement dated as of December 26, 1996 among Liberty, BANC ONE and BOOC
(the "Merger Agreement").
In rendering the opinions set forth below, I or attorneys under my
supervision have examined originals, or copies certified or otherwise identified
to my satisfaction, of such documents, corporate records and other instruments
as I have deemed necessary or appropriate for the purposes of this opinion,
including without limitation the Merger Agreement.
Based upon and subject to the foregoing and after examination of such
matters of law as I have deemed applicable or relevant to this opinion, I am of
the opinion that, upon effectiveness of the Registration Statement and the
satisfaction of certain conditions provided for in the Merger Agreement, the
Shares, when issued and delivered pursuant to the provisions of the Merger
Agreement and upon consummation of the Merger, will be validly issued, fully
paid and non-assessable.
<PAGE> 2
The Board of Directors of
BANC ONE CORPORATION
February 18, 1997
Page 2
The opinions expressed herein are limited to the laws of the State of Ohio
and the federal laws of the United States of America. I hereby consent to (i)
the use and filing of this opinion as an exhibit to the Registration Statement
and to the reference to this opinion under the heading "Legal Matters" in any
prospectus filed in connection with the Registration Statement and (ii) the
incorporation by reference of this opinion into a subsequent registration
statement filed by BANC ONE pursuant to Rule 462(b) under the Securities Act
relating to the offering covered by the Registration Statement. In giving such
consent, I do not thereby admit that I come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933 or the General
Rules and Regulations thereunder.
Very truly yours,
/s/ Steven Alan Bennett
- ------------------------------------------------------
Steven Alan Bennett
Senior Vice President and General Counsel
<PAGE> 1
Exhibit 8
[LETTERHEAD]
February 17, 1997
Liberty Bancorp, Inc. and its Shareholders
100 North Broadway
Oklahoma City, Oklahoma 73102
BANC ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43215
Ladies/Gentlemen:
We have acted as special counsel to Liberty Bancorp, Inc., an Oklahoma
corporation ("LBI"), in connection with the proposed merger (the "Merger") of
LBI with and into Banc One Oklahoma Corporation, an Oklahoma corporation
("BOOC") and a direct wholly-owned subsidiary of BANC ONE CORPORATION, an Ohio
corporation ("BANC ONE"), upon the terms and conditions set forth in Merger
Agreement dated as of December 28, 1996 by and among LBI, BOOC and BANC ONE (the
"Agreement"). At your request, in connection with the closing of the Merger, we
are rendering our opinion concerning certain federal income tax consequences of
the Merger.
For purposes of the opinion set forth below, we have relied, with the
consent of LBI and the consent of BANC ONE, upon the accuracy and completeness
of the statements and representations (which statements and representations we
have neither investigated nor verified) contained, respectively, in the
certificates of the officers of LBI, BOOC and BANC ONE (copies of which are
attached hereto and which are incorporated herein by reference), and have
assumed that such certificates will be complete and accurate as of the Effective
Time. We have also relied upon the accuracy of the Registration Statement on
Form S-4 (the "Registration Statement") and the Proxy Statement-Prospectus
(together, the "Proxy Statement") filed with the Securities Exchange Commission,
as amended through the date hereof, in connection with the Merger. Any
capitalized term used and not defined herein has the meaning given to it in the
Proxy Statement or the appendices thereto (including the Agreement).
We have also assumed that the transactions contemplated by the Agreement
will be consummated in accordance therewith and as described in the Proxy
Statement and that the Merger will qualify as a statutory merger under the
applicable laws of the State of Oklahoma.
Based upon and subject to the foregoing, the discussion contained in the
Proxy Statement under the caption "MERGER--Federal Income Tax Consequences",
except as otherwise indicated, represents our opinion as to the material federal
income tax consequences of the Merger under currently applicable law.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement, and to the
reference to this opinion under the caption "SUMMARY--Federal Income Tax
Consequences", under the caption "MERGER--Federal Income Tax Consequences" and
elsewhere in the Proxy Statement. In giving such consent, we do not hereby admit
that we are in the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
of BANC ONE CORPORATION on Form S-4 of our report dated February 21, 1996 on our
audits of the consolidated financial statements of BANC ONE CORPORATION which
includes an explanatory paragraph regarding the change in method of accounting
for certain investment securities in 1994 and the change in method of accounting
for income taxes and post-retirement benefits other than pensions in 1993 as of
December 31, 1995 and 1994, and for the years ended December 31, 1995, 1994 and
1993, included in BANC ONE CORPORATION's Annual Report on Form 10-K for the year
ended December 31, 1995, as amended by Form 10-K/A filed on June 27, 1996. We
also consent to the reference to our firm under the caption of "Experts" on Form
S-4.
/s/ COOPERS & LYBRAND L.L.P.
------------------------------------
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
February 18, 1997
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated January 19, 1996
included in the Liberty Bancorp, Inc. Annual Report on Form 10-K for the year
ended December 31, 1995 (as amended by Form 10-K/A filed June 28, 1996) and to
all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
February 17, 1997
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-4, and in the related prospectus of BANC ONE CORPORATION for the
proposed merger of Liberty Bancorp, Inc. with Banc One Oklahoma Corporation of
our report dated January 18, 1995 with respect to the consolidated financial
statements of Liberty Mortgage Company (not presented separately therein)
included in the Annual Report (Form 10-K) of Liberty Bancorp, Inc. for the year
ended December 31, 1995 (as amended by Form 10-K/A filed June 28, 1996), filed
with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
OKLAHOMA CITY, OKLAHOMA
FEBRUARY 17, 1997
<PAGE> 1
EXHIBIT 23.6
CONSENT OF
MORGAN STANLEY & CO. INCORPORATED
February 20, 1997
Banc One Corporation
100 East Broad Street
Columbus, Ohio 43271-0158
Dear Sirs:
We hereby consent to the inclusion in the Registration Statement of Banc
One Corporation ("Banc One") on Form S-4, with respect to the shares of Common
Stock, no par value ($5 stated value), of Banc One, of our opinion letter
appearing as Appendix A to the Prospectus and Proxy Statement which is part of
the Registration Statement, and to the references of our firm name therein. In
giving such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations adopted by the Securities and Exchange
Commission thereunder, nor do we admit that we are experts with respect to any
part of the Registration Statement within the meaning of the term "experts" as
used in the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ KIRK R. WILSON
-------------------------------------------
Kirk R. Wilson
Managing Director
<PAGE> 1
Exhibit 99.1
LIBERTY BANCORP, INC.
100 Broadway
Oklahoma City, Oklahoma 73102
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Kenneth R. Brown and Myra D. Trahern
R as Proxies, each with power to appoint his or her substitute, and hereby
authorizes them to represent and to vote, as designated below, all the
O shares of common stock of Liberty Bancorp, Inc. ("Liberty") held of
record by the undersigned on February 10, 1997 at the special meeting of
X shareholders of Liberty to be held on March 31, 1997 or any reconvention
thereof.
Y
1. A proposal to approve a Merger Agreement among Liberty, BANC ONE
CORPORATION ("BANC ONE"), and Banc One Oklahoma Corporation, a wholly
owned subsidiary of BANC ONE ("BOOC"), pursuant to which Liberty will
merge with and into BOOC and each outstanding share of Liberty common
stock will be converted into the right to receive 1.175 shares of BANC
ONE common stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Such other business as may properly come before the meeting or any
reconvention thereof.
This proxy will be voted as specified. IF NO SPECIFIC DIRECTIONS ARE
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL NO. 1 AND IN ACCORDANCE WITH
THE RECOMMENDATION OF THE BOARD OF DIRECTORS OF LIBERTY ON ANY OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY RECONVENTION
THEREOF.
Dated: , 1997
-----------------------------
-----------------------------
(Signature of Shareholder)
-----------------------------
(Signature of additional
Shareholder, if any)
Sign exactly as stock is
held. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title. If more than one
trustee, all should sign. All
joint owners must sign.
