<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO.333-15649
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 22, 1997)
$250,000,000
FIRST CHICAGO NBD CAPITAL I
FLOATING RATE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $1,000 PER PREFERRED SECURITY)
----------------
FULLY AND UNCONDITIONALLY GUARANTEED
TO THE EXTENT SET FORTH HEREIN BY
FIRST CHICAGO NBD CORPORATION
------------------
The Floating Rate Preferred Securities (the "Preferred Securities") offered
hereby represent preferred undivided beneficial interests in the assets of
First Chicago NBD Capital I, a statutory business trust formed under the laws
of the State of Delaware ("FCN Capital Trust" or the "Trust"). First Chicago
NBD Corporation, a Delaware corporation ("FCN" or the "Company"), will own all
the common securities (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities") representing undivided
beneficial interests in the assets of FCN Capital Trust. FCN Capital Trust
exists for the sole purpose of issuing the Trust Securities and investing the
proceeds thereof in Floating Rate Junior Subordinated Deferrable Interest
Debentures due February 1, 2027 (the "Subordinated Debt Securities") of FCN.
The Subordinated Debt Securities will mature on February 1, 2027 (the "Stated
Maturity"). The Subordinated Debt Securities when issued will be unsecured
obligations of FCN and will be subordinate and junior in right of payment to
certain other indebtedness of the Company, as described herein. Upon an event
of default under the Declaration (as defined herein), the holders of Preferred
Securities will have a preference over the holders of the Common Securities
with respect to payments of distributions and payments upon redemption,
liquidation and otherwise.
(continued on next page)
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-10 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESEN- TATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Initial Public Underwriting Proceeds to
Offering Price(1) Commission(2) Trust(3)(4)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security........... $ 989.596 (3) $ 989.596
- -------------------------------------------------------------------------------
Total............................ $247,399,000 (3) $247,399,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued distributions, if any, from January 31, 1997.
(2) FCN Capital Trust and FCN have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Subordinated Debt Securities, FCN has
agreed to pay to the Underwriters as compensation (the "Underwriters'
Compensation") for their arranging the investment therein of such proceeds
$10.00 per Preferred Security (or $2,500,000 in the aggregate). See
"Underwriting."
(4) Before deducting expenses of the offering payable by FCN estimated at
$450,000.
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in book-
entry form through the facilities of The Depository Trust Company, on or about
January 31, 1997.
This Prospectus Supplement and the related Prospectus may be used by First
Chicago Capital Markets, Inc. ("FCCM"), an affiliate of the Company and Trust,
in connection with offers and sales related to secondary market transactions
in the Preferred Securities. FCCM may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing market
prices at the time of sale or otherwise.
------------------
LEHMAN BROTHERS
FIRST CHICAGO CAPITAL MARKETS, INC.
CREDIT SUISSE FIRST BOSTON
SALOMON BROTHERS INC
The date of this Prospectus Supplement is January 24, 1997.
<PAGE>
(continued from previous page)
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THIS PROSPECTUS SUPPLEMENT AND THE RELATED PROSPECTUS DO NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE PREFERRED SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THERE ARE
RESTRICTIONS ON THE OFFER AND SALE OF THE PREFERRED SECURITIES IN THE UNITED
KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL SERVICES ACT OF 1986 AND
THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995 WITH RESPECT TO ANYTHING DONE
BY ANY PERSON IN RELATION TO THE PREFERRED SECURITIES, IN, FROM OR OTHERWISE
INVOLVING THE UNITED KINGDOM MUST BE COMPLIED WITH. SEE "UNDERWRITING."
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate equal to 3-Month LIBOR (as defined herein)
plus 0.55% (the "Distribution Rate") in respect of the liquidation amount of
$1,000 per Preferred Security, accruing from the date of original issuance and
payable quarterly in arrears on February 1, May 1, August 1 and November 1 of
each year, commencing May 1, 1997 ("distributions"). The payment of
distributions out of moneys held by FCN Capital Trust and payments on
liquidation of FCN Capital Trust or the redemption of Preferred Securities, as
set forth below, are guaranteed by FCN (the "Preferred Securities Guarantee")
to the extent described herein and under "Description of Preferred Securities
Guarantees" in the accompanying Prospectus. The Preferred Securities Guarantee
covers payments of distributions and other payments on the Preferred
Securities only if, and to the extent that, FCN Capital Trust has funds
available therefor which will not be the case unless FCN has made a payment of
interest or principal or other payments on the Subordinated Debt Securities
held by FCN Capital Trust, which are its only assets. The Preferred Securities
Guarantee, when taken together with FCN's obligations under the Subordinated
Debt Securities and the Indenture (as defined herein) and its obligations
under the Declaration, including its liabilities to pay costs, expenses, debts
and obligations of FCN Capital Trust (other than with respect to the Trust
Securities), provide a full and unconditional guarantee of amounts due on the
Preferred Securities. See "Risk Factors--Rights Under the Preferred Securities
Guarantee" herein. The obligations of FCN under the Preferred Securities
Guarantee are subordinate and junior in right of payment to all present and
future Senior Indebtedness and General Obligations (each as defined in
"Description of the Subordinated Debt Securities--Subordination") of FCN. The
obligations of FCN under the Subordinated Debt Securities are subordinate and
junior in right of payment to all present and future Senior Indebtedness
(which includes both senior and subordinated indebtedness for money borrowed)
and General Obligations of FCN, which aggregated approximately $5.13 billion
at September 30, 1996. In addition, because FCN is a holding company, the
Subordinated Debt Securities are effectively subordinated to all existing and
future liabilities of FCN's subsidiaries, including depositors. The
Subordinated Debt Securities purchased by the Trust may be subsequently
distributed pro rata to holders of the Preferred Securities and Common
Securities in connection with the dissolution of the Trust, upon the
occurrence of certain events.
The distribution rate and the distribution payment date and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment date and other payment dates for the Subordinated Debt
Securities, which will be the sole asset of the Trust. As a result, if
principal or interest is not paid on the Subordinated Debt Securities, no
amounts will be paid on the Preferred Securities. If FCN does not make
principal or interest payments on the Subordinated Debt Securities, the Trust
will not have sufficient funds to make distributions on the Preferred
Securities, in which event the Preferred Securities Guarantee will not apply
to such distributions until the Trust has sufficient funds available therefor.
S-2
<PAGE>
So long as FCN is not in default in the payment of interest on the
Subordinated Debt Securities, FCN has the right to defer payments of interest
on the Subordinated Debt Securities by extending the interest payment period
on the Subordinated Debt Securities at any time for up to 20 consecutive
quarters (each, an "Extension Period"), provided that an Extension Period may
not extend beyond the Stated Maturity of the Subordinated Debt Securities. If
interest payments are so deferred, distributions on the Preferred Securities
will also be deferred. During such Extension Period, distributions will
continue to accrue with interest thereon (to the extent permitted by
applicable law) at the Distribution Rate compounded quarterly, and during any
Extension Period, holders of Preferred Securities will be required to include
deferred interest income in their gross income for United States federal
income tax purposes in advance of receipt of the cash distributions with
respect to such deferred interest payments. There could be multiple Extension
Periods of varying lengths throughout the term of the Subordinated Debt
Securities. See "Description of the Subordinated Debt Securities--Option to
Extend Interest Payment Period;" "Risk Factors--Option to Extend Interest
Payment Period" and "United States Federal Income Taxation--Interest Income
and Original Issue Discount."
Subject to FCN having received prior approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") to do so if then
required under applicable law, rules, guidelines or policies of the Federal
Reserve Board, the Subordinated Debt Securities are redeemable prior to
maturity by FCN (i) on or after February 1, 2007, in whole at any time or in
part from time to time, or (ii) in whole (but not in part) at any time within
90 days following the occurrence of a Tax Event or Capital Treatment Event
(each as defined herein) or, if the prior approval of the Federal Reserve
Board is then required for such redemption, on such later date as promptly as
practicable after such approval is obtained, in each case at a redemption
price equal to the accrued and unpaid interest on the Subordinated Debt
Securities so redeemed to the date fixed for redemption, plus 100% of the
principal amount thereof. If FCN redeems Subordinated Debt Securities, the
Trust must redeem Trust Securities on a pro rata basis having an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Debt Securities so redeemed at $1,000 per Preferred Security plus accrued and
unpaid distributions thereon (the "Redemption Price") to the date fixed for
redemption. See "Description of the Preferred Securities--Mandatory
Redemption." The Preferred Securities will be redeemed upon maturity of the
Subordinated Debt Securities.
FCN will have the right at any time to liquidate the Trust and, after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law, cause the Subordinated Debt Securities to be distributed to
the holders of the Trust Securities in liquidation of the Trust, subject to
FCN having received prior approval of the Federal Reserve Board to do so if
then required under applicable law, rules, guidelines or policies of the
Federal Reserve Board. See "Description of the Preferred Securities--Tax Event
or Capital Treatment Event Redemption" and "Description of the Subordinated
Debt Securities."
In the event of the involuntary or voluntary dissolution, winding up or
termination of the Trust, the holders of the Preferred Securities will be
entitled to receive for each Preferred Security a liquidation amount of $1,000
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless, in connection with such dissolution, the
Subordinated Debt Securities are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities--Liquidation
Distribution Upon Dissolution."
The Preferred Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Preferred Securities will be shown on, and
transfers thereof will be effected only through, records maintained by DTC and
its participants, including depositaries for Morgan Guaranty Trust Company of
New York, Brussels Office, as operator of the Euroclear System ("Euroclear"),
and CEDEL Bank, societe anonyme ("Cedel"). Except as described herein,
Preferred Securities in certificated form will not be issued in exchange for
the global certificates. See "Description of the Preferred Securities--Book-
Entry Only Issuance--The Depository Trust Company." A portion of the Preferred
Securities will be offered by the Underwriters specified herein directly or
through their representative selling agents outside the United States.
Investors may elect to hold beneficial interest in the Preferred Securities
through
S-3
<PAGE>
either DTC (in the United States), Cedel or Euroclear (outside the United
States), if they are participants of such systems, or indirectly through
organizations which are participants in such systems.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A
"PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF
ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON
INVESTING "PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE PREFERRED
SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR
84-14 WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE
PREFERRED SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT EITHER (A) IS NOT A
PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING SUCH SECURITIES ON BEHALF OF
OR WITH "PLAN ASSETS" OF ANY PLAN OR (B) IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH
PURCHASE OR HOLDING.
S-4
<PAGE>
FIRST CHICAGO NBD CORPORATION
SUMMARY HISTORICAL FINANCIAL INFORMATION
SELECTED FINANCIAL DATA
This selected financial data of the Company is qualified in its entirety by
the detailed information and financial statements incorporated herein by
reference. See "Incorporation of Certain Documents by Reference" in the
Prospectus and "Recent Developments" herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1995 1994 1993 1992 1991 1996 1995
-------- -------- ------- ------- ------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF INCOME
Net interest income... $ 3,208 $ 2,956 $ 2,784 $ 2,692 $ 2,418 $ 2,737 $ 2,374
Provision for credit
losses............... 510 276 390 653 606 545 300
Provision for assets
held for accelerated
disposition(1)....... -- -- -- 625 -- -- --
Noninterest income.... 2,591 2,393 2,769 2,018 1,703 1,866 1,936
Merger-related
charges.............. 267 -- -- 76 -- -- --
Other noninterest
expense.............. 3,268 3,220 3,161 3,084 2,867 2,458 2,447
Income before
cumulative effect of
changes in accounting
principles........... 1,150 1,221 1,290 224 478 1,059 1,024
Net income............ 1,150 1,221 1,290 394 478 1,059 1,024
EARNINGS PER SHARE
Primary
Income before
cumulative effect
of changes in
accounting
principles......... $ 3.45 $ 3.62 $ 3.91 $ 0.60 $ 1.56 $ 3.24 $ 3.07
Net income.......... 3.45 3.62 3.91 1.17 1.56 3.24 3.07
Fully Diluted
Income before
cumulative effect
of changes in
accounting
principles......... 3.41 3.58 3.79 0.60 1.55 3.19 3.03
Net income.......... 3.41 3.58 3.79 1.17 1.55 3.19 3.03
PERIOD-END BALANCES
Total assets.......... $122,002 $112,763 $93,140 $90,011 $87,573 $106,694 $124,056
Long-term debt........ 8,163 7,246 5,250 4,175 3,822 7,967 8,445
Total stockholders'
equity............... 8,450 7,809 7,499 6,323 5,660 9,087 8,445
COMMON SHARE DATA
Dividends declared.... $ 1.35 $ 1.23 $ 1.08 $ 1.04 $ 0.95 $ 1.08 $ 0.99
Book value, period-
end.................. 25.25 22.60 21.25 18.27 18.06 27.11 24.96
Market price, period-
end.................. 39 1/2 27 3/8 29 3/4 32 3/4 29 3/4 45 1/4 38 1/4
CAPITAL RATIOS (2)
Common equity-to-
assets ratio......... 6.9% 6.8% 7.6% 6.5% 6.0% 8.1% 6.8%
Regulatory leverage
ratio................ 6.9 7.3 7.8 6.6 6.5 8.1 6.9
Risk-based capital
Tier 1 ratio........ 7.8 8.6 9.0 7.4 6.5 8.4 8.2
Total capital
ratio.............. 11.8 13.0 13.6 11.3 9.8 12.4 12.4
</TABLE>
- --------
(1) Of the total provision, $491 million relates to loans and $134 million
relates to other real estate held for accelerated disposition.
(2) Net of investment in First Chicago Capital Markets, Inc.
S-5
<PAGE>
RECENT DEVELOPMENTS
RECENT FINANCIAL RESULTS
The Company reported record net income of $377 million, or $1.14 per fully
diluted common share, for the fourth quarter of 1996. In the year-ago fourth
quarter, operating earnings were $318 million, or $0.96 per common share.
Return on common stockholders' equity for the fourth quarter of 1996 was
17.5%, compared with 15.4% a year ago.
Full-year 1996 net income was a record $1.436 billion, or $4.32 per share.
These results include a one-time charge of 4 cents per share related to the
recapitalization of the Savings Association Insurance Fund. For 1995,
operating earnings were $1.341 billion, or $3.99 per share. Return on equity
for 1996 was 17.0%, versus 16.8% for 1995. All 1995 operating results exclude
merger-related charges of $267 million, taken in the fourth quarter.
FIRST CHICAGO NBD CORPORATION KEY RATIOS
<TABLE>
<CAPTION>
4TH QTR. 4TH QTR.* FULL YEAR FULL YEAR*
1996 1995 1996 1995
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Earnings per common share............... $1.14 0.96 4.32 3.99
Return on common equity................. 17.5% 15.4 17.0 16.8
Return on assets........................ 1.46% 1.02 1.28 1.10
Adjusted net interest margin............ 4.64% 3.93 4.44 3.89
Operating efficiency.................... 51.2% 54.0 51.9 55.4
</TABLE>
- --------
* On an operating basis
Highlights
. The adjusted net interest margin for the fourth quarter rose to 4.64% from
4.51% for the third quarter and 3.93% for the year-ago quarter. The full-
year ratio was 4.44%, compared with 3.89% for 1995. This substantial
improvement resulted from the merger-related strategic reduction of low-
margin assets, and from loan growth in the higher-yielding credit card and
regional banking businesses.
. The credit card business produced record profits for the fourth quarter, and
its return on equity for the year exceeded 30%. Managed credit card
receivables increased 5.7% to $18.5 billion at December 31, compared with
$17.5 billion at the end of 1995. During the fourth quarter, the Company
securitized $1.3 billion of credit card assets, bringing total securitized
receivables to $8.9 billion at year-end. The charge-off rate for the managed
portfolio increased to 6.7% for the fourth quarter, compared with 5.9% for
the third quarter.
. The Company repurchased 7.3 million shares of its common stock during the
fourth quarter at an average price of $53.93. Remaining authorization on the
stock repurchase program announced in October 1996 is 32.7 million shares.
. Commercial credit quality continued to be excellent, with year-end
nonperforming assets of $290 million, or 0.4% of total loans and other real
estate.
. Market-driven revenues for the fourth quarter rose to $83 million, versus
$40 million for the third quarter.
. Operating expenses for 1996 totaled $3.253 billion, versus last year's
$3.268 billion, reflecting the achievement of the merger-related target of
$200 million in run-rate expense savings by the end of 1996.
. In November, the Company announced an 11% increase in the quarterly common
stock dividend to $0.40 per share, effective with the January 1, 1997,
payment.
. Tier 1 and total risk-based capital ratios increased to 9.1% and 13.2%,
respectively, at December 31, 1996. During the quarter the Company issued
$750 million of trust preferred securities, which qualify as tax-advantaged
Tier 1 capital. Book value per common share was $27.31 at year-end, an
increase from $25.25 one year ago.
S-6
<PAGE>
Net Interest Income
Net interest income on a tax-equivalent basis was $907 million for the
fourth quarter, up from $864 million in the year-ago quarter. Average loans
grew to $65.5 billion from $62.3 billion a year ago. Average earning assets
were $87.9 billion for the quarter.
Net interest margin on a reported basis was 4.11%, an increase of 11 basis
points from last quarter. For 1996, the reported margin was 3.83%, 69 basis
points higher than the 3.14% of 1995. Adjusted for credit card securitizations
and the activities of First Chicago Capital Markets, Inc., the net interest
margin was 4.64% for the fourth quarter, versus 4.51% in the third quarter.
This ratio was 4.44% for the full year, up from 3.89% in 1995.
Noninterest Income
Noninterest income was $682 million in the fourth quarter. Total noninterest
income for the year was $2.548 billion.
Market-driven revenue was $83 million for the quarter, with equity
securities gains totaling $71 million and combined trading profits of $12
million.
Credit card fee revenue was $259 million. Adjusted for securitizations,
credit card fees grew 28% from a year earlier. Fiduciary and investment
management fees were $102 million, and service charges and commissions were
$218 million for the fourth quarter.
Noninterest Expense
Noninterest expense was $813 million in the fourth quarter, compared with
operating expense of $821 million in the year-ago quarter. For the year,
operating expense was essentially flat with 1995's level. The fourth-quarter
operating efficiency ratio was 51.2%, and the full-year ratio was 51.9%.
Credit Quality
The provision for credit losses was $190 million for the fourth quarter,
versus $185 million for the third quarter and $210 million in the fourth
quarter of 1995.
The allowance for credit losses stood at $1.407 billion at December 31,
representing 537% of total nonperforming loans.
Total net charge-offs in the fourth quarter were $190 million, of which $154
million were related to credit card receivables. The net charge-off rate for
managed credit card receivables was 6.7% for the fourth quarter, up from 5.9%
for the third quarter and 4.4% a year ago. For 1996, the managed credit card
charge-off rate was 5.8%, versus 4.0% in 1995. The 30-day delinquency ratio
for managed credit card receivables was 4.5% at year-end, versus 3.6% at year-
end 1995.
S-7
<PAGE>
FIRST CHICAGO NBD CORPORATION AND SUBSIDIARIES
COMPARATIVE SUMMARY
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) ----------------------------
1996 1995 CHANGE
-------- -------- --------
<S> <C> <C> <C>
Net interest income--tax-equivalent basis......... $ 907 $ 864 + 5%
Provision for credit losses....................... 190 210 -10
Noninterest income................................ 682 655 + 4
Noninterest expense (excludes merger related
costs)........................................... 813 821 - 1
Merger-related costs.............................. -- 267 --
Net income........................................ 377 126 --
Earnings per share
Primary
Net income...................................... $1.15 $0.37 --
Average common and common-equivalent shares (in
millions)...................................... 321.4 320.0 --
Fully diluted
Net income...................................... $1.14 $0.37 --
Average shares, assuming full dilution (in mil-
lions)......................................... 327.6 326.9 --
Average balances
Loans............................................ $ 65,494 $ 62,258 + 5%
Earning assets................................... 87,896 106,187 -17
Total assets..................................... 102,687 123,773 -17
Common stockholders' equity...................... 8,421 7,998 + 5
Stockholders' equity............................. 8,886 8,488 + 5
Net interest margin............................... 4.11% 3.23% +27
Return on assets.................................. 1.46 0.40 --
Return on common stockholders' equity............. 17.5 5.9 --
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31,
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) ----------------------------
1996 1995 CHANGE
-------- -------- --------
<S> <C> <C> <C>
Net interest income--tax-equivalent basis......... $ 3,722 $ 3,311 +12%
Provision for credit losses....................... 735 510 +44
Noninterest income................................ 2,548 2,591 - 2
Noninterest expense (excludes merger related
costs)........................................... 3,271 3,268 --
Merger-related costs.............................. -- 267 --
Net income........................................ 1,436 1,150 +25
Earnings per share
Primary
Net income...................................... $4.39 $3.45 +27
Average common and common-equivalent shares (in
millions)...................................... 320.2 322.9 - 1
Fully diluted
Net income...................................... $4.32 $3.41 +27
Average shares, assuming full dilution (in mil-
lions)......................................... 328.1 330.1 - 1
Average balances
Loans............................................ $ 64,949 $ 58,944 +10%
Earning assets................................... 97,274 105,306 - 8
Total assets..................................... 112,565 122,370 - 8
Common stockholders' equity...................... 8,253 7,765 + 6
Stockholders' equity............................. 8,736 8,335 + 5
Net interest margin............................... 3.83% 3.14% +22%
Return on assets.................................. 1.28 0.94 +36
Return on common stockholders' equity............. 17.0 14.3 +19
<CAPTION>
AT DECEMBER 31,
----------------------------
1996 1995 CHANGE
-------- -------- --------
<S> <C> <C> <C>
Assets............................................ $104,619 $122,002 -14%
Loans............................................. 66,414 64,434 + 3
Deposits.......................................... 63,669 69,106 - 8
Common stockholders' equity....................... 8,563 7,961 + 8
Stockholders' equity.............................. 9,007 8,450 + 7
</TABLE>
S-8
<PAGE>
FIRST CHICAGO NBD CORPORATION
CAPITAL DATA
<TABLE>
<CAPTION>
12/31/96 9/30/96 6/30/96 3/31/96 12/31/95
-------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Common Equity/Assets Ratio (1).... 8.2% 8.1% 7.6% 7.3% 6.9%
Risk-Based Capital Ratios: (1)(2)
Tier 1........................... 9.1% 8.4% 8.1% 8.1% 7.8%
Total............................ 13.2% 12.4% 12.2% 12.3% 11.8%
Leverage Ratio (1)(2)............. 9.3% 8.1% 7.6% 7.3% 6.9%
Book Value of Common Equity....... $27.31 $27.11 $26.31 $25.70 $25.25
</TABLE>
- --------
(1) Net of investment in First Chicago Capital Markets, Inc.
(2) 12/31/96 ratios are estimated.
S-9
<PAGE>
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following
matters.
ABSENCE OF PRIOR PUBLIC MARKET
Prior to this offering, there has been no public market for the Preferred
Securities. There can be no assurance that an active trading market will
develop for the Preferred Securities or that, if such market develops, the
market price will equal or exceed the public offering price set forth on the
cover page of this Prospectus Supplement. The public offering price for the
Preferred Securities has been determined through negotiations between the
Company and the Underwriters. Prices for the Preferred Securities will be
determined in the marketplace and may be influenced by many factors, including
the liquidity of the market for the Preferred Securities, investor perceptions
of the Company and general industry and economic conditions.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE PREFERRED SECURITIES GUARANTEE
AND SUBORDINATED DEBT SECURITIES
FCN's obligations under the Preferred Securities Guarantee are subordinate
and junior in right of payment to all present and future Senior Indebtedness
and General Obligations (each as defined herein) of FCN. The obligations of
FCN under the Subordinated Debt Securities are subordinate and junior in right
of payment to all present and future Senior Indebtedness and General
Obligations of FCN. No direct or indirect payment may be made of principal of,
premium, if any, or interest on the Subordinated Debt Securities, or in
respect of any redemption, repayment, retirement, purchase or other
acquisition of any of the Subordinated Debt Securities, at any time when there
is a default in the payment of the principal of, premium, if any, interest on
or otherwise in respect of any Senior Indebtedness, whether at maturity or at
a date fixed for prepayment or by declaration or otherwise, unless and until
such default shall have been cured or waived or shall have ceased to exist or
all Senior Indebtedness shall have been paid. As of September 30, 1996, Senior
Indebtedness and General Obligations of FCN aggregated approximately $5.13
billion. Because FCN is a holding company, the right of FCN to participate in
any distribution of assets of any subsidiary upon such subsidiary's
liquidation or reorganization or otherwise (and thus the ability of holders of
the Preferred Securities to benefit indirectly from such distribution), is
subject to the prior claims of creditors of that subsidiary except to the
extent that FCN may itself be recognized as a creditor of that subsidiary. In
addition, there are various legal limitations on the extent to which FCN's
depository subsidiaries may extend credit, pay dividends or otherwise supply
funds to FCN or various of its affiliates. Accordingly, the Subordinated Debt
Securities and Preferred Securities Guarantee will be effectively subordinated
to all existing and future liabilities of FCN's subsidiaries, including
depositors, and holders of Subordinated Debt Securities and the Preferred
Securities Guarantee should look only to the assets of FCN for payments on the
Subordinated Debt Securities and the Preferred Securities Guarantee. See
"First Chicago NBD Corporation" in the accompanying Prospectus. There are no
terms in the Preferred Securities, the Subordinated Debt Securities or the
Preferred Securities Guarantee that limit FCN's ability to incur additional
indebtedness, including indebtedness that ranks senior to the Subordinated
Debt Securities and the Preferred Securities Guarantee. See "Description of
the Preferred Securities Guarantees--Status of the Preferred Securities
Guarantees" and "Description of the Subordinated Debt Securities" in the
accompanying Prospectus, and "Description of the Subordinated Debt
Securities--Subordination" herein.
The ability of the Trust to pay amounts due on the Preferred Securities is
solely dependent upon FCN making payments on the Subordinated Debt Securities
as and when required.
RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will be qualified as an indenture under
the Trust Indenture Act. The Chase Manhattan Bank will act as indenture
trustee under the Preferred Securities Guarantee for the purposes of
compliance with the provisions of the Trust Indenture Act (the "Preferred
Securities Guarantee Trustee"). The
S-10
<PAGE>
Preferred Securities Guarantee Trustee will hold the Preferred Securities
Guarantee for the benefit of the holders of the Preferred Securities.
The Preferred Securities Guarantee guarantees to the holders of the
Preferred Securities the payment of (i) any accrued and unpaid distributions
that are required to be paid on the Preferred Securities, to the extent the
Trust has funds available therefor, (ii) the Redemption Price with respect to
Preferred Securities called for redemption by the Trust, to the extent the
Trust has funds available therefor, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Subordinated Debt Securities to the holders of
Preferred Securities or a redemption of all the Preferred Securities), the
lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on the Preferred Securities to the date of the payment to
the extent the Trust has funds available therefor or (b) the amount of assets
of the Trust remaining available for distribution to holders of the Preferred
Securities in liquidation of the Trust. The holders of a majority in
liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Preferred Securities Guarantee Trustee or to direct the exercise of any
trust or power conferred upon the Preferred Securities Guarantee Trustee under
the Preferred Securities Guarantee. Notwithstanding the foregoing, any holder
of Preferred Securities may institute a legal proceeding directly against FCN
to enforce such holder's rights under the Preferred Securities Guarantee
without first instituting a legal proceeding against the Trust, the Preferred
Securities Guarantee Trustee or any other person or entity. If FCN were to
default on its obligation to pay amounts payable on the Subordinated Debt
Securities or otherwise, the Trust would lack available funds for the payment
of distributions or amounts payable on redemption of the Preferred Securities
or otherwise, and, in such event, holders of the Preferred Securities would
not be able to rely upon the Preferred Securities Guarantee for payment of
such amounts. Instead, holders of the Preferred Securities would rely on the
enforcement (1) by the Institutional Trustee (as defined herein) of its rights
as registered holder of the Subordinated Debt Securities against FCN pursuant
to the terms of the Subordinated Debt Securities or (2) by such holder of its
right against FCN to enforce payments on the Subordinated Debt Securities. See
"Description of the Preferred Securities Guarantees" and "Description of the
Subordinated Debt Securities" in the accompanying Prospectus. The Declaration
provides that each holder of Preferred Securities, by acceptance thereof,
agrees to the provisions of the Preferred Securities Guarantee, including the
subordination provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the
Subordinated Debt Securities against FCN. In addition, the holders of a
majority in liquidation amount of the Preferred Securities will have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Institutional Trustee or to direct the exercise of any
trust or power conferred upon the Institutional Trustee under the Declaration,
including the right to direct the Institutional Trustee to exercise the
remedies available to it as a holder of the Subordinated Debt Securities. If
the Institutional Trustee fails to enforce its rights under the Subordinated
Debt Securities, a holder of Preferred Securities may institute a legal
proceeding directly against FCN to enforce the Institutional Trustee's rights
under the Subordinated Debt Securities without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of FCN to pay
interest or principal on the Subordinated Debt Securities on the date such
interest or principal is otherwise payable (or in the case of redemption, on
the redemption date), then a holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder (a "Direct Action") on or after the respective due
date specified in the Subordinated Debt Securities. In connection with such
Direct Action, FCN will be subrogated to the rights of such holder of
Preferred Securities under the Declaration to the extent of any payment made
by FCN to such holder of Preferred Securities in such Direct Action. The
holders of Preferred Securities will not be able to exercise directly any
other remedy available to the holders of the Subordinated Debt Securities. See
"Description of the Preferred Securities--Declaration Events of Default."
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<PAGE>
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Indenture Event of Default (as defined herein) has occurred
and is continuing, FCN has the right under the Indenture to defer payments of
interest on the Subordinated Debt Securities by extending the interest payment
period at any time, and from time to time, on the Subordinated Debt
Securities. As a consequence of such an extension, quarterly distributions on
the Preferred Securities would be deferred (but would continue to accrue at
the Distribution Rate, despite such deferral, with interest thereon at the
Distribution Rate compounded quarterly) by the Trust during any such extended
interest payment period. Such right to extend the interest payment period for
the Subordinated Debt Securities is limited to a period not exceeding 20
consecutive quarters, but no such Extension Period may extend beyond the
Stated Maturity of the Subordinated Debt Securities. During any such Extension
Period, FCN may not, and may not permit any subsidiary of FCN to, (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or
make a liquidation payment with respect to, any of FCN's capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of FCN (including other Subordinated
Debt Securities) that rank pari passu in all respects with or junior in
interest to the Subordinated Debt Securities or make any guarantee payments
with respect to any guarantee by FCN of the debt securities of any subsidiary
of FCN if such guarantee ranks pari passu with or junior in interest to the
Subordinated Debt Securities (other than (a) dividends or distributions in
common stock of FCN, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Preferred Securities Guarantee
or Common Securities Guarantee, (d) purchases of common stock related to the
issuance of common stock or rights under any of FCN's benefit plans for its
directors, officers or employees and (e) obligations under any dividend
reinvestment and stock purchase plan). Prior to the termination of any such
Extension Period, FCN may further extend the interest payment period;
provided, that such Extension Period, together with all such previous and
further extensions thereof, may not exceed 20 consecutive quarters or extend
beyond the Stated Maturity of the Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment of all amounts then due,
FCN may commence a new Extension Period, subject to the above requirements.
See "Description of the Preferred Securities--Distributions" and "Description
of the Subordinated Debt Securities--Option to Extend Interest Payment
Period."
Should FCN exercise its right to defer payments of interest by extending the
interest payment period, each holder of Preferred Securities will be required
to accrue income (as original issue discount ("OID")) in respect of the
deferred stated interest allocable to its Preferred Securities for United
States federal income tax purposes, even though no cash is distributed. As a
result, each such holder of Preferred Securities will include such income in
gross income for United States federal income tax purposes in advance of the
receipt of cash attributable thereto and will not receive the cash from the
FCN Capital Trust related to such income if such holder disposes of its
Preferred Securities prior to the record date for the date on which
distributions of such amounts are made. FCN has no current intention of
exercising its right to defer payments of interest by extending the interest
payment period on the Subordinated Debt Securities. However, should FCN elect
to exercise such right in the future, the market price of the Preferred
Securities is likely to be affected. A holder that disposes of its Preferred
Securities during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its Preferred
Securities. In addition, as a result of the existence of FCN's right to defer
interest payments, the market price of the Preferred Securities (which
represent an undivided beneficial interest in the Subordinated Debt
Securities) may be more volatile than other securities on which OID accrues
that are not subject to such deferrals. See "United States Federal Income
Taxation--Sales of Preferred Securities."
PROPOSED TAX LEGISLATION
On March 19, 1996, as part of President Clinton's Fiscal 1996 Budget
Proposal, the United States Treasury Department proposed legislation that
would, among other things, treat as equity for United States Federal income
tax purposes instruments--such as the Subordinated Debt Securities--with a
maximum term of more than 20 years that are not shown as indebtedness on the
consolidated balance sheet of the issuer. If the proposed legislation were
enacted, such legislation would not be expected to apply to the Subordinated
Debt Securities because, based on statements by Congressional leaders, it is
not expected that the legislation would have a
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<PAGE>
retroactive effective date. There can be no assurances, however, that
legislation enacted after the date hereof would not adversely affect the tax
treatment of the Subordinated Debt Securities, or that such tax treatment
would not cause a Tax Event resulting in the redemption of the Preferred
Securities. See "Description of the Preferred Securities--Tax Event and
Capital Treatment Event Redemption."
REDEMPTION OR DISTRIBUTION OF THE SUBORDINATED DEBT SECURITIES
FCN will have the right at any time to terminate the Trust and, after the
satisfaction of claims of creditors as required by law, to cause the
Subordinated Debt Securities to be distributed to the holders of the Trust
Securities in liquidation of the Trust. In certain circumstances, FCN shall
have the right to redeem the Subordinated Debt Securities, in whole or in
part, in which event the Trust will redeem the Trust Securities on a pro rata
basis to the same extent as the Subordinated Debt Securities are redeemed by
FCN. Any such distribution or redemption will require prior approval of the
Federal Reserve Board if then required under applicable law, rules, guidelines
or policies. See "Description of the Preferred Securities--Tax Event and
Capital Treatment Event Redemption."
Under current United States federal income tax law, a distribution of
Subordinated Debt Securities upon the dissolution of FCN Capital Trust would
not be a taxable event to holders of the Preferred Securities. If, however,
the Trust is characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of the dissolution of the
Trust, the distribution of the Subordinated Debt Securities may constitute a
taxable event to holders of Preferred Securities. Moreover, upon occurrence of
a Tax Event or a Capital Treatment Event, a dissolution of the Trust in which
holders of the Preferred Securities receive cash, would be a taxable event to
such holders. See "United States Federal Income Taxation--Receipt of
Subordinated Debt Securities or Cash Upon Liquidation of FCN Capital Trust."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debt Securities that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of the Trust
were to occur. Accordingly, the Preferred Securities or the Subordinated Debt
Securities may trade at a discount to the price that the investor paid to
purchase the Preferred Securities offered hereby. Because holders of Preferred
Securities may receive Subordinated Debt Securities, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Subordinated Debt Securities and should carefully review all the information
regarding the Subordinated Debt Securities contained herein and in the
accompanying Prospectus. See "Description of the Preferred Securities--Tax
Event and Capital Treatment Event Redemption" and "Description of the
Subordinated Debt Securities--General."
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction, including a change of control, or other similar transactions
involving FCN that may adversely affect such holders. See "Description of the
Subordinated Debt Securities--General."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will not
be entitled to vote to appoint, remove or replace, or to increase or decrease
the number of, FCN Trustees, which voting rights are vested exclusively in the
holder of the Common Securities. The Institutional Trustee, the Regular
Trustees and FCN may amend the Declaration without the consent of the holders
of the Preferred Securities to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust unless such
action materially and adversely affects the interests of such holders. See
"Description of Preferred Securities--Voting Rights."
S-13
<PAGE>
TRADING PRICE
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest (or original issue discount
if the Subordinated Debt Securities are treated as having been issued, or
reissued, with original issue discount) with respect to the underlying
Subordinated Debt Securities. A holder who disposes of his Preferred
Securities will be required to include in ordinary income (i) any portion of
the amount realized that is attributable to such accrued but unpaid interest
to the extent not previously included in income or (ii) any amount of such
interest (original issue discount, in either case), that has accrued on his
pro rata share of the underlying Subordinated Debt Securities during the
taxable year of sale through the date of disposition. Any such income
inclusion will increase the holder's adjusted tax basis in his Preferred
Securities disposed of. To the extent that the amount realized in the sale is
less than the holder's adjusted tax basis, a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied
to offset ordinary income for United States federal income tax purposes. See
"United States Federal Income Taxation--Interest Income and Original Issue
Discount" and "--Sales of Preferred Securities."
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<PAGE>
FIRST CHICAGO NBD CORPORATION
GENERAL
The Company is a multi-bank holding company registered under the Bank
Holding Company Act, as amended, which was incorporated under the laws of the
State of Delaware in 1972. The Company is the surviving corporation resulting
from the merger, effective December 1, 1995, of First Chicago Corporation, a
Delaware corporation and registered bank holding company, with and into NBD
Bancorp, Inc., a Delaware corporation and registered bank holding company.
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), American National Bank and Trust Company of Chicago ("ANB"),
FCC National Bank ("FCCNB") and NBD Bank, N.A. (Indiana) ("NBD Indiana").
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 is a legal entity separate and distinct from the Company's
banking subsidiaries (the "Banks") and the Company's other affiliates. There
are various legal limitations on the extent to which the Banks may extend
credit, pay dividends or otherwise supply funds to the Company. Dividend
payments by national banks, such as FNBC, ANB, NBD Indiana and FCCNB, are
limited to the lesser of (i) the level of "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 such dividends would, in light of the financial
condition of such bank, constitute an unsafe or unsound practice. In addition,
there are numerous other governmental requirements and regulations that affect
the activities of the Company and its subsidiaries.
Under the longstanding policy of the Federal Reserve Board, a bank holding
company is expected to act as a source of financial strength for its
subsidiary banks and to commit resources to support such banks. As a result of
this policy, the Company may be required to commit resources to the Banks in
circumstances where it might not otherwise do so.
Because the Company is a holding company, its rights and the rights of its
creditors, including the holders of the Subordinated Debt Securities and the
Preferred Securities Guarantees, to participate in the distribution and
payment of assets of any subsidiary upon the subsidiary's liquidation or
recapitalization would be subject to the prior claims of 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.
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<PAGE>
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 Securities and
Exchange Commission (the "SEC")) 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>
YEAR ENDED DECEMBER 31, NINE MONTHS
------------------------ ENDED
1995 1994 1993 1992 1991 SEPTEMBER 30, 1996
---- ---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding interest expense on de-
posits.......................... 1.8x 2.2x 3.0x 1.3x 1.6x 2.1x
Including interest expense on de-
posits.......................... 1.4x 1.6x 1.8x 1.1x 1.1x 1.5x
</TABLE>
FCN CAPITAL TRUST
FCN Capital Trust is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, originally dated as of November 6,
1996, executed by FCN, as sponsor (the "Sponsor"), and the trustees of FCN
Capital Trust (the "FCN Capital Trustees") and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
November 6, 1996. Such declaration will be amended and restated in its
entirety (as so amended and restated, the "Declaration") substantially in the
form filed as an exhibit to the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus form a part. The
Declaration will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred
Securities, the purchasers thereof will own all of the Preferred Securities.
See "Description of the Preferred Securities--Book-Entry Only Issuance--The
Depository Trust Company." FCN will directly or indirectly acquire Common
Securities in an aggregate liquidation amount equal to at least 3 percent of
the total capital of FCN Capital Trust. FCN Capital Trust exists for the
exclusive purposes of (x) issuing the Trust Securities representing undivided
beneficial interests in the assets of the Trust, (y) investing the gross
proceeds of the Trust Securities in the Subordinated Debt Securities and (z)
engaging in only those other activities necessary or incidental thereto.
Pursuant to the Declaration, the number of FCN Capital Trustees will
initially be five. Three of the FCN Trustees (the "Regular Trustees") will be
persons who are employees or officers of, or who are affiliated with, FCN. The
fourth trustee will be a financial institution that is unaffiliated with FCN,
which trustee will serve as institutional trustee under the Declaration and as
indenture trustee for the purposes of compliance with the provisions of the
Trust Indenture Act (the "Institutional Trustee"). Initially, The Chase
Manhattan Bank will be the Institutional Trustee until removed or replaced by
the holder of the Common Securities as permitted in the Declaration. For the
purpose of compliance with the Trust Indenture Act, The Chase Manhattan Bank
will act as Preferred Securities Guarantee Trustee under the Preferred
Securities Guarantee and as Debt Trustee (as defined herein) under the
Indenture. The fifth trustee will be an entity that maintains its principal
place of business in the state of Delaware (the "Delaware Trustee"). Chase
Manhattan Bank Delaware ("Chase Delaware") will act as Delaware Trustee. See
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus and "Description of the Preferred Securities--Voting Rights"
herein.
The Institutional Trustee will hold title to the Subordinated Debt
Securities for the benefit of the holders of the Trust Securities and will
have the power to exercise all rights, powers and privileges under the
Indenture as the holder of the Subordinated Debt Securities. In addition, the
Institutional Trustee will maintain exclusive control of a segregated non-
interest bearing bank account (the "Property Account") to hold all payments
made in respect of the Subordinated Debt Securities for the benefit of the
holders of the Trust Securities. The Property Account may be held at the
Institutional Trustee or any Paying Agent of the Institutional Trustee,
including FNBC. The Institutional Trustee will make payments of distributions
and payments on liquidation, redemption and otherwise to the holders of the
Trust Securities out of funds from the Property Account. The Preferred
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<PAGE>
Securities Guarantee Trustee will hold the Preferred Securities Guarantee for
the benefit of the holders of the Preferred Securities. FCN, as the direct or
indirect holder of all the Common Securities, will have the right to appoint,
remove or replace any FCN Capital Trustee and to increase or decrease the
number of FCN Capital Trustees. FCN will pay all fees and expenses related to
FCN Capital Trust and the offering of the Trust Securities. See "Description
of the Subordinated Debt Securities--Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
The Chase Manhattan Bank ("Chase"), which serves as the Institutional
Trustee, the Debt Trustee and the Preferred Securities Guarantee Trustee, has
a principal corporate trust office at 450 West 33rd Street, New York, New York
10001. Chase also serves as property trustee under declarations of trust for
two other statutory business trusts formed under the laws of the State of
Delaware and sponsored by the Company. Chase serves as debt trustee under an
indenture dated as of November 15, 1996 with respect to junior subordinated
debentures of the Company purchased by such trusts and is the guarantee
trustee under each of two guarantee agreements dated as of December 3, 1996
and December 5, 1996, respectively, from the Company to the applicable trust
guaranteeing certain payments to such trust. In addition, Chase serves as
trustee for certain subordinated debt securities issued by FCN under
indentures originally dated as of July 1, 1986, July 15, 1992, April 30, 1993,
May 17, 1995 and December 1, 1995. Chase Delaware also serves as trustee for
senior debt securities of FCN issued under an indenture dated as of April 1,
1986. The Company and its affiliates have normal banking relationships with
Chase, Chase Delaware and their affiliates in the ordinary course of business.
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<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of FCN at September
30, 1996, and the "As Adjusted" column reflects (i) the application of the
estimated proceeds from the sale of the Preferred Securities and (ii) the
application of the net proceeds from the sale of $500,000,000 of 7.95% Capital
Securities, Series A (the "Series A Capital Securities") of First Chicago NBD
Institutional Capital A (the "Series A Trust") and $250,000,000 of 7.75%
Capital Securities (the "Series B Capital Securities") of First Chicago NBD
Institutional Capital B (the "Series B Trust"), which offerings were
consummated on December 3, 1996 and December 5, 1996, respectively. See "Use
of Proceeds." The table should be read in conjunction with FCN's consolidated
financial statements and notes thereto included in the documents incorporated
by reference herein. See "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------
ACTUAL AS ADJUSTED
---------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Long-term Debt...................................... $ 7,967 $ 7,967
Guaranteed preferred beneficial interests in
Corporation's junior subordinated debt(1).......... -- 998
---------- ----------
STOCKHOLDERS' EQUITY
Preferred Stock................................... 475 475
Common stock, par value $1.00 par share........... 319 319
Capital surplus................................... 2,179 2,179
Retained earnings................................. 6,189 6,189
Fair value adjustment on investment securities
available for sale............................... 23 23
Deferred compensation............................. (57) (57)
Accumulated translation adjustment................ 7 7
Treasury stock.................................... (48) (48)
---------- ----------
Total Stockholders' Equity...................... 9,087 9,087
---------- ----------
Total(2)...................................... $ 17,054 $ 18,052
========== ==========
</TABLE>
- --------
(1) The Preferred Securities will be issued by the Trust. The sole assets of
the Trust will consist of approximately $257,732,000 principal amount of
Subordinated Debt Securities issued by FCN to the Trust. The Subordinated
Debt Securities will bear interest at an annual rate equal to 3-Month
LIBOR plus 0.55%, and will mature on February 1, 2027. FCN owns all of the
Common Securities of the Trust.
The Series A Capital Securities were issued by the Series A Trust. The sole
assets of the Series A Trust consist of $515,464,000 principal amount of
7.95% Junior Subordinated Deferrable Interest Debentures, Series A (the
"Series A Debentures") issued by FCN to the Series A Trust. The Series A
Debentures bear interest at the rate of 7.95% per annum and will mature on
December 1, 2026. FCN owns all of the Common Securities of the Series A
Trust.
The Series B Capital Securities were issued by the Series B Trust. The sole
assets of the Series B Trust consist of $257,732,000 principal amount of
7.75% Junior Subordinated Deferrable Interest Debentures, Series B (the
"Series B Debentures") issued by FCN to the Series B Trust. The Series B
Debentures bear interest at the rate of 7.75% per annum and will mature on
December 1, 2026. FCN owns all of the Common Securities of the Series B
Trust.
(2) Subsequent to September 30, 1996, the capitalization of the Company and
its consolidated subsidiaries has been affected by various issuances,
redemptions, repurchases and maturities which are not reflected in this
table.
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<PAGE>
ACCOUNTING TREATMENT
For financial reporting purposes, the FCN Capital Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the FCN Capital
Trust will be included in the consolidated financial statements of the
Company. The Preferred Securities will be reported as "Guaranteed preferred
beneficial interests in Corporation's junior subordinated debt" as either a
separate line item in the consolidated balance sheet of the Company or in the
notes to the consolidated financial statements of the Company. Appropriate
disclosures about the Preferred Securities, the Preferred Securities Guarantee
and the Subordinated Debt Securities will be included in the notes to the
consolidated financial statements. For financial reporting purposes, the
Company will classify distributions payable on the Preferred Securities as an
expense in the consolidated statements of income.
The Company has agreed that future financial reports of the Company will:
(i) report the preferred securities issued by other trusts created by the
Company as "Guaranteed preferred beneficial interests in Corporation's junior
subordinated debt" as either a separate line item in the consolidated balance
sheet or in the notes to the consolidated financial statements; (ii) include
in a footnote to the financial statements disclosure that the sole assets of
the trusts are the junior subordinated debentures (specifying as to each trust
the principal amount, interest rate and maturity date of junior subordinated
debentures held); and (iii) if Staff Accounting Bulletin 53 treatment is
sought, include, in an audited footnote to the financial statements,
disclosure that (a) the trusts are wholly owned, (b) the sole assets of the
trusts are the junior subordinated debentures (specifying as to each trust the
principal amount, interest rate and maturity date of junior subordinated
debentures held), and (c) the obligations of the Company under the junior
subordinated debentures, the relevant indenture, trust agreement and
guarantee, in the aggregate, constitute a full and unconditional guarantee by
the Company of such trust's obligations under the preferred securities issued
by such trust.
USE OF PROCEEDS
The Trust will use all proceeds received from the sale of the Preferred
Securities to purchase Subordinated Debt Securities from FCN. FCN intends to
use the net proceeds from the sale of the Subordinated Debt Securities for
general corporate purposes, including the funding of investments in, or
extensions of credit to, the Company's subsidiaries. Pending such use, the
Company may temporarily invest the net proceeds in various short-term
securities or apply the net proceeds to reduce short-term indebtedness. Based
upon the historic and anticipated future growth of the Company and the
financial needs of its subsidiaries, FCN anticipates that it will, on a
recurrent basis, engage in additional financings in character and amount to be
determined.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, The Chase Manhattan Bank, will act
as indenture trustee for the Preferred Securities under the Declaration for
the purpose of compliance with the Trust Indenture Act. The terms of the
Preferred Securities will include those stated in the Declaration and those
made part of the Declaration by the Trust Indenture Act. The following summary
of the material terms and provisions of the Preferred Securities, which
supplements, and to the extent inconsistent, replaces, the description set
forth under the caption "Description of the Preferred Securities" in the
accompanying Prospectus, does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the Declaration, a copy of the
form of which is filed as an exhibit to the Registration Statement of which
this Prospectus Supplement is a part, the Trust Act and the Trust Indenture
Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities will be owned,
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directly or indirectly, by FCN. The Common Securities rank pari passu, and
payments will be made thereon on a pro rata basis, with the Preferred
Securities, except that upon the occurrence and during the continuance of a
Declaration Event of Default, the rights of the holders of the Common
Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the Preferred Securities. The Declaration does not permit the
issuance by the Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by the Trust. Pursuant to the Declaration, the
Institutional Trustee will own the Subordinated Debt Securities purchased by
the Trust for the benefit of the holders of the Trust Securities. The payment
of distributions out of money held by the Trust, and payments upon redemption
of the Preferred Securities or liquidation of the Trust, are guaranteed by FCN
to the extent described under "Description of the Preferred Securities
Guarantees" in the accompanying Prospectus. The Preferred Securities Guarantee
will be held by The Chase Manhattan Bank, the Preferred Securities Guarantee
Trustee, for the benefit of the holders of the Preferred Securities. The
Preferred Securities Guarantee does not cover payment of distributions when
the Trust does not have sufficient available funds to pay such distributions.
In such event, the remedy of a holder of Preferred Securities is to vote to
direct the Institutional Trustee to enforce the Institutional Trustee's rights
under the Subordinated Debt Securities except in the limited circumstances in
which the holder may take Direct Action. See "--Voting Rights" and "--
Declaration Events of Default."
DISTRIBUTIONS
Each Preferred Security will be entitled to preferential distributions at
the Distribution Rate, applied to the stated liquidation amount of $1,000.
Distributions in arrears for more than one quarter will bear interest thereon
at the Distribution Rate compounded quarterly. The term "distribution" as used
herein includes any such interest payable unless otherwise stated.
Distributions on the Preferred Securities will be cumulative, will accrue
from January 31, 1997 and, except as otherwise described below, will be
payable quarterly in arrears on February 1, May 1, August 1, and November 1 of
each year, commencing May 1, 1997, when, as and if available for payment.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from FCN on the Subordinated Debt Securities. See
"Description of the Subordinated Debt Securities." The payment of
distributions out of moneys held by the Trust is guaranteed by FCN to the
extent set forth under "Description of the Preferred Securities Guarantees" in
the accompanying Prospectus.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day (as defined below) prior to the relevant
payment dates. Such distributions will be paid through the Institutional
Trustee who will hold amounts received in respect of the Subordinated Debt
Securities in the Property Account for the benefit of the holders of the Trust
Securities. The Property Account may be held at the Institutional Trustee or
any Paying Agent of the Institutional Trustee, including FNBC. Subject to any
applicable laws and regulations and the provisions of the Declaration, each
such payment will be made as described under "--Book-Entry Only Issuance--The
Depository Trust Company" below. In the event that the Preferred Securities do
not continue to remain in book-entry only form, the record dates for payment
of distributions will be January 15, April 15, July 15 and October 15, as
applicable. In the event that any date on which distributions are payable is
not a Business Day, then payment of the distributions payable on such date
will be made on the next succeeding day which is a Business Day, except that,
if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such payment date (the date on which
distributions are actually payable, a "Distribution Date"). The period
beginning on, and including, the date of original issuance, and ending on, but
excluding, the first Distribution Date, and each successive period beginning
on, and including, a Distribution Date, and ending on, but excluding, the next
succeeding Distribution Date is herein called a "Distribution Period." A
"Business Day" shall mean any day other than Saturday, Sunday or any other day
on which banking institutions in New York, New York or Chicago, Illinois are
authorized or required by any applicable law or executive order to close.
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DETERMINATION OF 3-MONTH LIBOR
The Distribution Rate in respect of the Preferred Securities will be a
floating rate per annum determined by reference to 3-Month LIBOR, determined
as described below, plus a margin of %. "3-Month LIBOR"means the London
interbank offered rate for three month U.S. dollar deposits and with respect
to any Distribution Period will be calculated by The First National Bank of
Chicago, as calculation agent (the "Calculation Agent"), as follows:
(a) On the second Market Day (as defined below) preceding the
commencement of such Distribution Period (each, a "Determination Date"), 3-
Month LIBOR will be determined on the basis of the offered rate for
deposits of not less than U.S. $1,000,000 for a period of three months (the
"Index Maturity"), commencing on the second Market Day immediately
preceding the commencement of such Distribution Period, which appears on
the display designated as Page 3750 on the Dow Jones Telerate Service (or
such other pages as may replace Page 3750 on that service for the purpose
of displaying London interbank offered rates of major banks) ("Telerate
Page 3750") as of 11:00 a.m., London time on said Determination Date. If no
such offered rate appears, 3-Month LIBOR with respect to such Distribution
Period will be determined as described in (b) below.
(b) With respect to a Determination Date on which no such offered rate
appears on Telerate Page 3750 as described in (a) above, 3-Month LIBOR
shall be the arithmetic mean, expressed as a percentage, of the offered
rates (unless by its terms such display provides for only a single rate, in
which case a single rate shall be used) for deposits in U.S. dollars for
the Index Maturity which appears on the display designated as "LIBO" on the
Reuters Monitor Money Market Rates Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks) ("Reuters Screen LIBO Page") as of
11:00 a.m., London time, on such date. If, in turn, at least two such rates
are not displayed on the Reuters Screen LIBO Page at such time (unless, as
aforesaid, only a single rate is required), the Calculation Agent will
obtain from each of four reference banks in London selected by the
Calculation Agent ("Reference Banks") such bank's offered quotation
(expressed as a percentage per annum) as of approximately 11:00 a.m.,
London time, on such date for deposits in U.S. dollars to prime banks in
the London interbank market for the Index Maturity. If two or more such
quotations are provided as requested, then 3-Month LIBOR for such date
shall be the arithmetic average of such quotations. If, in turn, fewer than
two such quotations are provided as requested, then 3-Month LIBOR for such
date will be obtained from the preceding Market Day for which the Reuters
Screen LIBO Page displayed a rate for the Index Maturity.
(c) If on any Determination Date, the Calculation Agent is required but
unable to determine 3-Month LIBOR in the manner provided in paragraphs (a)
and (b) above, 3-Month LIBOR for such Distribution Period shall be 3-Month
LIBOR as determined on the previous Determination Date.
The term "Market Day" means any Business Day on which commercial banks and
foreign exchange markets are open for business (including dealings in foreign
exchange and foreign currency deposits) in New York and London.
The Distribution Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be
modified by United States law.
All percentages resulting from any calculations referred to in this
Prospectus Supplement will be rounded, if necessary, to the nearest multiple
of 1/100 of 1% and all U.S. dollar amounts used in or resulting from such
calculations will be rounded to the nearest cent (with one-half cent or more
being rounded upwards).
DETERMINATION OF DISTRIBUTION RATE AND CALCULATION OF DISTRIBUTION AMOUNT
The Calculation Agent shall, as soon as practicable after 11:00 a.m., London
time, on each Determination Date, determine the Distribution Rate and inform
the Debt Trustee, the Institutional Trustee and the Paying Agent. The
Institutional Trustee, or if so designated, the Paying Agent will calculate
the amount of distributions
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payable in respect of the following Distribution Period (the "Distribution
Amount"). The Distribution Amount shall be calculated by applying the
Distribution Rate to the liquidation amount of each Preferred Security
outstanding at the commencement of the Distribution Period, multiplying each
such amount by the actual number of days in the Distribution Period concerned
(which actual number of days shall include the first day but exclude the last
day of such Distribution Period) divided by 360 and rounding the resultant
figure to the nearest cent (with one-half cent or more being rounded upwards).
The determination of the Distribution Rate by the Calculation Agent and the
Distribution Amount by the Institutional Trustee or Paying Agent, as the case
may be, will (in the absence of wilful default, bad faith or manifest error)
be final, conclusive and binding on all concerned. None of the Debt Trustee,
the Institutional Trustee, the Paying Agent, the Calculation Agent, the Trust
or the Company (or any of their respective officers, directors, agents,
beneficiaries, employees or affiliates) shall have any liability to any person
for (i) the selection of any Reference Bank or (ii) any inability to retain
major banks in the London interbank market, in the case of the Calculation
Agent, which is caused by circumstances beyond its reasonable control.
Upon the request of a holder of a Preferred Security, the Calculation Agent
will provide the Distribution Rate then in effect and, if determined, the
Distribution Rate for the next Distribution Period with respect to the
Preferred Securities. Each such Distribution Rate may be obtained by
telephoning the Calculation Agent at (312) 407-4660.
CERTIFICATES TO BE FINAL
All certificates, communications, opinions, determinations, calculations,
quotations and decisions given, expressed, made or obtained for the purposes
of the provisions relating to the payment and calculation of distributions on
the Preferred Securities, whether by the Reference Banks (or any of them) or
the Calculation Agent, Institutional Trustee, Debt Trustee or Paying Agent,
will (in the absence of wilful default, bad faith or manifest error) be
binding on the Trust, the Company, the Trustees and all of the holders of the
Preferred Securities, and no liability will (in the absence of wilful default,
bad faith or manifest error) attach to the Calculation Agent, Institutional
Trustee, Debt Trustee or Paying Agent in connection with the exercise or non-
exercise by any of them of their powers, duties and discretion.
DEFERRAL OF DISTRIBUTIONS
So long as no Indenture Event of Default has occurred and is continuing, FCN
has the right under the Indenture to defer payments of interest on the
Subordinated Debt Securities by extending the interest payment period from
time to time on the Subordinated Debt Securities, which, if exercised, would
defer quarterly distributions on the Preferred Securities (though such
distributions would continue to accrue with interest since interest would
continue to accrue on the Subordinated Debt Securities at the Distribution
Rate) during any such Extension Period. Such right to extend the interest
payment period for the Subordinated Debt Securities is limited to a period not
exceeding 20 consecutive quarters and such period may not extend beyond the
Stated Maturity of the Subordinated Debt Securities. In the event that FCN
exercises this right, then FCN shall not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of FCN's capital stock or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company that rank pari passu in all respects with
or junior in interest to the Subordinated Debt Securities or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any subsidiary of the Company if such guarantee ranks pari passu
with or junior in interest to the Subordinated Debt Securities (other than (a)
dividends or distributions in common stock of FCN, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under the
Preferred Securities Guarantee or Common Securities Guarantee, (d) purchases
of common stock related to the issuance of common stock or rights under any of
the Company's benefit plans for its directors, officers, or employees and (e)
obligations under any dividend reinvestment and stock purchase plan). Prior to
the termination of any such Extension Period, FCN may further extend the
interest payment period; provided, that such Extension Period, together with
all such previous and further extensions thereof, may not exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Subordinated
Debt Securities. Upon the termination of any Extension Period and the payment
of all amounts then due, FCN may
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select a new Extension Period, subject to the foregoing requirements. See
"Description of the Subordinated Debt Securities--Interest" and "--Option to
Extend Interest Payment Period."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period of the
Subordinated Debt Securities.
MANDATORY REDEMPTION
The Subordinated Debt Securities will mature on February 1, 2027. Moreover,
the Subordinated Debt Securities are redeemable (i) in whole or in part, at
any time on or after February 1, 2007, or (ii) in whole, but not in part, at
any time within 90 days following the occurrence of a Tax Event or Capital
Treatment Event (or, if the approval of the Federal Reserve Board is then
required for such redemption, on such later date as promptly as practicable
after such approval is obtained), in each case at a redemption price equal to
the accrued and unpaid interest on the Subordinated Debt Securities so
redeemed to but excluding the date fixed for redemption, plus 100% of the
principal amount thereof. See "Description of the Subordinated Debt
Securities." Upon the repayment of the Subordinated Debt Securities, whether
at maturity or upon redemption, the proceeds from such repayment or payment
shall simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Debt Securities so repaid or redeemed at the Redemption Price; provided, that
holders of Trust Securities shall be given not less than 30 nor more than 60
days' notice of such redemption. See "Description of the Subordinated Debt
Securities--Optional Redemption." In the event that fewer than all of the
outstanding Preferred Securities are to be redeemed, the Preferred Securities
will be redeemed pro rata as described under "--Book-Entry Only Issuance--The
Depository Trust Company" below. Any such redemption or distribution of the
Subordinated Debt Securities will require the prior approval of the Federal
Reserve Board if such approval is then required under applicable law, rules,
guidelines or policies.
TAX EVENT AND CAPITAL TREATMENT EVENT REDEMPTION
Subject to the prior approval of the Federal Reserve Board if such approval
is then required under applicable law, rules, guidelines or policies, if, at
any time, a Tax Event or Capital Treatment Event shall occur and be
continuing, FCN shall have the right, upon not less than 30 and no more than
60 days' notice, to redeem the Subordinated Debt Securities, in whole, but not
in part, for cash within 90 days following the occurrence of such Tax Event or
Capital Treatment Event (or, if the approval of the Federal Reserve Board is
then required for such redemption, on such later date as promptly as
practicable after such approval is obtained) and, following such redemption,
all Trust Securities shall be redeemed by the Trust at the Redemption Price.
"Tax Event" means the receipt by the Trust of an opinion of counsel to the
Company experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance
of such Preferred Securities under the Declaration, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the Subordinated Debt Securities, (ii)
interest payable by the Company on the Subordinated Debt Securities is not, or
within 90 days of the date of such opinion, will not be, deductible by the
Company, in whole or in part, for United States federal income tax purposes or
(iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than de minimis amount of other taxes, duties or other
governmental charges.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision thereof or therein, or as a
result of any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement, action or decision is announced on
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or after the date of issuance of the Preferred Securities under the
Declaration, there is more than an insubstantial risk that the Company will
not be entitled to treat an amount equal to the liquidation amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve Board, as
then in effect and applicable to the Company.
DISTRIBUTION OF THE SUBORDINATED DEBT SECURITIES
FCN will have the right at any time to liquidate the Trust and cause the
Subordinated Debt Securities to be distributed to the holders of the Trust
Securities, subject to the prior approval of the Federal Reserve Board if such
approval is then required under applicable law, rules, guidelines or policies.
After the date for any distribution of Subordinated Debt Securities upon
dissolution of the Trust, (i) the Preferred Securities will no longer be
deemed to be outstanding, (ii) the Depositary (as defined herein) or its
nominee, as the record holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Subordinated
Debt Securities to be delivered upon such distribution, and (iii) any
certificates representing Preferred Securities not held by the Depositary or
its nominee will be deemed to represent Subordinated Debt Securities having an
aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the distribution rate of, and accrued
and unpaid interest equal to accrued and unpaid distributions on, such
Preferred Securities until such certificates are presented to FCN or its agent
for transfer or reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Subordinated Debt Securities that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Preferred Securities or the Subordinated
Debt Securities may trade at a discount to the price that the investor paid to
purchase the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred Securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time,
on the redemption date, provided that FCN has paid to the Institutional
Trustee a sufficient amount of cash in connection with the related redemption
or maturity of the Subordinated Debt Securities, the Trust will irrevocably
deposit with the Depositary funds sufficient to pay the applicable Redemption
Price and will give the Depositary irrevocable instructions and authority to
pay the Redemption Price to the holders of the Preferred Securities. See "--
Book-Entry Only Issuance--The Depository Trust Company." If notice of
redemption shall have been given and funds deposited as required, then, from
and after the announced redemption date, distributions will cease to accrue
and all rights of holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price but without interest on such
Redemption Price. In the event that any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day
(without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will
be made on the immediately preceding Business Day. In the event that payment
of the Redemption Price in respect of Preferred Securities is improperly
withheld or refused and not paid either by the Trust, or by FCN pursuant to
the Preferred Securities Guarantee, distributions on such Preferred Securities
will continue to accrue at the then applicable rate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating
the Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed in accordance with
procedures of the Depository as described below under "--Book-Entry Only
Issuance--The Depository Trust Company."
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Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws and the regulations of the Federal
Reserve Board), FCN or its subsidiaries may at any time, and from time to
time, purchase outstanding Preferred Securities by tender, in the open market
or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then
holders of the Preferred Securities will be entitled to receive out of the
assets of the Trust, after satisfaction of liabilities to creditors,
distributions in an amount equal to the aggregate of the stated liquidation
amount of $1,000 per Preferred Security plus accrued and unpaid distributions
thereon to the date of payment (the "Liquidation Distribution"), unless, in
connection with such Liquidation, Subordinated Debt Securities in an aggregate
stated principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the distribution rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on, the Preferred
Securities have been distributed on a pro rata basis to the holders of the
Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive distributions
upon any such dissolution pro rata with the holders of the Preferred
Securities, except that if a Declaration Event of Default has occurred and is
continuing, the Preferred Securities shall have a preference over the Common
Securities with regard to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on January 31,
2052, the expiration of the term of the Trust, (ii) upon the bankruptcy of
FCN, (iii) upon the filing of a certificate of dissolution or its equivalent
with respect to FCN, the filing of a certificate of cancellation with respect
to the Trust after obtaining the consent of the holders of at least a majority
in liquidation amount of the Trust Securities affected thereby voting together
as a single class to file such certificate of cancellation or the revocation
of the charter of FCN and the expiration of 90 days after the date of
revocation without a reinstatement thereof, (iv) upon the distribution of
Subordinated Debt Securities to holders of the Preferred Securities, (v) upon
the entry of a decree of a judicial dissolution of FCN or the Trust, or (vi)
upon the redemption of all the Trust Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture relating to the Subordinated Debt
Securities (an "Indenture Event of Default") constitutes an event of default
under the Declaration with respect to the Trust Securities (a "Declaration
Event of Default"); provided, that pursuant to the Declaration, the holder of
the Common Securities will be deemed to have waived any Declaration Event of
Default with respect to the Common Securities until all Declaration Events of
Default with respect to the Preferred Securities have been cured, waived or
otherwise eliminated. Until such Declaration Events of Default with respect to
the Preferred Securities have been so cured, waived, or otherwise eliminated,
the Institutional Trustee will be deemed to be acting solely on behalf of the
holders of the Preferred Securities and only the holders of the Preferred
Securities will have the right to direct the Institutional Trustee with
respect to certain matters under the Declaration, and therefore the Indenture.
If the Institutional Trustee fails to enforce its rights under the
Subordinated Debt Securities after a holder of Preferred Securities has made a
written request, such holder of record of Preferred Securities may institute a
legal proceeding against FCN to enforce the Institutional Trustee's rights
under the Subordinated Debt Securities without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of FCN to pay
interest or principal on the Subordinated Debt Securities on the date such
interest or principal is otherwise payable (or in the case of redemption, the
redemption date), then a holder of Preferred Securities may institute a Direct
Action for enforcement of payment to such holder directly of the principal of
or interest on the Subordinated Debt Securities having a principal amount
equal to the aggregate liquidation amount of the Preferred Securities of such
holder on or after the respective due date
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specified in the Subordinated Debt Securities. In connection with such Direct
Action, FCN will be subrogated to the rights of such holder of Preferred
Securities under the Declaration to the extent of any payment made by FCN to
such holder of Preferred Securities in such Direct Action. The holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Subordinated Debt Securities.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Subordinated Debt Securities will have the
right under the Indenture to declare the principal of and interest on the
Subordinated Debt Securities to be immediately due and payable. FCN and the
Trust are each required to file annually with the Institutional Trustee an
officer's certificate as to its compliance with all conditions and covenants
under the Declaration.
VOTING RIGHTS
Except as described herein and under "Description of the Preferred
Securities Guarantees--Modification of the Preferred Securities Guarantees;
Assignment" in the accompanying Prospectus, as provided under the Trust Act
and the Trust Indenture Act, and as otherwise required by law and the
Declaration, the holders of the Preferred Securities will have no voting
rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the following paragraph, the
holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Institutional Trustee, or to
direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Subordinated Debt Securities, to (i) exercise the
remedies available to it under the Indenture as a holder of the Subordinated
Debt Securities, (ii) waive any past Indenture Event of Default that is
waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Debt Securities shall
be due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or the Subordinated Debt Securities where such
consent of the holders of the Subordinated Debt Securities shall be required;
provided, however, that, where a consent or action under the Indenture would
require the consent or act of holders of more than a majority in principal
amount of the Subordinated Debt Securities (a "Super-Majority") affected
thereby, only the holders of at least such Super-Majority in aggregate
liquidation amount of the Preferred Securities may direct the Institutional
Trustee to give such consent or take such action. If the Institutional Trustee
fails to enforce its rights under the Subordinated Debt Securities after a
holder of record of Preferred Securities has made a written request, such
holder of record of Preferred Securities may institute a legal proceeding
directly against FCN to enforce the Institutional Trustee's rights under the
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of
FCN to pay interest or principal on the Subordinated Debt Securities on the
date such interest or principal is otherwise payable (or in the case of
redemption on the redemption date), then a holder of Preferred Securities may
institute a Direct Action for enforcement of payment to such holder of the
principal of or interest on the Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Subordinated Debt Securities. The Institutional Trustee shall within 90 days
notify all holders of the Preferred Securities of any notice of default
received from the Debt Trustee with respect to the Subordinated Debt
Securities. Such notice shall state that such Indenture Event of Default also
constitutes a Declaration Event of Default. Except with respect to directing
the time, method and place of conducting a proceeding for a remedy, the
Institutional Trustee shall not take any of the actions described in clauses
(i), (ii) or (iii) of the preceding paragraph unless the Institutional Trustee
has obtained an opinion of a nationally recognized tax counsel experienced in
such matters to the effect that, as a result of such action, for the purposes
of United States federal income tax the Trust will not be classified as other
than a grantor trust. The holders of a majority in aggregate outstanding
principal amount of Subordinated Debt Securities may annul any declaration of
acceleration under
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the Indenture and waive any default if the default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debt Trustee. In
the case of the Subordinated Debt Securities held by the Institutional Trustee
on behalf of the Trust, a waiver of any default shall not be effective until a
majority in liquidation amount of the Trust Securities shall have consented to
such waiver; provided that if the Indenture requires the consent of a Super-
Majority, such waiver shall only be effective if the holders of at least the
proportion in liquidation amount of the Trust Securities which the relevant
Super-Majority represents of the aggregate principal amount of the
Subordinated Debt Securities outstanding so consent.
In the event the consent of the Institutional Trustee, as the holder of the
Subordinated Debt Securities, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities
with respect to such amendment, modification or termination and shall vote
with respect to such amendment, modification or termination as directed by a
majority in liquidation amount of the Trust Securities voting together as a
single class; provided, however, that where a consent under the Indenture
would require the consent of a Super-Majority, the Institutional Trustee may
only give such consent at the direction of the holders of at least the
proportion in liquidation amount of the Trust Securities which the relevant
Super-Majority represents of the aggregate principal amount of the
Subordinated Debt Securities outstanding. The Institutional Trustee shall not
take any such action in accordance with the directions of the holders of the
Trust Securities unless the Institutional Trustee has obtained an opinion of a
nationally recognized tax counsel experienced in such matters to the effect
that for the purposes of United States federal income tax the Trust will not
be classified as other than a grantor trust on account of such action.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be
taken, to be mailed to each holder of record of Preferred Securities. Each
such notice will include a statement setting forth the following information:
(i) the date of such meeting or the date by which such action is to be taken;
(ii) a description of any resolution proposed for adoption at such meeting on
which such holders are entitled to vote or of such matter upon which written
consent is sought; and (iii) instructions for the delivery of proxies or
consents. No vote or consent of the holders of Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or distribute
Subordinated Debt Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by FCN or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, FCN, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "--Book-Entry Only Issuance--The
Depository Trust Company" below.
Holders of the Preferred Securities will have no rights to appoint or remove
the FCN Capital Trustees, who may be appointed, removed or replaced solely by
FCN as the indirect or direct holder of all of the Common Securities.
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MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees
otherwise propose to effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Trust Securities, whether by way
of amendment to the Declaration or otherwise or (ii) the dissolution, winding-
up or termination of the Trust other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities voting together as a
single class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least a majority in liquidation amount of the Trust Securities affected
thereby; provided, that, if any amendment or proposal referred to in clause
(i) above would adversely affect only the Preferred Securities or the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the Investment Company Act
of 1940, as amended (the "1940 Act").
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, the Institutional
Trustee or the Delaware Trustee consolidate, amalgamate, merge with or into,
or be replaced by a trust organized as such under the laws of any State of the
United States; provided, that (i) if the Trust is not the survivor, such
successor entity either (x) expressly assumes all of the obligations of the
Trust under the Trust Securities or (y) substitutes for the Preferred
Securities other securities having substantially the same terms as the Trust
Securities (the "Successor Securities"), so long as the Successor Securities
rank the same as the Trust Securities rank with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) FCN expressly
acknowledges a trustee of such successor entity possessing the same powers and
duties as the Institutional Trustee as the holder of the Subordinated Debt
Securities, (iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or another organization on which
the Preferred Securities are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (vi) such
successor entity has a purpose identical to that of the Trust, (vii) prior to
such merger, consolidation, amalgamation or replacement, FCN has received an
opinion of a nationally recognized independent counsel to the Trust
experienced in such matters to the effect that: (A) such merger,
consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), and (B)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an investment
company under the 1940 Act and (viii) FCN guarantees the obligations of such
successor entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee and the Common Securities
Guarantee (as described in the accompanying Prospectus). Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100
percent in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit
any other entity to consolidate, amalgamate, merge with or
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into, or replace it, if such consolidation, amalgamation, merger or
replacement would cause the Trust or the Successor Entity to be classified as
other than a grantor trust for United States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary (the
"Depositary") for the Preferred Securities. The Preferred Securities will be
issued only as fully-registered securities registered in the name of Cede &
Co. (DTC's nominee) or such other nominee as selected by DTC. One or more
fully-registered global Preferred Securities certificates, representing the
total aggregate number of Preferred Securities, will be issued and will be
deposited with DTC.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form ("Certificated
Securities"). Such laws may impair the ability to transfer beneficial
interests in the global Preferred Securities as represented by a global
certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Participants in DTC include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations ("Direct Participants") . DTC is owned by a
number of its Participants and by the New York Stock Exchange, the American
Stock Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others, such as securities
brokers and dealers, banks and trust companies that clear transactions through
or maintain a direct or indirect custodial relationship with a Direct
Participant either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the SEC.
Purchases of Preferred Securities within the DTC system must be made by or
through Participants, which will receive a credit for the Preferred Securities
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records, including Euroclear and
Cedel. Beneficial Owners will not receive written confirmation from DTC of
their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Preferred Securities. Transfers of
ownership interests in the Preferred Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in the Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities is discontinued.
Transfers between Participants will be effected in accordance with DTC's
procedures and will be settled in same-day funds. Transfers between
participants in Euroclear and Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Cross-market transfers between Participants, on the one hand, and Euroclear
participants or Cedel participants, on the other hand, will be effected in DTC
in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case
may be, by its respective depositary; however, such cross-market transactions
will require delivery of instructions to Euroclear or Cedel, as the case may
be, by the counterparty in such system in accordance with the rules and
procedures and within the established deadlines (Brussels time) of such
system. Euroclear or Cedel, as the case may be, will, if the transaction meets
its settlement requirements, deliver instructions to its respective depositary
to take action to effect final settlement on its behalf by delivering or
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receiving interests in the Preferred Securities in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Cedel participants
may not deliver instructions directly to the depositaries for Euroclear or
Cedel.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Preferred Security from a
Participant in DTC will be credited, and any such crediting will be reported
to the relevant Euroclear participant or Cedel participant, during the
securities settlement processing day (which must be a business day for
Euroclear and Cedel, as the case may be) immediately following the DTC
settlement date. Cash received in Euroclear or Cedel as a result of sales of
interests in a Preferred Security by or through a Euroclear or Cedel
participant to a Participant in DTC will be received with value on the DTC
settlement date but will be available in the relevant Euroclear or Cedel cash
account only as of the business day for Euroclear or Cedel following the DTC
settlement date.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the Preferred Securities represented
thereby for all purposes under the Declaration and the Preferred Securities.
No beneficial owner of an interest in a Global Certificate will be able to
transfer that interest except in accordance with DTC's applicable procedures,
in addition to those provided for under the Declaration.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Preferred Securities (including the presentation of
Preferred Securities for exchange as described below) only at the direction of
one or more Participants to whose account the DTC interests in the Global
Certificates are credited and only in respect of such portion of the aggregate
liquidation amount of Preferred Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event
of Default under the Preferred Securities, DTC will exchange the Global
Certificates for Certificated Securities, which it will distribute to its
Participants and which will be legended as set forth under the heading
"Notices to Investors."
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Preferred Securities held in book-entry
form will be sent to Cede & Co. If less than all of the Preferred Securities
are being redeemed, DTC will determine the amount of the interest of each
Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Preferred Securities
are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Distributions on the Preferred Securities held in book-entry form will be
made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payments on such payment date. Payments by
Participants and Indirect Participants to Beneficial Owners will be governed
by standing instructions and customary practices and will be the
responsibility of such Participants and Indirect Participants and not of DTC,
the Trust or the Company, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of distributions to DTC is the
responsibility of the Trust, disbursement of such payments to Participants is
the responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Participants and Indirect Participants.
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Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC,
DTC is under no obligation to perform or continue to perform such procedures,
and such procedures may be discontinued at any time. Neither the Company, the
Issuer nor the Trustee will have any responsibility for the performance by DTC
or its Participants or Indirect Participants under the rules and procedures
governing DTC. DTC may discontinue providing its services as securities
depositary with respect to the Preferred Securities at any time by giving
notice to the Trust. Under such circumstances, in the event that a successor
securities depositary is not obtained, Preferred Security certificates are
required to be printed and delivered. Additionally, the Trust (with the
consent of the Company) may decide to discontinue use of the system of book-
entry transfers through DTC (or a successor depositary). In that event,
certificates for the Preferred Securities will be printed and delivered. In
each of the above circumstances, the Company will appoint a paying agent with
respect to the Preferred Securities.
The information in this section concerning DTC and DTC's book entry system
has been obtained from sources that the Company and the Trust believe to be
reliable, but neither the Company nor the Trust takes responsibility for the
accuracy thereof.
PAYMENT
Payments in respect of the Preferred Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable distribution dates or, in the case of Preferred
Securities represented by Certificated Securities, such payments shall be made
by check mailed to the address of the holder entitled thereto as such address
shall appear on the Securities Register.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
The First National Bank of Chicago ("FNBC") will act as registrar, transfer
agent and paying agent for the Preferred Securities (the "Paying Agent"). FNBC
is presently located at One First National Plaza, Chicago, Illinois 60670. If
the Preferred Securities do not remain in book-entry only form, one or more
additional paying agents may be appointed if so required by any rule or
regulation of any securities exchange upon which the Preferred Securities may
be listed at such time. The Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Issuer Trustees. In the event
that FNBC shall no longer be the Paying Agent, the Institutional Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company acceptable to the Company).
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or the Company may require) in respect of any tax or
other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with respect
to the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care
as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at
the request of any holder of Preferred Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
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might be incurred thereby, provided, that, the Institutional Trustee shall not
be relieved of its obligation to exercise the rights and powers vested in it
by the Declaration following the occurrence of a Declaration Event of Default.
The Institutional Trustee also serves as trustee under the Preferred
Securities Guarantee and the Indenture. For information concerning the
relationship between the Institutional Trustee and the Company, see "FCN
Capital Trust" herein.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an
"investment company" under the 1940 Act or characterized as other than a
grantor trust for United States federal income tax purposes. FCN is authorized
and directed to conduct its affairs so that the Subordinated Debt Securities
will be treated as indebtedness of FCN for United States federal income tax
purposes. In this connection, FCN and the Regular Trustees are authorized to
take any action, not inconsistent with applicable law, the certificate of
trust of the Trust or the certificate of incorporation of FCN, that each of
FCN and the Regular Trustees determine in their discretion to be necessary or
desirable to achieve such end, as long as such action does not adversely
affect the interests of the holders of the Preferred Securities or vary the
terms thereof.
Holders of the Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Pursuant to the Preferred Securities Guarantee, FCN will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full to the
holders of the Preferred Securities issued by the Trust, the Guarantee
Payments (as defined in the accompanying Prospectus) (except to the extent
paid by the Trust), as and when due, regardless of any defense, right of set-
off or counterclaim which the Trust may have or assert. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Company to the holders of Preferred Securities or
by causing the Trust to pay such amounts to such holders. The Preferred
Securities Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Chase Manhattan Bank will act as the Preferred Securities
Guarantee Trustee under the Preferred Securities Guarantee. The terms of the
Preferred Securities Guarantee will be those set forth in such Preferred
Securities Guarantee and those made part of such Preferred Securities
Guarantee by the Trust Indenture Act. The Preferred Securities Guarantee will
be held by the Preferred Securities Guarantee Trustee for the benefit of the
holders of the Preferred Securities. A summary description of the Preferred
Securities Guarantee appears in the accompanying Prospectus under the caption
"Description of the Preferred Securities Guarantees."
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the Subordinated
Debt Securities in which the Trust will invest the proceeds from the issuance
and sale of the Trust Securities. This description supplements the description
of the general terms and provisions of the Subordinated Debt Securities set
forth in the accompanying Prospectus under the caption "Description of the
Subordinated Debt Securities." The following description does not purport to
be complete and is subject to, and is qualified in its entirety by reference
to, the description in the accompanying Prospectus and the Indenture, dated as
of January 1, 1997 (the "Base Indenture"), between FCN and The Chase Manhattan
Bank, as Trustee (the "Debt Trustee"), as supplemented by a First Supplemental
Indenture, dated as of January 31, 1997 (the Base Indenture, as so
supplemented, is hereinafter referred to as the "Indenture"), the forms of
which are filed as Exhibits to the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus form a part. Certain
capitalized terms used herein are defined in the Indenture.
FCN will have the right to liquidate the Trust and cause the Subordinated
Debt Securities to be distributed to the holders of the Trust Securities.
GENERAL
The Subordinated Debt Securities will be issued as unsecured indebtedness
under the Indenture. The Subordinated Debt Securities will be limited in
aggregate principal amount to approximately $257,732,000, such amount being
the sum of the aggregate stated liquidation of the Preferred Securities and
the Common Securities.
The Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Subordinated Debt Securities
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and
Additional Sums (as defined herein), if any, on February 1, 2027.
If Subordinated Debt Securities are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, such
Subordinated Debt Securities will initially be issued as a Global Security (as
defined herein). As described herein, Subordinated Debt Securities may be
issued in certificated form in exchange for a Global Security. See "--Book-
Entry and Settlement" below. In the event that Subordinated Debt Securities
are issued in certificated form, such Subordinated Debt Securities will be in
denominations of $1,000 and integral multiples thereof and may be transferred
or exchanged at the offices described below. Payments on Subordinated Debt
Securities issued as a Global Security will be made to DTC, a successor
depositary or, in the event that no
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depositary is used, to a Paying Agent for the Subordinated Debt Securities. In
the event Subordinated Debt Securities are issued in certificated form,
principal and interest will be payable, the transfer of the Subordinated Debt
Securities will be registrable and Subordinated Debt Securities will be
exchangeable for Subordinated Debt Securities of other denominations of a like
aggregate principal amount at the corporate trust office of (i) the
Institutional Trustee in New York, New York, (ii) FNBC in Chicago, Illinois,
or (iii) any other Paying Agent or transfer agent appointed in addition or
lieu thereof; provided, that payment of interest may be made at the option of
FCN by check mailed to the address of the holder entitled thereto or by wire
transfer to an account appropriately designated by the holder entitled
thereto. Notwithstanding the foregoing, so long as the holder of any
Subordinated Debt Securities is the Institutional Trustee, the payment of
principal and interest on the Subordinated Debt Securities held by the
Institutional Trustee will be made at such place and to such account as may be
designated by the Institutional Trustee.
Any moneys deposited with the Debt Trustee or any Paying Agent, or then held
by FCN in trust, for the payment of principal of (and premium, if any) or
interest on any Subordinated Debt Securities and remaining unclaimed for two
years after such principal (and premium, if any) or interest has become due
and payable shall, at the request of FCN, be repaid to FCN and the holder of
such Subordinated Debt Security shall thereafter look, as a general unsecured
creditor, only to FCN for payment thereof.
The Indenture does not contain provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction or other similar transaction involving FCN that may adversely
affect such holders.
SUBORDINATION
The Indenture provides that the Subordinated Debt Securities are
subordinated and junior in right of payment to all present and future Senior
Indebtedness (as defined herein and which includes both senior and
subordinated indebtedness for money borrowed) and General Obligations (as
defined herein) and rank pari passu and are equivalent to creditor obligations
of those holding general unsecured claims not entitled to statutory priority
under the United States Bankruptcy Code or otherwise. In addition, no direct
or indirect payment may be made of principal, premium, if any, or interest on
the Subordinated Debt Securities, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the Subordinated Debt
Securities, at any time when there is a default in the payment of the
principal of, premium, if any, interest on or otherwise with respect to any
Senior Indebtedness, whether at maturity or any date fixed for prepayment or
by declaration or otherwise, unless and until such default shall have been
cured or waived or shall have ceased to exist or all Senior Indebtedness shall
have been paid. Upon any distribution of assets of the Company to creditors
upon any dissolution, winding-up, liquidation or reorganization, whether
voluntary or involuntary, or in a bankruptcy, insolvency, receivership or
other proceedings, the payment of the principal of, and interest on, the
Subordinated Debt Securities will, to the extent set forth in the Indenture,
be subordinated in right of payment to the prior payment in full of all Senior
Indebtedness and General Obligations of FCN. Upon any payment or distribution
of assets to creditors upon dissolution, winding-up, liquidation,
reorganization, assignment for benefit of creditors, marshalling of assets or
any bankruptcy, insolvency or similar proceedings of FCN, the holders of all
Senior Indebtedness and the creditors in respect of all General Obligations
will first be entitled to receive payment in full of all amount due or to
become due thereon before the holders of the Subordinated Debt Securities will
be entitled to receive and retain any payments in respect of the principal of,
or interest on, the Subordinated Debt Securities. By reason of such
subordination, in the event of the insolvency of the Company, holders of
Senior Indebtedness and creditors in respect of General Obligations may
receive more, ratably, and holders of Subordinated Debt Securities having a
claim pursuant to such securities may receive less, ratably, than other
creditors of FCN.
The term "Senior Indebtedness" means, with respect to FCN, the principal of,
premium, if any, and interest on (i) all of FCN's indebtedness for money
borrowed (but excluding trade accounts payable arising in the ordinary course
of business) whether outstanding on the date of execution of the Indenture or
thereafter created,
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assumed or incurred and (ii) any deferrals, renewals or extensions of any such
Senior Indebtedness, except that Senior Indebtedness shall not include (1) any
such indebtedness that is by its terms subordinated to or ranks pari passu
with the Subordinated Debt Securities, (2) any indebtedness between or among
such obligor or its affiliates, including all other debt securities and
guarantees in respect of those debt securities, issued to any other trust, or
a trustee of such trust, partnership or other entity affiliated with FCN that
is a financing vehicle of FCN (a "financing entity") in connection with the
issuance by such financing entity of securities that rank pari passu with, or
junior to, the Trust Securities, and (3) indebtedness evidenced by securities
issued under an indenture dated as of November 15, 1996 between the Company
and The Chase Manhattan Bank, as trustee (unless such securities are by their
terms senior in right of payment to the securities heretofore issued under
said indenture). The term "indebtedness for money borrowed" as used in the
foregoing sentence shall include, 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 term "General Obligations" means all the obligations of FCN 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 Debt Securities and (iii)
obligations which by their terms are expressly stated not to be superior in
right of payment of the Subordinated Debt Securities or to rank on a parity
with the Subordinated Debt 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, establishes
or specifies criteria for the inclusion in regulatory capital of subordinated
debt of a bank holding company requiring that such subordinated debt be
subordinated to obligations to creditors in addition to those set forth above,
then the term "General Obligations" shall include such additional obligations
to creditors (excluding trade accounts payable arising in the ordinary course
of business), as from time to time in effect pursuant to such rules,
guidelines or interpretations. For purposes of this definition, "claim" shall
have the meaning assigned thereto in Section 101(4) of the Bankruptcy Code of
1978, as amended to the date of the Indenture.
The Subordinated Debt Securities will rank pari passu with the Series A
Debentures issued to the Series A Trust and the Series B Debentures issued to
the Series B Trust.
To the extent of any payments made on Senior Indebtedness and General
Obligations, the rights of the holders of the Subordinated Debt Securities
will be subrogated to the rights of holders of the Senior Indebtedness and
General Obligations of FCN until all amounts owing to the holders of the
Subordinated Debt Securities are paid in full. Such Senior Indebtedness and
General Obligations shall continue to be Senior Indebtedness and General
Obligations and be entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of such
Senior Indebtedness and General Obligations.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by FCN or the amount of General Obligations which FCN may
incur. As of September 30, 1996, Senior Indebtedness and General Obligations
of FCN aggregated approximately $5.13 billion. In addition, because FCN is a
holding company, the Subordinated Debt Securities are effectively subordinated
to all existing and future liabilities of FCN's subsidiaries, including
depositors of its banking subsidiaries.
OPTIONAL REDEMPTION
Subject to FCN having received prior approval of the Federal Reserve Board
if then required under applicable law, rules guidelines or policies of the
Federal Reserve Board, FCN shall have the right to redeem the Subordinated
Debt Securities, (i) in whole or in part, from time to time, on or after
February 1, 2007, or (ii) in whole, but not in part, at any time within 90
days following the occurrence of a Tax Event or Capital Treatment
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Event (or if the approval of the Federal Reserve Board is then required for
such redemption, on such later date as promptly as practicable after such
approval is obtained), in either case, upon not less than 30 nor more than 60
days, notice, at a redemption price equal to 100 percent of the principal
amount to be redeemed plus any accrued and unpaid interest, including
Additional Sums, if any, to the redemption date.
In the event of any redemption, neither FCN, the Debt Trustee nor any Paying
Agent shall be required to issue, register the transfer of or exchange (i)
Subordinated Debt Securities for the period beginning 15 days before the day
of selection of Subordinated Debt Securities to be redeemed and ending on the
day of the mailing of the redemption notice, or (ii) Subordinated Debt
Securities so selected for redemption, except, in the case of any Subordinated
Debt Securities being redeemed in part, any portion thereof not to be
redeemed.
INTEREST
The Subordinated Debt Securities shall bear interest at a rate per annum
equal to 3-Month LIBOR (determined in the same manner as the Distribution
Rate, as described under "Description of the Preferred Securities--
Distributions--Determination of 3-Month LIBOR") plus 0.55% (the "Interest
Rate"), from January 31, 1997, payable quarterly in arrears on February 1, May
1, August 1, and November 1 of each year, commencing May 1, 1997, to the
person in whose name such Subordinated Debt Securities is registered, subject
to certain exceptions, at the close of business on the Business Day next
preceding such Interest Payment Date. In the event the Subordinated Debt
Securities are not in book-entry only form (except if the Subordinated Debt
Securities are held by the Institutional Trustee), the record dates shall be
the January 15, April 15, July 15 and October 15 prior to the applicable
Interest Payment Date.
In the event that any interest payment date is not a Business Day, then
payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day, except that, if such Business Day is in
the next succeeding calendar year, then such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date (the date on which the interest payment is
actually payable, an "Interest Payment Date"). The period beginning on, and
including, the date of original issuance of the Subordinated Debt Securities,
and ending on, but excluding, the first Interest Payment Date, and each
successive period beginning on, and including, an Interest Payment Date, and
ending on, but excluding, the next succeeding Interest Payment Date is herein
called an "Interest Period." The amount of interest payable on the
Subordinated Debt Securities will be computed on the basis of a 360-day year
and the actual number of days in the applicable Interest Period.
The Interest Rate and the amount of interest payable in respect of each
Interest Period will be calculated by the Calculation Agent or the Debt
Trustee or any paying agent, as the case may be, in the same manner as the
Distribution Rate and Distribution Amount in respect of each Distribution
Period, as described under "Description of the Preferred Securities--
Distributions."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Indenture Event of Default has occurred and is continuing, FCN
shall have the right at any time, and from time to time, during the term of
the Subordinated Debt Securities to defer payments of interest by extending
the interest payment period for a period not exceeding 20 consecutive quarters
or extending beyond the Stated Maturity, at the end of which Extension Period,
FCN shall pay all interest then accrued and unpaid (including any Additional
Sums, as herein defined) together with interest thereon compounded quarterly
at the Interest Rate to the extent permitted by applicable law ("Compound
Interest"); provided, that during any such Extension Period, FCN shall not,
and shall not permit any subsidiary of FCN to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of FCN's capital stock or (ii) make
any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
in all respects with or junior in interest to the Subordinated Debt Securities
or make any guarantee payments with respect to any guarantee by the Company of
the debt securities of any subsidiary of the Company if such guarantee ranks
pari passu with or junior in interest to the Subordinated Debt Securities
(other than (a) dividends or distributions in common stock of FCN, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Preferred Securities Guarantee or Common Securities
Guarantee, (d) purchases of
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common stock related to the issuance of common stock or rights under any of
the Company's benefit plans for its directors, officers, or employees and
(e) obligations under any dividend reinvestment and stock purchase plan).
Prior to the termination of any such Extension Period, FCN may further defer
payments of interest by extending the interest payment period; provided,
however, that, such Extension Period, including all such previous and further
extensions, may not exceed 20 consecutive quarters or beyond the Stated
Maturity of the Subordinated Debt Securities. Upon the termination of any
Extension Period and the payment of all amounts then due, FCN may commence a
new Extension Period, subject to the terms set forth in this section. No
interest during an Extension Period, except at the end thereof, shall be due
and payable. FCN has no present intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debt Securities. If the Institutional Trustee shall be the sole
holder of the Subordinated Debt Securities, FCN shall give the Regular
Trustees and the Institutional Trustee notice of its selection of such
Extension Period at least one Business Day prior to the earlier of (i) the
date distributions on the Preferred Securities are payable or (ii) the date
the Trustees or FCN Capital Trust are required to give notice to the New York
Stock Exchange (or other applicable self-regulatory organization) or to
holders of the Preferred Securities of the record date or the date such
distribution is payable, but in any event not less than one Business Day prior
to such record date. The Regular Trustees shall give notice of FCN's selection
of such Extension Period to the holders of the Preferred Securities. If the
Institutional Trustee is not the sole holder of the Subordinated Debt
Securities, FCN shall give the holders of the Subordinated Debt Securities
notice of its selection of such Extension Period at least ten Business Days
before the earlier of (i) the next succeeding Interest Payment Date, or (ii)
the date upon which FCN is required to give notice of the record date or
payment date of such interest payment to the New York Stock Exchange (or other
applicable self-regulatory organization) or to holders of the Subordinated
Debt Securities.
ADDITIONAL SUMS
In the event a Tax Event has occurred and is continuing and the Trust shall
be required to pay any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States,
or any other taxing authority, then, in any such case, FCN will pay as
additional sums ("Additional Sums") such additional amounts as shall be
required so that the net amounts received and retained by the Trust after
paying any such taxes, duties, assessments or other governmental charges will
be not less than the amounts the Trust would have received had it not been
subject to such taxes, duties, assessments or other governmental charges as a
result of such Tax Event.
PROPOSED TAX LEGISLATION
On March 19, 1996, as part of President Clinton's Fiscal 1996 Budget
Proposal, the United States Treasury Department proposed legislation that
would, among other things, treat as equity for United States federal income
tax purposes instruments--such as the Subordinated Debt Securities--with a
maximum term of more than 20 years that are not shown as indebtedness on the
consolidated balance sheet of the issuer. If the proposed legislation were
enacted, such legislation would not be expected to apply to the Subordinated
Debt Securities because, based on statements by Congressional leaders, it is
not expected that the legislation would have a retroactive effective date.
There can be no assurances, however, that legislation enacted after the date
hereof would not adversely affect the tax treatment of the Subordinated Debt
Securities, or that such tax treatment would not cause a Tax Event resulting
in the redemption of the Preferred Securities. See "Description of the
Preferred Securities--Tax Event and Capital Treatment Event Redemption."
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Subordinated Debt Securities, will
have the right to declare the principal of and the interest on the
Subordinated Debt Securities (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Subordinated Debt Securities. See "Description of Subordinated
Debt Securities--Events of
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Default, Waiver and Notice" in the accompanying Prospectus for a description
of the Indenture Events of Default. An Indenture Event of Default also
constitutes a Declaration Event of Default. The holders of Preferred
Securities in certain circumstances have the right to direct the Institutional
Trustee to exercise its rights as the holder of the Subordinated Debt
Securities. See "Description of the Preferred Securities--Declaration Events
of Default" and "--Voting Rights." The holders of a majority in aggregate
outstanding principal amount of Subordinated Debt Securities may annul any
declaration of acceleration under the Indenture and waive any default if the
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Debt Trustee. In the case of the Subordinated Debt Securities held by
the Institutional Trustee on behalf of the Trust, a waiver of any default
shall not be effective until a majority in liquidation amount of the Trust
Securities shall have consented to such waiver; provided that if the Indenture
requires the consent of a Super-Majority, such waiver shall only be effective
if the holders of at least the proportion in liquidation amount of the Trust
Securities which the relevant Super-Majority represents of the aggregate
principal amount of the Subordinated Debt Securities outstanding so consent.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of FCN to pay
interest or principal on the Subordinated Debt Securities on the date such
interest or principal is otherwise payable, FCN acknowledges that a holder of
Preferred Securities may then institute a Direct Action for payment on or
after the respective due date specified in the Subordinated Debt Securities.
Notwithstanding any payments made to such holder of Preferred Securities by
FCN in connection with a Direct Action, FCN shall remain obligated to pay the
principal of or interest on the Subordinated Debt Securities held by the Trust
or the Institutional Trustee of the Trust, and FCN shall be subrogated to the
rights of the holder of such Preferred Securities with respect to payments on
the Preferred Securities to the extent of any payments made by the Company to
such holder in any Direct Action. The holders of Preferred Securities will not
be able to exercise directly any other remedy available to the holders of the
Subordinated Debt Securities.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Trust,
the Subordinated Debt Securities will be issued in the form of one or more
global certificates (each a "Global Security") registered in the name of the
depositary or its nominee. Except under the limited circumstances described
below, Subordinated Debt Securities represented by the Global Security will
not be exchangeable for, and will not otherwise be issuable as, Subordinated
Debt Securities in definitive form. The Global Securities described above may
not be transferred except by the depositary to a nominee of the depositary or
by a nominee of the depositary to the depositary or another nominee of the
depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Subordinated
Debt Securities in definitive form and will not be considered the holders (as
defined in the Indenture) thereof for any purpose under the Indenture, and no
Global Security representing Subordinated Debt Securities shall be
exchangeable, except for another Global Security of like denomination and
tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if such person is not a
Participant, on the procedures of the Participant through which such person
owns its interest to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Subordinated Debt Securities are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will
act as securities depositary for the Subordinated Debt Securities. For a
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description of DTC and the specific terms of the depositary arrangements, see
"Description of the Preferred Securities--Book-Entry Only Issuance--The
Depository Trust Company." As of the date of this Prospectus Supplement, the
description therein of DTC's book-entry system and DTC's practices as they
relate to purchases, transfers, notices and payments with respect to the
Preferred Securities apply in all material respects to any debt obligations
represented by one or more Global Securities held by FCN. FCN may appoint a
successor to DTC or any successor depositary in the event DTC or such
successor depositary is unable or unwilling to continue as a depositary for
the Global Securities.
None of FCN, the Trust, the Institutional Trustee, any paying agent and any
other agent of FCN, or the Debt Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a Global Security for such
Subordinated Debt Securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Subordinated Debt Securities
registered in the names of persons other than the Depositary or its nominee
only if (i) the Depositary notifies FCN that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, (ii) the Depositary, at any time, ceases to be a
clearing agency registered under the Exchange Act at which time the Depositary
is required to be so registered to act as such depositary and no successor
depositary shall have been appointed, (iii) FCN, in its sole discretion,
determines that such Global Security shall be so exchangeable or (iv) there
shall have occurred an Indenture Event of Default with respect to such
Subordinated Debt Securities. Any Global Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for Subordinated Debt
Securities registered in such names as the Depositary shall direct. It is
expected that such instructions will be based upon directions received by the
Depositary from its Participants with respect to ownership of beneficial
interests in such Global Security.
GOVERNING LAW
The Indenture and the Subordinated Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the Debt Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Subordinated Debt Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Debt Trustee is not required
to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Debt Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
The Debt Trustee also serves as the Institutional Trustee under the
Declaration and the trustee under the Preferred Securities Guarantee. For
information concerning the relationship between the Debt Trustee and the
Company, see "FCN Capital Trust" herein.
MISCELLANEOUS
The Indenture will provide that FCN will pay all fees and expenses related
to (i) the offering of the Trust Securities and the Subordinated Debt
Securities, (ii) the organization, maintenance and dissolution of the Trust,
(iii) the retention of the FCN Capital Trustees and (iv) the enforcement by
the Institutional Trustee of the rights of the holders of the Preferred
Securities. The payment of such fees and expenses will be fully and
unconditionally guaranteed by FCN.
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EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBT
SECURITIES AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets
of the Trust, and to invest the proceeds from such issuance and sale in the
Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the
following factors: (i) the aggregate principal amount of Subordinated Debt
Securities will be equal to the sum of the aggregate stated liquidation amount
of the Trust Securities; (ii) the interest rate and the interest and other
payment dates on the Subordinated Debt Securities will match the distribution
rate and distribution and other payment dates for the Preferred Securities;
(iii) FCN shall pay all, and the Trust shall not be obligated to pay, directly
or indirectly, all costs, expenses, debt, and obligations of the Trust (other
than with respect to the Trust Securities); and (iv) the Declaration further
provides that the FCN Capital Trustees shall not take or cause or permit the
Trust to, among other things, engage in any activity that is not consistent
with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor
are available) are guaranteed by FCN as and to the extent set forth under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. If FCN does not make interest payments on the Subordinated Debt
Securities purchased by the Trust, the Trust will not have sufficient funds to
pay distributions on the Preferred Securities. The Preferred Securities
Guarantee does not apply to any payment of distributions unless and until the
Trust has sufficient funds for the payment of such distributions. The
Preferred Securities Guarantee covers the payment of distributions and other
payments on the Preferred Securities if and to the extent that FCN has made a
payment of interest or principal on the Subordinated Debt Securities held by
the Trust as its sole asset. The Preferred Securities Guarantee, when taken
together with FCN's obligations under the Subordinated Debt Securities and the
Indenture and its obligations under the Declaration, including its obligations
to pay costs, expenses, debts and liabilities of the Trust (other than with
respect to the Trust Securities), provide a full and unconditional guarantee
on a subordinated basis of amounts due on the Preferred Securities.
If FCN fails to make interest or other payments on the Subordinated Debt
Securities when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using
the procedures described in "Description of the Preferred Securities--Book-
Entry Only Issuance--The Depository Trust Company" and "--Voting Rights," may
direct the Institutional Trustee to enforce its rights under the Subordinated
Debt Securities. If the Institutional Trustee fails to enforce its rights
under the Subordinated Debt Securities, a holder of Preferred Securities may
institute a legal proceeding against FCN to enforce the Institutional
Trustee's rights under the Subordinated Debt Securities without first
instituting any legal proceeding against the Institutional Trustee or any
other person or entity. Notwithstanding the foregoing, if a Declaration Event
of Default has occurred and is continuing and such event is attributable to
the failure of FCN to pay interest or principal on the Subordinated Debt
Securities on the date such interest or principal is otherwise payable (or in
the case of redemption on the redemption date), then a holder of Preferred
Securities may institute a Direct Action for payment on or after the
respective due date specified in the Subordinated Debt Securities. In
connection with such Direct Action, FCN will be subrogated to the rights of
such holder of Preferred Securities under the Declaration to the extent of any
payment made by FCN to such holder of Preferred Securities in such Direct
Action. FCN, under the Preferred Securities Guarantee, acknowledges that the
Preferred Securities Guarantee Trustee shall enforce the Preferred Securities
Guarantee on behalf of the holders of the Preferred Securities. If FCN fails
to make payments under the Preferred Securities Guarantee, any holder of
Preferred Securities may institute a Direct Action against FCN to enforce the
Preferred Guarantee Trustee's rights under the Preferred Securities Guarantee
without first instituting a legal proceeding against the Trust, the Preferred
Guarantee Trustee, or any other person or entity.
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UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of certain United States federal income tax
consequences of the purchase, ownership, and disposition of the Preferred
Securities. Unless otherwise stated, this summary deals only with Preferred
Securities held as capital assets (generally, assets held for investment) by
holders who purchase the Preferred Securities upon original issuance. The tax
treatment of a holder of Preferred Securities may vary depending on his
particular situation. This summary does not address all of the tax
consequences that may be relevant to holders who may be subject to special tax
treatment such as, for example, insurance companies, broker-dealers, tax-
exempt organizations, or, except to the extent described below, foreign
taxpayers. In addition, this summary does not address any aspects of state,
local, or foreign tax laws. This summary is based on the United States federal
income tax law in effect as of the date hereof, which is subject to change,
possibly on a retroactive basis. Each investor is urged to consult his tax
advisor as to the particular tax consequences of purchasing, owning, and
disposing of the Preferred Securities, including the application and effect of
United States federal, state, local, foreign, and other tax laws.
CLASSIFICATION OF THE SUBORDINATED DEBT SECURITIES
In connection with the issuance of the Subordinated Debt Securities,
Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel to FCN and the
Trust ("Tax Counsel"), will render an opinion generally to the effect that
under current law and assuming full compliance with the terms of the Indenture
and certain other documents, and based on certain facts and assumptions
contained in such opinion, the Subordinated Debt Securities to be held by the
Trust will be classified, for United States federal income tax purposes, as
indebtedness of FCN.
CLASSIFICATION OF FCN CAPITAL TRUST
In connection with the issuance of the Preferred Securities, Tax Counsel
will render an opinion generally to the effect that, under current law and
assuming full compliance with the terms of the Declaration, the Indenture, and
certain other documents, and based on certain facts and assumptions contained
in such opinion, the Trust will be classified, for United States federal
income tax purposes, as a grantor trust and not as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
holder of Preferred Securities will generally be treated as the owner of an
undivided interest in the Subordinated Debt Securities and, as further
discussed below, each holder will be required to include in ordinary income
his allocable share of interest (or original issue discount) paid or accrued
on the Subordinated Debt Securities.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations"), a debt
instrument will be deemed to be issued with original issued discount if there
is more that a "remote" contingency that periodic stated interest payments due
on the instrument will not be timely paid. Because the exercise by FCN of its
option to defer the payment of stated interest on the Subordinated Debt
Securities would prevent FCN from declaring dividends on any class of equity,
FCN believes that the likelihood of its exercising the option is "remote"
within the meaning of the Regulations. As a result, FCN intends to take the
position, based on the advice of Tax Counsel, that the Subordinated Debt
Securities will not be deemed to be issued with original issue discount.
Accordingly, based on this position, stated interest payments on the
Subordinated Debt Securities will be includible in the ordinary income of a
holder at the time that such payments are paid or accrued in accordance with
the holder's regular method of accounting. Because the Regulations have not
yet been addressed in any published rulings or other published interpretations
issued by the Internal Revenue Service, it is possible that the Internal
Revenue Service could take a position contrary the position taken by the
Company.
Exercise of Deferral Option. If FCN were to exercise its option to defer the
payment of stated interest on the Subordinated Debt Securities, the
Subordinated Debt Securities would be treated, solely for purpose of the
original issue discount rules, as being "re-issued" at such time with original
issue discount. Under these rules, a
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holder of the Subordinated Debt Securities would be required to include
original issue discount in ordinary income, on a current basis, over the
period that the instrument is held even though FCN would not be making any
actual cash payments during the extended interest payment period. The amount
of interest income includible in the taxable income of a holder of the
Subordinated Debt Securities would be determined on the basis of a constant
yield method over the remaining term of the instrument and the actual receipt
of future payments of stated interest on the Subordinated Debt Securities
would no longer be separately reported as taxable income. The amount of
original issue discount that would accrue, in the aggregate, during the
extended interest payment period would be approximately equal to the amount of
the cash payment due at the end of such period. Any original issue discount
included in income would increase the holder's adjusted tax basis in the
Subordinated Debt Securities and the holder's actual receipt of interest
payments would reduce such basis.
Because income on the Preferred Securities will constitute interest income
for United States federal income tax purposes, corporate holders of Preferred
Securities will not be entitled to claim a dividends received deduction in
respect of such income.
RECEIPT OF SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF FCN
CAPITAL TRUST
If FCN exercises its right to liquidate the Trust and cause the Subordinated
Debt Securities to be distributed on a pro rata basis to the holders of the
Preferred Securities, such distribution would be treated as a nontaxable event
to the holders. In such event, each holder of Preferred Securities would have
an adjusted tax basis in the Subordinated Debt Securities received in the
liquidation equal to the adjusted tax basis in his Preferred Securities
surrendered therefor and the holding period of the Subordinated Debt
Securities would include the period during which the holder had held the
Preferred Securities. If, however, the Trust is characterized, for United
States federal income tax purposes, as an association taxable as a corporation
at the time of such liquidation, the distribution of the Subordinated Debt
Securities would constitute a taxable event to the holders of Preferred
Securities.
If the Subordinated Debt Securities are redeemed for cash and the proceeds
of such redemption are distributed to holders in redemption of their Preferred
Securities, the redemption would be treated as a sale of the Preferred
Securities, in which gain or loss would be recognized, as described
immediately below.
SALES OF PREFERRED SECURITIES
Upon the sale of the Preferred Securities, a holder will recognize gain or
loss in an amount equal to the difference between adjusted tax basis in the
Preferred Securities and the amount realized in the sale (except to the extent
any amount received in respect of accrued but unpaid interest not previously
included in income). Such gain or loss will be a capital gain or loss and will
be a long term capital gain or loss if the Preferred Securities have been held
for more than one year.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest (or original issue discount
if the Subordinated Debt Securities are treated as having been issued, or
reissued, with original issue discount) with respect to the underlying
Subordinated Debt Securities. A holder who disposes of his Preferred
Securities will be required to include in ordinary income (i) any portion of
the amount realized that is attributable to such accrued but unpaid interest
to the extent not previously included in income or (ii) any amount of such
interest (original issue discount, in either case), that has accrued on his
pro rata share of the underlying Subordinated Debt Securities during the
taxable year of sale through the date of disposition. Any such income
inclusion will increase the holder's adjusted tax basis in his Preferred
Securities disposed of. To the extent that the amount realized in the sale is
less than the holder's adjusted tax basis, a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied
to offset ordinary income for United States federal income tax purposes.
S-42
<PAGE>
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the
United States, a foreign corporation, a nonresident alien individual, a
foreign partnership, or a nonresident fiduciary of a foreign estate or trust.
Payments made to a holder of a Preferred Securities who is a United States
Alien Holder will not be subject to withholding of United States federal
income tax, provided that (a) the beneficial owner of the Preferred Securities
does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of FCN entitled to vote, (b) the
beneficial owner of the Preferred Securities is not a controlled foreign
corporation that is related to FCN through stock ownership, and (c) either (A)
the beneficial owner of the Preferred Securities certifies to the Trust or its
agent, under the penalty of perjury, that it is not a United States holder and
provides his name and address or (B) a securities clearing organization, bank
or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution"), and
holds the Preferred Securities in such capacity, certifies to the Trust or its
agent, under the penalty of perjury, that such statement has been received
from the beneficial owner by it or by a Financial Institution between it and
the beneficial owner and furnishes the Trust or its agent with a copy thereof.
In addition, a United States Alien Holder of Preferred Securities will not be
subject to withholding of United States federal income tax on any gain
realized upon the sale or other disposition of a Preferred Security.
PROPOSED TAX LEGISLATION
On March 19, 1996, as part of President Clinton's Fiscal 1996 Budget
Proposal, the United States Treasury Department proposed legislation that
would, among other things, treat as equity for United States federal income
tax purposes instruments--such as the Subordinated Debt Securities--with a
maximum term of more than 20 years that are not shown as indebtedness on the
consolidated balance sheet of the issuer. If the proposed legislation were
enacted, such legislation would not be expected to apply to the Subordinated
Debt Securities because, based on statements by Congressional leaders, it is
not expected that the legislation would have a retroactive effective date.
There can be no assurances, however, that legislation enacted after the date
hereof would not adversely affect the tax treatment of the Subordinated Debt
Securities, or that such tax treatment would not cause a Trust Tax Event
resulting in the redemption of the Preferred Securities. See "Description of
the Preferred Securities--Tax Event and Capital Treatment Event Redemption."
INFORMATION REPORTING TO HOLDERS
Income on the Preferred Securities will be reported to holders on Forms
1099, which forms should be mailed to holders of Preferred Securities by
January 31 following each calendar year.
ERISA CONSIDERATIONS
Each of the Company (the obligor with respect to the Subordinated Debt
Securities held by the Trust) and its affiliates and the Institutional Trustee
may be considered a "party in interest" (within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many employee benefit plans ("Plans") that are subject to ERISA.
The purchase and/or holding of Preferred Securities by a Plan that is subject
to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Code (including individual
retirement arrangements and other plans described in Section 4975(e)(1) of the
Code) and with respect to which the Company, the Institutional Trustee or any
affiliate is a service provider (or otherwise is a party in interest or a
disqualified person) may constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code, unless such Preferred Securities are
acquired pursuant to and in accordance with an applicable exemption, such as
Prohibited Transaction Class Exemption ("PTCE") 84-14 (an exemption for
certain transactions determined by an independent qualified professional asset
manager), PTCE 91-38 (an
S-43
<PAGE>
exemption for certain transactions involving bank collective investment
funds), PTCE 90-1 (an exemption for certain transactions involving insurance
company pooled separate accounts), PTCE 95-60 (an exemption for transactions
involving certain insurance company general accounts) or PTCE 96-23 (an
exemption for certain transactions determined by an in-house asset manager).
Any purchaser or holder of the Preferred Securities or any interest therein
will be deemed to have represented by its purchase and holding thereof that
either (a) it is not a Plan or an entity whose underlying assets include "plan
assets" by reason of any Plan's investment in that entity and is not
purchasing such securities on behalf of or with "plan assets" of any Plan or
(b) it is eligible for the exemptive relief available under PTCE 96-23, 95-60
91-38, 90-1 or 84-14 with respect to such purchase or holding.
In addition, a Plan fiduciary considering the purchase of Preferred
Securities should be aware that the assets of the Trust may be considered
"plan assets" for ERISA purposes unless the Preferred Securities meet the
conditions for the "publicly offered securities" exception from the "plan
asset" rules under ERISA. These conditions include, but are not limited to,
investment in the Preferred Securities by more than 100 investors independent
of the Company and each other.
In the event that the "publicly offered securities" exception were not
available and the assets of the FCN Capital Trust were, accordingly, deemed to
be "plan assets" of Plans that are holders of the Preferred Securities, the
Institutional Trustee, as well as any other persons exercising discretion with
respect to the Subordinated Debt Securities, would be fiduciaries and parties
in interest with respect to the investing Plans. To avoid certain additional
prohibited transactions under ERISA and the Code that could thereby result,
each investing Plan, by purchasing the Preferred Securities, will be deemed to
have directed the Trust to invest in the Subordinated Debt Securities and to
have appointed the Institutional Trustee. In this regard, it should be noted
that, in the event of a Declaration Event of Default, the Company may not
remove the Institutional Trustee. Any purchaser proposing to acquire Preferred
Securities with assets of any Plan should consult with its counsel.
S-44
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), FCN Capital Trust has agreed to sell to each
of the Underwriters named below, and each of the Underwriters has severally
agreed to purchase the number of Preferred Securities set forth opposite its
name below. In the Underwriting Agreement, the several Underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
the Preferred Securities offered hereby if any of the Preferred Securities are
purchased. In the event of default by an Underwriter, the Underwriting
Agreement provides that, in certain circumstances, the purchase commitments of
the non-defaulting Underwriters may be increased or the Underwriting Agreement
may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS PREFERRED SECURITIES
------------ --------------------
<S> <C>
Lehman Brothers Inc. ................................... 62,500
First Chicago Capital Markets, Inc. .................... 62,500
Credit Suisse First Boston Corporation.................. 62,500
Salomon Brothers Inc.................................... 62,500
-------
Total................................................. 250,000
=======
</TABLE>
The Underwriters propose to offer the Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and, in part, to certain securities
dealers at such price less a concession of $6.00 per Preferred Security. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $4.00 per Preferred Security to certain brokers and dealers. After
the Preferred Securities are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Underwriters.
In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used to purchase the Subordinated Debt
Securities of FCN, the Underwriting Agreement provides that FCN will pay as
compensation ("Underwriters' Compensation") to the Underwriters arranging the
investment therein of such proceeds, an amount in immediately available funds
of $10.00 per Preferred Security (or $2,500,000 in the aggregate) for the
accounts of the several Underwriters.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Preferred Securities offered hereby as interests in a
direct participation program, the offering is being made in compliance with
Rule 2810 of the NASD's Conduct Rules. Offers and sales of Preferred
Securities will be made only to (i) "qualified institutional buyers", as
defined in Rule 144A under the Securities Act of 1933, as amended (the "Act");
(ii) institutional "accredited investors", as defined in Rule 501(a)(1)-(3) of
Regulation D under the Act or (iii) individual investors for whom an
investment in non-convertible investment grade preferred securities is
appropriate. The Underwriters may not confirm sales to any accounts over which
they exercise discretionary authority without the prior written approval of
the transaction by the customer.
During the period from the date of the Underwriting Agreement and continuing
to and including the closing date for the Preferred Securities, neither FCN
Capital Trust nor FCN will, without the prior written consent of the
Underwriters, directly or indirectly, sell, offer to sell, or otherwise
dispose of, any Preferred Securities, any other beneficial interests in the
assets of the Trust, or any preferred securities or any other securities of
the Trust or FCN which are substantially similar to the Preferred Securities,
including any guarantee of such securities (except for the Preferred
Securities offered hereby).
Each Underwriter has agreed that (a) it has not offered or sold and prior to
the date six months after the date of issue of the Preferred Securities will
not offer or sell any Preferred Securities to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the
S-45
<PAGE>
Public Offers of Securities Regulations 1995, (b) it has complied, and will
comply with, all applicable provisions of the Financial Services Act of 1986
of Great Britain with respect to anything done by it in relation to the
Preferred Securities in, from or otherwise involving the United Kingdom, and
(c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issuance of
the Preferred Securities to a person who is of a kind described in Article
11(3) of the Financial Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1995 of Great Britain or is a person to whom the document
may otherwise lawfully be issued or passed on.
A portion of the Preferred Securities will be offered by the Underwriters
specified herein directly or through their representative selling agents
outside the United States. Investors may elect to hold beneficial interests in
the Preferred Securities through either DTC (in the United States), Cedel or
Euroclear (outside the United States), if they are participants of such
systems, or indirectly through organizations which are participants in such
systems.
Prior to this offering there has been no public market for the Preferred
Securities. FCN Capital Trust does not intend to apply for listing of the
Preferred Securities on a national securities exchange. The Underwriters have
advised FCN Capital Trust that they intend to make a market in the Preferred
Securities. The Underwriters will have no obligation to make a market in the
Preferred Securities, however, and may cease market making activities, if
commenced, at any time.
FCN Capital Trust and FCN have agreed to indemnify the Underwriters against,
or contribute to payments that the Underwriters may be required to make in
respect of, certain liabilities, including liabilities under the Securities
Act of 1933, as amended.
One of the Underwriters, First Chicago Capital Markets, Inc. ("FCCM"), is a
wholly owned subsidiary of the Company.
This Prospectus Supplement and the accompanying Prospectus may be used by
FCCM in connection with offers and sales related to secondary market
transactions in the Preferred Securities. FCCM may act as principal or agent
in such transactions. Such sales will be made at prices related to the
prevailing market prices at the time of sale or otherwise.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, FCN and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Declaration and the creation the Trust
will be passed upon by Skadden, Arps, Slate, Meagher & Flom (Delaware) special
Delaware counsel to the Company and the Trust. The validity of the
Subordinated Debt Securities and the Preferred Securities Guarantee and
certain matters relating thereto will be passed upon for FCN by Sherman I.
Goldberg, Esq., Executive Vice President, General Counsel and Secretary of FCN
and for the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP. Certain
United States federal income taxation matters will be passed upon for FCN and
the Trust by Skadden, Arps, Slate, Meagher & Flom LLP. As of December 31,
1996, Sherman I. Goldberg was the record and beneficial owner of 222,249
shares of common stock of FCN and had options to purchase 207,898 shares of
common stock of FCN.
S-46
<PAGE>
PROSPECTUS
FIRST CHICAGO NBD CORPORATION
SUBORDINATED DEBT SECURITIES
---------------
FIRST CHICAGO NBD CAPITAL I
FIRST CHICAGO NBD CAPITAL II
FIRST CHICAGO NBD CAPITAL III
FIRST CHICAGO NBD CAPITAL IV
PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
FIRST CHICAGO NBD CORPORATION
---------------
First Chicago NBD Corporation ("FCN" or the "Company"), a Delaware
corporation, may from time to time offer its subordinated debentures, notes or
other evidence of indebtedness (the "Subordinated Debt Securities") in one or
more series and in amounts, at prices and on terms to be determined at the
time of the offering. The Subordinated Debt Securities when issued will be
unsecured obligations of the Company. The Company's obligations under the
Subordinated Debt Securities will be subordinate and junior in right of
payment to certain other indebtedness, as may be described in an accompanying
Prospectus Supplement (the "Prospectus Supplement").
First Chicago NBD Capital I, First Chicago NBD Capital II, First Chicago NBD
Capital III and First Chicago NBD Capital IV (each, an "FCN Capital Trust"),
each a statutory business trust formed under the laws of the State of
Delaware, may offer, from time to time, preferred securities, representing
undivided beneficial interests in the assets of the respective FCN Capital
Trust ("Preferred Securities"). The payment of periodic cash distributions
("distributions") with respect to Preferred Securities of each of the FCN
Capital Trusts out of moneys held by each of the FCN Capital Trusts, and
payments on liquidation, redemption or otherwise with respect to such
Preferred Securities, will be guaranteed by FCN to the extent described herein
(each a "Preferred Securities Guarantee"). See "Description of the Preferred
Securities Guarantees" below. FCN's obligations under the Preferred Securities
Guarantees are subordinate and junior in right of payment to certain other
indebtedness of FCN, as may be described in the Prospectus Supplement.
Subordinated Debt Securities may be issued and sold from time to time in one
or more series to a FCN Capital Trust, or a trustee of such FCN Capital Trust,
in connection with the investment of the proceeds from the offering of
Preferred Securities and Common Securities (as defined herein, together the
"Trust Securities") of such FCN Capital Trust. The Subordinated Debt
Securities purchased by an FCN Capital Trust may be subsequently distributed
pro rata to holders of Preferred Securities and Common Securities in
connection with the dissolution of such FCN Capital Trust as may be described
in an accompanying Prospectus Supplement. The Subordinated Debt Securities and
the Preferred Securities and the related Preferred Securities Guarantees are
sometimes collectively referred to hereafter as the "Offered Securities."
Specific terms of the Subordinated Debt Securities of any series or the
Preferred Securities of any FCN Capital Trust, the terms of which will mirror
the terms of the Subordinated Debt Securities held by the FCN Capital Trust,
in respect of which this prospectus (the "Prospectus") is being delivered will
be set forth in a Prospectus Supplement with respect to such securities, which
will describe, without limitation and where applicable, the following: (i) in
the case of Subordinated Debt Securities, the specific designation, aggregate
principal amount, denomination, maturity, premium, if any, any exchange,
redemption or sinking fund provisions, if any, interest rate (which may be
fixed or variable), if any, the time and method of calculating interest
payments, if any, dates on which premium, if any, and interest, if any, will
be payable, the right of FCN, if any, to defer payment of interest on the
Subordinated Debt Securities and the maximum length of such deferral period,
the initial public offering price, subordination terms, and any listing on a
securities exchange and other specific terms of the offering; and (ii) in the
case of Preferred Securities, the designation, number of securities,
liquidation preference per security, initial public offering price, any
listing on a securities exchange, distribution rate (or method of calculation
thereof), dates on which distributions shall be payable and dates from which
distributions shall accrue, any voting rights, terms for any exchange into
other securities, any redemption, exchange or sinking fund provisions, any
other rights, preferences, privileges, limitations or restrictions relating to
the Preferred Securities and the terms upon which the proceeds of the sale of
the Preferred Securities shall be used to purchase a specific series of
Subordinated Debt Securities of FCN. If so specified in the applicable
Prospectus Supplement, Offered Securities may be issued in whole or in part in
the form of one or more temporary or permanent global securities.___ (Continued
on next page)
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
The date of this Prospectus is January 22, 1997
<PAGE>
If as set forth in the applicable Prospectus Supplement, the Corporation has
the right to defer payments of interest on a series of Subordinated Debt
Securities by extending the interest payment period of such series of
Subordinated Debt Securities, distributions on the corresponding series of
Preferred Securities will also be deferred.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering. The Prospectus Supplement relating to
any series of Offered Securities will contain information concerning the
United States federal income tax considerations applicable to purchasers of
the Offered Securities.
FCN and/or each of the FCN Capital Trusts may sell the Offered Securities
directly, through agents designated from time to time, or through underwriters
or dealers. See "Plan of Distribution" below. If any agents of FCN and/or any
FCN Capital Trust or any underwriters or dealers are involved in the sale of
the Offered Securities, the names of such agents, underwriters or dealers and
any applicable commissions and discounts will be set forth in any related
Prospectus Supplement.
This Prospectus and the related Prospectus Supplement may be used by direct
or indirect subsidiaries of FCN in connection with offers and sales related to
secondary market transactions in the Offered Securities. Such subsidiaries may
act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale.
This Prospectus may not be used to consummate sales of securities unless
accompanied by a Prospectus Supplement.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS OR ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY FCN, ANY
FCN CAPITAL TRUST OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS
OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF FCN OR ANY FCN CAPITAL TRUST SINCE THE DATE
HEREOF. THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT DOES NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
----------------
IN CONNECTION WITH THE OFFERING OF CERTAIN OF THE OFFERED SECURITIES, THE
UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
THE MARKET PRICES OF SUCH OFFERED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE>
AVAILABLE INFORMATION
This Prospectus constitutes a part of a combined Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by FCN and the FCN Capital Trusts with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Offered Securities. This
Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC, although it does include a summary of
the material terms of the Indenture and the Declaration of Trust (each as
defined herein). Reference is made to such Registration Statement and to the
exhibits thereto for further information with respect to the Company, the FCN
Capital Trusts and the Offered Securities. Any statements contained herein
concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the SEC or incorporated by
reference herein are not necessarily complete, and, in each instance,
reference is made to the copy of such document so filed for a more complete
description of the matter involved. Each such statement is qualified in its
entirety by such reference.
FCN is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith
files reports, proxy statements and other information with the SEC. Reports,
proxy statements and other information concerning FCN can be inspected and
copied at prescribed rates at the SEC's Public Reference Room, Judiciary
Plaza, 450 Fifth Street, Northwest, Washington, D.C. 20549, as well as the
following Regional Offices of the SEC: Seven World Trade Center, New York, New
York 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may be obtained by mail from the SEC's Public
Reference Section at prescribed rates. If available, such reports and other
information may also be accessed through the SEC's electronic data gathering,
analysis and retrieval system ("EDGAR") via electronic means, including the
SEC's home page on the Internet (http://www.sec.gov). Such reports, proxy
statements and other information may also be inspected at the offices of the
following stock exchanges on which certain of the Company's securities are
listed: the New York Stock Exchange, 20 Broad Street, New York, New York; the
Pacific Stock Exchange, 301 Pine Street, San Francisco, California; and the
Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois.
No separate financial statements of any of the FCN Capital Trusts have been
included herein. FCN does not consider that such financial statements would be
material to holders of the Preferred Securities because (i) all of the voting
securities of each of the FCN Capital Trusts will be owned, directly or
indirectly, by FCN, a reporting company under the Exchange Act, (ii) each of
the FCN Capital Trusts has no independent operations but exists for the sole
purpose of issuing securities representing undivided beneficial interests in
the assets of such FCN Capital Trust and investing the proceeds thereof in
Subordinated Debt Securities issued by FCN, and (iii) FCN's obligations
described herein and in any accompanying Prospectus Supplement to provide
certain indemnities in respect of and be responsible for certain costs,
expenses, debts and liabilities of each of the FCN Capital Trusts under the
Indenture and any supplemental indenture thereto and pursuant to the
Declarations of each Trust, the guarantee issued with respect to Preferred
Securities issued by that Trust, the Subordinated Debt Securities purchased by
that Trust and the related Indenture, taken together, constitute a full and
unconditional guarantee of payments due on the Preferred Securities. See
"Description of the Subordinated Debt Securities" and "Description of the
Preferred Securities Guarantees."
The FCN Capital Trusts are not currently subject to the information
reporting requirements of the Exchange Act. The FCN Capital Trusts will become
subject to such requirements upon the effectiveness of the Registration
Statement, although they intend to seek and expect to receive exemptions
therefrom.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the SEC pursuant to Section
13 of the Exchange Act are incorporated by reference in this Prospectus:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(b) the Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996; and
(c) 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, July 15,
1996, October 15, 1996, January 13, 1997 and January 15, 1997.
All documents filed by FCN pursuant to Sections 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 Offered Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in this Prospectus or
in a document incorporated or deemed to be incorporated by reference herein or
in any Prospectus Supplement shall be deemed to be modified or superseded for
purposes of this Prospectus or any Prospectus Supplement to the extent that a
statement contained herein or therein (or in any subsequently filed document
that also is or is deemed to be incorporated by reference herein or therein)
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus or any Prospectus Supplement.
FCN will provide without charge to each person to whom a copy of this
Prospectus has been delivered, upon the written or oral request of such person,
a copy of any or all of the documents referred to above which have been or may
be incorporated by reference herein (other than exhibits to such documents
unless such exhibits are specifically incorporated by reference in such
documents). Requests for such copies should be directed to First Chicago NBD
Corporation, One First National Plaza, Chicago, Illinois 60670, Attention:
Investor Relations (312) 732-4812.
4
<PAGE>
FIRST CHICAGO NBD CORPORATION
GENERAL
The Company is a multi-bank holding company registered under the Bank
Holding Company Act, as amended, which was incorporated under the laws of the
State of Delaware in 1972. The Company is the surviving corporation resulting
from the merger, effective December 1, 1995, of First Chicago Corporation, a
Delaware corporation and registered bank holding company, with and into NBD
Bancorp, Inc., a Delaware corporation and registered bank holding company.
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), American National Bank and Trust Company of Chicago ("ANB"),
FCC National Bank ("FCCNB") and NBD Bank, N.A. (Indiana) ("NBD Indiana").
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 is a legal entity separate and distinct from the Company's
banking subsidiaries (the "Banks") and the Company's other affiliates. There
are various legal limitations on the extent to which the Company's Banks may
extend credit, pay dividends or otherwise supply funds to the Company.
Dividend payments by national banks such as FNBC, ANB, NBD Indiana and FCCNB
are limited to the lesser of (i) the level of "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 such dividends would, in light of the financial
condition of such bank, constitute an unsafe or unsound practice. In addition,
there are numerous other governmental requirements and regulations that affect
the activities of the Company and its bank and non-bank subsidiaries.
Under the longstanding policy of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), a bank holding company is
expected to act as a source of financial strength for its subsidiary banks and
to commit resources to support such banks. As a result of this policy, the
Company may be required to commit resources to the Banks in circumstances
where it might not otherwise do so.
Because the Company is a holding company, its rights and the rights of its
creditors, including the holders of the Subordinated Debt Securities and the
Preferred Securities Guarantees, to participate in the distribution and
payment of assets of any subsidiary upon the subsidiary's liquidation or
recapitalization would be subject to the prior claims of 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.
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 SEC) 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.
5
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<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS
------------------------ ENDED SEPTEMBER 30,
1995 1994 1993 1992 1991 1996
---- ---- ---- ---- ---- -------------------
<S> <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 2.1x
Including interest expense on
deposits....................... 1.4x 1.6x 1.8x 1.1x 1.1x 1.5x
</TABLE>
THE TRUSTS
Each of First Chicago NBD Capital I, First Chicago NBD Capital II, First
Chicago NBD Capital III and First Chicago NBD Capital IV is a statutory
business trust formed under Delaware law pursuant to (i) a separate
declaration of trust (each a "Declaration") executed by the Company, as
sponsor for such trust (the "Sponsor"), and the FCN Capital Trustees (as
defined herein) for such trust and (ii) the filing of a certificate of trust
with the Delaware Secretary of State. Each FCN Capital Trust exists for the
exclusive purposes of (i) issuing the Preferred Securities and common
securities representing undivided beneficial interests in the assets of such
Trust (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities"), (ii) investing the gross proceeds of the Trust
Securities in the Subordinated Debt Securities, and (iii) engaging in only
those other activities necessary or incidental thereto. All of the Common
Securities will be directly or indirectly owned by the Company. The Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Preferred Securities except that upon an event of default under the
Declaration, the rights of the holders of the Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. The Company will, directly or indirectly, acquire Common
Securities in an aggregate liquidation amount equal to 3 percent of the total
capital of each FCN Capital Trust. Each FCN Capital Trust has a term of
approximately 55 years, but may earlier terminate as provided in the
Declaration. Each FCN Capital Trust's business and affairs will be conducted
by the trustees (the "FCN Capital Trustees") appointed by the Company, as the
direct or indirect holder of all the Common Securities. The holder of the
Common Securities will be entitled to appoint, remove or replace any of, or
increase or reduce the number of, the FCN Capital Trustees of a FCN Capital
Trust. The duties and obligations of the FCN Capital Trustees shall be
governed by the Declaration of such FCN Capital Trust. Each FCN Capital Trust
will have one or more FCN Capital Trustees who are employees or officers of or
affiliated with the Company (the "Regular Trustees"). One FCN Capital Trustee
of each FCN Capital Trust will be a financial institution which will be
unaffiliated with the Company and which shall act as property trustee and as
indenture trustee for purposes of the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), pursuant to the terms set forth in a Prospectus
Supplement (the "Institutional Trustee"). In addition, unless the
Institutional Trustee maintains a principal place of business in the State of
Delaware, and otherwise meets the requirements of applicable law, one FCN
Capital Trustee of each FCN Capital Trust will have its principal place of
business or reside in the State of Delaware (the "Delaware Trustee"). The
Company will pay all fees and expenses related to the FCN Capital Trusts and
the offering of Trust Securities, the payment of which will be guaranteed by
the Company. No amendment or modification may be made to the Declaration which
would adversely affect the powers, preferences or special rights of the Trust
Securities without the approval in majority in liquidation amount of the Trust
Securities. If any such amendment or modification would adversely affect only
the Preferred Securities or the Common Securities, then only the affected
class will be entitled to vote on such amendment or modification and such
amendment or modification shall not be effective except with the approval of a
majority in liquidation amount of such class of Trust Securities.
Chase Manhattan Bank Delaware will be the Delaware Trustee. The Delaware
Trustee serves in a similar capacity under declarations of trust for two other
statutory business trusts formed under Delaware law and sponsored by the
Company. In addition, the Delaware Trustee serves as trustee for senior debt
securities of the Company issued under an Indenture originally dated as of
April 1, 1986. The office of the Delaware Trustee for each FCN Capital Trust
in the State of Delaware is 1201 Market Street, Wilmington, Delaware 19801.
The principal place of business of each FCN Capital Trust shall be c/o First
Chicago NBD Corporation, One First National Plaza, Chicago, Illinois 60670.
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<PAGE>
USE OF PROCEEDS
Each FCN Capital Trust will use all proceeds received from the sale of the
Preferred Securities to purchase Subordinated Debt Securities from FCN. FCN
intends to use the net proceeds from the sale of the Subordinated Debt
Securities for general corporate purposes, including the funding of
investments in, or extensions of credit to, the Company's subsidiaries. Except
as described in the applicable Prospectus Supplement, specific allocations of
the proceeds to such purposes have not been made, although FCN management will
have determined at the date of the applicable Prospectus Supplement that funds
should be borrowed at that time. Pending the uses described above, the Company
may temporarily invest the net proceeds in various short-term securities or
apply the net proceeds to reduce short-term indebtedness. Based upon the
historic and anticipated future growth of the Company and the financial needs
of its subsidiaries, FCN anticipates that it will, on a recurrent basis,
engage in additional financings in character and amount to be determined.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Subordinated Debt Securities may be issued from time to time in one or more
series under an Indenture (the "Indenture"), between the Company and The Chase
Manhattan Bank, as Trustee (the "Debt Trustee"). The terms of the Subordinated
Debt Securities will include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act. The following
summary of the material terms does not purport to be complete and is subject
in all respects to the provisions of, and is qualified in its entirety by
reference to, the Indenture, which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and the Trust Indenture Act.
Whenever particular provisions or defined terms in the Indenture are referred
to herein, such provisions or defined terms are incorporated by reference
herein.
GENERAL
The Subordinated Debt Securities will be unsecured, subordinated obligations
of the Company. The Indenture does not limit the aggregate principal amount of
Subordinated Debt Securities which may be issued thereunder and provides that
the Subordinated Debt Securities may be issued from time to time in one or
more series. The Subordinated Debt Securities are issuable in one or more
series pursuant to an indenture supplemental to the Indenture or a resolution
of the Company's Board of Directors or a committee appointed thereby (each, a
"Supplemental Indenture").
In the event Subordinated Debt Securities are issued to an FCN Capital Trust
or a trustee of such trust in connection with the issuance of Trust Securities
by such FCN Capital Trust, such Subordinated Debt Securities subsequently may
be distributed pro rata to the holders of such Trust Securities in connection
with the dissolution of such FCN Capital Trust as described in the Prospectus
Supplement relating to such Trust Securities. Only one series of Subordinated
Debt Securities will be issued to a FCN Capital Trust or a trustee of such
trust in connection with the issuance of Trust Securities by such FCN Capital
Trust.
Reference is made to the Prospectus Supplement relating to the particular
Subordinated Debt Securities being offered thereby for the following terms:
(1) the specific designation of such Subordinated Debt Securities; (2) the
aggregate principal amount of such Subordinated Debt Securities; (3) the
percentage of their principal amount at which such Subordinated Debt
Securities will be issued; (4) the date or dates on which the principal of and
premium, if any, on such Subordinated Debt Securities will be payable and the
right, if any, to extend such date or dates; (5) the rate or rates (which may
be fixed or variable), if any, per annum, at which such Subordinated Debt
Securities will bear interest, or the method of determination of such rate or
rates; (6) the date or dates from which such interest shall accrue, the
interest payment dates on which such interest will be payable or the manner of
determination of such interest payment dates and the record dates for the
determination of holders to whom interest is payable on any such interest
payment dates; (7) the right, if any, to extend the interest payment periods
and the duration of such extension; (8) the period or periods, if any, within
which, the price or prices of which, and the terms and conditions upon which
such Subordinated Debt Securities may be redeemed,
7
<PAGE>
in whole or in part; (9) the right and/or obligation, if any, of FCN to redeem
or purchase such Subordinated Debt Securities pursuant to any sinking fund or
analogous provisions or at the option at the holder thereof and the period or
periods for which, the price or prices at which, and the terms and conditions
upon which, such Subordinated Debt Securities shall be redeemed or
repurchased, in whole or in part, pursuant to such right and/or obligation;
(10) the terms and conditions, if any, upon which the Subordinated Debt
Securities may be converted into shares of the common stock of FCN, including
the conversion price and the circumstances, if any, under which such
conversion price and the circumstances, if any, under which such conversion
right shall expire; (11) the terms of subordination; (12) the form of such
Subordinated Debt Securities; and (13) any other specific terms of the
Subordinated Debt Securities.
If a Prospectus Supplement specifies that a series of Subordinated Debt
Securities is denominated in a currency or currency unit other than United
States dollars, such Prospectus Supplement shall also specify the denomination
in which such Subordinated Debt Securities will be issued and the coin or
currency in which the principal, premium, if any, and interest, if any, on
such Subordinated Debt Securities will be payable, which may be United States
dollars based upon the exchange rate for such other currency or currency unit
existing on or about the time a payment is due.
The Indenture does not contain provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction or other similar transaction involving FCN that may adversely
affect such holders.
FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Subordinated Debt Securities will be issued in fully registered form without
coupons and in denominations of $1,000 and multiples of $1,000. No service
charge will be made for any transfer or exchange of the Subordinated Debt
Securities, but the Company or the Debt Trustee may require payment of a sum
sufficient to cover any tax or other government charge payable in connection
therewith.
Unless otherwise provided in the applicable Prospectus Supplement, principal
and premium, if any, or interest, if any, will be payable and the Subordinated
Debt Securities may be surrendered for payment or transferred at the offices
of the Debt Trustee as paying and authenticating agent, provided that payment
of interest, if any, may be made at the option of the Company (i) by check
mailed to the address of the person entitled thereto as it appears in the
Security Register or (ii) by wire transfer to an account maintained by the
person entitled thereto as specified in the applicable Security Register.
BOOK-ENTRY SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities of a series may be issued in whole or in
part in the form of one or more Global Securities that will be deposited with,
or on behalf of, a depositary (the "Global Depositary"), or its nominee,
identified in the Prospectus Supplement relating to such series. In such a
case, one or more Global Securities will be issued in a denomination or
aggregate denomination equal to the portion of the aggregate principal amount
of Outstanding Subordinated Debt Securities of the series to be represented by
such Global Security or Securities. Unless and until it is exchanged in whole
or in part for Subordinated Debt Securities in definitive registered form, a
Global Security may not be registered for transfer or exchange except as a
whole by the Global Depositary for such Global Security to a nominee for such
Global Depositary and except in the circumstances described in the applicable
Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Subordinated Debt Securities to be represented by a Global
Security and a description of the Global Depositary will be provided in the
applicable Prospectus Supplement.
8
<PAGE>
SUBORDINATION
The Subordinated Debt Securities will be subordinated and junior in right of
payment to certain other indebtedness of the Company (which may include both
senior and subordinated indebtedness for money borrowed) to the extent set
forth in the applicable Prospectus Supplement.
CERTAIN COVENANTS OF THE COMPANY
The Company has covenanted, that it will not, and will not permit any
subsidiary of the Company to,(i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect
to, any of FCN's capital stock or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior
in interest to the Subordinated Debt Securities or make any guarantee payments
with respect to any guarantee by the Company of the debt securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior in
interest to the Subordinated Debt Securities (other than (a) dividends or
distributions in common stock of FCN, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Preferred Securities Guarantee or Common Securities Guarantee relating to
Trust Securities issued by the FCN Capital Trust holding the Subordinated Debt
Securities, (d) purchases of common stock related to the issuance of common
stock or rights under any of the Company's benefit plans for its directors,
officers or employees and (e) obligations under any dividend reinvestment and
stock purchase plan), if at such time (i) there shall have occurred any event
of which the Company has actual knowledge that (a) with the giving of notice
or the lapse of time, or both, would constitute an "Event of Default" under
the Indenture with respect to the Subordinated Debt Securities of such series
and (b) in respect of which the Company shall not have taken reasonable steps
to cure, (ii) if such Subordinated Debt Securities are held by an FCN Capital
Trust, the Company shall be in default with respect to its payment of any
obligations under the Preferred Securities Guarantee or Common Securities
Guarantee relating to such FCN Capital Trust or (iii) the Company shall have
given notice of its election to defer payments of interest on such
Subordinated Debt Securities by extending the interest payment period as
provided in the Indenture with respect to the Subordinated Debt Securities and
shall not have rescinded such notice, or such period, or any extension
thereof, shall be continuing.
In the event Subordinated Debt Securities are issued to an FCN Capital Trust
or a trustee of such trust in connection with the issuance of Trust Securities
of such FCN Capital Trust, for so long as such Trust Securities remain
outstanding, the Company will covenant (i) to maintain directly or indirectly
100% ownership of the Common Securities of such FCN Capital Trust, provided
that certain successors which are permitted pursuant to the Indenture may
succeed to the Company's ownership of the Common Securities, (ii) as holder of
the Common Securities, not to voluntarily terminate, wind-up or liquidate such
FCN Capital Trust, except upon prior approval of the Federal Reserve Board if
then required under applicable capital guidelines or policies of the Federal
Reserve Board and (a) in connection with a distribution of Subordinated Debt
Securities to the holders of the Trust Securities in liquidation of the FCN
Capital Trust or (b) in connection with certain mergers consolidations or
amalgamations permitted by the Declaration of such FCN Capital Trust and (iii)
to use its reasonable efforts, consistent with the terms and provisions of the
Declaration of such FCN Capital Trust to cause such FCN Capital Trust to
remain classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes.
LIMITATION ON MERGERS AND SALES OF ASSETS
The Company shall not consolidate with, or merge into, any corporation or
convey or transfer its properties and assets substantially as an entirety to
any Person unless (a) the successor entity shall expressly assume the
obligations of the Company under the Indenture and (b) after giving effect
thereto, no Event of Default, and no event which, after notice or lapse of
time, or both, would become an Event of Default, shall have occurred and be
continuing under the Indenture.
9
<PAGE>
EVENTS OF DEFAULT, WAIVER AND NOTICE
The Indenture provides that any one or more of the following described
events which has occurred and is continuing constitutes an "Event of Default"
with respect to each series of Subordinated Debt Securities:
(a) default for 30 days in payment of any interest on the Subordinated
Debt Securities of that series, when due; provided, however, that a valid
extension of the interest payment period by the Company shall not
constitute a default in the payment of interest for this purpose; or
(b) default in payment of principal and premium, if any, on the
Subordinated Debt Securities of that series when due either at maturity,
upon redemption, by declaration or otherwise; provided, however, that a
valid extension of the maturity of such Subordinated Debt Securities shall
not constitute a default for this purpose; or
(c) default by the Company in the performance, or breach, in any material
respect of any other of the covenants or agreements in the Indenture which
shall not have been remedied for a period of 90 days after notice; or
(d) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(e) any other Event of Default provided with respect to a particular
series of Subordinated Debt Securities as described in the related
Prospectus Supplement.
The Indenture provides that the Debt Trustee may withhold notice to the
holders of a series of Subordinated Debt Securities (except in payment of
principal or of interest or premium on the Subordinated Debt Securities) if
the Trustee considers it in the interest of such holders to do so.
The Indenture provides that if an Event of Default with respect to any
series of Subordinated Debt Securities shall have occurred and be continuing,
either the Debt Trustee or the holders of 25 percent in principal amount of
the Subordinated Debt Securities of such series affected thereby then
outstanding may declare the principal of all such Subordinated Debt Securities
of such series to be due and payable immediately, but upon certain conditions
such declarations may be annulled and past defaults may be waived (except
defaults in payment of principal of or interest or premium, if any, on the
Subordinated Debt Securities) by the holders of a majority in principal amount
of the Subordinated Debt Securities of such series then outstanding.
The holders of a majority in principal amount of the Subordinated Debt
Securities of any series affected and then outstanding shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debt Trustee under the Indenture with respect to such series,
provided that the holders of the Subordinated Debt Securities shall have
offered to the Debt Trustee reasonable indemnity against expenses and
liabilities. The Indenture also provides that notwithstanding any other
provision of the Indenture, the holder of any Subordinated Debt 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
Debt Security on the Stated Maturity (as defined in the Indenture) or upon
repayment or redemption of such Subordinated Debt Security and that such right
shall not be impaired without the consent of such holder. The Indenture
requires the annual filing by the Company with the Debt Trustee of a
certificate as to the absence of certain defaults under the Indenture.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Debt
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Subordinated Debt Securities of all series affected by
such modification at the time outstanding, to modify the Indenture or any
Supplemental Indenture or the rights of the holders of the Subordinated Debt
Securities; provided that no such modification shall (i) change the fixed
maturity of any Subordinated Debt Securities, or reduce the principal amount
thereof (including in the case of a discounted Subordinated Debt Securities
the amount payable thereon in the event of acceleration or the amount provable
in bankruptcy) or any redemption premium thereon, or reduce the rate or extend
the time of payment of interest thereon, or make the principal of, or interest
or premium, if any, on, the Subordinated Debt Securities
10
<PAGE>
payable in any coin or currency other than that provided in the Subordinated
Debt Securities, or impair or affect the right of any holder of Subordinated
Debt Securities to institute suit for the payment thereof or the right of
prepayment, if any, at the option of the holder, without the consent of the
holder of each Subordinated Debt Security so affected, or (ii) reduce the
aforesaid percentage of Subordinated Debt Securities the consent of the
holders of which is required for any such modification, without the consent of
the holders of each Subordinated Debt Security affected. If Subordinated Debt
Securities of a series are held by an FCN Capital Trust or a trustee of such
trust, a supplemental indenture requiring such consent will not be effective
until the holders of a majority in liquidation amount of the Trust Securities
of the applicable FCN Capital Trust shall have consented to such supplemental
indenture; provided, that if the consent of the holders of each outstanding
Subordinated Debt Security of a series is required, such supplemental
indenture shall not be effective until each holder of the Trust Securities of
the applicable FCN Capital Trust shall have consented to such supplemental
indenture. As a result of these pass through voting rights with respect to
modifications to the Indenture, no modification thereto shall be effective
until the holders of a majority in liquidation amount of the Trust Securities
consent to such modification and no modification described in clauses (i) or
(ii) shall be effective without the consent of each holder of Preferred
Securities and each holder of Common Securities of the applicable FCN Capital
Trust.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Subordinated Debt
Securities not previously delivered to the Debt Trustee for cancellation (i)
have become due and payable or (ii) will become due and payable at their
Stated Maturity within one year, and the Company deposits or causes to be
deposited with the Debt Trustee trust funds, in trust, for the purpose and in
an amount sufficient to pay and discharge the entire indebtedness on the
Subordinated Debt Securities not previously delivered to the Debt Trustee for
cancellation, for the principal (and premium, if any) and interest to the date
of the deposit or to the Stated Maturity, as the case may be, then the
Indenture will cease to be of further effect (except as to the Company's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and the
Company will be deemed to have satisfied and discharged the Indenture.
GOVERNING LAW
The Indenture and the Subordinated Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
THE DEBT TRUSTEE
The Chase Manhattan Bank ("Chase"), which serves as the Debt Trustee, the
Institutional Trustee and the Preferred Guarantee Trustee, has a principal
corporate trust office at 450 West 33rd Street, New York, New York 10001.
Chase also serves as property trustee under declarations of trust for two
other statutory business trusts formed under the laws of the State of Delaware
and sponsored by the Company. Chase serves as the debt trustee under an
indenture dated as of November 15, 1996, with respect to junior subordinated
debentures of the Company purchased by such trusts and is the guarantee
trustee under each of two guarantee agreements dated as of December 3, 1996
and December 5, 1996, respectively, from the Company to the applicable trust
guaranteeing certain payments to such trust. In addition, Chase serves as
trustee for certain subordinated debt securities issued by the Company under
indentures originally dated as of July 1, 1986, July 15, 1992, April 30, 1993,
May 17, 1995 and December 1, 1995. The Company and its affiliates have normal
banking relationships with the Debt Trustee and its affiliates in the ordinary
course of business.
DESCRIPTION OF THE PREFERRED SECURITIES
Each FCN Capital Trust may issue only one series of Preferred Securities and
such series shall have the terms described in the Prospectus Supplement
relating thereto. The Declaration of each FCN Capital Trust authorizes the
Regular Trustees of such FCN Capital Trust to issue on behalf of such FCN
Capital Trust one series of Preferred Securities. The Declaration will be
qualified as an indenture under the Trust Indenture Act. The Preferred
Securities will have such terms, including with respect to distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the
Declaration or made part of the Declaration by the Trust Indenture Act and
which will mirror the
11
<PAGE>
terms of the Subordinated Debt Securities held by the FCN Capital Trust and
described in the Prospectus Supplement relating thereto. Reference is made to
the Prospectus Supplement relating to the Preferred Securities of the FCN
Capital Trust for specific terms, including (i) the distinctive designation of
such Preferred Securities; (ii) the number and the initial public offering
price of Preferred Securities issued by such FCN Capital Trust; (iii) the
annual distribution rate (or method of determining such rate) for Preferred
Securities issued by such FCN Capital Trust, the date or dates upon which such
distributions shall be payable and the date or dates from which distributions
shall accrue; (iv) whether distributions on Preferred Securities issued by
such FCN Capital Trust shall be cumulative, and, in the case of Preferred
Securities having such cumulative distribution rights, the date or dates or
method of determining the date or dates from which distributions on Preferred
Securities issued by such FCN Capital Trust shall be cumulative; (v) the
amount or amounts which shall be paid out of the assets of such FCN Capital
Trust to the holders of Preferred Securities of such FCN Capital Trust upon
voluntary or involuntary dissolution, winding-up or termination of such FCN
Capital Trust; (vi) the obligation, if any, of such FCN Capital Trust to
purchase or redeem Preferred Securities issued by such FCN Capital Trust and
the price or prices at which, the period or periods within which, and the
terms and conditions upon which, Preferred Securities issued by such FCN
Capital Trust shall be purchased or redeemed, in whole or in part, pursuant to
such obligation; (vii) the voting rights, if any, of Preferred Securities
issued by such FCN Capital Trust in addition to those required by law,
including the number of votes per Preferred Security and any requirement for
the approval by the holders of Preferred Securities, or of Preferred
Securities issued by one or more FCN Capital Trusts, or of both, as a
condition to specified action or amendments to the Declaration of such FCN
Capital Trust; (viii) the terms and conditions, if any, upon which the
Subordinated Debt Securities may be distributed to holders of Preferred
Securities; (ix) the right and/or obligation, if any, of FCN to redeem or
purchase such Preferred Securities pursuant to any sinking fund or analogous
provisions or at the option at the holder thereof and the period or periods
for which, the price or prices at which, and the terms and conditions upon
which, such Preferred Securities shall be redeemed or repurchased, in whole or
in part, pursuant to such right and/or obligation; (x) the terms and
conditions, if any, upon which the Preferred Securities may be converted into
shares of the common stock of FCN, including the conversion price and the
circumstances, if any, under which such conversion right shall expire; (xi) if
applicable, any securities exchange upon which the Preferred Securities shall
be listed; and (xii) any other relevant rights, preferences, privileges,
limitations or restrictions of Preferred Securities issued by such FCN Capital
Trust not inconsistent with the Declaration of such FCN Capital Trust or with
applicable law. All Preferred Securities offered hereby will be guaranteed by
the Company to the extent set forth below under "Description of the Preferred
Securities Guarantees." Certain United States federal income tax
considerations applicable to any offering of Preferred Securities will be
described in the Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each FCN Capital
Trust will issue one series of Common Securities. The Declaration of each FCN
Capital Trust authorizes the Regular Trustees of such trust to issue on behalf
of such FCN Capital Trust one series of Common Securities having such terms
including distributions, redemption, voting, liquidation rights or such
restrictions as shall be set forth therein. Except for voting rights, the
terms of the Common Securities issued by an FCN Capital Trust will be
substantially identical to the terms of the Preferred Securities issued by
such trust and the Common Securities will rank pari passu, and payments will
be made thereon pro rata, with the Preferred Securities except that, upon an
Event of Default under the Declaration, the rights of the holders of the
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the Preferred Securities. Except in certain limited
circumstances, the Common Securities will also carry the right to vote to
appoint, remove or replace any of the FCN Capital Trustees of an FCN Capital
Trust. All of the Common Securities of each FCN Capital Trust will be directly
or indirectly owned by the Company.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an Event of Default under the Declaration of an FCN Capital Trust occurs
and is continuing, then the holders of Preferred Securities of such FCN
Capital Trust will rely on the enforcement by the Institutional Trustee of its
rights as a holder of the applicable series of Subordinated Debt Securities
against the Company. In addition, the holders of a majority in liquidation
amount of the Preferred Securities of such FCN Capital Trust
12
<PAGE>
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Institutional Trustee or to direct
the exercise of any trust or power conferred upon the Institutional Trustee
under the applicable Declaration, including the right to direct the
Institutional Trustee to exercise the remedies available to it as a holder of
the Subordinated Debt Securities. If the Institutional Trustee fails to
enforce its rights under the applicable series of Subordinated Debt
Securities, a holder of Preferred Securities of such FCN Capital Trust may
institute a legal proceeding directly against the Company to enforce the
Institutional Trustee's rights under the applicable series of Subordinated
Debt Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default under the applicable Declaration has
occurred and is continuing and such event is attributable to the failure of
the Company to pay interest or principal on the applicable series of
Subordinated Debt Securities on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then
a holder of Preferred Securities of such FCN Capital Trust may directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the applicable series of Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder (a "Direct Action") on or after the
respective due date specified in the applicable series of Subordinated Debt
Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of Preferred Securities under the
applicable Declaration to the extent of any payment made by the Company to
such holder of Preferred Securities in such Direct Action.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
For information concerning the relationship between The Chase Manhattan
Bank, the Institutional Trustee, and the Company, see "Description of the
Subordinated Debt Securities--The Debt Trustee."
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by FCN for the
benefit of the holders from time to time of Preferred Securities. Each
Preferred Securities Guarantee will be qualified as an indenture under the
Trust Indenture Act. The Chase Manhattan Bank will act as indenture trustee
under each Preferred Securities Guarantee for purposes of the Trust Indenture
Act (the "Preferred Guarantee Trustee"). The terms of each Preferred
Securities Guarantee will be those set forth in such Preferred Securities
Guarantee and those made part of such Preferred Securities Guarantee by the
Trust Indenture Act. The summary of the material terms of the Preferred
Securities Guarantees does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference
to, the form of Preferred Securities Guarantee, which is filed as an exhibit
to the Registration Statement of which this Prospectus forms a part, and the
Trust Indenture Act. Each Preferred Securities Guarantee will be held by the
Preferred Guarantee Trustee for the benefit of the holders of the Preferred
Securities of the applicable FCN Capital Trust.
GENERAL
Pursuant to each Preferred Securities Guarantee, the Company will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities issued by an FCN Capital
Trust, the Guarantee Payments (as defined herein) (except to the extent paid
by such FCN Capital Trust), as and when due, regardless of any defense, right
of set-off or counterclaim which such FCN Capital Trust may have or assert.
The following payments with respect to Preferred Securities issued by an FCN
Capital Trust, to the extent not paid by such FCN Capital Trust (the
"Guarantee Payments"), will be subject to the Preferred Securities Guarantee
thereon (without duplication): (i) any accrued and unpaid distributions which
are required to be paid on such Preferred Securities, to the extent such FCN
Capital Trust shall have funds available therefor; (ii) the redemption price,
including all accrued and unpaid distributions to the date of payment (the
"Redemption Price"), to the extent such FCN Capital Trust has funds available
therefor with respect to any Preferred Securities called for redemption by
such FCN Capital Trust and (iii) upon a voluntary or involuntary dissolution,
13
<PAGE>
winding-up or termination of such FCN Capital Trust (other than in connection
with the distribution of Subordinated Debt Securities to the holders of
Preferred Securities or the redemption of all of the Preferred Securities),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on such Preferred Securities to the date of payment to
the extent such FCN Capital Trust has funds available therefor and (b) the
amount of assets of such FCN Capital Trust remaining available for
distribution to holders of such Preferred Securities in liquidation of such
FCN Capital Trust. The redemption price and liquidation amount will be fixed
at the time the Preferred Securities are issued. The Company's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of Preferred Securities or by causing
the applicable FCN Capital Trust to pay such amounts to such holders.
Each Preferred Securities Guarantee will not apply to any payment of
distributions except to the extent such FCN Capital Trust shall have funds
available therefor. If the Company does not make interest payments on the
Subordinated Debt Securities purchased by an FCN Capital Trust, such FCN
Capital Trust will not pay distributions on the Preferred Securities issued by
such FCN Capital Trust and will not have funds available therefor. See
"Description of the Subordinated Debt Securities--Certain Covenants of the
Company." The Preferred Securities Guarantee, when taken together with the
Company's obligations under the Subordinated Debt Securities, the Indenture
and the Declaration, including its obligations to pay costs, expenses, debts
and liabilities of such FCN Capital Trust (other than with respect to the
Trust Securities), will provide a full and unconditional guarantee on a
subordinated basis by the Company of payments due on the Preferred Securities.
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the FCN Capital Trusts with respect to the Common
Securities (the "Common Securities Guarantees") to the same extent as the
Preferred Securities Guarantees, except that upon an Event of Default under
the Indenture, holders of Preferred Securities shall have priority over
holders of Common Securities with respect to distributions and payments on
liquidation, redemption or otherwise.
MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior
approval of the holders of not less than a majority in liquidation amount of
the outstanding Preferred Securities issued by the applicable FCN Capital
Trust. The manner of obtaining any such approval of holders of such Preferred
Securities will be as set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in a Preferred Securities Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of the
Company and shall inure to the benefit of the holders of the Preferred
Securities of the applicable FCN Capital Trust then outstanding.
TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable FCN Capital Trust (a) upon full payment of
the Redemption Price of all Preferred Securities of such FCN Capital Trust,
(b) upon distribution of the Subordinated Debt Securities held by such FCN
Capital Trust to the holders of the Preferred Securities of such FCN Capital
Trust or (c) upon full payment of the amounts payable in accordance with the
Declaration of such FCN Capital Trust upon liquidation of such FCN Capital
Trust. Each Preferred Securities Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of Preferred
Securities issued by the applicable FCN Capital Trust must restore payment of
any sums paid under such Preferred Securities or such Preferred Securities
Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of the Company to perform any of its payment or other obligations
thereunder.
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<PAGE>
The holders of a majority in liquidation amount of the Preferred Securities
relating to such Preferred Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Preferred Guarantee Trustee in respect of the Preferred Securities
Guarantee or to direct the exercise of any trust or power conferred upon the
Preferred Guarantee Trustee under such Preferred Securities. If the Preferred
Guarantee Trustee fails to enforce such Preferred Securities Guarantee, any
holder of Preferred Securities relating to such Preferred Securities Guarantee
may institute a legal proceeding directly against the Company to enforce the
Preferred Guarantee Trustee's rights under such Preferred Securities
Guarantee, without first instituting a legal proceeding against the relevant
FCN Capital Trust, the Preferred Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Company has failed to make a
Guarantee Payment, a holder of Preferred Securities may directly institute a
proceeding against the Company for enforcement of the Preferred Securities
Guarantee for such payment. The Company waives any right or remedy to require
that any action be brought first against such FCN Capital Trust or any other
person or entity before proceeding directly against the Company.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
Unless otherwise provided in the applicable Prospectus Supplement, the
Preferred Securities Guarantees with respect to the Preferred Securities of
any FCN Capital Trust will constitute unsecured obligations of the Company and
will rank (i) subordinate and junior in right of payment to certain other
liabilities of the Company, as described in the Prospectus Supplement and (ii)
pari passu with any guarantee now or hereafter entered into by FCN in respect
of any other FCN Capital Trust or any other similar financing vehicle
sponsored by FCN. The terms of the Preferred Securities provide that each
holder of Preferred Securities issued by the applicable FCN Capital Trust by
acceptance thereof agrees to the subordination provisions and other terms of
the Preferred Securities Guarantee relating thereto as described in the
applicable Prospectus Supplement.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
Preferred Securities Guarantee without instituting a legal proceeding against
any other person or entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee
and, after default, shall exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provisions, the Preferred Guarantee Trustee is under no obligation to
exercise any of the powers vested in it by a Preferred Securities Guarantee at
the request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby.
For information concerning the relationship between the Preferred Guarantee
Trustee and the Company, see "Description of the Subordinated Debt
Securities--The Debt Trustee."
GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with the laws of the State of New York.
15
<PAGE>
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBT SECURITIES
AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of each of the FCN Capital
Trusts is to issue the Trust Securities evidencing undivided beneficial
interests in the assets of such FCN Capital Trust, and to invest the proceeds
from such issuance and sale in the Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the
following factors: (i) the aggregate principal amount of Subordinated Debt
Securities will be equal to the sum of the aggregate stated liquidation amount
of the Trust Securities; (ii) the interest rate and the interest and other
payment dates on the Subordinated Debt Securities will match the distribution
rate and distribution and other payment dates for the Preferred Securities;
(iii) FCN shall pay all, and the applicable FCN Capital Trust shall not be
obligated to pay, directly or indirectly, all costs, expenses, debt, and
obligations of the applicable FCN Capital Trust (other than with respect to
the Trust Securities); and (iv) the Declaration further provides that the FCN
Trustees shall not take or cause or permit the applicable FCN Capital Trust
to, among other things, engage in any activity that is not consistent with the
purposes of the applicable FCN Capital Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor
are available) are guaranteed by FCN as and to the extent set forth under
"Description of the Preferred Securities Guarantees." If FCN does not make
interest payments on the Subordinated Debt Securities purchased by the
applicable FCN Capital Trust, it is expected that the applicable FCN Capital
Trust will not have sufficient funds to pay distributions on the Preferred
Securities. The Preferred Securities Guarantee does not apply to any payment
of distributions unless and until the applicable FCN Capital Trust has
sufficient funds for the payment of such distributions. The Preferred
Securities Guarantee covers the payment of distributions and other payments on
the Preferred Securities only if and to the extent that FCN has made a payment
of interest or principal on the Subordinated Debt Securities held by the
applicable FCN Capital Trust as its sole asset. The Preferred Securities
Guarantee, when taken together with FCN's obligations under the Subordinated
Debt Securities and the Indenture and its obligations under the Declaration,
including its obligations to pay costs, expenses, debts and liabilities of the
applicable FCN Capital Trust (other than with respect to the Trust
Securities), provide a full and unconditional guarantee on a subordinated
basis of amounts due on the Preferred Securities.
If FCN fails to make interest or other payments on the Subordinated Debt
Securities when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using
the procedures described in "Description of the Preferred Securities--Book-
Entry Only Issuance--The Depository Trust Company" and "--Voting Rights" in
the accompanying Prospectus Supplement, may direct the Institutional Trustee
to enforce its rights under the Subordinated Debt Securities. If the
Institutional Trustee fails to enforce its rights under the Subordinated Debt
Securities, a holder of Preferred Securities may institute a legal proceeding
against FCN to enforce the Institutional Trustee's rights under the
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of FCN to pay
interest or principal on the Subordinated Debt Securities on the date such
interest or principal is otherwise payable (or in the case of redemption on
the redemption date), then a holder of Preferred Securities may institute a
Direct Action for payment on or after the respective due date specified in the
Subordinated Debt Securities. In connection with such Direct Action, FCN will
be subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by FCN to such holder of
Preferred Securities in such Direct Action. FCN, under the Preferred
Securities Guarantee, acknowledges that the Guarantee Trustee shall enforce
the Preferred Securities Guarantee on behalf of the holders of the Preferred
Securities. If FCN fails to make payments under the Preferred Securities
Guarantee, the Preferred Securities Guarantee provides a mechanism whereby the
holders of the Preferred Securities may direct the Guarantee Trustee to
enforce its rights thereunder. Any holder of Preferred Securities
16
<PAGE>
may institute a legal proceeding directly against FCN to enforce the Preferred
Guarantee Trustee's rights under the Preferred Securities Guarantee without
first instituting a legal proceeding against the applicable FCN Capital Trust,
the Guarantee Trustee, or any other person or entity.
FCN and each of the FCN Capital Trusts believe that the above mechanisms and
obligations, taken together, provide a full and unconditional guarantee by FCN
on a subordinated basis of payments due on the Preferred Securities. See
"Description of the Preferred Securities Guarantees--General."
PLAN OF DISTRIBUTION
FCN may sell the Subordinated Debt Securities and any FCN Capital Trust may
sell Preferred Securities in any of, or any combination of, the following
ways: (i) directly to purchasers, (ii) through agents, (iii) through
underwriters, and (iv) through dealers. Such underwriters, dealers or agents
may be affiliates of FCN, and offers or sales of such securities may include
secondary market transactions by affiliates of FCN.
Offers to purchase Offered Securities may be solicited directly by FCN
and/or any FCN Capital Trust, as the case may be, or by agents designated by
FCN and/or any FCN Capital Trust, as the case may be, from time to time. Any
such agent, who may be deemed to be an underwriter as that term is defined in
the Securities Act, involved in the offer or sale of the Offered Securities in
respect of which this Prospectus is delivered will be named, and any
commissions payable by FCN to such agent will be set forth, in the Prospectus
Supplement. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its appointment
(ordinarily five business days or less). Agents, dealers and underwriters may
be customers of, engage in transactions with, or perform services for the
Company in the ordinary course of business.
If an underwriter or underwriters are utilized in the sale, FCN will execute
an underwriting agreement with such underwriters at the time of sale to them
and the names of the underwriters and the terms of the transaction will be set
forth in the Prospectus Supplement, which will be used by the underwriters to
make resales of the Offered Securities in respect of which this Prospectus is
delivered to the public.
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, FCN and/or any FCN Capital Trust, as the
case may be, will sell such Offered Securities to the dealer, as principal.
The dealer may then resell such Offered Securities to the public at varying
prices to be determined by such dealer at the time of resale. The name of the
dealer and the terms of the transaction will be set forth in the Prospectus
Supplement.
Agents, underwriters, and dealers may be entitled under the relevant
agreements to indemnification by FCN and/or any FCN Capital Trust, as the case
may be, against certain liabilities, including liabilities under the
Securities Act.
This Prospectus and the related Prospectus Supplement may be used by direct
or indirect subsidiaries of FCN in connection with offers and sales related to
secondary market transactions. Such subsidiaries may act as principal or agent
in such transactions. Such sales may be made at prices related to prevailing
market prices at the time of sale.
The offer and sale of the Offered Securities will comply with Rule 2810 of
the Rules of Conduct of the National Association of Securities Dealers, Inc.
(the "NASD"). In addition, no NASD member participating in offers and sales of
securities will execute a transaction in the Offered Securities in a
discretionary account without the prior specific written approval of the
member's customer.
Underwriters, agents or their controlling persons may engage in transactions
and perform services for FCN and its affiliates in the ordinary course of
business.
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<PAGE>
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the FCN Capital Trusts by Skadden,
Arps, Slate, Meagher & Flom (Delaware), special Delaware counsel to FCN and
the FCN Capital Trusts. The validity of the Subordinated Debt Securities and
the Preferred Securities Guarantee and certain matters relating thereto will
be passed upon for FCN by Sherman I. Goldberg, Esq., Executive Vice President,
General Counsel and Secretary of FCN. Certain United States federal income
taxation matters will be passed upon for FCN and the FCN Capital Trusts by
Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel to FCN and the
FCN Capital Trusts. As of September 30, 1996, Sherman I. Goldberg was the
record and beneficial owner of 189,122 shares of common stock of FCN and held
options to purchase 221,083 shares of common stock of FCN.
EXPERTS
The consolidated financial statements of FCN included in the Annual Report
on 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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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY FIRST CHICAGO NBD CORPORATION,
FIRST CHICAGO NBD CAPITAL I OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF FIRST CHICAGO NBD CORPORATION OR FIRST
CHICAGO NBD CAPITAL I SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C>
First Chicago NBD Corporation Summary Historical Financial Information... S-5
Recent Developments...................................................... S-6
Risk Factors............................................................. S-10
First Chicago NBD Corporation............................................ S-15
FCN Capital Trust........................................................ S-16
Capitalization........................................................... S-18
Accounting Treatment..................................................... S-19
Use of Proceeds.......................................................... S-19
Description of the Preferred Securities.................................. S-19
Description of the Preferred Securities Guarantee........................ S-33
Description of the Subordinated Debt Securities.......................... S-33
Effect of Obligations Under the Subordinated Debt Securities and the
Preferred Securities Guarantee.......................................... S-40
United States Federal Income Taxation.................................... S-41
ERISA Considerations..................................................... S-43
Underwriting............................................................. S-45
Legal Matters............................................................ S-46
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information..................................................... 3
Incorporation of Documents by Reference................................... 4
First Chicago NBD Corporation............................................. 5
The Trusts................................................................ 6
Use of Proceeds........................................................... 7
Description of the Subordinated Debt Securities........................... 7
Description of the Preferred Securities................................... 11
Description of the Preferred Securities Guarantees........................ 13
Effect of Obligations Under the Subordinated Debt Securities and the
Preferred Securities Guarantee........................................... 16
Plan of Distribution...................................................... 17
Legal Matters............................................................. 18
Experts................................................................... 18
</TABLE>
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$250,000,000
FIRST CHICAGO NBD
CAPITAL I
FLOATING RATE PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY
GUARANTEED TO THE EXTENTSET FORTH HEREIN BY
FIRST CHICAGO NBD
CORPORATION
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PROSPECTUS SUPPLEMENT
January 24, 1997
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LEHMAN BROTHERS
FIRST CHICAGO CAPITAL MARKETS, INC.
CREDIT SUISSE FIRST BOSTON
SALOMON BROTHERS INC
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