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Filed Pursuant to Rule 424(b)(2) Registration Statement No. 333-08903
PROSPECTUS
First Chicago NBD Corporation
Debt Securities
First Chicago NBD Corporation (the "Company") has from time to time
previously issued certain series of its unsecured debt securities
(collectively, the "Debt Securities"), which may be either senior (the "Senior
Securities") or subordinated (the "Subordinated Securities") in priority of
payment, under several indentures with various trustees. This Prospectus has
been prepared in connection with certain market making activities relating to
the Debt Securities described herein.
The Company has issued and outstanding the following series of
Subordinated Securities pursuant to an indenture dated as of July 1, 1986, as
amended by a First Supplemental Indenture dated as of December 1, 1995,
between the Company and Chemical Bank, as Trustee (the "1986 Subordinated
Indenture"):
9 7/8% Subordinated Notes Due July 1999
The Company has issued and outstanding the following series of Senior
Securities pursuant to an indenture dated as of April 1, 1986, as amended by a
First Supplemental Indenture dated as of December 1, 1995, between the Company
and Chase Manhattan Bank Delaware, as Trustee (the "1986 Senior Indenture"):
8 1/2% Notes Due June 1, 1998
The Company has issued and outstanding four series of Senior Securities
pursuant to an indenture dated as of August 1, 1987, as amended by a First
Supplemental Indenture dated as of March 1, 1989, and a Second Supplemental
Indenture dated as of December 1, 1995, between the Company and Citibank,
N.A., as Trustee (the "1987 Senior Indenture"). The following Senior
Securities have been issued and remain outstanding pursuant to the 1987 Senior
Indenture and are offered pursuant to this Prospectus:
Medium-Term Notes Due From 9 Months to 15 Years From Date of Issue
Medium-Term Notes Due From 9 Months to 15 Years From Date of Issue,
Series D
Medium-Term Notes Due From 9 Months to 15 Years From Date of Issue,
Series E
The Company has issued and outstanding the following 12 series of
Subordinated Securities pursuant to an indenture dated as of August 1, 1987,
as amended by a First Supplemental Indenture dated as of March 1, 1989, a
Second Supplemental Indenture dated as of January 1, 1993, and a Third
Supplemental Indenture dated as of December 1, 1995, between the Company and
First Trust of California, National Association, as Trustee (the "1987
Subordinated Indenture"):
9% Subordinated Notes Due June 15, 1999
9 7/8% Subordinated Notes Due August 15, 2000
11 1/4% Subordinated Notes Due February 20, 2001
10 1/4% Subordinated Notes Due May 1, 2001
9 1/4% Subordinated Notes Due November 15, 2001
8 7/8% Subordinated Notes Due March 15, 2002
8 1/4% Subordinated Notes Due June 15, 2002
7 5/8% Subordinated Notes Due January 15, 2003
6 7/8% Subordinated Notes Due June 15, 2003
Floating Rate Subordinated Notes Due July 28, 2003
6 3/8% Subordinated Notes Due January 30, 2009
Medium-Term Notes Due From 9 Months to 15 Years from Date of
Issue, Series E
The Company has issued and outstanding the following series of
Subordinated Securities pursuant to an indenture dated as of July 15, 1992,
between the Company and The Chase Manhattan Bank, N.A., as Trustee (the "July
1992 Subordinated Indenture"):
7 1/4% Subordinated Debentures Due August 15, 2004
The Company has issued and outstanding the following series of
Subordinated Securities pursuant to an indenture dated as of February 1, 1992,
between the Company and Bankers Trust Company, as Trustee (the "February 1992
Subordinated Indenture"):
8.10% Subordinated Notes Due March 1, 2002
The Company has issued and outstanding the following series of
Subordinated Securities pursuant to an indenture dated as of May 17, 1995,
between the Company and Chemical Bank, as Trustee (the "1995 Subordinated
Indenture"):
7 1/8% Subordinated Notes Due May 15, 2007
The 1986 Senior Indenture and the 1987 Senior Indenture collectively are
referred to herein as the "Senior Indentures" and the 1986 Subordinated
Indenture, the 1987 Subordinated Indenture, the 1995 Subordinated Indenture,
the July 1992 Subordinated Indenture and the February 1992 Subordinated
Indenture collectively are referred to herein as the "Subordinated
Indentures". The Senior Indentures and Subordinated Indentures collectively
are referred to herein as the "Indentures" and the respective trustees under
the Indentures are collectively referred to herein as the "Trustees".
This Prospectus is to be used by First Chicago Capital Markets, Inc.
("FCCM"), a broker-dealer and an indirect wholly-owned subsidiary of the
Company, in connection with offers and sales of the Debt Securities in the
course of its business as a broker-dealer. The participation of FCCM in the
offer and sale of the Debt Securities complies with the requirements of
Schedule E of the By-laws of the National Association of Securities Dealers,
Inc. (the "NASD") regarding underwriting of securities of an affiliate and
complies with any restrictions imposed on FCCM by the Board of Governors of
the Federal Reserve System. FCCM may act as principal or agent in such
transactions. The Debt Securities may be offered or sold on the New York
Stock Exchange in the event the particular series of Debt Securities has been
listed thereon, or another stock exchange, or off any exchange in negotiated
transactions, or otherwise. Sales will be made at prices related to prices
prevailing at the time of sale.
THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS
OF A BANK 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.
August 2, 1996.
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No person has been authorized to give any information or to make any
representation other than those contained or incorporated by reference in
this Prospectus in connection with the offering made hereby, and, if given
or made, such information or representation must not be relied upon as
having been authorized by the Company or by another person. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Information, as of
particular dates, concerning directors and executive officers, their
compensation, options granted to them, the principal holders of securities
of the Company and any material interest of such persons in transactions
with the Company is disclosed in proxy statements distributed to
stockholders of the Company and filed with the Commission. Such reports,
proxy statements and other information can be inspected and copied at the
Public Reference Room of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and the Commission's Regional Offices at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center (13th Floor), New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In
addition, such reports, proxy statements and other material concerning the
Company can be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York; the Chicago Stock Exchange, 440 South
LaSalle Street, Chicago, Illinois; and the Pacific Stock Exchange, 301 Pine
Street, San Francisco, California.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933, as amended (the "Securities Act"), with respect
to the Debt Securities being offered by this Prospectus. This Prospectus
does not contain all the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the
rules and regulations of the Commission. For further information with
respect to the Company and the Debt Securities, reference is made to the
Registration Statement, including the exhibits thereto. The Registration
Statement may be inspected by anyone without charge at the principal office
of the Commission in Washington, D.C. and copies of all or any part of it
may be obtained from the Commission upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission pursuant to Section 13 of the Exchange Act are incorporated
herein by reference:
(i) The Company's Annual Report on Form 10-K for the fiscal year ending
December 31, 1995;
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ending
March 31, 1996; and
(iii) The Company's Current Reports on Form 8-K dated January 16, 1996,
January 26, 1996, April 15, 1996, June 6, 1996, June 27, 1996 and July 15,
1996.
All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such documents.
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Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Any person receiving a copy of this Prospectus may obtain without charge,
upon written or oral request, a copy of any of the documents incorporated
by reference herein, except for the exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests should be addressed to First Chicago NBD Corporation, One First
National Plaza, Chicago, Illinois 60670, Attention: Investor Relations
(312) 732-4812.
FIRST CHICAGO NBD CORPORATION
General
The Company is a multi-bank holding company registered under the Bank
Holding Company Act, as amended (the "BHC Act"), which was incorporated
under the laws of the State of Delaware in 1972. The Company is the
surviving corporation resulting from the merger (the "Merger"), effective
December 1, 1995, of First Chicago Corporation ("First Chicago"), a
Delaware corporation and registered bank holding company, with and into NBD
Bancorp, Inc. ("NBD"), a Delaware corporation and registered bank holding
company. Through its bank subsidiaries, the Company provides consumer and
corporate banking products and services. The Company's lead bank is The
First National Bank of Chicago ("FNBC"). The Company also is the parent
corporation of NBD Bank (Michigan)("NBD Michigan"), American National Bank
and Trust Company of Chicago ("ANB"), FCC National Bank ("FCCNB"), NBD
Bank, N.A., (Indiana), ("NBD Indiana"), NBD Bank (Florida), and several
other bank subsidiaries.
The Company directly or indirectly raises funds principally to finance
the operations of its nonbank subsidiaries. A substantial portion of the
Company's annual income typically has been derived from dividends from its
subsidiaries, and from interest on loans, some of which are subordinated,
to its subsidiaries.
The Company engages primarily in four lines of business - credit card;
regional banking, which includes retail banking and middle market banking;
corporate and institutional banking; and corporate investments. Each of
these businesses is conducted through the Company's bank and nonbank
subsidiaries.
Because the Company is a holding company, its rights and the rights of
its creditors, including the holders of the Debt Securities, to participate
in the assets of any subsidiary upon the subsidiary's liquidation or
recapitalization would be subject to the prior claims of such subsidiary's
creditors except to the extent that the Company may itself be a creditor
with recognized claims against the subsidiary.
The Company's executive offices are located at One First National Plaza,
Chicago, Illinois 60670, and the telephone number is (312) 732-4000.
Supervision and Regulation
The operations of financial institutions may be affected by legislative
changes and by the policies of various regulatory authorities. In
particular, bank holding companies and their subsidiaries are affected by
the credit
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policies of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") through its regulation of the national supply of
bank credit. Among the instruments of monetary policy used by the Federal
Reserve Board to implement its objectives are open market operations in
U.S. Government securities, changes in the discount rate on bank borrowings
and changes in reserve requirements on bank deposits.
Bank holding companies, banks and financial institutions generally are
highly regulated, with numerous federal and state laws and regulations
governing their activities. As a bank holding company, the Company is
subject to regulation under the BHC Act and is subject to examination and
supervision by the Federal Reserve Board. Under the BHC Act, the Company
is prohibited, with certain exceptions, from acquiring or retaining direct
or indirect ownership or control of voting shares of any company which is
not a bank or bank holding company, and from engaging in activities other
than those of banking or of managing or controlling banks other than
subsidiary companies and activities which the Federal Reserve Board
determines to be so closely related to the business of banking as to be a
proper incident thereto. The acquisition of direct or indirect ownership
or control of a bank or bank holding company by the Company is also subject
to certain restrictions under the BHC Act and applicable state laws.
The Company is a legal entity separate and distinct from the Company's
banking subsidiaries (the "Banks") and the Company's other affiliates.
Investors should be aware of the various legal limitations on the extent to
which the Banks can finance or otherwise supply funds to the Company or
various of its affiliates. In particular, the Banks are subject to certain
restrictions imposed by the laws of the United States on any extensions of
credit to the Company or, with certain exceptions, other affiliates, on
investments in stock or other securities thereof, on the taking of such
securities as collateral for loans, and on the terms of transactions
between the Banks and other subsidiaries. The Company and its
subsidiaries, including the Banks, are also subject to certain restrictions
with respect to engaging in the issuance, flotation, underwriting, public
sale or distribution of securities.
Various federal and state laws govern the operations of the Banks. The
national bank subsidiaries of the Company, including FNBC, ANB, FCCNB and
NBD Indiana, are supervised, examined and regulated by the Office of the
Comptroller of the Currency (the "Comptroller") under the National Bank
Act, as amended. Since national banks are also members of the Federal
Reserve System and their deposits are insured by the Federal Deposit
Insurance Corporation (the "FDIC"), they are also subject to the applicable
provisions of the Federal Reserve Act, as amended, the Federal Deposit
Insurance Act, as amended, and, in certain respects, to state laws
applicable to financial institutions. NBD Michigan and the other state-
chartered bank subsidiaries of the Company are, in general, subject to the
same or similar restrictions and regulations as the national bank
subsidiaries, but with more extensive regulation and examination by state
banking departments, the Federal Reserve Board for those which are members
of the Federal Reserve System, and the FDIC for those which are not members
of the Federal Reserve System. In addition, the Banks' operations in other
countries are subject to various restrictions imposed by the laws of such
countries.
Federal law prohibits the Company and certain of its affiliates from
borrowing from the Banks without the prior approval of the respective
Bank's Board of Directors and unless such loans are secured by U.S.
Treasury or other specified obligations. Further, such secured loans and
investments by any of the Banks are limited in amount as to the Company or
any other such affiliate to 10% of the respective Bank's capital and
surplus and as to the Company and all such affiliates to an aggregate 20%
of the respective Bank's capital and surplus. Under Federal Reserve Board
policy, the Company is expected to act as a source of financial strength to
each Bank and to commit resources to support such Bank in circumstances
where it might not do so absent such policy. In addition, any capital
loans by the Company to any of the Banks would be subordinate in right of
payment to deposits and to certain other indebtedness of such Bank.
Additionally, there are certain federal and state regulatory limitations
on the payment of dividends to the Company by the Banks. Dividend payments
by national banks are limited to the lesser of (i) the level of
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"undivided profits then on hand" less the amount of bad debts, as defined,
in excess of the allowance for credit losses and (ii) absent regulatory
approval, an amount not in excess of "net profits" for the current year
combined with "retained net profits" for the preceding two years. As of
January 1, 1996, the Banks could have declared additional dividends of
approximately $1.2 billion without the approval of banking regulatory
agencies. The payment of dividends by any Bank may also be affected by
other factors, such as the maintenance of adequate capital for such Bank.
Bank regulatory agencies have the authority to prohibit the banking
organizations they supervise from paying dividends if, in the regulator's
opinion, the payment of dividends would, in light of the financial
condition of such bank, constitute an unsafe or unsound practice.
As a bank holding company, the Company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection with
extensions of credit or providing property or services.
Legislation may be enacted or regulation imposed in the United States or
its political subdivisions, or in any other jurisdiction in which the
Company does business, to further regulate banking and financial services.
There can be no assurance whether any such legislation or regulation will
place additional limitations on the Company's operations.
Capital Adequacy
The Federal Reserve Board has adopted risk-based capital guidelines for
bank holding companies that require bank holding companies to maintain a
minimum ratio of total capital to risk-weighted assets (including certain
off-balance sheet items, such as standby letters of credit) of 8%. At
least half of total capital must be composed of common stockholders'
equity, noncumulative perpetual preferred stock and a limited amount of
cumulative perpetual preferred stock, less disallowed intangibles and other
adjustments ("Tier I capital"). The remainder ("Tier II capital") may
consist of subordinated debt, other preferred stock, certain other
instruments and a limited amount of loan loss reserves. At March 31, 1996,
the Company's consolidated Tier I capital and total capital ratios were
8.1% and 12.3%, respectively.
In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for
a minimum ratio of Tier I capital to total average assets (the "leverage
ratio") of 3% for bank holding companies that meet certain specified
criteria, including those having the highest regulatory rating. All other
bank holding companies generally are required to maintain a leverage ratio
of at least 3% plus an additional cushion of 100 to 200 basis points. The
Company's leverage ratio at March 31, 1996, was 7.3%. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant
reliance on intangible assets. Furthermore, the Federal Reserve Board has
indicated that it will consider a "tangible Tier I capital leverage ratio"
(deducting all intangibles) and other indicia of capital strength in
evaluating proposals for expansion or new activities.
Each of the Banks is subject to similar risk-based and leverage capital
requirements adopted by its applicable federal banking agency. Each of the
Company's Banks was in compliance with the applicable minimum capital
requirements as of March 31, 1996. Neither the Company nor any of the
Banks has been advised by any federal banking agency of any specific
minimum leverage ratio requirement applicable to it.
Failure to meet capital requirements could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business, which are described
below under "FDICIA and FIRREA".
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Bank regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current
levels. However, the management of the Company is unable to predict
whether higher capital requirements would be imposed and, if so, at what
levels and on what schedule.
FDICIA and FIRREA
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") significantly expanded the regulatory and enforcement powers of
federal banking regulators, in particular the FDIC, and has important
consequences for the Company, the Banks and other depository institutions
located in the United States.
A major feature of FDICIA is the comprehensive directions it gives to
federal banking regulators to promptly direct or require the correction of
problems at inadequately capitalized banks in the manner that is least
costly to the federal deposit insurance funds. The degree of corrective
regulatory involvement in the operations and management of banks and their
holding companies is, under FDICIA, largely determined by the actual or
anticipated capital positions of the subject institution.
FDICIA established five tiers of capital measurement for regulatory
purposes ranging from "well capitalized" to "critically undercapitalized."
Under regulations adopted by the federal banking agencies, a depository
institution is well capitalized if it significantly exceeds the minimum
level required by regulation for each relevant capital measure, adequately
capitalized if it meets such measure, undercapitalized if it fails to meet
any such measure, significantly undercapitalized if it is significantly
below such measure and critically undercapitalized if its tangible equity
is not greater than 2% of total tangible assets. A depository institution
may be deemed to be in a capitalization category lower than is indicated by
its actual capital position if it receives an unsatisfactory examination
rating. FDICIA requires banking regulators to take increasingly strong
corrective steps, based on the capital tier of any subject bank, to cause
such bank to achieve and maintain capital adequacy. Even if a bank is
adequately capitalized, however, the banking regulators are authorized to
apply corrective measures if the bank is determined to be in an unsafe or
unsound condition or engaging in an unsafe or unsound activity.
Depending on the level of capital of an insured depository institution,
the banking regulatory agencies' corrective powers can include: requiring
a capital restoration plan; placing limits on asset growth and restrictions
on activities; requiring the institution to reduce total assets; requiring
the institution to issue additional stock (including voting stock) or to be
acquired; placing restrictions on transactions with affiliates; restricting
the interest rate the institution may pay on deposits; ordering a new
election for the institution's board of directors; requiring that certain
senior executive officers or directors be dismissed; prohibiting the
institution from accepting deposits from correspondent banks; requiring the
institution to divest certain subsidiaries; prohibiting the payment of
principal or interest on subordinated debt; prohibiting the institution's
parent bank holding company from making capital distributions without prior
regulatory approval; and, ultimately, appointing a receiver for the
institution.
If the insured depository institution is undercapitalized, the parent
bank holding company is required to guarantee that the institution will
comply with any capital restoration plan submitted to, and approved by, the
appropriate federal banking agency in an amount equal to the lesser of (i)
5% of the institution's total assets at the time the institution became
undercapitalized or (ii) the amount which is necessary (or would have been
necessary) to bring the institution into compliance with all applicable
capital standards as of the time the institution fails to comply with the
capital restoration plan. If such parent bank holding company guarantee is
not obtained, the capital restoration plan may not be accepted by the
banking regulators. As a result, such institution would be subject to the
more severe restrictions imposed on significantly undercapitalized
institutions. Further, the failure of such a depository institution to
submit an acceptable capital plan is grounds for the appointment of a
conservator or receiver.
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FDICIA also contains a number of other provisions affecting depository
institutions, including additional reporting and independent audit
requirements, the establishment of safety and soundness standards, the
changing of FDIC insurance premiums from flat amounts to the system of
risk-based assessments described below under "FDIC Insurance", a review of
accounting standards, and supplemental disclosures and limits on the
ability of all but well capitalized depository institutions to acquire
brokered deposits. The Riegle Community Development and Regulatory
Improvement Act of 1994, however, among other things, contains a number of
specific provisions easing the regulatory burden on banks and bank holding
companies, including some imposed by FDICIA, and making the bank regulatory
system more efficient. Federal banking regulators are taking actions to
implement these provisions.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA"), among other things, provides generally that, upon the default
of any bank of a multi-unit holding company, the FDIC may assess an
affiliated insured depository institution for the estimated losses incurred
by the FDIC. Specifically, FIRREA provides that a depository institution
insured by the FDIC can be held liable for any loss incurred by, 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 a default. "Default" is
defined generally as the appointment of a conservator or receiver. "In
danger of a default" is defined generally as the existence of certain
conditions indicating that a default is likely to occur in the absence of
regulatory assistance. All of the Banks are FDIC-insured depository
institutions.
FDIC Insurance
The Banks are subject to FDIC deposit insurance assessments. Under the
FDIC's risk-based assessment system effective January 1, 1994, the
assessment rate is based on classification of a depository institution in
one of nine risk assessment categories. Such classification is based upon
the institution's capital level and upon certain supervisory evaluations of
the institution by its primary regulator. The assessment rate schedule,
effective January 1, 1996, creates a 0.27% spread in assessment rates,
ranging from 0.27% per annum on the amount of domestic deposits for banks
classified as weakest by the FDIC down to the statutory annual minimum of
$2,000 for banks classified as strongest by the FDIC.
Interstate Banking and Branching
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "Riegle-Neal Act") significantly revised prior laws applicable to
interstate acquisitions of banks and bank holding companies and the
branching powers of national banks. Prior to the Riegle-Neal Act, the
Federal Reserve Board was not permitted to approve a bank holding company's
application to acquire shares of a bank located outside the state in which
the operations of the applicant's bank subsidiaries were principally
conducted unless the acquisition were specifically authorized by a statute
of the acquired bank's state. Effective September 29, 1995, the Federal
Reserve Board is authorized to approve an application of an adequately
capitalized and adequately managed bank holding company to acquire control
of a bank located in another state without regard to whether such
transaction is prohibited under the law of such state. The Federal Reserve
Board may not, however, approve such an application if, following the
acquisition, the applicant would control either (1) more than 10% of all
insured depository institution deposits in the United States or (2) under
certain circumstances, 30% or more of all insured depository institution
deposits in any state where either the applicant or the acquired bank is
located. The 30% limit on aggregate deposits that may be controlled by an
applicant can be adjusted by the states on a non-discriminatory basis.
The Riegle-Neal Act also revises the rules applicable to mergers between
insured banks located in different states. Before passage of the Riegle-
Neal Act, such mergers generally were not authorized. Commencing June 1,
1997, however, adequately capitalized and adequately managed insured banks
in different states may merge
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without regard to whether the merger is authorized under the law of any
state. States may elect to prohibit interstate bank mergers or may elect
to permit early interstate bank mergers by adopting, prior to June 1, 1997,
legislation that expressly so provides, and that applies on equal terms to
all out-of-state banks. The Riegle-Neal Act provides that an interstate
merger involving the acquisition of a branch (as distinguished from an
entire bank) or the de novo establishment of a national bank branch in
another state may be approved only if the law of the host state expressly
permits such action. An interstate merger may not be approved if,
following the merger, the resulting bank would control (1) more than 10% of
all insured depository institution deposits in the United States or (2)
under certain circumstances, 30% or more of all insured depository
institution deposits in any state where the resulting bank will be located.
The 30% limit on aggregate deposits that may be controlled by the resulting
bank can be adjusted by the states on a non-discriminatory basis. The laws
of the host state regarding community reinvestment, consumer protection,
fair lending and the establishment of intrastate branches will apply to any
out-of-state branch of a national bank unless preempted by federal law or
the Comptroller determines that application of such laws would have a
discriminatory effect on the national bank.
The Riegle-Neal Act contains a number of other provisions related to
banks and bank holding companies, including: authorization of interstate
branching by foreign banks; additional branch closing notice requirements
for interstate banks proposing to close a branch in a low or moderate
income area; amendments to the Community Reinvestment Act of 1977 to
require separate written evaluations of an insured depository institution
for each state in which it maintains branches; a prohibition on interstate
banks maintaining out-of-state deposit production offices; and
authorization for a bank subsidiary of a bank holding company to receive
deposits, renew time deposits, close and service loans and receive payments
on loans as agent for a depository institution affiliate of such bank.
The extent to, and terms on, which full interstate branching and certain
other actions authorized under the Riegle-Neal Act are implemented will
depend on the actions of entities other than the Company and the Banks,
including the legislatures of various states. Further developments by
state and federal authorities, including legislation, with respect to
matters covered by the Riegle-Neal Act reasonably can be anticipated to
occur in the future. In addition, there may be new, significant banking
legislation introduced in the current Congress related to bank holding
companies and their powers; the likelihood of passage and effect, if any,
of such legislation on the Company and the Banks cannot be predicted.
Consolidated Ratios of Earnings to Fixed Charges
The ratios of earnings to fixed charges for the Company, which are
computed on the basis of the total enterprise (as defined by the
Commission) by dividing earnings before fixed charges and income taxes by
fixed charges, are set forth below for the periods indicated. Fixed
charges consist principally of interest expense on all long- and short-term
borrowings, excluding or including interest on deposits as indicated.
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended December 31, March 31,
---------------------------- ------------
1995 1994 1993 1992 1991 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding interest expense on deposits 1.8x 2.2x 3.0x 1.3x 1.6x 2.0x
Including interest expense on deposits 1.4x 1.6x 1.8x 1.1x 1.1x 1.5x
</TABLE>
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DESCRIPTION OF DEBT SECURITIES
General
The Debt Securities comprise either Senior Securities or
Subordinated Securities and have been issued under one of the Indentures.
The statements under this caption are brief summaries of certain provisions
contained in the Indentures, do not purport to be complete and are
qualified in their entirety by reference to the applicable Indenture,
copies of which are exhibits to, or incorporated by reference into, the
Registration Statement. Whenever defined terms are used but not defined
herein, such terms shall have the meanings ascribed to them in the
applicable Indenture; it being intended that such defined terms shall be
incorporated herein by reference.
A brief description of the terms of each Debt Security is
included herein under the caption relating to the Indenture pursuant to
which such Debt Security was issued. For a description of the
subordination provisions relating to the Subordinated Securities, see
"Subordinated Securities--Subordination."
Neither the Indentures nor the Debt Securities limit or otherwise
restrict the amount of other indebtedness which may be incurred or the
other securities which may be issued by the Company or any of its
subsidiaries. The Indentures and the Debt Securities do not contain, among
other things, provisions which would afford holders of the Debt Securities
protection in the event of a highly leveraged or other transaction
involving the Company which could adversely affect the holders of Debt
Securities.
All Debt Securities have been issued in registered form without
coupons.
The Debt Securities (other than a Global Security (as defined
herein)) may be presented for transfer (with the form of transfer endorsed
thereon duly executed) or exchanged for other Debt Securities of the same
series at the office of the Note Registrar specified according to the terms
of the applicable Indenture. Such transfer or exchange shall be made
without a service charge, but the Company may require payment of any taxes
or other governmental charges as described in the applicable Indenture.
Unless otherwise indicated herein with respect to a series of
Debt Securities, payment of principal of, premium, if any, and any interest
on the Debt Securities will be made at the office of such Paying Agent or
Paying Agents as the Company may designate from time to time, except that,
at the option of the Company, payment of any interest may be made (i) by
check mailed to the address of the person entitled thereto as such address
shall appear in the applicable Note Register or (ii) by wire transfer to an
account maintained by the person entitled thereto as specified in the
applicable Note Register. Payment of any installment of interest on the
Debt Securities will be made to the person in whose name such Debt Security
is registered at the close of business on the Regular Record Date for such
payment.
Modification of the Indenture; Waiver of Covenants
Each Indenture provides that, with the consent of the holders of
not less than a majority in aggregate principal amount of the outstanding
Debt Securities of each affected series (or with respect to the 1995
Subordinated Indenture, the July 1992 Subordinated Indenture and the
February 1992 Subordinated Indenture, 66% in aggregate principal amount of
each affected series (voting as one class)), modifications and alterations
of such Indenture may be made which affect the rights of the holders of
such Debt Securities; provided, however, that no such modification or
alteration may be made without the consent of the holder of each Debt
Security so affected which would, among other things, (i) change the
maturity of the principal of, or of any installment of interest (or
premium, if any) on, any Debt Security issued pursuant to such Indenture,
or reduce the principal amount thereof or any premium thereon, or change
the method of calculation of interest or the currency of payment of
principal or interest (or premium, if any) on, or reduce the minimum rate
of interest thereon, or impair
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the right to institute suit for the enforcement of any such payment on, or
with respect to, any such Debt Security; or (ii) reduce the above-stated
percentage in principal amount of outstanding Debt Securities required to
modify or alter such Indenture.
Consolidation, Merger or Sale of Assets
Each Indenture provides that the Company may, without the consent
of the holders of any of the Debt Securities outstanding under the
applicable Indenture, consolidate with, merge into or transfer its assets
substantially as an entirety to any person, provided that (i) any such
successor assumes the Company's obligations on the applicable Debt
Securities and under the applicable Indenture, (ii) after giving effect
thereto, no Event of Default (as defined in the Senior Indenture) in the
case of the Senior Securities, or Default (as defined in the applicable
Subordinated Indenture) in the case of the Subordinated Securities, shall
have happened and be continuing, and (iii) certain other conditions under
the applicable Indenture are met. Accordingly, any such consolidation,
merger or transfer of assets substantially as an entirety, which meets the
conditions described above, would not create any Event of Default or
Default which would entitle holders of the Debt Securities, or the
applicable Trustee on their behalf, to take any of the actions described
below under "Senior Securities--Events of Default, Waivers, etc." or
"Subordinated Securities--Events of Default, Waivers, etc."
Information Concerning the Trustees
The Trustees under the various Indentures and certain of their
respective affiliates from time to time maintain accounts and conduct other
banking transactions with the Bank and certain other affiliates of the
Company, and vice versa. Any Trustee may, from time to time, make loans to
the Company and perform other services for the Company in the normal course
of business. Under the provision of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), upon the occurrence of a default under
an indenture, if a trustee has a conflicting interest (as defined in the
Trust Indenture Act) the trustee must, within 90 days, either eliminate
such conflicting interest or resign. Under the provisions of the Trust
Indenture Act, an indenture trustee shall be deemed to have a conflicting
interest if the trustee is a creditor of the obligor. If the trustee fails
either to eliminate the conflicting interest or to resign within 10 days
after the expiration of such 90-day period, the trustee is required to
notify debt holders to this effect and any debt holder who has been a bona
fide holder for at least six months may petition a court to remove the
trustee and to appoint a successor trustee.
SENIOR SECURITIES
The Senior Securities are direct, unsecured obligations of the
Company and rank pari passu with all outstanding unsecured senior
indebtedness of the Company.
Events of Default, Waivers, etc.
An Event of Default with respect to Senior Securities of any
series is defined in the applicable Senior Indentures as (i) default in the
payment of principal of or premium, if any, on the outstanding Senior
Securities of that series when due; (ii) default in the payment of interest
on the outstanding Senior Securities of that series when due and
continuance of such default for 30 days; (iii) default in the performance
of any other covenant of the Company in the applicable Senior Indenture
with respect to Senior Securities of such series and continuance of such
default for 60 days after written notice; (iv) due acceleration of any
indebtedness for borrowed money in principal amount in excess of $1,000,000
of the Company under the terms of the instrument under which such
indebtedness is issued or secured, if such acceleration is not rescinded or
annulled or such indebtedness is not discharged within 30 days after
written notice; (v) certain events of bankruptcy, insolvency or
reorganization of the Company or FNBC; and (vi) any other event that may be
specified in a Prospectus Supplement with respect to such series of Senior
Securities. If an Event of Default with respect to any series of Senior
Securities occurs
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and is continuing, either the applicable Trustee or the holders of not less
than 25% in aggregate principal amount of the Senior Securities of such
series outstanding may declare the principal amount of all Senior
Securities of that series to be immediately due and payable. The holders
of a majority in aggregate principal amount of the Senior Securities of any
series outstanding under a Senior Indenture may waive an Event of Default
resulting in acceleration of such Senior Securities, but only if all Events
of Default with respect to Senior Securities of such series have been
remedied and all payments due (other than those due as a result of
acceleration) have been made. If an Event of Default occurs and is
continuing with respect to a series of Senior Securities, the applicable
Trustee may, in its discretion, and at the written request of holders of
not less than a majority in aggregate principal amount of the outstanding
Senior Securities of such series and upon reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such
request and subject to certain other conditions set forth in the applicable
Senior Indenture shall, proceed to protect the rights of the holders of all
the Senior Securities of such series. Prior to acceleration of maturity of
the Senior Securities of any series outstanding under the applicable Senior
Indenture, the holders of a majority in aggregate principal amount of such
Senior Securities may waive any past default under the Senior Indenture
except a default in the payment of principal of, premium, if any, or
interest on the Senior Securities of such series.
The Senior Indentures provide that upon the occurrence of an
Event of Default specified in clauses (i) or (ii) of the immediately
preceding paragraph, the Company will, upon demand of the applicable
Trustee, pay to it, for the benefit of the holder of any such affected
Senior Security, the whole amount then due and payable on such series of
Senior Securities for principal, premium, if any, and interest. The Senior
Indentures further provide that if the Company fails to pay such amount
forthwith upon such demand, the Trustee may, among other things, institute
a judicial proceeding for the collection thereof.
The Senior Indentures also provide that notwithstanding any other
provision of the applicable Senior Indentures, the holder of a Senior
Security of a series shall have the right to institute suit for the
enforcement of any payment of principal of, premium, if any, and interest
on such Senior Securities when due and that such right shall not be
impaired without the consent of such holder.
The Company is required to file annually with each of the
applicable Trustees a written statement of officers as to the existence or
non-existence of defaults under the applicable Senior Indentures or the
Senior Securities.
SUBORDINATED SECURITIES
The Subordinated Securities are direct, unsecured obligations of
the Company and are subject to the subordination provisions described
below.
Subordination
It is the intent of the Company that Subordinated Securities
issued by the Company be treated as capital for calculation of regulatory
capital ratios. The Federal Reserve Board has issued interpretations of
its capital regulations indicating, among other things, that subordinated
debt of bank holding companies issued on or after September 4, 1992, is
included in capital for calculation of regulatory capital ratios only if
the subordination of the debt meets certain criteria and if the debt may be
accelerated only for bankruptcy, insolvency and similar matters (the
"Subordination Interpretations"). Subordinated debt of the Company
(including subordinated debt issued by First Chicago and NBD prior to the
Merger) issued after September 4, 1992, which meets the Subordination
Interpretations are referred to herein as "New Subordinated Securities".
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Upon any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization, the payment of the
principal of, premium, if any, and interest on the Subordinated Securities
is to be subordinated in right of payment, to the extent provided in the
applicable Subordinated Indenture, to the prior payment in full of all
Senior Indebtedness. In certain events of bankruptcy or insolvency, the
payment of the principal of and interest on the New Subordinated Securities
will, to the extent provided in the applicable Subordinated Indenture, also
be effectively subordinated in right of payment to the prior payment in
full of all General Obligations.
Upon any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization, the holders of
Senior Indebtedness will first be entitled to receive payment in full of
all amounts due or to become due before the holders of the Subordinated
Securities will be entitled to receive any payment in respect of the
principal of, premium, if any, or interest on the Subordinated Securities.
If upon any such payment or distribution of assets there remain, after
giving effect to such subordination provisions in favor of the holders of
Senior Indebtedness, any amounts of cash, property or securities available
for payment or distribution in respect of the New Subordinated Securities
("Excess Proceeds") and if, at such time, any creditors in respect of
General Obligations have not received payment in full of all amounts due or
to become due on or in respect of such General Obligations, then such
Excess Proceeds shall first be applied to pay or provide for the payment in
full of such General Obligations before any payment or distribution may be
made in respect of the New Subordinated Securities.
In addition, no payment may be made of the principal of, premium,
if any, or interest on the Subordinated Securities, or in respect of any
redemption, retirement, purchase or other acquisition of any of the
Subordinated Securities, at any time when (i) there is a default in the
payment of the principal of, premium, if any, interest on or otherwise in
respect of any Senior Indebtedness or (ii) any event of default with
respect to any Senior Indebtedness has occurred and is continuing, or would
occur as a result of such payment on the Subordinated Securities or any
redemption, retirement, purchase or other acquisition of any of the
Subordinated Securities, permitting the holders of such Senior Indebtedness
to accelerate the maturity thereof. Except as described above, the
obligation of the Company to make payment of the principal of, premium, if
any, or interest on the Subordinated Securities will not be affected.
By reason of such subordination in favor of the holders of Senior
Indebtedness, in the event of a distribution of assets upon any
dissolution, winding up, liquidation or reorganization, certain creditors
of the Company who are not holders of Senior Indebtedness or of the
Subordinated Securities may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than holders of the
Subordinated Securities. By reason of the subordination of payments and
distributions on the New Subordinated Securities to creditors in respect of
General Obligations, in the event of a distribution of assets upon any
dissolution, winding up, liquidation or reorganization, holders of Old
Subordinated Securities (as defined herein) may recover less, ratably, than
creditors in respect of General Obligations and may recover more, ratably,
than the holders of New Subordinated Securities.
Subject to payment in full of all Senior Indebtedness, the rights
of the holders of Subordinated Securities will be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or distributions
of cash, property or securities of the Company applicable to Senior
Indebtedness. Subject to payment in full of all General Obligations, the
rights of the holders of the New Subordinated Securities will be subrogated
to the rights of the creditors in respect of General Obligations to receive
payments or distributions of cash, property or securities of the Company
applicable to such creditors in respect of General Obligations.
"Senior Indebtedness" is defined generally in the Subordinated
Indentures as the principal of, premium, if any, and interest on (i) all of
the Company's indebtedness for money borrowed, other than the Subordinated
Securities, whether outstanding on the date of execution of the applicable
Subordinated Indenture or thereafter
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created, assumed or incurred, except such indebtedness as is by its terms
expressly stated to be not superior in right of payment to the Subordinated
Securities or to rank pari passu with the Subordinated Securities; and (ii)
any deferrals, renewals or extensions of any such Senior Indebtedness. The
term "indebtedness for money borrowed" as used in the prior sentence
includes, without limitation, any obligation of, or any obligation
guaranteed by, the Company for the repayment of borrowed money, whether or
not evidenced by bonds, debentures, notes or other written instruments, and
any deferred obligation for the payment of the purchase price of property
or assets. The Subordinated Indentures contain no limitation on the
issuance of additional Senior Indebtedness of the Company.
As of the date of this Prospectus, the following issues of
subordinated indebtedness of the Company are outstanding: Floating Rate
Subordinated Capital Notes Due December 1996; 9 7/8% Subordinated Notes Due
July 1999; 9% Subordinated Notes Due June 15, 1999; 9 7/8% Subordinated
Notes Due August 15, 2000; 11 1/4% Subordinated Notes Due February 20,
2001; 10 1/4% Subordinated Notes Due May 1, 2001; 9 1/4% Subordinated Notes
Due November 15, 2001; 8 7/8% Subordinated Notes Due March 15, 2002; 8 1/4%
Subordinated Notes Due June 15, 2002; 9 1/5% Subordinated Notes Due
December 17, 2001; 7 5/8% Subordinated Notes Due January 15, 2003 (the
"January 2003 Notes"); 6 7/8% Subordinated Notes Due June 15, 2003 (the
"June 2003 Notes"); the Floating Rate Subordinated Notes Due July 28, 2003
(the "July 2003 Notes"); 6 3/8% Subordinated Notes Due January 30, 2009
(the "January 2009 Notes"); 7 1/8% Subordinated Notes Due May 15, 2007 (the
"May 2007 Notes"); 7 1/4% Subordinated Debentures Due August 15, 2004 (the
"2004 Debentures"); 8.10% Subordinated Notes Due March 1, 2002 (the "2002
Notes"); 7.40% Subordinated Debentures due May 10, 2023 (the "2023
Debentures"); Floating Rate Subordinated Notes Due 2005; and 6 1/8%
Subordinated Notes Due February 15, 2006 (the "2006 Notes") (collectively,
all of the foregoing notes and debentures are hereinafter referred to as
the "Existing Subordinated Indebtedness").
The January 2003 Notes, the June 2003 Notes, the July 2003 Notes,
the January 2009 Notes, the May 2007 Notes, the 2023 Debentures and the
2006 Notes all constitute New Subordinated Securities; all other Existing
Subordinated Indebtedness constitutes "Old Subordinated Securities". In
the event of a distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization, the holders of the New
Subordinated Securities may receive less, ratably, than holders of Old
Subordinated Securities.
"General Obligations", with respect to the New Subordinated
Securities, generally means all obligations of the Company to make payment
on account of claims in respect of derivative products such as interest and
foreign exchange rate contracts, commodity contracts and similar
arrangements, other than (i) obligations on account of Senior Indebtedness,
(ii) obligations on account of indebtedness for money borrowed ranking pari
passu with or subordinate to the Subordinated Securities and (iii)
obligations which by their terms are expressly stated not to be superior in
right of payment to the Subordinated Securities or to rank on parity with
the Subordinated Securities; provided, however, that notwithstanding the
foregoing, in the event that any rule, guideline, or interpretation
promulgated or issued by the Federal Reserve Board (or other competent
regulatory agency or authority), as from time to time in effect,
established or specified criteria for the inclusion in regulatory capital
of subordinated debt of a bank holding company requiring that such
subordinated debt be subordinated to obligations to creditors in addition
to those set forth above, then the term "General Obligations" shall also
include such additional obligations to creditors, as from time to time in
effect pursuant to such rules, guidelines or interpretations.
As of March 31, 1996 the aggregate amount of Senior Indebtedness
and General Obligations of the Company was approximately $1.981 billion.
Limited Rights of Acceleration
Payment of principal of the New Subordinated Securities may be
accelerated only in case of the bankruptcy or reorganization of the
Company. There is no right of acceleration in the case of a default in the
payment of
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principal of, premium, if any, or interest on the Subordinated Securities
or the performance of any other covenant of the Company in the applicable
Subordinated Indenture. Payment of principal of the Old Subordinated
Securities may be accelerated in the case of the bankruptcy, insolvency or
reorganization of the Company. Such payment may also be accelerated in the
case of certain events of insolvency or receivership of FNBC or NBD
Michigan, as the case may be. In addition, the 2004 Debentures and the
2002 Notes may be accelerated upon the occurrence of any other Event of
Default applicable to such issuance as described below under "Events of
Default, Defaults, Waivers, etc."
Events of Default, Defaults, Waivers, etc.
An Event of Default with respect to Subordinated Securities of
any series is defined in the applicable Subordinated Indenture as certain
events involving the bankruptcy or reorganization of the Company and any
other Event of Default provided with respect to Subordinated Securities of
that series. For Old Subordinated Securities, the 2004 Debentures and the
2002 Notes, an Event of Default also includes certain events involving the
bankruptcy or insolvency of FNBC or NBD Michigan, as well. In addition,
with respect to the 2002 Notes and the 2004 Debentures, an Event of Default
also includes (i) default in the payment of principal when due, (ii)
default in the payment of interest when due and the continuance of such
default for a period of 30 days, and (iii) default in the performance of
any covenant or agreement of the Company in the applicable Subordinated
Indenture and continuance of such default for 90 days after written notice.
A Default with respect to Subordinated Securities of any series is defined
in the applicable Subordinated Indenture as an Event of Default with
respect to such series, and, if not otherwise and Event of Default for such
series, (i) default in the payment of the principal of, or premium, if any,
on any Subordinated Security of such series when due, (ii) default in the
payment of interest upon any Subordinated Security of such series when due
and the continuance of such default for a period of 30 days, (iii) default
in the performance of any other covenant or agreement of the Company in the
applicable Subordinated Indenture with respect to Subordinated Securities
of such series and continuance of such default for beyond the applicable
grace period (generally 60 days) after written notice, or (iv) any other
Default provided with respect to Subordinated Securities of the applicable
series. If an Event of Default with respect to any outstanding series of
Subordinated Securities occurs and is continuing, either the applicable
Trustee, or the holders of not less than 25% in aggregate principal amount
of the outstanding Subordinated Securities of such series may declare the
principal amount of all Subordinated Securities of that series to be
immediately due and payable. The holders of a majority in aggregate
principal amount of the Subordinated Securities of any series outstanding
under a Subordinated Indenture may waive an Event of Default resulting in
acceleration of such Subordinated Securities, but only if all Defaults have
been remedied (or, to the extent permitted under the applicable
Subordinated Indenture, waived), and all payments due (other than those due
as a result of acceleration) have been made. If a Default occurs and is
continuing with respect to a series of Subordinated Securities, the
applicable Trustee may in its discretion, and at the written request of
holders of not less than a majority in aggregate principal amount of the
outstanding Subordinated Securities of the affected series under the
applicable Subordinated Indenture and upon reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such
request and subject to certain other conditions set forth in the applicable
Subordinated Indenture shall, proceed to protect the rights of the holders
of all the Subordinated Securities of such affected series. Prior to
acceleration of maturity of the Subordinated Securities of any series
outstanding under a Subordinated Indenture, the holders of a majority in
aggregate principal amount of such Subordinated Securities may waive any
past default under the Subordinated Indenture except a default in the
payment of principal of, premium, if any, or interest on the Subordinated
Securities of such series.
Each Subordinated Indenture provides that in the event of a
Default specified in clauses (i) or (ii) of the immediately preceding
paragraph (which may constitute an "Event of Default" for the 2004
Debentures and 2002 Notes) in payment of principal of, premium, if any, or
interest on any Subordinated Security of a series, the Company will, upon
demand of the applicable Trustee, pay to it, for the benefit of the holder
of any such
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Subordinated Security of such affected series, the whole amount then due
and payable on such Subordinated Security for principal, premium, if any,
and interest. Each Subordinated Indenture further provides that if the
Company fails to pay such amount forthwith upon such demand, the applicable
Trustee may, among other things, institute a judicial proceeding for the
collection thereof.
Each Subordinated Indenture also provides that notwithstanding
any other provision of such Subordinated Indenture, the holder of any
Subordinated Security of any series shall have the right to institute suit
for the enforcement of any payment of principal of, premium, if any, and
interest on such Subordinated Security on the respective stated maturity
expressed in such Subordinated Security and that such right shall not be
impaired without the consent of such holder.
The Company is required to file annually with each of the
applicable Trustees a written statement of officers as to the existence or
non-existence of defaults under the applicable Subordinated Indenture or
the Subordinated Securities.
BOOK ENTRY SYSTEM
If so provided herein with respect to a series of Debt
Securities, such series may have been issued in whole or in part in the
form of one or more global securities (the "Global Securities", or
individually, a "Global Security") that were deposited with, or on behalf
of, a depositary (the "Depositary"). The initial Depositary for any series
of Debt Securities originally issued as a Global Security offered hereunder
was The Depository Trust Company, New York, New York ("DTC"). The
following descriptions of DTC and the book-entry system apply only to those
Debt Securities represented in whole or in part by a Global Security.
DTC is a limited-purpose trust company organized under the laws
of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York UCC, and a
"clearing agency" registered pursuant to the provisions of Section 17A of
the Exchange Act. DTC was created to hold securities for its participating
organizations (the "Participants") and to facilitate the clearance and
settlement of securities transactions between Participants through
electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. Indirect access
to the DTC system also is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (the
"Indirect Participants"). Beneficial owners of the Debt Securities
represented by Global Securities that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership
of, or other interest in, the Debt Securities may do so only through
Participants and Indirect Participants.
Payments with respect to any Global Security will be made by the
applicable Paying Agent to DTC or any successor Depositary, or its nominee.
The Company expects that any such Depositary, or its nominee, upon receipt
of any payment of principal of or interest on the Global Security will
credit the accounts of its Participants with payments in amounts
proportionate to such Participants' ownership interests in the Global
Security. Beneficial owners of the Debt Securities, directly or
indirectly, will receive distributions of principal and interest in
proportion to their beneficial ownership through the Participants.
Consequently, any payments to beneficial owners of Debt Securities will be
subject to the terms, conditions and time of payment required by the
Depositary, the Participants and Indirect Participants, as applicable. The
Company expects that such payments will be governed by standing
instructions and customary practices, as is now the case with securities
held for the accounts of customers registered in "street name". Such
payments will be the responsibility of such Participants and Indirect
Participants.
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Under the rules, regulations and procedures creating and
affecting DTC and its operations, DTC is required to make book-entry
transfers among Participants on whose behalf it acts with respect to the
Debt Securities and is required to receive and transmit distributions of
principal of and interest on the Debt Securities. Participants and Indirect
Participants with which beneficial owners of the Debt Securities have
accounts similarly are required to make book-entry transfers and receive
and transmit such payments on behalf of their respective beneficial owners
of the Debt Securities. Accordingly, although beneficial owners of the
Debt Securities will not possess certificated Debt Securities, beneficial
owners will receive payments and will be able to transfer their interests.
Since it is anticipated that the one holder of the Debt
Securities will be the Depositary or its nominee, beneficial owners of the
Debt Securities represented by Global Securities will not be recognized as
holders of the Debt Securities under the applicable Indentures unless
certificated definitive Debt Securities are issued. So long as the Debt
Securities are represented by the Global Security, beneficial owners of the
Debt Securities will only be permitted to exercise the rights of holders of
Debt Securities indirectly through the Participants who, in turn, will
exercise the rights of holders of the Debt Securities through the
Depositary.
If DTC is at any time unwilling, unable or ineligible to continue
as depositary for any series of Debt Securities and a successor depositary
is not appointed by the Company within 90 days, the Company will issue
certificated Debt Securities in definitive form in exchange for the
applicable Global Security. In addition, the Company may at any time
determine not to have one or more series of Debt Securities represented by
a Global Security, and, in such event, will issue certificated Debt
Securities for such series in definitive form in exchange for the related
Global Security. In either instance, an owner of a beneficial interest in
the Global Security will be entitled to physical delivery of certificated
Debt Securities in definitive form equal in principal amount to such
beneficial interest and to have such certificated Debt Securities
registered in its name. Certificated Debt Securities so issued in
definitive form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form only, without
coupons.
DESCRIPTIONS OF SUBORDINATED SECURITIES UNDER THE
1986 SUBORDINATED INDENTURE
The brief summary of the principal provisions of the 1986
Subordinated Indenture and the Subordinated Securities issued thereunder
does not purport to be complete and is qualified in its entirety by
reference to the 1986 Subordinated Indenture, a copy of which has
previously been filed with the Commission. Certain capitalized terms used
herein are defined in the 1986 Subordinated Indenture.
Restrictions on Disposition of Stock of FNBC
The 1986 Subordinated Indenture contains a covenant by the
Company that it will not sell, assign, transfer or otherwise dispose of any
shares of, securities convertible into or options, warrants or rights to
subscribe for or purchase shares of voting stock of FNBC, nor will it
permit FNBC (or any successor association thereto) to issue any shares of,
securities convertible into, or options, warrants or rights to subscribe
for or purchase shares of, voting stock of FNBC except that, with respect
to such voting stock, (i) the Company may make any such sale, assignment,
transfer or other disposition for fair market value on the date thereof, as
determined by the Board of Directors of the Company (which determination
shall be conclusive) and evidenced by a duly adopted resolution thereof;
and (ii) FNBC (or any successor association thereto) may issue any such
shares, securities, options, warrants or rights, if, in each such case
after giving effect thereto, the Company will own at least 80% of the
voting stock of FNBC (or such successor association) then issued and
outstanding.
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Terms and Provisions of the 9 7/8% Subordinated Notes Due July 1999 (the
"July 1999 Notes")
General
The July 1999 Notes were issued in $200,000,000 aggregate
principal amount on July 8, 1987, will mature on July 1, 1999, and
constitute a separate series of Subordinated Securities for the purposes of
the 1986 Subordinated Indenture. The July 1999 Notes may not be redeemed
prior to their stated maturity. Interest is payable semiannually on
January 1 and July 1 of each year, to the person in whose name a July 1999
Note (or any predecessor note) is registered at the close of business on
the December 15 or June 15, as the case may be, next preceding such
Interest Payment Date. Interest is computed on the basis of a 360-day year
consisting of twelve 30-day months. The July 1999 Notes were issued only
in fully registered form in denominations of $1,000 and integral multiples
thereof. Principal of, and interest on, the July 1999 Notes are payable at
the principal office of FNBC, the Principal Paying Agent, One First
National Plaza, Chicago, Illinois 60670. Payment of interest may, at the
option of the Company, be made by check mailed to the address of the
registered holder entitled thereto.
Subordination
The July 1999 Notes are unsecured and are subordinate and junior
in right of payment to the Company's obligations to the holders of Senior
Indebtedness of the Company as described under "Subordinated Securities--
Subordination" herein. The July 1999 Notes constitute Old Subordinated
Securities.
Limited Right of Acceleration
Payment of principal of the July 1999 Notes may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of the
Company or FNBC. There is no right of acceleration in the case of a
default in the payment of interest on the July 1999 Notes or in the
performance of any other covenant of the Company in the 1986 Subordinated
Indenture or in the July 1999 Notes. See "Subordinated Securities--Events
of Default, Defaults, Waivers, etc." herein.
Available Funds
The Company has designated certain funds with regard to the July
1999 Notes as Available Funds (as defined below) for United State bank
regulatory purposes. Although such Available Funds are expected to provide
a source of funds for the payment of all or a substantial portion of the
July 1999 Notes, such Available Funds shall not be deemed to be property of
the holders of any July 1999 Note or trust funds and will not constitute
security for the payment of any July 1999 Note.
"Available Funds" will consist of amounts equal to (i) the new
proceeds from the sale for cash from time to time of Capital Securities (as
defined below), (ii) the market value, as determined by the Company, of
Capital Securities sold from time to time in exchange for other property or
issued to finance acquisitions, including acquisition of business entities,
less the expenses to effect any such exchanges or issuances, and (iii)
other funds which the regulations or other criteria of the Company's
Primary Federal Regulator then permit for the purpose of determining
primary capital of the Company; provided that (x) the Company has
designated such amounts as Available Funds on its books and records in the
manner required by the Company's Primary Federal Regulator and (y) there
shall be deducted from Available Funds an amount equal to the amount of any
funds used to repay the July 1999 Notes for which Available Funds are
required to be designated. The Company's "Primary Federal Regulator" means
the Board of Governors of the Federal Reserve System of the United States
or any successor agency performing substantially the same regulatory
function with respect to the Company.
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"Capital Securities" means any securities issued by the Company
which consists of any one of the following: (i) common stock, (ii)
perpetual preferred stock, or (iii) other securities which at the date of
issuance constitute primary capital of the Company under regulations of or
as determined by the Company's Primary Federal Regulator. Capital
Securities may have such terms, rights and preferences as may be determined
by the Company.
The Company has covenanted in the July 1999 Notes to obtain
Available Funds by July 1, 1991, July 1, 1995 and 60 days prior to the
stated maturity date of the July 1999 Notes on July 1, 1999, in amounts
equal to at least one-third, two-thirds and the full amount, respectively,
of the original aggregate principal amount (or such lesser amount as the
Company's Primary Federal Regulator may permit from time to time) of the
July 1999 Notes which may be treated at such time as primary capital of the
Company for United States bank regulatory purposes.
The July 1999 Notes also provide, however, that such covenant of
the Company will be cancelled, and amounts theretofore designated as
Available Funds will cease to be Available Funds, in the event and to the
extent that the Company's Primary Federal Regulator determines that any
portion of the indebtedness represented by the July 1999 Notes treated as
primary capital of the Company for United States bank regulatory purposes
may not thereafter be so treated.
The obligations of the Company to make payments of all amounts of
principal of the July 1999 Notes at their stated maturity date or in the
event of acceleration of the July 1999 Notes upon the occurrence of an
Event of Default and to make payments of interest on the July 1999 Notes
will not be affected by whether or to what extent there are Available
Funds. Available Funds remaining after payment in full (or provision
therefor made as provided in the 1986 Subordinated Indenture) of all the
July 1999 Notes shall be released from such designation. As of the date of
this Prospectus, the Company has designated Available Funds equal to the
aggregate original principal amount of the July 1999 Notes.
Regarding the Trustee
Chemical Bank ("Chemical"), the Trustee under the 1986
Subordinated Indenture, has its principal corporate trust office at 450
West 33rd Street, New York, New York 10001. The Company has normal banking
relationships with Chemical, and Chemical is also trustee for the Company's
May 2007 Notes issued under the 1995 Subordinated Indenture and the
Company's 2023 Debentures issued under an Indenture dated as of April 30,
1993.
DESCRIPTION OF SENIOR SECURITIES UNDER THE 1986 SENIOR INDENTURE
The brief summary of the principal provisions of the 1986 Senior
Indenture and the Senior Securities issued thereunder does not purport to
be complete and is qualified in its entirety by reference to the 1986
Senior Indenture, a copy of which has previously been filed with the
Commission. Certain capitalized terms used herein are defined in the 1986
Senior Indenture.
Restrictions on Disposition of Stock of FNBC
The 1986 Senior Indenture contains a covenant by the Company that
it will not sell, assign, transfer or otherwise dispose of any shares of,
securities convertible into or options, warrants or rights to subscribe for
or purchase shares of, of FNBC nor will it permit FNBC (or any successor
association thereto) to issue any shares of, voting stock of FNBC except
that, with respect to such voting stock, (i) the Company may make any such
sale, assignment, transfer or other disposition for fair market value on
the date thereof, as determined by the Board of Directors of the Company
(which determination shall be conclusive) and evidenced by a duly adopted
resolution thereof, and (ii) FNBC (or any successor association thereto)
may issue any such shares, securities, options,
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warrants or rights, if, in each such case after giving effect thereto, the
Company will own at least 80% of the voting stock of FNBC (or such
successor association) then issued and outstanding.
Terms and Provisions of the 8 1/2% Notes Due June 1, 1998 (the "June 1998
Notes")
The June 1998 Notes were issued in $100,000,000 aggregate
principal amount on May 20, 1986, will mature on June 1, 1998, and
constitute a separate series of Senior Securities for the purposes of the
1986 Senior Indenture. The June 1998 Notes are direct, unsecured
obligations of the Company and rank pari passu with all outstanding senior
indebtedness of the Company. The June 1998 Notes may not be redeemed prior
to their stated maturity. During the period from April 1, 1993, to May 1,
1993, a holder of a June 1998 Note could elect to have such note (or any
portion thereof) repaid on June 1, 1993, at its principal amount, plus
accrued interest to the repayment date. As of the date of this Prospectus,
$150,000 of the aggregate principal amount of the June 1998 Notes were so
repaid. Interest is payable semiannually on June 1 and December 1 of each
year, to the person in whose name the June 1998 Note (or any predecessor
note) is registered at the close of business on May 15 or November 15, as
the case may be, next preceding such Interest Payment Date. Interest will
be computed on the basis of a 360-day year consisting of twelve 30-day
months. The June 1998 Notes were issued only in fully registered form in
denomination of $1,000 and integral multiples thereof. Principal of and
interest on the June 1998 Notes are payable at the corporate trust office
of Chemical Bank, the Company's Paying Agent in the City of New York,
presently located at 55 Water Street, New York, New York 10041, and at the
principal office of FNBC, the Principal Paying Agent, One First National
Plaza, Chicago, Illinois 60670. Payment of interest may, at the option of
the Company, be made by check mailed to the address of the registered
holder entitled thereto. Payment of principal of the June 1998 Notes may be
accelerated under the circumstances described under "Senior Securities--
Events of Default, Waivers, etc." herein.
The June 1998 Notes are traded on the New York Stock Exchange.
Regarding the Trustee
Chase Manhattan Bank Delaware, formerly Chemical Bank Delaware
("Chase Delaware"), the Trustee under the 1986 Senior Indenture, has its
principal corporate trust office at 1201 Market Street, Wilmington,
Delaware 19801. The Company has normal banking relationships with Chase
Delaware.
DESCRIPTION OF SENIOR SECURITIES UNDER THE 1987 SENIOR INDENTURE
The brief summary of the principal provisions of the 1987 Senior
Indenture and the Senior Securities issued thereunder does not purport to
be complete and is qualified in its entirety by reference to the 1987
Senior Indenture, a copy of which has previously been filed with the
Commission. Certain capitalized terms used herein are defined in the 1987
Senior Indenture.
The outstanding Senior Securities under the 1987 Senior Indenture
were all issued pursuant to certain Medium-Term Note Programs of the
Company. A brief description of each of the programs whose notes are being
offered by this Prospectus follows. The specific terms of each such
medium-term note will be set forth in the applicable pricing supplement
hereto (the "Pricing Supplement").
Medium-Term Notes Due From 9 Months to 15 Years From Date of Issue (the
"Series A Notes")
The Series A Notes were issued from time to time, from October
1987 to May 1989, in an aggregate principal amount of $646,825,000. As of
the date of this Prospectus, $10,000,000 of the Series A Notes remain
outstanding. The outstanding Series A Notes will mature on October 31,
1997 and constitute a separate series of
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Senior Securities for purposes of the 1987 Senior Indenture. The Series A
Notes may not be redeemed prior to their stated maturity. Interest at the
annual rate of 11.15% is payable semiannually on March 15 and September 15
of each year to the person in whose name the Series A Note is registered at
the close of business on March 1 and September 1, as the case may be, next
preceding such Interest Payment Date. Interest is computed on the basis of
a 360-day year consisting of twelve 30-day months.
The Series A Notes were issued in fully registrable form only in
denominations of $100,000 and integral multiples in $1,000 in excess
thereof. Principal and interest are payable, and the transfer of the
Series A Notes is registrable, at the office of Citibank, N.A., the
Company's Paying Agent and Note Registrar for the Series A Notes, currently
located at 120 Wall Street, 13th Floor, New York, New York 10018, provided
that payment of interest, other than interest at maturity, may be made at
the option of the Company by check mailed to the address of the person
entitled thereto as it appears on the Note Register at the close of
business on the Regular Record Date corresponding to the relevant Interest
Payment Date. The principal and interest payable at the maturity of the
Series A Notes will be paid upon maturity in immediately available funds
against presentation of the Series A Notes at the office of Citibank, N.A.,
120 Wall Street, 13th Floor, New York, New York 10018.
Medium-Term Notes Due From 9 Months to 15 Years From Date of Issue, Series
D (the "Series D Notes")
The Series D Notes were issued from time to time, from August
1990 to December 1991, in an aggregate principal amount of $700,000,000.
As of July 15, 1996, $98,000,000 of the Series D Notes remain outstanding.
The Series D Notes were issued as Senior Securities under the 1987 Senior
Indenture. The terms of each of the Series D Notes, including interest
rates and maturity dates, were fixed at the time of issuance and described
in a Pricing Supplement related to such note. The Series D Notes may not
be redeemed prior to their stated maturity.
The outstanding Series D Notes have maturity dates ranging from
October 2, 1996 to November 15, 1996, and bear interest at annual fixed
rates ranging from 8.51% to 9.00%. Interest on the outstanding Series D
Notes is payable semiannually on March 15 and September 15 of each year to
the person in whose name a Series D Note is registered at the close of
business on March 1 and September 1, as the case may be, next preceding
such Interest Payment Date. Interest is computed on the basis of a 360-day
year consisting of twelve 30-day months. The Series D Notes constitute a
separate series of Senior Securities for purposes of the 1987 Senior
Indenture.
The Series D Notes are represented by Global Securities deposited
with or on behalf of DTC and registered in the name of a nominee of DTC.
The Series D Notes were issued in book-entry form only. Unless and until
certificated Series D Notes are issued under the limited circumstances
described under "Book Entry System" herein, no beneficial owner of a Series
D Note will be entitled to receive a definitive certificate representing a
Series D Note. So long as DTC or any successor Depositary or its nominee
is the registered owner of the Global Security representing a Series D
Note, the Depositary, or such nominee, as the case may be, will be
considered to be the sole owner or holder of such Series D Note for all
purposes of the 1987 Senior Indenture. Unless and until it is exchanged in
whole or in part for the applicable Series D Note represented thereby, the
Global Security may not be transferred except as a whole by the Depositary
to a nominee of the Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by the Depositary or
any nominee to a successor depositary or a nominee of such successor.
Interest on the Series D Notes will be payable at the office of
Citibank, N.A., the Company's Paying Agent and Note Registrar for the
Series D Notes, currently located at 120 Wall Street, 13th Floor, New York,
New York 10018; provided that payment of interest, other than interest at
maturity, may be made at the option of the Company by check mailed to the
address of the person entitled thereto as it appears on the Note Register
at the close of business on the Regular Record Date corresponding to the
relevant Interest Payment Date. The principal and interest payable at
maturity will be paid in immediately available funds against presentation
of such Series D Note at the office of Citibank, 120 Wall Street, 13th
Floor, New York, New York 10018. So long as
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a Series D Note is represented by a Global Security, such payments of
interest and principal will be made to the Depositary or its nominee.
Payments to the beneficial owners of the Series D Notes will be made
through the Depositary or its nominee, as described under "Book Entry
System" herein. Neither the Company, the Trustee under the 1987 Senior
Indenture, any Paying Agent nor the Note Registrar for the Series D Notes
will have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests
of the Global Securities for such Series D Notes or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
Medium-Term Notes Due From 9 Months to 15 Years From Date of Issue, Series
E (the "Series E Notes")
The Series E Notes were issued from time to time from December
1991 to October 1993, in an aggregate principal amount of $650,000,000. As
of July 15, 1996, $184,000,000 of the Series E Notes remain outstanding.
The Series E Notes were issued as Senior Securities under the 1987 Senior
Indenture (the "Senior Series E Notes") and Subordinated Securities under
the 1987 Subordinated Indenture (the "Subordinated Series E Notes"). The
terms of the Series E Notes, including interest rates and maturity dates,
were fixed at the time of issuance and described in a Pricing Supplement
related to such note. The Series E Notes may not be redeemed prior to their
stated maturity.
The Senior Series E Notes have maturity dates ranging from
December 13, 1996, to August 7, 1997, and bear interest at fixed annual
rates ranging from 6.25 % to 7.95%. The Senior Series E Notes constitute a
separate series of Senior Notes for purposes of the 1987 Senior Indenture.
The Subordinated Series E Notes mature on December 17, 2001, and
bear interest at the annual rate of 9.20%. The Subordinated Series E Notes
constitute a separate series of Subordinated Securities for purposes of the
1987 Subordinated Indenture. The Subordinated Series E Notes are unsecured
and are subordinate and junior in right of payment to the Company's
obligations to the holders of Senior Indebtedness of the Company as
described under "Subordinated Securities--Subordination" herein. The
Subordinated Series E Notes constitute Old Subordinated Securities.
Payment of principal of the Subordinated Series E Notes may be accelerated
only in the case of bankruptcy, insolvency or reorganization of the Company
or FNBC. There is no right of acceleration in the case of a default in the
payment of interest on the Subordinated Series E Notes or in the
performance of any other covenant of the Company in the 1987 Subordinated
Indenture or in the Subordinated Series E Notes. See "Subordinated
Securities--Events of Default, Defaults, Waivers, etc." herein.
Interest on the outstanding Series E Notes is payable
semiannually on March 15 and September 15 of each year to the person in
whose name a Series E Note is registered at the close of business on March
1 and September 1, as the case may be, next preceding such Interest Payment
Date. Interest is computed on the basis of a 360-day year consisting of
twelve 30-day months.
The Series E Notes are represented by Global Securities deposited
with or on behalf of DTC and registered in the name of a nominee of DTC.
The Series E Notes were issued in book-entry form only. Unless and until
certificated Series E Notes are issued under the limited circumstances
described herein under "Book Entry System," no beneficial owner of a Series
E Note will be entitled to receive a definitive certificate representing a
Series E Note. So long as DTC or any successor Depositary or its nominee
is the registered owner of the Global Security representing a Series E
Note, the Depositary, or such nominee, as the case may be, will be
considered to be the sole owner or holder of such Series E Note for all
purposes of the applicable Indenture. Unless and until it is exchanged in
whole or in part for the applicable Series E Note represented thereby, the
Global Security may not be transferred except as a whole by the Depositary
to a nominee of the Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by the Depositary or
any nominee to a successor depositary or a nominee of such successor.
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Interest on the Series E Notes will be payable at the office of
FNBC, the Company's Paying Agent and Note Registrar, currently located at
One First National Plaza, Chicago, Illinois 60670, provided that payment of
interest, other than interest at maturity may be made at the option of the
Company by check mailed to the address of the person entitled thereto as it
appears on the Note Register at the close of business on the Regular Record
Date corresponding to the relevant Interest Payment Date. The principal
and interest payable at maturity will be paid in immediately available
funds against presentation of the Series E Note at the office of FNBC, One
First National Plaza, Chicago, Illinois 60670. So long as a Series E Note
is represented by a Global Security, such payments of interest and
principal will be made to the Depositary or its nominee. Payments to the
beneficial owners of the Series E Notes will be made through the Depositary
or its nominee, as described herein under "Book Entry System." Neither the
Company, the Trustees under the 1987 Senior Indenture or the 1987
Subordinated Indenture, any Paying Agent nor the Note Registrar for the
Series E Notes will have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial
ownership interests of the Global Securities for such Series E Notes or for
maintaining, supervising or reviewing any records relating to such
beneficial interests.
DESCRIPTION OF SUBORDINATED SECURITIES UNDER THE 1987 SUBORDINATED
INDENTURE
The brief summary of the principal provisions of the 1987
Subordinated Indenture and the Subordinated Securities issued thereunder
does not purport to be complete and is qualified in its entirety by
reference to the 1987 Subordinated Indenture, a copy of which has
previously been filed with the Commission. Certain capitalized terms used
herein are defined in the 1987 Subordinated Indenture.
Terms and Provisions of the 9% Subordinated Notes Due June 15, 1999 (the
"June 1999 Notes")
General
The June 1999 Notes were issued in $200,000,000 aggregate
principal amount on June 15, 1989, will mature on June 15, 1999, and
constitute a separate series of Subordinated Securities for the purposes of
the 1987 Subordinated Indenture. The June 1999 Notes may not be redeemed
prior to their stated maturity. Interest is payable semiannually on June
15 and December 15 of each year, to the person in whose name the June 1999
Note (or any predecessor note) is registered at the close of business on
the May 31 or November 30, as the case may be, next preceding such Interest
Payment Date. Interest is computed on the basis of a 360-day year
consisting of twelve 30-day months.
The June 1999 Notes are represented by a single Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
June 1999 Notes were issued in denominations of $1,000 (representing
1/200,000 of the Global Security) and integral multiples thereof in book-
entry form only. Unless and until certificated June 1999 Notes are issued
under the limited circumstances described under "Book-Entry System" herein,
no beneficial owner of a June 1999 Note shall be entitled to receive a
definitive certificate representing a June 1999 Note. So long as DTC or
any successor Depositary or its nominee is the registered owner of the
Global Security, the Depositary, or such nominee, as the case may be, will
be considered to be the sole owner or holder of the June 1999 Notes for all
purposes of the 1987 Subordinated Indenture. Unless and until it is
exchanged in whole or in part for the June 1999 Notes represented thereby,
the Global Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any nominee to a successor depositary or any nominee of
such successor.
Principal of and interest on the June 1999 Notes are payable at
the principal office of FNBC, the principal Paying Agent, presently located
at One First National Plaza, Chicago, Illinois 60670. Payment of
interest, other
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than at maturity, may be made at the option of the Company by check mailed
to the address of the registered holder entitled thereto. So long as the
Global Security represents the June 1999 Notes, such payments of interest
and principal will be made to the Depositary or its nominee. Payments to
beneficial owners of the June 1999 Notes will be made through the
Depositary or its nominee, as described under "Book Entry System" herein.
Neither the Company, the Trustee under the 1987 Subordinated Indenture, any
Paying Agent, nor the Note Registrar for the June 1999 Notes will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of, beneficial ownership interests of the Global
Security for such June 1999 Notes or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
Subordination
The June 1999 Notes are unsecured and are subordinate and junior
in right of payment to the Company's obligations to the holders of Senior
Indebtedness of the Company as described under "Subordinated Securities--
Subordination" herein. The June 1999 Notes constitute Old Subordinated
Securities.
Limited Right of Acceleration
Payment of principal of the June 1999 Notes may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of the
Company or FNBC. There is no right of acceleration in the case of a
default in the payment of interest on the June 1999 Notes or in the
performance of any other covenant of the Company in the 1987 Subordinated
Indenture or in the June 1999 Notes. See "Subordinated Securities--Events
of Default, Defaults, Waivers, etc." herein.
Terms and Provisions of the 9 7/8% Subordinated Notes Due August 15, 2000
(the "August 2000 Notes")
General
The August 2000 Notes were issued in $100,000,000 aggregate
principal amount on August 15, 1990, will mature on August 15, 2000, and
constitute a separate series of Subordinated Securities for the purposes of
the 1987 Subordinated Indenture. The August 2000 Notes may not be redeemed
prior to their stated maturity. Interest is payable semiannually on
February 15 and August 15 of each year, to the person in whose name the
August 2000 Note (or any predecessor note) is registered at the close of
business on the January 31 or July 31, as the case may be, next preceding
such Interest Payment Date. Interest is computed on the basis of a 360-day
year consisting of twelve 30-day months.
The August 2000 Notes are represented by a Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
Notes were issued in denominations of $1,000 (representing 1/100,000 of the
Global Security) and integral multiples thereof in book-entry form only.
Unless and until certificated August 2000 Notes are issued under the
limited circumstances described under "Book Entry System" herein, no
beneficial owner of an August 2000 Note shall be entitled to receive a
definitive certificate representing an August 2000 Note. So long as DTC or
any successor Depositary or its nominee is the registered owner of the
Global Security, the Depositary, or such nominee, as the case may be, will
be considered to be the sole owner or holder of the August 2000 Notes for
all purposes of the 1987 Subordinated Indenture. Unless and until it is
exchanged in whole or in part for the August 2000 Notes represented
thereby, the Global Security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any nominee to a successor depositary or any nominee of
such successor.
Principal of and interest on the August 2000 Notes are payable at
the principal office of FNBC, the principal Paying Agent, presently located
at One First National Plaza, Chicago, Illinois 60670. Payment of
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interest, other than at maturity, may be made at the option of the Company
by check mailed to the address of the registered holder entitled thereto.
So long as the Global Security represents the August 2000 Notes, such
payments of interest and principal will be made to the Depositary or its
nominee. Payments to beneficial owners of the August 2000 Notes will be
made through the Depositary or its nominee. Neither the Company, the
Trustee under the 1987 Subordinated Indenture, any Paying Agent, nor the
Note Registrar for the August 2000 Notes will have any responsibility or
liability for any aspect of the records relating to, or payments made on
account of, beneficial ownership interests of the Global Security for such
August 2000 Notes or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
Subordination
The August 2000 Notes are unsecured and are subordinate and
junior in right of payment to the Company's obligations to the holders of
Senior Indebtedness of the Company as described under "Subordinated
Securities--Subordination" herein. The August 2000 Notes constitute Old
Subordinated Securities.
Limited Right of Acceleration
Payment of principal of the August 2000 Notes may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of the
Company or FNBC. There is no right of acceleration in the case of a
default in the payment of interest on the August 2000 Notes or in the
performance of any other covenant of the Company in the 1987 Subordinated
Indenture or in the August 2000 Notes. See "Subordinated Securities--
Events of Default, Defaults, Waivers, etc." herein.
Terms and Provisions of the 11 1/4% Subordinated Notes Due February 20,
2001 (the "February 2001 Notes")
General
The February 2001 Notes were issued in $100,000,000 aggregate
principal amount on February 20, 1991, will mature on February 20, 2001,
and constitute a separate series of Subordinated Securities for the
purposes of the 1987 Subordinated Indenture. The Notes may not be redeemed
prior to their stated maturity. Interest is payable semiannually on
February 20 and August 20 of each year, to the person in whose name the
February 2001 Note (or any predecessor note) is registered at the close of
business on the January 31 or July 31, as the case may be, next preceding
such Interest Payment Date. Interest is computed on the basis of a 360-day
year consisting of twelve 30-day months.
The February 2001 Notes are represented by a Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
Notes were issued in denominations of $1,000 (representing 1/100,000 of the
Global Security) and integral multiples thereof in book-entry form only.
Unless and until certificated February 2001 Notes are issued under the
limited circumstances described under "Book Entry System" herein, no
beneficial owner of a February 2001 Note shall be entitled to receive a
definitive certificate representing a February 2001 Note. So long as DTC
or any successor Depositary or its nominee is the registered owner of the
Global Security, the Depositary, or such nominee, as the case may be, will
be considered to be the sole owner or holder of the February 2001 Notes for
all purposes of the 1987 Subordinated Indenture. Unless and until it is
exchanged in whole or in part for the February 2001 Notes represented
thereby, the Global Security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any nominee to a successor depositary or any nominee of
such successor.
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Principal of and interest on the Notes are payable at the
principal office of FNBC, the principal Paying Agent, presently located at
One First National Plaza, Chicago, Illinois 60670. Payment of interest,
other than at maturity, may be made at the option of the Company by check
mailed to the address of the registered holder entitled thereto. So long
as the Global Security represents the February 2001 Notes, such payments of
interest and principal will be made to the Depositary or its nominee.
Payments to beneficial owners of the February 2001 Notes will be made
through the Depositary or its nominee, as described under "Book Entry
System" herein. Neither the Company, the Trustee under the 1987
Subordinated Indenture, any Paying Agent, nor the Note Registrar for the
February 2001 Notes will have any responsibility or liability for any
aspect of the records relating to, or payments made on account of,
beneficial ownership interests of the Global Security for such February
2001 Notes or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
Subordination
The February 2001 Notes are unsecured and are subordinate and
junior in right of payment to the Company's obligations to the holders of
Senior Indebtedness of the Company as described under "Subordinated
Securities--Subordination" herein. The February 2001 Notes constitute Old
Subordinated Securities.
Limited Right of Acceleration
Payment of principal of the February 2001 Notes may be
accelerated only in the case of the bankruptcy, insolvency or
reorganization of the Company or FNBC. There is no right to acceleration
in the case of a default in the payment of interest on the February 2001
Notes or in the performance of any other covenant of the Company in the
1987 Subordinated Indenture or in the February 2001 Notes. See
"Subordinated Securities -- Events of Default, Defaults, Waivers, etc."
herein.
Terms and Provisions of the 10 1/4% Subordinated Notes Due May 1, 2001 (the
"May 2001 Notes")
General
The May 2001 Notes were issued in $100,000,000 aggregate
principal amount on May 1, 1991, will mature on May 1, 2001, and constitute
a separate series of Subordinated Securities for the purposes of the 1987
Subordinated Indenture. The May 2001 Notes may not be redeemed prior to
their stated maturity. Interest is payable semiannually on May 1 and
November 1 of each year, to the person in whose name the May 2001 Note (or
any predecessor note) is registered at the close of business on the April
15 or October 15, as the case may be, next preceding such Interest Payment
Date. Interest is computed on the basis of a 360-day year consisting of
twelve 30-day months.
The May 2001 Notes are represented by a Global Security deposited
with DTC and registered in the name of a nominee of DTC. The May 2001
Notes were issued in denominations of $1,000 (representing 1/100,000 of the
Global Security) and integral multiples thereof in book-entry form only.
Unless and until certificated May 2001 Notes are issued under the limited
circumstances described under "Book Entry System" herein, no beneficial
owner of a May 2001 Note shall be entitled to receive a definitive
certificate representing a May 2001 Note. So long as DTC or any successor
Depositary or its nominee is the registered owner of the Global Security,
the Depositary, or such nominee, as the case may be, will be considered to
be the sole owner or holder of the May 2001 Notes for all purposes of the
1987 Subordinated Indenture. Unless and until it is exchanged in whole or
in part for the May 2001 Notes represented thereby, the Global Security may
not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a
successor depositary or any nominee of such successor.
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<PAGE>
Principal of and interest on the May 2001 Notes are payable at
the principal office of FNBC, the principal Paying Agent, presently located
at One First National Plaza, Chicago, Illinois 60670. Payment of
interest, other than at maturity, may be made at the option of the Company
by check mailed to the address of the registered holder entitled thereto.
So long as the Global Security represents the May 2001 Notes, such payments
of interest and principal will be made to the Depositary or its nominee.
Payments to beneficial owners of the May 2001 Notes will be made through
the Depositary or its nominee, as described under "Book Entry System"
herein. Neither the Company, the Trustee under the 1987 Subordinated
Indenture, any Paying Agent, nor the Note Registrar for the May 2001 Notes
will have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests
of the Global Security for such May 2001 Notes or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
Subordination
The May 2001 Notes are unsecured and are subordinate and junior
in right of payment to the Company's obligations to the holders of Senior
Indebtedness of the Company as described under "Subordinated Securities --
Subordination" herein. The May 2001 Notes constitute Old Subordinated
Securities.
Limited Right of Acceleration
Payment of principal of the May 2001 Notes may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of the
Company or FNBC. There is no right of acceleration in the case of a
default in the payment of interest on the May 2001 Notes or in the
performance of any other covenant of the Company in the 1987 Subordinated
Indenture or in the May 2001 Notes. See "Subordinated Securities -- Events
of Default, Default, Waivers, etc." herein.
Terms and Provisions of the 9 1/4% Subordinated Notes Due November 15, 2001
(the "November 2001 Notes")
General
The November 2001 Notes were issued in $100,000,000 aggregate
principal amount on November 20, 1991, will mature on November 15, 2001,
and constitute a separate series of Subordinated Securities for the
purposes of the 1987 Subordinated Indenture. The November 2001 Notes may
not be redeemed prior to their stated maturity. Interest is payable
semiannually on May 15 and November 15 of each year, to the person in whose
name the November 2001 Note (or any predecessor note) is registered at the
close of business on the April 30 or October 31, as the case may be, next
preceding such Interest Payment Date. Interest is computed on the basis of
a 360-day year consisting of twelve 30-day months.
The November 2001 Notes are represented by a Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
November 2001 Notes were issued in denominations of $1,000 (representing
1/100,000 of the Global Security) and integral multiples thereof in book-
entry form only. Unless and until certificated November 2001 Notes are
issued under the limited circumstances described under "Book Entry System"
herein, no beneficial owner of a November 2001 Note shall be entitled to
receive a definitive certificate representing a November 2001 Note. So
long as DTC or any successor Depositary or its nominee is the registered
owner of the Global Security, the Depositary, or such nominee, as the case
may be, will be considered to be the sole owner or holder of the November
2001 Notes for all purposes of the 1987 Subordinated Indenture. Unless and
until it is exchanged in whole or in part for the November 2001 Notes
represented thereby, the Global Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or
by the Depositary or any nominee to a successor depositary or any nominee
of such successor.
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<PAGE>
Principal of and interest on the November 2001 Notes are payable
at the principal office of FNBC, the principal Paying Agent, presently
located at One First National Plaza, Chicago, Illinois 60670. Payment of
interest, other than at maturity, may be made at the option of the Company
by check mailed to the address of the registered holder entitled thereto.
So long as the Global Security represents the November 2001 Notes, such
payments of interest and principal will be made to the Depositary or its
nominee. Payments to beneficial owners of the November 2001 Notes will be
made through the Depositary or its nominee, as described under "Book Entry
System" herein. Neither the Company, the Trustee under the 1987
Subordinated Indenture, any Paying Agent, nor the Note Registrar for the
November 2001 Notes will have any responsibility or liability for any
aspect of the records relating to, or payments made on account of,
beneficial ownership interests of the Global Security for such November
2001 Notes or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
Subordination
The November 2001 Notes are unsecured and are subordinate and
junior in right of payment to the Company's obligations to the holders of
Senior Indebtedness of the Company as described under "Subordinated
Securities -- Subordination" herein. The November 2001 Notes constitute
Old Subordinated Securities.
Limited Right of Acceleration
Payment of principal of the November 2001 Notes may be
accelerated only in the case of the bankruptcy, insolvency or
reorganization of the Company or FNBC. There is no right of acceleration
in the case of a default in the payment of interest on the November 2001
Notes or in the performance of any other covenant of the Company in the
1987 Subordinated Indenture or in the November 2001 Notes. See
"Subordinated Securities --Events of Default, Default, Waivers, etc."
herein.
Terms and Provisions of the 8 7/8% Subordinated Notes Due March 15, 2002
(the "March 2002 Notes")
General
The March 2002 Notes were issued in $100,000,000 aggregate
principal amount on March 17, 1992, will mature on March 15, 2002, and
constitute a separate series of Subordinated Securities for the purposes of
the 1987 Subordinated Indenture. The March 2002 Notes may not be redeemed
prior to their stated maturity. Interest is payable semiannually on March
15 and September 15 of each year, to the person in whose name the March
2002 Note (or any predecessor note) is registered at the close of business
on the February 28 or August 31, as the case may be, next preceding such
Interest Payment Date. Interest is computed on the basis of a 360-day year
consisting of twelve 30-day months.
The March 2002 Notes are represented by a Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
March 2002 Notes were issued in denominations of $1,000 (representing
1/100,000 of the Global Security) and integral multiples thereof in book-
entry form only. Unless and until certificated March 2002 Notes are issued
under the limited circumstances described under "Book Entry System"
herein, no beneficial owner of a March 2002 Note shall be entitled to
receive a definitive certificate representing a March 2002 Note. So long
as DTC or any successor Depositary or its nominee is the registered owner
of the Global Security, the Depositary, or such nominee, as the case may
be, will be considered to be the sole owner or holder of the March 2002
Notes for all purposes of the 1987 Subordinated Indenture. Unless and
until it is exchanged in whole or in part for the March 2002 Notes
represented thereby, the Global Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or
by the Depositary or any nominee to a successor depositary or any nominee
of such successor.
-27-
<PAGE>
Principal of and interest on the March 2002 Notes are payable at
the principal office of FNBC, the principal Paying Agent, presently located
at One First National Plaza, Chicago, Illinois 60670. Payment of
interest, other than at maturity, may be made at the option of the Company
by check mailed to the address of the registered holder entitled thereto.
So long as the Global Security represents the March 2002 Notes, such
payments of interest and principal will be made to the Depositary or its
nominee. Payments to beneficial owners of the March 2002 Notes will be
made through the Depositary or its nominee, as described under "Book Entry
System" herein. Neither the Company, the Trustee under the 1987
Subordinated Indenture, any Paying Agent, nor the Note Registrar for the
March 2002 Notes will have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial
ownership interests of the Global Security for such March 2002 Notes or for
maintaining, supervising or reviewing any records relating to such
beneficial interests.
Subordination
The March 2002 Notes are unsecured and are subordinate and junior
in right of payment to the Company's obligations to the holders of Senior
Indebtedness of the Company as described under "Subordinated Securities --
Subordination" herein. The March 2002 Notes constitute Old Subordinated
Securities.
Limited Right of Acceleration
Payment of principal of the March 2002 Notes may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of the
Company or FNBC. There is no right of acceleration in the case of a
default in the payment of interest on the March 2002 Notes or in the
performance of any other covenant of the Company in the 1987 Subordinated
Indenture or in the March 2002 Notes. See "Subordinated Securities --
Events of Default, Default, Waivers, etc." herein.
Terms and Provisions of the 8 1/4% Subordinated Notes Due June 15, 2002
(the "June 2002 Notes")
General
The June 2002 Notes were issued in $100,000,000 aggregate
principal amount on June 23, 1992, will mature on June 15, 2002, and
constitute a separate series of Subordinated Securities for the purposes of
the 1987 Subordinated Indenture. The June 2002 Notes may not be redeemed
prior to their stated maturity. Interest is payable semiannually on June
15 and December 15 of each year, to the person in whose name the June 2002
Note (or any predecessor note) is registered at the close of business on
the May 31 or November 30, as the case may be, next preceding such Interest
Payment Date. Interest is computed on the basis of a 360-day year
consisting of twelve 30-day months.
The June 2002 Notes are represented by a Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
June 2002 Notes were issued in denominations of $1,000 (representing
1/100,000 of the Global Security) and integral multiples thereof in book-
entry form only. Unless and until certificated June 2002 Notes are issued
under the limited circumstances described under "Book Entry System"
herein, no beneficial owner of a June 2002 Note shall be entitled to
receive a definitive certificate representing a June 2002 Note. So long as
DTC or any successor Depositary or its nominee is the registered owner of
the Global Security, the Depositary, or such nominee, as the case may be,
will be considered to be the sole owner or holder of the June 2002 Notes
for all purposes of the 1987 Subordinated Indenture. Unless and until it
is exchanged in whole or in part for the June 2002 Notes represented
thereby, the Global Security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any nominee to a successor depositary or any nominee of
such successor.
-28-
<PAGE>
Principal of and interest on the June 2002 Notes are payable at
the principal office of FNBC, the principal Paying Agent, presently located
at One First National Plaza, Chicago, Illinois 60670. Payment of
interest, other than at maturity, may be made at the option of the Company
by check mailed to the address of the registered holder entitled thereto.
So long as the Global Security represents the June 2002 Notes, such
payments of interest and principal will be made to the Depositary or its
nominee. Payments to beneficial owners of the June 2002 Notes will be made
through the Depositary or its nominee, as described under "Book Entry
System" herein. Neither the Company, the Trustee under the 1987
Subordinated Indenture, any Paying Agent, nor the Note Registrar for the
June 2002 Notes will have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial
ownership interests of the Global Security for such June 2002 Notes or for
maintaining, supervising or reviewing any records relating to such
beneficial interests.
Subordination
The June 2002 Notes are unsecured and are subordinate and junior
in right of payment to the Company's obligations to the holders of Senior
Indebtedness of the Company as described under "Subordinated Securities --
Subordination" herein. The June 2002 Notes constitute Old Subordinated
Securities.
Limited Right of Acceleration
Payment of principal of the June 2002 Notes may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of the
Company or FNBC. There is no right of acceleration in the case of a
default in the payment of interest on the June 2002 Notes or in the
performance of any other covenant of the Company in the 1987 Subordinated
Indenture or in the June 2002 Notes. See "Subordinated Securities --
Events of Default, Default, Waivers, etc." herein.
Terms and Provisions of the 7 5/8% Subordinated Notes Due January 15, 2003
(the "January 2003 Notes")
General
The January 2003 Notes were issued in $200,000,000 aggregate
principal amount on January 22, 1993, will mature on January 15, 2003, and
constitute a separate series of Subordinated Securities for the purposes of
the 1987 Subordinated Indenture. The January 2003 Notes may not be
redeemed prior to their stated maturity. Interest is payable semiannually
on January 15 and July 15 of each year, to the person in whose name the
January 2003 Note (or any predecessor note) is registered at the close of
business on the December 31 or June 30, as the case may be, next preceding
such Interest Payment Date. Interest is computed on the basis of a 360-day
year consisting of twelve 30-day months.
The January 2003 Notes are represented by a Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
January 2003 Notes were issued in denominations of $1,000 (representing
1/200,000 of the Global Security) and integral multiples thereof in book-
entry form only. Unless and until certificated January 2003 Notes are
issued under the limited circumstances described under "Book Entry System"
herein, no beneficial owner of a January 2003 Note shall be entitled to
receive a definitive certificate representing a January 2003 Note. So long
as DTC or any successor Depositary or its nominee is the registered owner
of the Global Security, the Depositary, or such nominee, as the case may
be, will be considered to be the sole owner or holder of the January 2003
Notes for all purposes of the 1987 Subordinated Indenture. Unless and
until it is exchanged in whole or in part for the January 2003 Notes
represented thereby, the Global Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or
by the Depositary or any nominee to a successor depositary or any nominee
of such successor.
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<PAGE>
Principal of and interest on the January 2003 Notes are payable
at the principal office of FNBC, the principal Paying Agent, presently
located at One First National Plaza, Chicago, Illinois 60670. Payment of
interest, other than at maturity, may be made at the option of the Company
by check mailed to the address of the registered holder entitled thereto.
So long as the Global Security represents the January 2003 Notes, such
payments of interest and principal will be made to the Depositary or its
nominee. Payments to beneficial owners of the January 2003 Notes will be
made through the Depositary or its nominee, as described under "Book Entry
System" herein. Neither the Company, the Trustee under the 1987
Subordinated Indenture, any Paying Agent, nor the Note Registrar for the
January 2003 Notes will have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial
ownership interests of the Global Security for such January 2003 Notes or
for maintaining, supervising or reviewing any records relating to such
beneficial interests.
Subordination
The January 2003 Notes are unsecured and are subordinate and
junior in right of payment to the Company's obligations to the holders of
Senior Indebtedness and General Obligations of the Company as described
under "Subordinated Securities -- Subordination" herein. The January 2003
Notes constitute New Subordinated Securities.
Limited Right of Acceleration
Payment of principal of the January 2003 Notes may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of the
Company. There is no right of acceleration in the case of a default in the
payment of interest on the January 2003 Notes or in the performance of any
other covenant of the Company in the 1987 Subordinated Indenture or in the
January 2003 Notes. See "Subordinated Securities -- Events of Default,
Default, Waivers, etc." herein.
Terms and Provisions of the 6 7/8% Subordinated Notes Due June 15, 2003
(the "June 2003 Notes")
General
The June 2003 Notes were issued in $200,000,000 aggregate
principal amount on June 15, 1993, will mature on June 15, 2003, and
constitute a separate series of Subordinated Securities for the purposes of
the 1987 Subordinated Indenture. The June 2003 Notes may not be redeemed
prior to their stated maturity. Interest is payable semiannually on June
15 and December 15 of each year, to the person in whose name the June 2003
Note (or any predecessor note) is registered at the close of business on
the May 31 or November 30, as the case may be, next preceding such Interest
Payment Date. Interest is computed on the basis of a 360-day year
consisting of twelve 30-day months.
The June 2003 Notes are represented by a Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
June 2003 Notes were issued in denominations of $1,000 (representing
1/200,000 of the Global Security) and integral multiples thereof in book-
entry form only. Unless and until certificated June 2003 Notes are issued
under the limited circumstances described under "Book Entry System"
herein, no beneficial owner of a June 2003 Note shall be entitled to
receive a definitive certificate representing a June 2003 Note. So long as
DTC or any successor Depositary or its nominee is the registered owner of
the Global Security, the Depositary, or such nominee, as the case may be,
will be considered to be the sole owner or holder of the June 2003 Notes
for all purposes of the 1987 Subordinated Indenture. Unless and until it
is exchanged in whole or in part for the June 2003 Notes represented
thereby, the Global Security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any nominee to a successor depositary or any nominee of
such successor.
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<PAGE>
Principal of and interest on the June 2003 Notes are payable at
the principal office of FNBC, the principal Paying Agent, presently located
at One First National Plaza, Chicago, Illinois 60670. Payment of interest,
other than at maturity, may be made at the option of the Company by check
mailed to the address of the registered holder entitled thereto. So long as
the Global Security represents the June 2003 Notes, such payments of
interest and principal will be made to the Depositary or its nominee.
Payments to beneficial owners of the June 2003 Notes will be made through
the Depositary or its nominee, under "Book Entry System" herein. Neither
the Company, the Trustee under the 1987 Subordinated Indenture, any Paying
Agent, nor the Note Registrar for the June 2003 Notes will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests of the Global
Security for such June 2003 Notes or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
Subordination
The June 2003 Notes are unsecured and are subordinate and junior
in right of payment to the Company's obligations to the holders of Senior
Indebtedness and General Obligations of the Company as described under
"Subordinated Securities--Subordination" herein. The June 2003 Notes
constitute New Subordinated Securities.
Limited Right of Acceleration
Payment of principal of the June 2003 Notes may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of the
Company. There is no right of acceleration in the case of a default in the
payment of interest on the June 2003 Notes or in the performance of any
other covenant of the Company in the 1987 Subordinated Indenture or in the
June 2003 Notes. See "Subordinated Securities -- Events of Default,
Default, Waivers, etc." herein.
Terms and Provisions of the Floating Rate Subordinated Notes Due July 28,
2003 (the "July 2003 Notes")
General
The July 2003 Notes were issued in $150,000,000 aggregate
principal amount on July 28, 1993, will mature on July 28, 2003, and
constitute a separate series of Subordinated Securities for the purposes of
the 1987 Subordinated Indenture. The July 2003 Notes may not be redeemed
prior to their stated maturity.
The July 2003 Notes are represented by a Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
July 2003 Notes were issued in denominations of $1,000 (representing
1/150,000 of the Global Security) and integral multiples thereof in book-
entry form only. Unless and until certificated July 2003 Notes are issued
under the limited circumstances described under "Book Entry System"
herein, no beneficial owner of a July 2003 Note shall be entitled to
receive a definitive certificate representing a July 2003 Note. So long as
DTC or any successor Depositary or its nominee is the registered owner of
the Global Security, the Depositary, or such nominee, as the case may be,
will be considered to be the sole owner or holder of the July 2003 Notes
for all purposes of the 1987 Subordinated Indenture. Unless and until it
is exchanged in whole or in part for the July 2003 Notes represented
thereby, the Global Security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any nominee to a successor depositary or any nominee of
such successor.
Principal of and interest on the July 2003 Notes are payable at
the principal office of FNBC, the principal Paying Agent, presently located
at One First National Plaza, Chicago, Illinois 60670. Payment of
interest, other than at maturity, may be made at the option of the Company
by check mailed to the address of the registered holder entitled thereto.
So long as the Global Security represents the July 2003 Notes, such
payments of interest and
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<PAGE>
principal will be made to the Depositary or its nominee. Payments to
beneficial owners of the July 2003 Notes will be made through the
Depositary or its nominee, as described under "Book Entry System" herein.
Neither the Company, the Trustee under the 1987 Subordinated Indenture, any
Paying Agent, nor the Note Registrar for the July 2003 Notes will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests of the Global
Security for such July 2003 Notes or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
Interest
Interest is payable quarterly on January 28, April 28, July 28
and October 28 of each year (each, an "Interest Payment Date"), to the
persons in whose names the July 2003 Notes are registered at the close of
business on the preceding January 13, April 13, July 13 or October 13, as
the case may be. Interest payable at maturity will be payable to the
person to whom principal shall be payable. The "Interest Period" with
respect to a July 2003 Note is each successive period from and including an
Interest Payment Date with respect to such July 2003 Note to, but
excluding, the next Interest Payment Date or the maturity date, as the case
may be; provided, however, if such Interest Payment Date would not be a
Business Day, then such Interest Payment Date and the first day of the
Interest Period will be the next succeeding Business Day, except that if
such Business Day is in the next succeeding calendar month, such Interest
Payment date and the first day of the Interest Period will be the
immediately preceding Business Day. The "Interest Determination Date" for
an Interest Period is two London Banking Days (as defined below) preceding
the first day of such Interest Period.
The interest rate on the July 2003 Notes for any Interest Period
will be effective as of the first day of such Interest Period. The
interest rate on the July 2003 Notes for each Interest Period will be
determined on the Interest Determination Date for such Interest Period and
will be the greater of (i) a per annum rate equal to three-month U.S.
dollar LIBOR (determined as set forth below) plus .125% or (ii) 4.25%.
Interest will be computed on the basis of a 360-day year and the actual
number of days in the applicable Interest Period.
LIBOR, with respect to an Interest Determination Date, will be
the rate (expressed as a percentage per annum) for deposits in U.S. dollars
for a three-month period that appears on Telerate Page 3750 (as defined
below) as of 11:00 a.m. (London time) on the Interest Determination Date.
If such rate does not appear on Telerate Page 3750 on such Interest
Determination Date, the Calculation Agent (as defined below) will request
the principal London offices of four leading banks in London selected by
the Calculation Agent to provide each such bank's offered quotation
(expressed as a percentage per annum) to prime banks in the London
interbank market as of 11:00 a.m. (London time) on such Interest
Determination Date for deposits in U.S. dollars for a three-month period
commencing on the first day of such Interest Period and in a principal
amount that is representative for a single transaction in such market at
such time. If at least two such quotations are provided, LIBOR, with
respect to such Interest Determination Date, will be the arithmetic mean of
such quotations. If fewer than two such quotations are provided as
requested, the Calculation Agent will request three major banks in New York
City selected by the Calculation Agent to provide each such bank's offered
quotation (expressed as a percentage per annum) to major European banks for
loans in U.S. dollars for a three-month period as of approximately 11:00
a.m. (New York City time) on the first day of such Interest Period and in a
principal amount that is representative for a single transaction in such
market at such time. If at least two such quotations are provided, LIBOR,
with respect to such Interest Determination Date, will be the arithmetic
mean of such quotations. If fewer than two such quotations are provided as
requested, LIBOR will be LIBOR in effect on such Interest Determination
Date.
If the rate for deposits in U.S. dollars for a three-month period
that initially appears on Telerate Page 3750 as of 11:00 a.m. (London time)
on the Interest Determination Date is superseded on such Telerate Page by a
corrected rate before 12:00 noon (London time) on the Interest
Determination Date, such corrected rate as so substituted shall be the
applicable LIBOR for such Interest Determination Date.
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<PAGE>
As used with respect to the July 2003 Notes:
"Business Day" means any day, other than a Saturday or
Sunday, on which banking institutions in the City of New York,
New York and the City of Chicago, Illinois are open for business.
"Calculation Agent" means The First National Bank of
Chicago.
"London Banking Day" means a day on which dealings in
deposits in U.S. dollars are transacted in the London interbank
market.
"Telerate Page 3750" means the display designated as "Page
3750" on the Dow Jones Telerate Service (or such other page as
may replace Page 3750 on that service or such other service as
may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for U.S. dollar deposits).
All percentages resulting from any calculations on the July 2003
Note will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point
rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655%
(or .0987655)), and all dollar amounts used in or resulting from such
calculation will be rounded to the nearest cent (with one-half cent being
rounded upward).
The interest rate on the July 2003 Notes will in no event be
higher than the maximum rate permitted by New York law as the same may be
modified by United States law of general application. Under present New
York law, the maximum rate of interest, subject to certain exceptions, for
any loan in an amount less than $250,000 is 16%, and for any loan in the
amount of $250,000 or more but less than $2,500,000 is 25%, per annum on a
simple interest basis. These limits do not apply to loans of $2,500,000 or
more.
The Calculation Agent will, upon the request of the holder of any
July 2003 Note, provide the interest rate then in effect. All calculations
made by the Calculation Agent in the absence of manifest error shall be
conclusive for all purposes and binding on the Company and the holders of
the July 2003 Notes.
Subordination
The July 2003 Notes are unsecured and are subordinate and junior
in right of payment to the Company's obligations to the holders of Senior
Indebtedness and General Obligations of the Company as described under
"Subordinated Securities -- Subordination" herein. The July 2003 Notes
constitute New Subordinated Securities.
Limited Right of Acceleration
Payment of principal of the July 2003 Notes may be accelerated
only in the case of the bankruptcy or reorganization of the Company.
There is no right of acceleration in the case of a default in the payment
of interest on the July 2003 Notes or in the performance of any other
covenant of the Company in the 1987 Subordinated Indenture or in the July
2003 Notes. See "Subordinated Securities -- Events of Default, Default,
Waivers, etc." herein.
Terms and Provisions of the 6 3/8% Subordinated Notes Due January 30, 2009
(the "January 2009 Notes")
General
The January 2009 Notes were issued in $200,000,000 aggregate
principal amount on January 26, 1994, will mature on January 30, 2009, and
constitute a separate series of Subordinated Securities for the purposes of
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the 1987 Subordinated Indenture. The January 2009 Notes may not be
redeemed prior to their stated maturity. Interest is payable semiannually
on January 30 and July 30 of each year, to the person in whose name the
January 2009 Note (or any predecessor note) is registered at the close of
business on the January 15 or July 15, as the case may be, next preceding
such Interest Payment Date. Interest is computed on the basis of a 360-day
year consisting of twelve 30-day months.
The January 2009 Notes are represented by a Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
January 2009 Notes were issued in denominations of $1,000 (representing
1/200,000 of the Global Security) and integral multiples thereof in book-
entry form only. Unless and until certificated January 2009 Notes are
issued under the limited circumstances described under "Book Entry System"
herein, no beneficial owner of a January 2009 Note shall be entitled to
receive a definitive certificate representing a January 2009 Note. So long
as DTC or any successor Depositary or its nominee is the registered owner
of the Global Security, the Depositary, or such nominee, as the case may
be, will be considered to be the sole owner or holder of the January 2009
Notes for all purposes of the 1987 Subordinated Indenture. Unless and
until it is exchanged in whole or in part for the January 2009 Notes
represented thereby, the Global Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or
by the Depositary or any nominee to a successor depositary or any nominee
of such successor.
Principal of and interest on the January 2009 Notes are payable
at the principal office of FNBC, the principal Paying Agent, presently
located at One First National Plaza, Chicago, Illinois 60670. Payment of
interest, other than at maturity, may be made at the option of the Company
by check mailed to the address of the registered holder entitled thereto.
So long as the Global Security represents the January 2009 Notes, such
payments of interest and principal will be made to the Depositary or its
nominee. Payments to beneficial owners of the January 2009 Notes will be
made through the Depositary or its nominee, as described under "Book Entry
System" herein. Neither the Company, the Trustee under the 1987
Subordinated Indenture, any Paying Agent, nor the Note Registrar for the
January 2009 Notes will have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial
ownership interests of the Global Security for such January 2009 Notes or
for maintaining, supervising or reviewing any records relating to such
beneficial interests.
Same-Day Funds Settlement and Payment
Secondary trading in long-term notes of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
January 2009 Notes trade and will trade in the Depositary's Same-Day Funds
Settlement System until maturity, and secondary market trading activity in
the January 2009 Notes is therefore required by the Depositary to settle in
immediately available funds. No assurance can be given as to the effect,
if any, of settlement in immediately available funds on trading activity in
the January 2009 Notes. All payments of principal and interest will be
made by the Company in immediately available funds.
Subordination
The January 2009 Notes are unsecured and are subordinate and
junior in right of payment to the Company's obligations to the holders of
Senior Indebtedness and General Obligations of the Company as described
under "Subordinated Securities -- Subordination" herein. The January 2009
Notes constitute New Subordinated Securities.
Limited Right of Acceleration
Payment of principal of the January 2009 Notes may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of the
Company. There is no right of acceleration in the case of a default in the
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payment of interest on the January 2009 Notes or in the performance of any
other covenant of the Company in the 1987 Subordinated Indenture or in the
January 2009 Notes. See "Subordinated Securities -- Events of Default,
Default, Waivers, etc." herein.
Terms and Provisions of Medium-Term Notes Due From 9 Months to 15 Years
From Date of Issue (the "Series E Notes")
For a description of the Subordinated Series E Notes issued under
the 1987 Subordinated Indenture, see "Description of Senior Securities
Under the 1987 Senior Indenture -- Medium Term Notes Due From 9 Months to
15 Years From Date of Issue, Series E."
Regarding the Trustee
First Trust of California, National Association ("First Trust"),
the successor Trustee to Bank of America National Trust and Savings
Association under the 1987 Subordinated Indenture, has a principal
corporate trust office at 550 South Hope Street, Suite 500, Los Angeles,
California 90071. The Company has normal banking relationships with First
Trust.
DESCRIPTION OF SUBORDINATED SECURITIES UNDER THE FEBRUARY 1992 SUBORDINATED
INDENTURE
The brief summary of the principal provisions of the February
1992 Subordinated Indenture and the Subordinated Securities issued
thereunder does not purport to be complete and is qualified in its entirety
by reference to the February 1992 Subordinated Indenture, a copy of which
has previously been filed with the Commission. Certain capitalized terms
used herein are defined in the February 1992 Subordinated Indenture.
Restrictions on Disposition of Stock of NBD Michigan
The February 1992 Subordinated Indenture contains a covenant by
the Company that it will not sell, assign, transfer or otherwise dispose of
any shares of, or securities convertible or exchangeable into shares of,
capital stock of NBD Michigan, nor will it permit NBD Michigan (or any
successor entity thereto) to issue any shares of, or securities convertible
or exchangeable into shares of, capital stock of NBD Michigan, unless after
giving effect to such transaction and to shares issuable upon conversion or
exchange into such capital stock, at least 80% of the outstanding shares of
capital stock of each class of NBD Michigan shall be owned directly at that
time by the Company. In addition, the Company has also covenanted that it
will not permit NBD Michigan to merge or consolidate or convey or transfer
all or substantially all of its assets, unless at least 80% of the
outstanding shares of capital stock of each class (after giving effect to
such transaction and to share issuable upon conversion or exchange of
outstanding securities convertible or exchangeable into capital stock,
including such securities, if any, which may be issued in such transaction)
of the surviving corporation in the case of merger or consolidation or of
the transferee corporation in the case of a conveyance or transfer, shall
be owned at that time directly by the Company.
Terms and Provisions of the 8.10% Subordinated Notes Due March 1, 2002 (the
"2002 Notes")
General
The 2002 Notes were issued in $200,000,000 aggregate principal
amount on March 3, 1992, and will mature on March 1, 2002. The 2002 Notes
may not be redeemed prior to their stated maturity. Interest is payable
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semiannually on March 1 and September 1 of each year to the person in whose
name the 2002 Note (or any predecessor note) is registered at the close of
business on February 15 or August 15, as the case may be, next preceding
such Interest Payment Date. Interest is computed on the basis of a 360-day
year consisting of twelve 30-day months.
The 2002 Notes are represented by a Global Security deposited
with DTC and registered in the name of a nominee of DTC. The 2002 Notes
were issued in denominations of $1,000 (representing 1/200,000 of the
Global Security) and integral multiples thereof in book-entry form only.
Unless and until certificated 2002 Notes are issued under the limited
circumstances described under "Book Entry System" herein, no beneficial
owner of a 2002 Note shall be entitled to receive a definitive certificate
representing a 2002 Note. So long as DTC or any successor Depositary or
its nominee is the registered owner of the Global Security, the Depositary,
or such nominee, as the case may be, will be considered to be the sole
owner or holder of the 2002 Note for all purposes of the February 1992
Subordinated Indenture. Unless and until it is exchanged in whole or in
part for the 2002 Notes represented thereby, the Global Security may not be
transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a
successor depositary of any nominee of such successor.
Principal and interest payments on 2002 Notes represented by a
Global Security registered in the name of the Depositary or its nominee
will be made to the Depositary or its nominee, as the case may be, as the
registered owner of the Global Security. Such payments to the Depositary
or its nominee, as the case may be, will be made by NBD Michigan, as Paying
Agent, provided that, in the case of payments of principal, the Global
Security is presented to the Paying Agent in time for the Paying Agent to
make such payments in accordance with its normal procedures. None of the
Company, the Trustee under the February 1992 Subordinated Indenture, any
Paying Agent, nor the Note Registrar for the 2002 Notes will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account, of beneficial ownership interests in such Global
Security or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
Subordination
The 2002 Notes are unsecured and are subordinate and junior in
right of payment to the Company's obligations to the holders of Senior
Indebtedness of the Company as described under "Subordinated Securities--
Subordination" herein. The 2002 Notes constitute Old Subordinated
Securities.
Right of Acceleration
Payment of the principal of the 2002 Notes may be accelerated
upon the occurrence and continuance of an Event of Default. See
"Subordinated Securities--Events of Default, Defaults, Waivers, etc."
herein.
Regarding the Trustee
Bankers Trust Company ("Bankers Trust"), the Trustee under the
February 1992 Subordinated Indenture, has a corporate trust office at Four
Albany Street, New York, New York 10006. The Company has normal banking
relationships with Bankers Trust.
DESCRIPTION OF SUBORDINATED SECURITIES UNDER THE JULY 1992 SUBORDINATED
INDENTURE
The brief summary of the principal provisions of the July 1992
Subordinated Indenture and the Subordinated Securities issued thereunder
does not purport to be complete and is qualified in its entirety by
reference to the July 1992 Subordinated Indenture, a copy of which has
previously been filed with the Commission.
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Restrictions on Disposition of Stock of NBD Michigan
The July 1992 Subordinated Indenture contains a covenant by the
Company that it will not sell, assign, transfer or otherwise dispose of any
shares of, or securities convertible or exchangeable into shares of,
capital stock of NBD Michigan, nor will it permit NBD Michigan (or any
successor entity thereto) to issue any shares of, or securities convertible
or exchangeable into shares of, capital stock of NBD Michigan, unless after
giving effect to such transaction and to shares issuable upon conversion or
exchange into such capital stock, at least 80% of the outstanding shares of
capital stock of each class of NBD Michigan shall be owned directly at that
time by the Company. In addition, the Company has also covenanted that it
will not permit NBD Michigan to merge or consolidate or convey or transfer
all or substantially all of its assets, unless at least 80% of the
outstanding shares of capital stock of each class (after giving effect to
such transaction and to share issuable upon conversion or exchange of
outstanding securities convertible or exchangeable into capital stock,
including such securities, if any, which may be issued in such transaction)
of the surviving corporation in the case of merger or consolidation or of
the transferee corporation in the case of a conveyance or transfer, shall
be owned at that time directly by the Company.
Terms and Provisions of the 7 1/4% Subordinated Debentures Due August 15,
2004 (the "2004 Debentures")
General
The 2004 Debentures were issued in $200,000,000 aggregate
principal amount on August 24, 1992 and will mature on August 15, 2004.
The 2004 Debentures may not be redeemed prior to their stated maturity.
Interest is payable semiannually on February 15 and August 15 of each year
to the person in whose name the 2004 Debenture (or any predecessor
debenture) is registered at the close of business on February 1 or August
1, as the case may be, next preceding such Interest Payment Date. Interest
is computed on the basis of a 360-day year consisting of twelve 30-day
months.
The 2004 Debentures are represented by a Global Security
deposited with DTC and registered in the name of a nominee of DTC. The
2004 Debentures were issued in denominations of $1,000 (representing
1/200,000 of the Global Security) and integral multiples thereof in book-
entry form only. Unless and until certificated 2004 Debentures are issued
under the limited circumstances described under "Book Entry System" herein,
no beneficial owner of a 2004 Debenture shall be entitled to receive a
definitive certificate representing a 2004 Debenture. So long as DTC or
any successor Depositary or its nominee is the registered owner of the
Global Security, the Depositary, or such nominee, as the case may be, will
be considered to be the sole owner or holder of the 2004 Debenture for all
purposes of the July 1992 Subordinated Indenture. Unless and until it is
exchanged in whole or in part for the 2004 Debentures represented thereby,
the Global Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any nominee to a successor depositary of any nominee of
such successor.
Principal and interest payments on 2004 Debentures represented by
a Global Security registered in the name of the Depositary or its nominee
will be made to the Depositary or its nominee, as the case may be, as the
registered owner of the Global Security. Such payments to the Depositary
or its nominee, as the case may be, will be made by NBD Michigan, as Paying
Agent, provided that, in the case of payments of principal, the Global
Security is presented to the Paying Agent in time for the Paying Agent to
make such payments in accordance with its normal procedures. None of the
Company, the Trustee under the July 1992 Subordinated Indenture, any Paying
Agent, nor the Note Registrar for the 2004 Debentures will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account, of beneficial ownership interests in such Global
Security or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
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Same-Day Funds Settlement and Payment
Secondary trading in long-term notes and debentures of corporate
issuers is generally settled in clearing-house or next-day funds. In
contrast, the 2004 Debentures trade and will trade in the Depositary's
Same-Day Funds Settlement System until maturity and secondary market
trading activity in the 2004 Debentures is therefore required by the
Depositary to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available
funds on trading activity in the 2004 Debentures. All payments of
principal and interest on the 2004 Debentures will be made by the Company
in immediately available funds.
Subordination
The 2004 Debentures are unsecured and are subordinate and junior
in right of payment to the Company's obligations to the holders of Senior
Indebtedness of the Company as described under "Subordinated Securities--
Subordination" herein. The 2004 Debentures constitute Old Subordinated
Securities.
Right of Acceleration
Payment of the principal of the 2004 Debentures may be
accelerated upon the occurrence and continuance of an Event of Default.
See "Subordinated Securities--Events of Default, Defaults, Waivers, etc."
herein.
Regarding the Trustee
The Chase Manhattan Bank, N.A. ("Chase"), the Trustee under the
July 1992 Subordinated Indenture, has a principal corporate trust office at
4 Chase MetroTech Center, Brooklyn, New York 11245. Chase is also trustee
for the Company's subordinated securities issued or to be issued under an
Indenture dated as of December 1, 1995 (including the 2006 Notes). The
Company has normal banking relationships with Chase.
DESCRIPTION OF SUBORDINATED SECURITIES UNDER THE 1995 SUBORDINATED
INDENTURE
The brief summary of the principal provisions of the 1995
Subordinated Indenture and the Subordinated Securities issued thereunder
does not purport to be complete and is qualified in its entirety by
reference to the 1995 Subordinated Indenture, a copy of which has
previously been filed with the Commission. Certain capitalized terms used
herein are defined in the 1995 Subordinated Indenture.
Terms and Provisions of the 7 1/8% Subordinated Notes due May 15, 2007 (the
"May 2007 Notes")
General
The May 2007 Notes were issued in $200,000,000 aggregate
principal amount on May 17, 1995, and will mature on May 15, 2007. The May
2007 Notes may not be redeemed prior to their stated maturity. Interest is
payable semiannually on May 15 and November 15 of each year to the person
in whose name the May 2007 Note (or any predecessor note) is registered at
the close of business on May 1 or November 1, as the case may be, next
preceding such Interest Payment Date. Interest is computed on the basis of
a 360-day year consisting of twelve 30-day months.
The May 2007 Notes are represented by a Global Security deposited
with DTC and registered in the name of a nominee of DTC. The May 2007
Notes were issued in denominations of $1,000 (representing 1/200,000 of the
Global Security) and integral multiples thereof in book-entry form only.
Unless and until certificated May 2007
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Notes are issued under the limited circumstances described under "Book
Entry System" herein, no beneficial owner of a May 2007 Note shall be
entitled to receive a definitive certificate representing a May 2007 Note.
So long as DTC or any successor Depositary or its nominee is the registered
owner of the Global Security, the Depositary, or such nominee, as the case
may be, will be considered to be the sole owner or holder of the May 2007
Notes for all purposes of the 1995 Subordinated Indenture. Unless and
until it is exchanged in whole or in part for the May 2007 Notes
represented thereby, the Global Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or
by the Depositary or any nominee to a successor depositary of any nominee
of such successor.
Principal and interest payments on May 2007 Notes represented by
a Global Security registered in the name of the Depositary or its nominee
will be made to the Depositary or its nominee, as the case may be, as the
registered owner of the Global Security. Such payments to the Depositary
or its nominee, as the case may be, will be made by NBD Michigan, as Paying
Agent, provided that, in the case of payments of principal, the Global
Security is presented to the Paying Agent in time for the Paying Agent to
make such payments in accordance with its normal procedures. None of the
Company, the Trustee under the 1995 Subordinated Indenture, any Paying
Agent, nor the Note Registrar for the May 2007 Notes will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account, of beneficial ownership interests in such Global
Security or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
Same-Day Funds Settlement and Payment
Secondary trading in long-term notes of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
May 2007 Notes trade and will trade in the Depositary's Same-Day Funds
Settlement System until maturity and secondary market trading activity in
the May 2007 Notes is therefore required by the Depositary to settle in
immediately available funds. No assurance can be given as to the effect,
if any, of settlement in immediately available funds on trading activity in
the May 2007 Notes. All payments of principal and interest on the May 2007
Notes will be made by the Company in immediately available funds.
Subordination
The May 2007 Notes are unsecured and are subordinate and junior
in right of payment to the Company's obligations to the holders of Senior
Indebtedness and General Obligations of the Company as described under
"Subordinated Securities--Subordination" herein. The May 2007 Notes
constitute New Subordinated Securities.
Limited Right of Acceleration
Payment of the principal of the May 2007 Notes may be accelerated
only in the case of the bankruptcy or reorganization of the Company. There
is no right of acceleration in the case of a default in the payment of
interest on the May 2007 Notes or in the performance of any other covenant
of the Company in the 1995 Subordinated Indenture or in the May 2007 Notes.
See "Subordinated Securities--Events of Default, Defaults, Waivers, etc."
herein.
Regarding the Trustee
Chemical, the Trustee under the 1995 Subordinated Indenture, has
its principal corporate trust office at 450 West 33rd Street, New York, New
York 10001. Chemical is also trustee for the Company's July 1999 Notes
issued under the 1986 Subordinated Indenture and the Company's 2023
Debentures issued under an Indenture dated as of April 30, 1993.
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PLAN OF DISTRIBUTION
This Prospectus is to be used by First Chicago Capital Markets,
Inc. ("FCCM"), a wholly-owned subsidiary of the Company, in connection with
offers and sales related to market-making transactions in the Debt
Securities in which FCCM acts as principal. FCCM may also act as agent in
such transactions. The Debt Securities may be offered or sold on the New
York Stock Exchange in the event the particular series of Debt Securities
has been listed therein, or another exchange, or off any exchange in
negotiated transactions, or otherwise. Sales will be made at prices
related to prevailing prices at the time of sale. Any obligations of FCCM
are the sole obligations of FCCM and do not create any obligations on the
part of any affiliate of FCCM.
The participation of FCCM in the offer and sale of the Debt
Securities will comply with regulations of the National Association of
Securities Dealers, Inc. (the "NASD") regarding the offer and sale of
securities of an affiliate.
EXPERTS
The consolidated financial statements of the Company included in
the Form 10-K for the year ended December 31, 1995, incorporated herein by
reference have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said
firm as experts in accounting and auditing in giving said report.
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