-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, btFuZSjoh8OXor8i4NHl/cN2iFC8DV7YIV90z2wWjYmbq1u1Ll5QoT4BQ0K0pALx r52iR2utaLTeO5UnX3AR4g== 0000036090-94-000046.txt : 19940228 0000036090-94-000046.hdr.sgml : 19940228 ACCESSION NUMBER: 0000036090-94-000046 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19940225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANC ONE CORP/OH/ CENTRAL INDEX KEY: 0000036090 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 310738296 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 33 SEC FILE NUMBER: 033-52413 FILM NUMBER: 94512864 BUSINESS ADDRESS: STREET 1: 100 E BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43271 BUSINESS PHONE: 6142485944 MAIL ADDRESS: STREET 1: 100 EAST BROAD STREET CITY: COLUMBUS STATE: OH ZIP: 43271-0251 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BANC GROUP OF OHIO INC /OH/ DATE OF NAME CHANGE: 19800301 S-4 1 S-4 REG STATEMENT BANC ONE CORP & CAPITAL BANCORP Filed with the Securities and Exchange Commission on February 25, 1994 Registration No. 33- SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 F O R M S - 4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 BANC ONE CORPORATION (Exact name of Registrant as specified in its charter) Ohio (State or other jurisdiction of incorporation or organization) 6711 (Primary Standard Industrial Classification Code Number) 31-0738296 (I.R.S. Employer Identification No.) 100 East Broad Street, Columbus, Ohio 43271, (614) 248-5944 (Address, including Zip Code, and telephone number, including area code, of Registrant's principal executive offices) Roman J. Gerber, Esq., BANC ONE CORPORATION 100 East Broad Street, Columbus, Ohio 43271, (614) 248-5903 (Name, address, including Zip Code, and telephone number, including area code, of agent for service) With Copies to: Carter K. McDowell, Esq. BANC ONE CORPORATION 100 East Broad Street Columbus, Ohio 43271 614/248-6697 Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this Registration Statement and all other conditions to the merger of Capital Bancorp with and into a wholly owned subsidiary of the Registrant pursuant to the Merger Agreement described in the enclosed Prospectus and Proxy Statement have been satisfied or waived. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. Calculation of Registration Fee Proposed Proposed maximum maximum Title of each class Amount offering aggregate Amount of of securities to be price offering registration to be registered registered(1) per unit(2) price(2) fee(2) Common Stock 433,850 $17.00 $7,375,450 $2,543.27 (1) Based on an estimate of the maximum number of shares of common stock of the Registrant to be issued in connection with the merger of Capital Bancorp with and into a wholly owned subsidiary of the Registrant and the merger of Capital City Bank, a subsidiary of Capital Bancorp, with and into a wholy owned bank subsidiary of Registrant. (2) Estimated solely for purpose of computing the registration fee based upon the book value of the Common Stock, par value $10.00 per share, of Capital Bancorp as of January 31, 1994 in accordance with Rule 457(f)(2) of the General Rules and Regulations under the Securities Act of 1933. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. BANC ONE CORPORATION Cross Reference Sheet Caption in Prospectus Item of Form S-4 and Proxy Statement A. Information about the Transaction Item 1 - Forepart of Registration Outside Front Cover Page Statement and Outside Front Cover Reference Sheet Page of Prospectus Item 2 - Inside Front and Outside Available Information; Incorpora- Back Cover Pages of Prospectus tion by Reference; Table of Contents Item 3 - Risk Factors, Ratio of Information About the Transactions Earnings to Fixed Charges and Other Information Item 4 - Terms of the Transaction Merger and Consolidation; Comparative Rights of Shareholders Item 5 - Pro Forma Financial Infor- Incorporation by Reference mation Item 6 - Material Contacts with Background of Transactions the Company Being Acquired Item 7 - Additional Information * Required for Reoffering by Persons and Parties Deemed To Be Underwriters Item 8 - Interests of Named Interests of Named Experts Experts Item 9 - Disclosure of Commission * Position on Indemnification for Securities Act Liabilities B. Information about the Registrant Item 10 - Information with Respect Information about BANC ONE to S-3 Registrants CORPORATION; Comparative Rights of Shareholders Item 11 - Incorporation of Certain Incorporation of Certain Informa- Information by Reference tion About BANC ONE by Reference Item 12 - Information with Respect * to S-2 or S-3 Registrants Item 13 - Incorporation of Certain * Information by Reference Item 14 - Information with Respect * to Registrants Other Than S-2 or S-3 Registrants C. Information about the Company Being Acquired Item 15 - Information with Respect * to S-3 Companies Item 16 - Information with Respect * to S-2 or S-3 Companies Item 17 - Information with Respect Information About Capital Bancorp; to Companies Other Than S-2 or Information About Capital City Bank; S-3 Companies Information About the Transactions D. Voting and Management Information Item 18 - Information if Proxies, The Special Meeting of Stockholders; Consents or Authorizations Are To Voting and Management Information Be Solicited Item 19 - Information if Proxies, * Consents or Authorizations Are Not To Be Solicited or in an Exchange Offer * Omitted because item is inapplicable or answer to item is negative , 1994 Capital Bancorp Capital City Bank 2200 South State Street 2200 South State Street Salt Lake City, Utah 84115 Salt Lake City, Utah 84115 Notice of Special Meeting of Stockholders To be Held , 1994 To the Shareholders of Capital Bancorp and the Shareholders of Capital City Bank: The documents following this letter are notices of special meetings of the shareholders of Capital Bancorp ("CAPITAL") and the shareholders of Capital City Bank ("CCB") and a Prospectus and Joint Proxy Statement for the special meetings of the shareholders of CAPITAL and CCB, each of which will be held at 2200 South State Street, Salt Lake City, Utah. The special meeting of CAPITAL's shareholders will be held on , 1994 at : P.M. and the special meeting of CCB shareholders will commence at : P.M. that same day. The special meetings are of great importance to the shareholders of CAPITAL and CCB. CAPITAL shareholders will be asked to approve a Merger Agreement between Banc One Arizona Corporation ("Banc One Arizona") and CAPITAL, joined in by BANC ONE CORPORATION ("BANC ONE"), the parent of Banc One Arizona, dated September 17, 1993, as amended, (the "Merger Agreement"). The shareholders of CCB will be asked to ratify and confirm a Bank Merger Agreement (the "Consolidation Agreement") between CCB and Bank One, Utah, N.A. ("Bank One Utah"), a wholly owned subsidiary of Banc One Arizona and an indirect subsidiary of BANC ONE. BANC ONE is a bank holding company owning substantially all of the capital stock of 81 commercial banks located in Arizona, California, Colorado, Illinois, Indiana, Kentucky, Michigan, Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin. Banc One Arizona is a wholly owned subsidiary of BANC ONE and is the direct parent of 3 commercial banks located in Arizona, California and Utah, including Bank One Utah. If the shareholders of CAPITAL approve the Merger Agreement and if the shareholders of CCB ratify and confirm the Consolidation Agreement, subject to receipt of regulatory approval and satisfaction of other conditions, CAPITAL will combine its business and operations with those of Banc One Arizona through a statutory merger (the "Merger") of CAPITAL with Banc One Arizona and CCB will combine its business and operations with those of Bank One Utah through a consolidation (the "Consolidation") of CCB and Bank One Utah. Shareholders of Capital Bancorp Shareholders of Capital City Bank , 1994 Page Two If the Merger and Consolidation become effective, as described in the Prospectus and Joint Proxy Statement, shareholders of CAPITAL will become entitled to receive shares of BANC ONE Common Stock in exchange for their shares of CAPITAL Common Stock at the "Merger Exchange Rate" and shareholders of CCB, other than CAPITAL (or Banc One Arizona, as successor by merger to CAPITAL), will become entitled to receive BANC ONE Common Stock for each share of BANK Common Stock held by them at the "Bank Exchange Rate." No fractional shares of BANC ONE Common Stock will be issued in the proposed transactions. In lieu thereof, shareholders of CAPITAL and CCB with an entitlement to fractional shares of BANC ONE Common Stock will be entitled to receive cash equal to the applicable fractional share times the market value of BANC ONE Common Stock as provided in the Merger Agreement and Consolidation Agreement. Shareholders of CAPITAL and of CCB are advised to consult their tax advisors with respect to income tax consequences of the transaction. Details of the proposed transactions are set forth in the accompanying Prospectus and Joint Proxy Statement. The Board of Directors of CAPITAL has unanimously approved the terms of the Merger Agreement and recommends that all the shareholders of CAPITAL vote to approve the Merger Agreement. The Board of Directors of CCB has unanimously agreed to the terms of the Consolidation Agreement and recommends that all the shareholders of CCB vote to ratify and confirm the Consolidation Agreement. The Boards believe that the Merger and the Consolidation will benefit the shareholders of CAPITAL and CCB and the customers and employees of CCB. IN ORDER TO APPROVE THE MERGER AGREEMENT, IT IS NECESSARY THAT NOT LESS THAN A MAJORITY OF ALL THE OUTSTANDING SHARES OF CAPITAL VOTE AFFIRMATIVELY IN FAVOR OF THE MERGER AGREEMENT AND IN ORDER TO RATIFY AND CONFIRM THE CONSOLIDATION AGREEMENT, IT IS NECESSARY THAT NOT LESS THAN TWO-THIRDS OF ALL THE OUTSTANDING SHARES OF CCB BE VOTED TO RATIFY AND CONFIRM THE CONSOLIDATION AGREEMENT. Very truly yours, Norton Parker Chairman, Capital Bancorp Chairman and President, Capital City Bank Enclosure PROSPECTUS 433,850 Shares BANC ONE CORPORATION Common Stock CAPITAL BANCORP CAPITAL CITY BANK PROXY STATEMENT PROXY STATEMENT for for Special Meeting of Stockholders Special Meeting of Stockholders , 1994 , 1994 This Prospectus and Joint Proxy Statement (the "Prospectus" or "Prospectus and Joint Proxy Statement") relates to the proposed merger of Capital Bancorp ("CAPITAL") with Banc One Arizona Corporation ("Banc One Arizona"), a wholly owned subsidiary of BANC ONE CORPORATION ("BANC ONE") and the subsequent merger of CAPITAL's sole subsidiary, Capital City Bank ("CCB"), with and into Banc One Arizona's subsidiary, Bank One, Utah, N.A. ("Bank One Utah"). If the proposed merger of CAPITAL with and into Banc One Arizona (the "Merger") is consummated, each outstanding share of CAPITAL Common Stock, par value $10.00 per share ("CAPITAL Common Stock"), will be converted into shares of BANC ONE Common Stock, no par value ("BANC ONE Common Stock") as follows: If the average price of BANC ONE Common is not less than $36.85 nor greater than $44.55 during the Valuation Period (as defined below), each share of CAPITAL Common will be converted into an amount of BANC ONE Common having a market value of $95.33 during the Valuation Period. If the average price of BANC ONE Common is below $36.85 during the Valuation Period, each share of CAPITAL Common will be converted into 2.587 shares of BANC ONE Common, and if the average price of BANC ONE Common is above $44.55 during the Valuation Period, each share of CAPITAL Common will be converted into 2.140 shares of BANC ONE Common. The Valuation Period will be the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") as reported in The Wall Street Journal for NYSE composite transactions ending on the sixth NYSE trading day immediately prior to the Merger. See "MERGER--Exchange Rate." The Merger is subject to the approval of not less than a majority of the holders of the outstanding shares of CAPITAL Common Stock entitled to vote thereon and to the satisfaction of certain other conditions, including obtaining various regulatory approvals. Following the Merger, if the proposed merger of CCB with and into Bank One Utah (the "Consolidation") is consummated, the shares of CCB Common Stock not owned by CAPITAL, or Banc One Arizona or BANC ONE as the successors to Capital ("CCB Common"), will be converted into BANC ONE Common (the "Consolidation Exchange Rate") as follows: If the average price of BANC ONE Common is not less than $36.85 nor greater than $44.55 during the Valuation Period (as defined below), each share of CCB Common will be converted into an amount of BANC ONE Common having a market value of $125.40 during the Valuation Period. If the average price of BANC ONE Common is below $36.85 during the Valuation Period, each share of CCB Common will be converted into 3.403 shares of BANC ONE Common, and if the average price of BANC ONE Common is above $44.55 during the Valuation Period, each share of CCB Common will be converted into 2.815 shares of BANC ONE Common. The Valuation Period will be the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") as reported in The Wall Street Journal for NYSE composite transactions ending on the sixth NYSE trading day immediately prior to the Merger. See "Consolidation--Exchange Rate." The Consolidation is subject to approval of not less than two-thirds of the holders of the outstanding shares of CCB Common Stock entitled to vote thereon and to the satisfaction of certain other conditions, including obtaining various regulatory approvals. This Prospectus and Proxy Statement does not cover any resales of BANC ONE Common Stock received by affiliates of CAPITAL and CCB upon consummation of the Merger and Consolidation, respectively, and no person is authorized to make use of this Prospectus and Joint Proxy Statement in connection with any such resale. BANC ONE Common Stock is traded on the New York Stock Exchange. The closing price of BANC ONE Common Stock on the New York Stock Exchange on Friday, February 18, 1994 was $32.375. On July 20, 1993, BANC ONE announced a five shares for four shares common stock split payable to shareholders of record on August 3, 1993 and to be distributed August 31, 1993 and on January 25, 1994 BANC ONE announced a 10% stock dividend payable March 4, 1994 to shareholders of record on February 16, 1994. However, the exchange rates mentioned above have been adjusted to reflect the split and the dividend. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. A Special Meeting of Stockholders of CAPITAL and CCB will be held at 2200 South State Street, Salt Lake City, Utah, on , 1994, to consider a proposal to approve the Merger Agreement and the Consolidation Agreement, respectively, (as hereinafter defined). The date of this Prospectus and Joint Proxy Statement is , 1994. AVAILABLE INFORMATION BANC ONE is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy and information statements and other information filed by BANC ONE can be inspected and copied, at prescribed rates, at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located at Northwestern Atrium Center, 500 West Madison Street, Suite 1600, Chicago, Illinois 60661, and 75 Park Place, New York, New York 10007. Reports, proxy and information statements and other information concerning BANC ONE can be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. This Prospectus does not contain all information set forth in the Registration Statement and exhibits thereto which BANC ONE has filed with the Commission under the Securities Act of 1933, as amended (the "Securities Act") and to which reference is hereby made. INCORPORATION BY REFERENCE THIS PROSPECTUS AND PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE THEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY CAPITAL OR CCB SHAREHOLDER, TO WHOM THIS PROSPECTUS IS DELIVERED UPON ORAL OR WRITTEN REQUEST TO WILLIAM C. LEITER, CONTROLLER, BANC ONE CORPORATION, 100 EAST BROAD STREET, COLUMBUS, OHIO 43271-0251, TELEPHONE NUMBER 614/248-5905. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1994. BANC ONE's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, BANC ONE's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993, June 30, 1993 and September 30, 1993 and BANC ONE's Current Reports on Form 8-K, including both forms filed February 4, 1993, the Form 8-K filed February 16, 1993, the Form 8-K filed August 20, 1993, the Form 8-K filed November 9, 1993, the Form 8-K filed November 16, 1994, the Form 8-K filed November 24, 1993, the 8-K filed January 28, 1994 and the Form 8-K filed February 17, 1994, in each case filed with the Commission pursuant to Section 13 of the Exchange Act and the description of BANC ONE Common Stock which is contained in its registration statement filed under Section 12 of the Exchange Act, including any amendment or report filed for the purpose of updating such description, are incorporated into this Prospectus and Proxy Statement by reference. All documents filed by BANC ONE pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the Special Meeting of Stockholders of CAPITAL and CCB shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that such statement is modified or superseded by a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. No person is authorized to give any information or to make any representations other than those contained in this Prospectus and Proxy Statement and, if given or made, such information or representation must not be relied upon as having been authorized by BANC ONE, CAPITAL or CCB. This Prospectus and Joint Proxy Statement does not constitute an offering within any jurisdiction to any person to whom it is unlawful to make such offer within such jurisdiction. TABLE OF CONTENTS Page A. INFORMATION ABOUT THE TRANSACTION . . . . . . . . . . . . . . . . . 1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Capital Bancorp Special Meeting . . . . . . . . . . . . . . . . . 1 Capital City Bank Special Meeting . . . . . . . . . . . . . . . . 1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 BANC ONE CORPORATION and Banc One Arizona Corporation . . . . . . 1 SUMMARY OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . 2 Terms of Merger Agreement and Exchange Rate . . . . . . . . . . . 2 Terms of Consolidation Agreement and Consolidation Exchange Rate . . . . . . . . . . . . . . . . 2 Management After the Merger . . . . . . . . . . . . . . . . . . . 3 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . 3 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Rights of Dissenting Stockholders . . . . . . . . . . . . . . . . 4 Differences in Shareholder Rights . . . . . . . . . . . . . . . . 4 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . 5 Conditions; Termination . . . . . . . . . . . . . . . . . . . . . 5 Selected Financial Data . . . . . . . . . . . . . . . . . . . . 5 Comparative Per Share Data . . . . . . . . . . . . . . . . . . . 8 THE SPECIAL MEETING OF STOCKHOLDERS of CAPITAL . . . . . . . . . . . 12 Purpose of the Special Meeting of Stockholders . . . . . . . . . 12 Record Date and Voting Rights . . . . . . . . . . . . . . . . . . 12 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 THE SPECIAL MEETINTING OF STOCKHOLDERS OF CCB. . . . . . . . . . . . 13 Purpose of the Special Meeting of Stockholders . . . . . . . . . 13 Record Date and Voting Rights . . . . . . . . . . . . . . . . . . 13 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 MERGER and CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . 14 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Exchange Rate and Consolidation Exchange Rate . . . . . . . . . . 15 Operations After the Merger and Consolidation . . . . . . . . . . 16 Background of Transaction . . . . . . . . . . . . . . . . . . . . 16 Merger and Consolidation Recommendations and Reasons for Transactions . . . . . . . . . . . . . . . . . 17 Conditions to the Merger; Termination . . . . . . . . . . . . . 19 Conditions to the Consolidation . . . . . . . . . . . . . . . . . 21 Federal Income Tax . . . . . . . . . . . . . . . . . . . . . . . 22 Federal Tax Income Tax Consequences of the Merger . . . . . . . . 22 Federal Income Tax Consequences of the Consolidation . . . . . . 23 Tax Consequences -- General . . . . . . . . . . . . . . . . . . . 23 Conversion of Shares and Exchange of Certificates . . . . . . . . 23 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . 24 Resales by Affiliates . . . . . . . . . . . . . . . . . . . . . . 24 Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . 25 Description of BANC ONE Stock . . . . . . . . . . . . . . . . . . 26 Special Voting Requirements for Certain Transactions . . . . . . 28 Comparison of BANC ONE Common Stock, CAPITAL Common Stock and CCB Common Stock . . . . . . . . . . . 30 MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . 34 Transfer and Exchange Agents . . . . . . . . . . . . . . . . . . 34 Interests of Named Experts . . . . . . . . . . . . . . . . . . . 34 Sources of Information . . . . . . . . . . . . . . . . . . . . . 34 Registration Statement . . . . . . . . . . . . . . . . . . . . . 35 Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 35 B. INFORMATION ABOUT BANC ONE CORPORATION . . . . . . . . . . . . . . . 36 General--Business . . . . . . . . . . . . . . . . . . . . . . . . . 36 Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . 36 Certain Regulatory Matters . . . . . . . . . . . . . . . . . . . . . 37 Market Prices of and Dividends Paid on BANC ONE Common Stock . . . . 40 Incorporation of Certain Information About BANC ONE CORPORATION by Reference . . . . . . . . . . . . . . . . . . . . 41 C. INFORMATION ABOUT Capital Bancorp and Capital City Bank . . . . . . 42 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Dividends Paid on CAPITAL and CCB Common Stock . . . . . . . . . . . 42 Management Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . 46 Capital Interim Consolidated Financial Statements . . . . . . . . . 61 CCB Interim Consolidated Financial Statements . . . . . . . . . . . 67 Financial Statements for CAPITAL . . . . . . . . . . . . . . . . . 72 Financial Statements for CCB . . . . . . . . . . . . . . . . . . . 91 D. VOTING AND MANAGEMENT INFORMATION . . . . . . . . . . . . . . . . . 109 Voting -- CAPITAL and CCB . . . . . . . . . . . . . . . . . . . . . 109 Rights of Dissenting Stockholders . . . . . . . . . . . . . . . . . 110 Management and Principal Shareholders of BANC ONE . . . . . . . . . 112 Management and Principal Stockholders of CAPITAL and CCB . . . . . 112 EXHIBITS Exhibit A - Opinion of Gerrish & McCreary, P.C. Exhibit B - Sections 16-10a-1301 to 16-10a-1331 of the Utah Code Annotated PROSPECTUS AND JOINT PROXY STATEMENT Capital Bancorp and Capital City Bank SPECIAL MEETINGS OF SHAREHOLDERS A. INFORMATION ABOUT THE TRANSACTION INTRODUCTION Capital Bancorp Special Meeting This Prospectus and Joint Proxy Statement ("the Prospectus") is furnished in connection with the Special Meeting of shareholders of Capital Bancorp ("CAPITAL") to be held on , 1994 for the purpose of approving a Merger Agreement dated September 17, 1993, as amended, (the "Merger Agreement"), by and between CAPITAL and Banc One Arizona Corporation ("Bank One Arizona"), a wholly owned subsidiary of BANC ONE CORPORATION ("BANC ONE"), a registered multi-bank holding company headquartered in Columbus, Ohio, and joined in by BANC ONE. The Merger Agreement provides for the merger of CAPITAL with and into Banc One Arizona. Capital City Bank Special Meeting This Prospectus is also furnished in connection with a Special Meeting of shareholders of Capital City Bank ("CCB") to be held on , 1994 for the purpose of ratifying and confirming a Bank Merger Agreement dated December 14, 1993 (the "Consolidation Agreement"), by and between CCB and Bank One, Utah, N.A. ("Bank One Utah"), a wholly owned subsidiary of Banc One Arizona and an indirect subsidiary of BANC ONE. The Consolidation Agreement provides for the consolidation of CCB and Bank One Utah. General The principal office of BANC ONE is 100 East Broad Street, Columbus, Ohio 43271 and its telephone number is 614/248-5944. The principal office of both CAPITAL and CCB is 2200 South State Street, Salt Lake City, Utah 84115 and the telephone number for both CAPITAL and CCB is 801/486-4800. BANC ONE CORPORATION and Banc One Arizona Corporation BANC ONE is a multi-bank holding company incorporated under the laws of the State of Ohio which as of September 30, 1993 owned all of the outstanding stock of one Arizona, one California, six Colorado, six Illinois, eight Indiana, two Kentucky, one Texas, four Michigan, eighteen Ohio, one Utah, sixteen West Virginia and fourteen Wisconsin commercial banks. As of September 30, 1993, these 78 banks operated more than 1,340 offices in this twelve-state area and, at September 30, 1993, BANC ONE, its affiliate banks and its non-bank subsidiaries had total assets of approximately $76.5 billion and total deposits of approximately $59.3 billion. Banc One Arizona, a direct subsidiary of BANC ONE, is the direct parent of BANC ONE's commercial banks situated in the states of Arizona, California and Utah. See "INFORMATION ABOUT BANC ONE CORPORATION," which includes information about pending acquisitions. SUMMARY OF THE TRANSACTION Terms of Agreement and Exchange Rate Upon the Merger becoming effective, each of the outstanding shares of CAPITAL Common Stock, par value $10.00 per share ("CAPITAL Common Stock"), will be converted into shares of BANC ONE Common Stock, no par value ("BANC ONE Common Stock"), after giving effect to the 10% stock dividend declared by BANC ONE's Board of Directors on January 25, 1994 and payable March 4, 1994 to shareholders of record on February 16, 1994 as follows: If the average price of BANC ONE Common is not less than $36.85 nor greater than $44.55 during the Valuation Period (as defined below), each share of CAPITAL Common will be converted into an amount of BANC ONE Common having a market value of $95.33 during the Valuation Period. If the average price of BANC ONE Common is below $36.85 during the Valuation Period, each share of CAPITAL Common will be converted into 2.587 shares of BANC ONE Common, and if the average price of BANC ONE Common is above $44.55 during the Valuation Period, each share of CAPITAL Common will be converted into 2.140 shares of BANC ONE Common. The Valuation Period will be the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") as reported in The Wall Street Journal for NYSE composite transactions ending on the sixth NYSE trading day immediately prior to the Merger (the "Exchange Rate"). Upon the consummation of the Merger, CAPITAL will be merged into Banc One Arizona and the separate corporate existence of CAPITAL will cease. Banc One Arizona, as the surviving corporation in the Merger and a wholly owned subsidiary of BANC ONE, will continue operations under the name Banc One Arizona Corporation. See "MERGER--Exchange Rate." Terms of Consolidation Agreement and Consolidation Exchange Rate As a result of and contemporaneously with the Merger, Banc One Arizona will become the owner of 114,768 of the 140,767 (after the exercise of all outstanding options to acquire CCB Common Stock) shares of CCB Common Stock outstanding and will, provided that shareholders of CCB approve the Consolidation Agreement, effect the merger of CCB and Bank One Utah (the "Consolidation") pursuant to federal law, the laws of the State of Utah and the Consolidation Agreement between CCB and Bank One Utah. Pursuant to the terms of the Consolidation Agreement, the CCB Common Stock, other than CCB Common Stock owned by CAPITAL or BANC ONE or Banc One Arizona as the successor to CAPITAL, will be converted into shares of BANC ONE Common Stock, after giving effect to the 10% stock dividend declared by BANC ONE's Board of Directors on January 25, 1994 and payable March 4, 1994 to shareholders of record on February 16, 1994, as follows: If the average price of BANC ONE Common is not less than $36.85 nor greater than $44.55 during the Valuation Period (as defined above), each share of CCB Common will be converted into an amount of BANC ONE Common having a market value of $125.40 during the Valuation Period. If the average price of BANC ONE Common is below $36.85 during the Valuation Period, each share of CCB Common will be converted into 3.403 shares of BANC ONE Common, and if the average price of BANC ONE Common is above $44.55 during the Valuation Period, each share of CCB Common will be converted into 2.815 shares of BANC ONE Common. See "Consolidation--Exchange Rate." Management After the Merger Banc One Arizona will operate with Banc One Arizona's current officers and employees, with its principal place of business in Phoenix, Arizona. Banc One Arizona's current directors will serve as the directors of the surviving corporation following the Merger. It is anticipated that following the Merger, CCB will merge with Banc One Arizona's subsidiary, Bank One Utah, (the "Consolidation") and operate under the name of Bank One, Utah, National Association (the "Resulting Bank"). The Resulting Bank will conduct its banking operations at its present offices and, except for offices which are consolidated, CCB's offices will become branches of the Resulting Bank. The Resulting Bank, as a BANC ONE affiliate after the Consolidation, will continue to operate under BANC ONE's operating philosophy whereby it will have autonomy to match its products and services to the needs of its local communities. BANC ONE bank affiliates have authority to make decisions locally in "people-related" matters such as lending, personnel, charitable contributions and other community and related matters, relying upon BANC ONE and its state holding companies for "paper and computer related" matters such as assistance in accounting, certain legal matters, investment portfolio management, regulatory compliance, data processing and other matters which are generally best performed by specialists on a centralized basis. Tax Consequences Consummation of the Merger is conditioned on receipt by CAPITAL and BANC ONE of an opinion dated February 11, 1994 from Gerrish & McCreary, P.C. to the effect that no gain or loss will be recognized by CAPITAL's stockholders for Federal income tax purposes as a result of the exchange of their CAPITAL Common Stock for BANC ONE Common Stock in the Merger. The tax consequences of the proposed transaction to stockholders of CAPITAL are summarized under "MERGER-Federal Income Tax Consequences." The Consolidation is not expected to qualify as a tax-free transaction and the tax opinion of Gerrish & McCreary, P.C. will not address the Consolidation. Vote Required Not less than a majority of the outstanding shares of CAPITAL Common Stock entitled to vote thereon must vote in favor of the approval of the Merger Agreement in order for the transaction to be completed. Not less than two-thirds of the outstanding shares of CCB Common Stock entitled to vote thereon must vote in favor of approval of the Consolidation Agreement in order for the Consolidation to be completed. The directors and executive officers of CAPITAL and their affiliates and associates are entitled to vote 66.1% of the outstanding shares of CAPITAL Common Stock and each such holder has indicated his or her intent to vote such shares for approval of the Merger Agreement. The directors and executive officers of CCB, together with their affiliates, are entitled to vote 3.6% of the outstanding shares of CCB Common Stock. Additionally, CAPITAL owns 86.4% (81.53% after the exercise of all outstanding options) of CCB Common Stock and will vote such shares to approve the Consolidation Agreement. It is not necessary for the shareholders of BANC ONE to approve the merger or consolidation proposals. However, BANC ONE, as the sole shareholder of Banc One Arizona, has approved the Merger and the Merger Agreement and Banc One Arizona as the sole shareholder of Bank One Utah will approve the Consolidation and Consolidation Agreement. For information concerning voting by stockholders of CAPITAL or CCB on the proposed Merger or Consolidation. See "MERGER-General" and "VOTING AND MANAGEMENT INFORMATION-Voting." Rights of Dissenting Stockholders Under Utah law, certain rights are available to a stockholder of CAPITAL and CCB who does not vote his or her shares in favor of the Merger or Consolidation, respectively, and delivers to CAPITAL or CCB, before the vote is taken, written notice of intent to demand payment for his or her CAPITAL Common Stock or CCB Common Stock if the Merger or Consolidation, respectively, are consummated. See "VOTING AND MANAGEMENT INFORMATION--Rights of Dissenting Stockholders." Differences in Shareholder Rights There are differences between the rights of CAPITAL stockholders and BANC ONE shareholders and the rights of CCB Stockholders and BANC ONE shareholders. Both Ohio law and BANC ONE's Amended Articles of Incorporation contain "control share acquisition" provisions which mandate certain procedures and shareholder consents to approve certain share acquisitions. In addition, under Ohio law, in evaluating an acquisition proposal, directors of an Ohio corporation such as BANC ONE are permitted, in determining whether any matter is in the best interest of the corporation, to take into consideration the interests of the corporation's employees, suppliers, creditors and customers, the economy and community and societal considerations in the interest of the corporation and its shareholders. The Utah Code Annotated does not contain any similar provisions, nor do CAPITAL's Articles of Incorporation ("CAPITAL's Articles") or CCB's Articles of Incorporation ("CCB's Articles"). Utah law provides that a merger, consolidation, sale, lease or exchange of all or substantially all of a corporation's assets may be effected upon a vote of a majority of a corporation's outstanding shares entitled to vote. CAPITAL's Articles do not contain provisions similar to the provisions of BANC ONE's Amended Articles of Incorporation relating to control share acquisitions. BANC ONE's Articles contain a so-called "fair price" provision which mandates certain procedures and approvals for a business combination. CAPITAL's Articles and CCB's Articles do not contain similar provisions. See "COMPARATIVE RIGHTS OF SHAREHOLDERS--Special Voting Requirements for Certain Transactions." In addition, Ohio law contains provisions prohibiting certain business combinations between corporations and "Interested Stockholders." Utah law does not contain a similar provision. The effect of the supermajority and fair price provisions contained in BANC ONE's Articles may be to discourage certain potential business combinations which some shareholders may believe to be in their best interests and to make more difficult management changes which might occur if the potential business combination were successful. See "COMPARATIVE RIGHTS OF SHAREHOLDERS-- Comparisons of BANC ONE Common Stock and CAPITAL Common Stock." Cumulative voting is not used in the election of the Boards of Directors of BANC ONE, CAPITAL or CCB. See "COMPARATIVE RIGHTS OF SHAREHOLDERS--Comparison of BANC ONE Common Stock and CAPITAL's Common Stock." Regulatory Approvals In order for the proposed transactions to be completed, approval of BANC ONE's acquisition of CAPITAL must be obtained from the Board of Governors of the Federal Reserve System (the "Federal Reserve") and the Utah Commissioner of Financial Institutions (the "Utah Commissioner"). The Consolidation must also be approved by the Office of the Comptroller of the Currency (the "OCC") and the Utah Commissioner. The parties expect to receive these regulatory approvals by March 31, 1994. Conditions; Termination Consummation of the Merger is subject to satisfaction or waiver of various conditions, including compliance with respective covenants and confirmation of respective representations and warranties, the absence of any material adverse change in the financial condition or business of CAPITAL, CCB or BANC ONE, the fulfillment of certain earnings tests and other matters. CAPITAL, by action of its Board of Directors, may elect to terminate the Merger Agreement, whether before or after approval of the Merger by the stockholders of CAPITAL, by giving written notice of such election to BANC ONE within two NYSE trading days after the Valuation Period (the ten consecutive days on which shares of BANC ONE Common are traded on the NYSE ending on the sixth NYSE trading day immediately prior to the consummation of the merger) provided that the average price during the Valuation Period is less than $31.82. The Merger Agreement provides that either party may abandon the Merger if it is not consummated on or before July 15, 1994. See "MERGER-Conditions to the Merger" for a more complete discussion of the conditions to the Merger. Consummation of the Consolidation is subject to approval of the Consolidation Agreement by not less than two-thirds of the outstanding shares of CCB Common and all of the outstanding shares of Bank One Utah Common and procurement of all required regulatory approvals. See "Merger--Conditions to the Consolidation" for a more complete discussion of the conditions to the Consolidation. Selected Financial Data On March 30, 1993 BANC ONE acquired Valley National Corporation ("Valley"); on May 3, 1993 BANC ONE acquired Key Centurion Bancshares, Inc. ("Key") and First Community Bancorp, Inc. ("First Community"); on November 1, 1993 BANC ONE acquired Colorado Western Bancorp, Inc. ("Colorado Western"); on December 17, 1993 BANC ONE acquired First Financial Associates, Inc. ("First Financial"); and on December 31, 1993 BANC ONE acquired Capital Banking Group ("CBG"). On November 2, 1993 BANC ONE entered into an Agreement to acquire Liberty National Bancorp, Inc. ("Liberty"), Louisville, Kentucky. BANC ONE has also announced three other acquisitions which are not material individually or in the aggregate, and, are therefore not included in the accompanying selected financial data. For further discussion on these acquisitions, see "INFORMATION ABOUT BANC ONE CORPORATION". All balance sheets and income statements presented for BANC ONE have been restated to include the poolings of interests with Valley, Key and First Community. CAPITAL will be accounted for as a pooling of interests. The following table presents on a historical basis selected unaudited consolidated financial data for BANC ONE; CAPITAL; and CCB. The financial data is based on the consolidated financial statements of BANC ONE and CAPITAL, respectively, and the financial statements of CCB incorporated herein by reference.
SELECTED FINANCIAL DATA (2) (UNAUDITED) Nine months ended September 30, Year ended December 31, ---------------------------------------------------------------------------------------- 1993 1992 1991 1990 1989 1988 ------------- ------------ ------------ ------------ ------------ ------------ Total interest income and other income: BANC ONE.............................. $5,398,958 $7,358,393 $6,828,327 $6,151,959 $5,473,099 $4,844,127 CAPITAL .............................. 8,266 10,044 8,464 7,704 7,301 6,478 CCB................................... 8,253 10,027 8,462 7,702 7,295 6,476 Income (loss) from continuing operations: BANC ONE.............................. $834,338 $876,588 $664,288 $536,066 $304,916 $485,533 CAPITAL .............................. 1,162 1,336 1,114 620 533 226 CCB................................... 1,527 1,510 1,199 948 850 508 Income (loss) from continuing operations per common share: BANC ONE.............................. $2.18 $2.29 $1.82 $1.57 $0.97 (1) $1.57 CAPITAL .............................. 7.44 8.72 8.22 6.01 5.04 2.26 CCB................................... 10.49 10.70 9.46 7.65 7.05 4.23 Historical dividends declared per common share: BANC ONE.............................. $0.79 $0.89 $0.76 $0.69 $0.63 $0.55 CAPITAL .............................. 1.00 - - - - - CCB................................... 4.00 3.20 1.90 5.52 3.72 3.08 Total assets (end of period): BANC ONE.............................. $76,461,592 $76,739,119 $73,840,498 $56,610,126 $48,111,384 $46,972,739 CAPITAL .............................. 122,041 118,519 90,658 71,862 61,523 64,600 CCB................................... 121,815 118,212 90,604 71,829 61,449 64,508 Long-term borrowings (end of period): BANC ONE.............................. $1,708,953 $1,357,462 $943,726 $810,197 $624,232 $798,177 CAPITAL .............................. 1,056 1,210 1,385 1,635 1,858 2,023 CCB................................... 727 756 - - - - Total stockholders' equity (end of period): BANC ONE.............................. $6,759,920 $6,241,586 $5,559,370 $4,514,652 $3,633,542 $3,474,513 CAPITAL .............................. 6,840 5,829 3,538 2,425 1,909 1,377 CCB................................... 8,945 8,033 5,509 4,551 4,145 3,705 (1) The decrease in 1989's income from continuing operations per common share is due principally to a significant increase in Valley's provision for loan losses. (2) Gives effect to the 10% stock dividend on BANC ONE common stock payable on March 4, 1994 to BANC ONE common stockholders of record as of February 16, 1994.
Based upon the Merger Exchange Rates and Consolidation Exchange Rates, the following tables set forth per common share income from continuing operations, dividends, book value, and market value of (i) BANC ONE, (ii) CAPITAL; (iii) CCB; (iv) pro forma equiv one share of CAPITAL Common Stock based on BANC ONE Common Stock; and (v) pro forma equivalent of one share of CCB Common Stock based on BANC ONE Common Stock.
(iv) Per Share of (v) Per Share of CCB CAPITAL common stock CCB common stock assuming an exchange assuming an exchange rate of one share of rate of one share of CAPITAL common stock CCB common stock for 2.587 shares of for 3.403 shares of (i) (ii) (iii) BANC ONE common stock BANC ONE common stock --------- --------- --------- --------------------- --------------------- BANC BANC BANC ONE CAPITAL CCB ONE ONE --------- --------- --------- --------------------- --------------------- Income from continuing operations per common share: December 31, 1988 $1.57 $2.26 $4.23 $4.06 $5.34 December 31, 1989 0.97 (5) 5.04 7.05 2.51 3.30 December 31, 1990 1.57 6.01 7.65 4.06 5.34 December 31, 1991 1.82 8.22 9.46 4.71 6.19 December 31, 1992 2.29 8.72 10.70 5.92 7.79 September 30, 1993 2.18 7.44 10.49 5.64 7.42 Dividends per common share: December 31, 1988 0.55 - 3.08 1.42 1.87 December 31, 1989 0.63 - 3.72 1.63 2.14 December 31, 1990 0.69 - 5.52 1.79 2.35 December 31, 1991 0.76 - 1.90 1.97 2.59 December 31, 1992 0.89 - 3.20 2.30 3.03 September 30, 1993 0.79 1.00 4.00 2.04 2.69 Book value per common share as of September 30, 1993 17.35 45.49 58.30 44.88 59.04 Market value per common share as of August 10, 1993 (1) 39.45 (2) (3) (3) 102.06 134.25 Market value per common share as of February __, 1994 (4) (2) (3) (3) (1) The business day immediately preceding public announcement of the proposed merger. (2) Based on the closing price of BANC ONE common stock as reported on the New York Stock Exchange, adjusted for the five shares for four shares common stock split effective August 31, 1993 and the 10% common stock dividend payable on March 4, 1994 to BANC ONE common stockholders of record as of February 16, 1994. (3) No active trading exists for CAPITAL or CCB common stock. (4) A recent business day preceding the date of this Prospectus. (5) The decrease in 1989's income from continuing operations per common share is due principally to a significant increase in Valley's provision for loan losses.
(iv) Per Share of (v) Per Share of CCB CAPITAL common stock CCB common stock assuming an exchange assuming an exchange rate of one share of rate of one share of CAPITAL common stock CCB common stock for 2.364 shares of for 3.109 shares of (i) (ii) (iii) BANC ONE common stock BANC ONE common stock --------- --------- --------- --------------------- --------------------- BANC BANC BANC ONE CAPITAL CCB ONE ONE --------- --------- --------- --------------------- --------------------- Income from continuing operations per common share: December 31, 1988 $1.57 $2.26 $4.23 $3.71 $4.88 December 31, 1989 0.97 (5) 5.04 7.05 2.29 3.02 December 31, 1990 1.57 6.01 7.65 3.71 4.88 December 31, 1991 1.82 8.22 9.46 4.30 5.66 December 31, 1992 2.29 8.72 10.70 5.41 7.12 September 30, 1993 2.18 7.44 10.49 5.15 6.78 Dividends per common share: December 31, 1988 0.55 - 3.08 1.30 1.71 December 31, 1989 0.63 - 3.72 1.49 1.96 December 31, 1990 0.69 - 5.52 1.63 2.15 December 31, 1991 0.76 - 1.90 1.80 2.36 December 31, 1992 0.89 - 3.20 2.10 2.77 September 30, 1993 0.79 1.00 4.00 1.87 2.46 Book value per common share as of September 30, 1993 17.35 45.49 58.30 41.02 53.94 Market value per common share as of August 10, 1993 (1) 39.45 (2) (3) (3) 93.26 122.65 Market value per common share as of February __, 1994 (4) (2) (3) (3) (1) The business day immediately preceding public announcement of the proposed merger. (2) Based on the closing price of BANC ONE common stock as reported on the New York Stock Exchange, adjusted for the five shares for four shares common stock split effective August 31, 1993 and the 10% common stock dividend payable on March 4, 1994 to BANC ONE common stockholders of record as of February 16, 1994. (3) No active trading exists for CAPITAL or CCB common stock. (4) A recent business day preceding the date of this Prospectus. (5) The decrease in 1989's income from continuing operations per common share is due principally to a significant increase in Valley's provision for loan losses.
(iv) Per Share of (v) Per Share of CCB CAPITAL common stock CCB common stock assuming an exchange assuming an exchange rate of one share of rate of one share of CAPITAL common stock CCB common stock for 2.140 shares of for 2.815 shares of (i) (ii) (iii) BANC ONE common stock BANC ONE common stock --------- --------- --------- --------------------- --------------------- BANC BANC BANC ONE CAPITAL CCB ONE ONE --------- --------- --------- --------------------- --------------------- Income from continuing operations per common share: December 31, 1988 $1.57 $2.26 $4.23 $3.36 $4.42 December 31, 1989 0.97 (5) 5.04 7.05 2.08 2.73 December 31, 1990 1.57 6.01 7.65 3.36 4.42 December 31, 1991 1.82 8.22 9.46 3.89 5.12 December 31, 1992 2.29 8.72 10.70 4.90 6.45 September 30, 1993 2.18 7.44 10.49 4.67 6.14 Dividends per common share: December 31, 1988 0.55 - 3.08 1.18 1.55 December 31, 1989 0.63 - 3.72 1.35 1.77 December 31, 1990 0.69 - 5.52 1.48 1.94 December 31, 1991 0.76 - 1.90 1.63 2.14 December 31, 1992 0.89 - 3.20 1.90 2.51 September 30, 1993 0.79 1.00 4.00 1.69 2.22 Book value per common share as of September 30, 1993 17.35 45.49 58.30 37.13 48.84 Market value per common share as of August 10, 1993 (1) 39.45 (2) (3) (3) 84.42 111.05 Market value per common share as of February __, 1994 (4) (2) (3) (3) (1) The business day immediately preceding public announcement of the proposed merger. (2) Based on the closing price of BANC ONE common stock as reported on the New York Stock Exchange, adjusted for the five shares for four shares common stock split effective August 31, 1993 and the 10% common stock dividend payable on March 4, 1994 to BANC ONE common stockholders of record as of February 16, 1994. (3) No active trading exists for CAPITAL or CCB common stock. (4) A recent business day preceding the date of this Prospectus. (5) The decrease in 1989's income from continuing operations per common share is due principally to a significant increase in Valley's provision for loan losses.
THE SPECIAL MEETING OF STOCKHOLDERS OF CAPITAL This Prospectus and Joint Proxy Statement is being furnished to the stockholders of CAPITAL in connection with the solicitation of proxies by the CAPITAL Board for use at CAPITAL's Special Meeting of Stockholders and at any adjournment or adjournments thereof (the "CAPITAL Special Meeting"). The Special Meeting of Stockholders of CAPITAL will be held on , 1994, at : .m., local time at 2200 South State Street, Salt Lake City, Utah. Purpose of the Special Meeting of Stockholders At the CAPITAL Special Meeting, the holders of CAPITAL Common Stock will vote on the approval of the Merger Agreement. Record Dates and Voting Rights The CAPITAL Board has fixed the close of business on February 28, 1994 as the record date for determination of stockholders entitled to notice of and to vote at the Special Meeting. As of the record date, CAPITAL had outstanding and entitled to vote 150,345 shares of CAPITAL Common Stock. Each share of CAPITAL Common Stock is entitled to one vote. The Merger Agreement must be approved by a majority of CAPITAL's stockholders. Votes, whether in person or by proxy, will be counted and tabulated by inspectors appointed by CAPITAL. Abstentions and broker non-votes will not be counted as votes either "for" or "against" any matters coming before the CAPITAL Special Meeting, nor will such abstentions and broker non-votes be counted toward determining a quorum. In accordance with Utah law and CAPITAL's Articles and Bylaws, such abstentions have the effect of a "no" vote since state law requires the Merger Agreement to be authorized and approved by the affirmative vote of not less than a majority of the CAPITAL Common Stock entitled to be voted, rather than a majority of those shares actually voting. Proxies Proxies for use at the CAPITAL Special Meeting accompany this Proxy Statement. A stockholder may use a proxy whether or not he or she intends to attend the Special Meeting in person. The proxy may be revoked in writing by the person giving it at any time before it is exercised by notice to the Secretary of CAPITAL, by submitting a later dated proxy or by attending and voting in person at the CAPITAL Special Meeting. All proxies validly submitted and not revoked will be voted in the manner specified therein. IF NO SPECIFICATION IS MADE, THE PROXIES WILL BE VOTED IN FAVOR OF APPROVAL OF THE MERGER AGREEMENT. The CAPITAL Board is not aware of any other matters which may be presented for action at the CAPITAL Special Meeting, but if other matters do properly come before the meeting it is intended that the shares represented by the accompanying proxy will be voted by the persons named in the proxy in accordance with their best judgment. Solicitation of proxies will be made in person, by mail, or by telephone or telegraph by present and former directors, officers and employees of CAPITAL and CCB for which no additional compensation will be paid. CAPITAL will bear the cost of solicitation of proxies from its stockholders and may reimburse brokers and others for their expenses in forwarding solicitation material to beneficial owners of its voting stock. CAPITAL held its 1993 Annual Meeting of Shareholders on May 18, 1993. THE SPECIAL MEETING OF STOCKHOLDERS OF CCB This Prospectus and Joint Proxy Statement is being furnished to the stockholders of CCB in connection with the solicitation of proxies by the CCB Board for use at CCB's Special Meeting of Stockholders and at any adjournment or adjournments thereof (the "CCB Special Meeting"). The Special Meeting of Stockholders of CCB will be held on , 1994, at : .m., local time at 2200 South State Street, Salt Lake City, Utah. Purpose of the Special Meeting of Stockholders At the CCB Special Meeting, the holders of CCB Common Stock will vote on the approval of the Consolidation Agreement. Record Dates and Voting Rights The CCB Board has fixed the close of business on February 28, 1994 as the record date for determination of stockholders entitled to notice of and to vote at the Special Meeting. As of the record date, CCB had outstanding and entitled to vote 132,850 shares of CCB Common Stock (prior to the consolidation, all outstanding options to acquire CCB Common Stock will be exercised and CCB will have 140,767 shares of CCB Common Stock outstanding). Each share of CCB Common Stock is entitled to one vote, except for any shares owned by CAPITAL. The Consolidation Agreement must be approved by two-thirds of CCB's stockholders. Votes, whether in person or by proxy, will be counted and tabulated by inspectors appointed by CCB. Abstentions and broker non-votes will not be counted as votes either "for" or "against" any matters coming before the CCB Special Meeting, nor will such abstentions and broker non-votes be counted toward determining a quorum. In accordance with Utah law and CCB's Articles and Bylaws, such abstentions have the effect of a "no" vote since state law requires the Consolidation Agreement to be authorized and approved by the affirmative vote of not less than a majority of the CCB Common Stock entitled to be voted, rather than two-thirds of those shares actually voting. Proxies Proxies for use at the CCB Special Meeting accompany this Proxy Statement. A stockholder may use a proxy whether or not he or she intends to attend the Special Meeting in person. The proxy may be revoked in writing by the person giving it at any time before it is exercised by notice to the Secretary of CCB, by submitting a later dated proxy or by attending and voting in person at the CCB Special Meeting. All proxies validly submitted and not revoked will be voted in the manner specified therein. IF NO SPECIFICATION IS MADE, THE PROXIES WILL BE VOTED IN FAVOR OF APPROVAL OF THE MERGER AGREEMENT. The CCB Board is not aware of any other matters which may be presented for action at the CCB Special Meeting, but if other matters do properly come before the meeting it is intended that the shares represented by the accompanying proxy will be voted by the persons named in the proxy in accordance with their best judgment. Solicitation of proxies will be made in person, by mail, or by telephone or telegraph by present and former directors, officers and employees of CAPITAL and CCB for which no additional compensation will be paid. CCB will bear the cost of solicitation of proxies from its stockholders and may reimburse brokers and others for their expenses in forwarding solicitation material to beneficial owners of its voting stock. CCB held its 1993 Annual Meeting of Shareholders on May 18, 1993. MERGER AND CONSOLIDATION The information in this Prospectus and Joint Proxy Statement concerning the terms of the Merger and Consolidation is a summary only and is qualified in its entirety by reference to the Merger Agreement and Consolidation Agreement. General The Merger Agreement provides for the Merger of CAPITAL with and into Banc One Arizona. As a result of the Merger, CCB will become a subsidiary of BANC ONE and Banc One Arizona. Upon the effectiveness of the Merger (the "Effective Time") each of the outstanding shares of CAPITAL Common Stock will be converted into shares of BANC ONE Common Stock (subject to adjustments in certain circumstances), which shares of BANC ONE Common Stock will be issued as a result of the Merger. See "MERGER--Exchange Rate." The Consolidation Agreement provides for the merger of CCB with and into Bank One Utah. Upon the effectiveness of the Consolidation (the "Consolidation Effective Time") each of the outstanding shares of CCB Common Stock not owned by Capital or BANC ONE or Banc One Arizona following the Merger will be converted into shares of BANC ONE Common Stock (subject to adjustments in certain circumstances), which shares of BANC ONE Common Stock will be issued as a result of the Consolidation. The affirmative vote of a majority of the outstanding shares of CAPITAL Common Stock entitled to vote at the Capital Special Meeting is required in order to approve the Merger Agreement. See "VOTING AND MANAGEMENT INFORMATION-Voting." However, it is a condition to BANC ONE's obligation to consummate the Merger that not more than 10% of the maximum aggregate total number of shares of BANC ONE Common Stock which could be issued by BANC ONE in the Merger and Consolidation are to be settled in cash as a result of fractional share interests or are to be issued to CAPITAL stockholders who have asserted rights of dissenting shareholders. The affirmative vote of two-thirds of the outstanding shares of CCB Common Stock entitled to vote at the CCB Special Meeting is required in order to approve the Consolidation Agreement. See "VOTING AND MANAGEMENT INFORMATION-Rights of Dissenting Stockholders." Subject to such stockholder approval and the satisfaction of certain conditions and receipt of all requisite regulatory approvals, in each case as provided for in the Merger Agreement, the Merger will become effective upon the issuance by the Secretary of State of the State of Utah of a certificate of merger with respect thereto as provided in applicable provisions of the Utah Code Annotated. The Boards of Directors of BANC ONE, Banc One Arizona and CAPITAL have approved the Merger Agreement and the Boards of Directors of Bank One Utah and CCB have approved the Consolidation Agreement. BANC ONE, as the sole shareholder of Banc One Arizona, has approved the Merger Agreement and Banc One Arizona, as the sole shareholder of Bank One Utah, will approve the Consolidation Agreement. Approval of the Merger Agreement by the shareholders of BANC ONE is not required for consummation of the Merger or Consolidation. Exchange Rate and Consolidation Exchange Rate At the Effective Time, stock issued by reason of the Merger will be allocated to the stockholders of record of CAPITAL as of the Effective Time as follows: If the average price of BANC ONE Common is not less than $36.85 nor greater than $44.55 during the Valuation Period (as defined below), each share of CAPITAL Common will be converted into an amount of BANC ONE Common having a market value of $95.33 during the Valuation Period. If the average price of BANC ONE Common is below $36.85 during the Valuation Period, each share of CAPITAL Common will be converted into 2.587 shares of BANC ONE Common, and if the average price of BANC ONE Common is above $44.55 during the Valuation Period, each share of CAPITAL Common will be converted into 2.140 shares of BANC ONE Common. The Valuation Period will be the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") as reported in The Wall Street Journal for NYSE composite transactions ending on the sixth NYSE trading day immediately prior to the Merger (the "Exchange Rate"). The Exchange Rate gives effect to the 5 for 4 shares Common Stock split declared by BANC ONE's Board of Directors on July 20, 1993, payable August 31, 1993 to BANC ONE Common shareholders of record on August 3, 1993 and the 10% Common Stock dividend declared by BANC ONE's Board of Directors on January 25, 1994, payable March 4, 1994 to BANC ONE Common Shareholders of record on February 16, 1994. At the Effective Time, stock issued by reason of the Consolidation will be allocated to the stockholders of record of CCB, other than CAPITAL or BANC ONE or Banc One Arizona following the Merger, as of the Effective Time as follows: If the average price of BANC ONE Common is not less than $36.85 nor greater than $44.55 during the Valuation Period (as defined above), each share of CCB Common will be converted into an amount of BANC ONE Common having a market value of $125.40 during the Valuation Period. If the average price of BANC ONE Common is below $36.85 during the Valuation Period, each share of CCB Common will be converted into 3.403 shares of BANC ONE Common, and if the average price of BANC ONE Common is above $44.55 during the Valuation Period, each share of CCB Common will be converted into 2.815 shares of BANC ONE Common (the "Consolidation Exchange Rate"). The Consolidation Exchange Rate gives effect to the 5 for 4 shares Common Stock split declared by BANC ONE's Board of Directors on July 20, 1993, payable August 31, 1993 to BANC ONE Common shareholders of record on August 3, 1993 and the 10% Common Stock dividend declared by BANC ONE's Board of Directors on January 25, 1994, payable March 4, 1994 to BANC ONE Common Shareholders of record on February 16, 1994. Operations After the Merger and Consolidation Upon the consummation of the Merger, CAPITAL will be merged into Banc One Arizona and the separate corporate existence of CAPITAL will cease. Banc One Arizona, as the surviving corporation in the Merger and a wholly owned subsidiary of BANC ONE, will continue operations under the name "Banc One Arizona Corporation" and will operate with Banc One Arizona's current officers and employees, with its principal place of business at Phoenix, Arizona. Banc One Arizona's current directors will serve as the directors of the surviving corporation following the Merger. It is anticipated that following the Merger, the Consolidation will occur. Following the Consolidation, the present directors, officers and employees of Bank One Utah will continue in those same capacities for the Resulting Bank. The Resulting Bank will conduct its banking operations at its present offices. The Resulting Bank, as a BANC ONE affiliate after the Merger and Consolidation, will operate under BANC ONE's operating philosophy whereby it will have autonomy to match its products and services to the needs of its local communities. Similarly, BANC ONE bank affiliates have authority to make decisions locally in "people-related" matters such as lending, personnel, charitable contributions and other community and related matters, relying upon BANC ONE and its state holding companies for "paper and computer related" matters such as assistance in accounting, certain legal matters, investment portfolio management, regulatory compliance, data processing and other matters which are generally best performed by specialists on a centralized basis. As of February 11, 1994, there were no outstanding unexercised options for shares of CAPITAL Common Stock held by officers and directors of CAPITAL. As of February 11, 1994, there were 7,917 unexercised options outstanding for shares of CCB Common Stock held by an individual not affiliated with CCB or CAPITAL. The Consolidation Agreement requires that these options be exercised prior to the Consolidation. Background of Transaction During 1992, the Board of Directors of CAPITAL and CCB (collectively, "CAPITAL") spent considerable time discussing which direction CAPITAL should proceed in order to maximize shareholder value. In early 1993, the Board hired an additional senior level management officer as President of Capital Bancorp. This new officer was to assist the Board in analyzing three long-term strategies and to assist in implementing the strategy of choice. The three strategies considered were: 1. Sell or merge CAPITAL with a larger institution whose stock is publicly traded. 2. Merge with or acquire other small banking institutions in order to grow in size and gain the economies of scale whereby public registration and trading of CAPITAL's stock would be economically justified. 3. Continue to operate as a closely held community bank and grow internally. After considerable analysis and discussion, the Board of Directors chose to pursue the option of growth through acquisition or merger with other banking institutions. The Board felt it appropriate, however, to retain the option to consider any future unsolicited offers from larger banks seeking to acquire CAPITAL. In April 1993, the CEO of Bank One Utah, on an unsolicited basis, made contact with the Chairman of CAPITAL. He stated BANC ONE's desire to discuss the possibility of acquiring CAPITAL in an exchange of stock. In late May 1993, CAPITAL's senior management met with Bank One Utah's senior management where BANC ONE was told that further discussions would be pursued only if BANC ONE presented an offer which warranted such discussions. BANC ONE then gave an indicated exchange ratio which equated to approximately 2.3 times CAPITAL's book value. CAPITAL's Board met and determined such an offer was fair and in the best interest of shareholders. The Board instructed CAPITAL's senior management to cooperate with BANC ONE in performing preliminary due diligence which would lead to a formal written offer. CAPITAL contacted several law firms and elected to retain the law firm of Gerrish & McCreary, P.C. to assist CAPITAL's Board and management in structuring and negotiating the various terms of the transaction. Gerrish & McCreary specializes in bank legal work and has represented numerous banks in merger and acquisition transactions. In July 1993, BANC ONE presented a written offer of a stock for stock exchange, the value of which equated to 2.3 times CAPITAL's book value at the time. The offer was subject to the satisfactory completion of certain due diligence reviews. CAPITAL's Board met shortly thereafter and discussed extensively the merits of accepting BANC ONE's offer. It was determined that the offer was fair and in the best interest of shareholders. CAPITAL's Board voted unanimously to move forward with exclusive merger discussions with BANC ONE. CAPITAL's Board instructed senior management to negotiate the numerous terms and conditions of the merger with BANC ONE and to work toward signing a Definitive Merger Agreement. On September 17, 1993, two separate Definitive Agreements wherein Capital Bancorp would be merged into Banc One Arizona and subsequently Capital City Bank would be consolidated with Bank One Utah were unanimously approved by CAPITAL's Board and signed by CAPITAL and BANC ONE. The Agreements were subject to various representations and warranties made by all parties including due diligence procedures yet to be performed by BANC ONE. After completion of all due diligence, both parties negotiated and signed an Amendment to the Merger Agreement reducing by five percent the number of shares of BANC ONE stock to be received by CAPITAL's shareholders. Merger and Consolidation Recommendations and Reasons for Transaction The terms of the merger and consolidation as outlined in the Merger Agreement and Consolidation Agreement were the result of arms-length negotiations between CAPITAL, CCB and BANC ONE and their respective representatives. In the course of reaching its decision to approve the Merger Agreement and Consolidation Agreement, the Boards of Directors of CAPITAL and CCB, respectively, consulted with their legal advisors and with senior management. Numerous factors, including, but not limited to, the following were considered: 1. The current condition and growth prospects for CAPITAL, including historical and prospective results of operations, financial condition and capital position. 2. The economic environment and competitive banking climate in Utah, with special consideration given to the increased competition coming from out-of-state financial institutions. 3. That a business combination with a larger bank holding company, like BANC ONE, would provide greater short term and long term risk adjusted returns to CAPITAL and CCB's shareholders and would benefit CCB's depositors, loan customers and the community in which CAPITAL and CCB operate. 4. General industry conditions, including a regulatory environment especially burdensome for small community banks, increased competition for deposits and loans from non-regulated financial institutions, and the heightened competitive environment created by the rapid consolidation occurring in the banking industry. 5. BANC ONE's proposed exchange ratios in monetary value to CAPITAL and CCB's shareholders, both in absolute terms and as compared to other similar merger and consolidation transactions. CAPITAL and CCB's Boards of Directors believe that the affiliation with BANC ONE will result in a competitively stronger combined entity with increased financial and human resources which will lead to enhanced financial performance and a larger and more geographically diverse banking operation. As of January 31, 1994, the directors and executive officers of CAPITAL, together with their affiliates and associates, as a group, were entitled to vote approximately 99,336 shares of CAPITAL Common Stock representing approximately 66.1% of the shares outstanding. These persons will be entitled to receive the same consideration for their shares as any other CAPITAL stockholder upon approval of the Merger. The directors and executive officers of CCB, together with their affiliates are entitled to vote 3.6% of the outstanding shares of CCB Common Stock. Additionally, CAPITAL owns 114,768 representing approximately 86.4% (81.53% after the exercise of all outstanding options) of the shares outstanding. The CCB shares owned by CAPITAL will not be converted into BANC ONE Common. CAPITAL believes that all of the directors' and executive officers' shares will be voted in favor of the Merger and it will vote all of the CCB shares it owns in favor of the Consolidation. After the Merger, CAPITAL's directors and executive officers will own less than 1% of the shares of BANC ONE Common Stock outstanding. CAPITAL AND CCB'S BOARDS OF DIRECTORS UNANIMOUSLY RECOMMEND THAT THE MERGER AGREEMENT AND CONSOLIDATION AGREEMENT BE APPROVED BY THE STOCKHOLDERS OF CAPITAL AND CCB, RESPECTIVELY. BANC ONE believes that the affiliation of CAPITAL with BANC ONE and the acquisition of CCB thereby will provide BANC ONE with a more meaningful presence in the Salt Lake City, Utah area and an expansion of BANC ONE's customer base and assets. Such expansion will provide BANC ONE with the opportunity to realize increased economies of scale while serving new customers with the expertise and assistance of the capable and experienced staff of CCB. Conditions to the Merger; Termination Consummation of the Merger is subject to satisfaction of a number of conditions, including: (1) the receipt of all necessary approvals of the acquisition by governmental agencies and authorities, including the Federal Reserve and the Utah Commissioner of financial Institutions, and each of such approvals shall remain in full force and effect at the Effective Time; (2) there being no change in the consolidated financial condition, aggregate net assets, shareholders' equity, business or operating results of CAPITAL and CCB, taken as a whole, or BANC ONE and its subsidiaries, taken as a whole, from June 30, 1993 to the Effective Time, that has had a material adverse effect; (3) compliance by CAPITAL, BANC ONE and Banc One Arizona with their respective covenants and confirmation of their respective representations and warranties as set forth in the Merger Agreement, including the agreement of CAPITAL that, except with the approval of BANC ONE or as otherwise permitted by the Merger Agreement, it will not (a) from June 30, 1993 to the Effective Time, pay any cash dividends, except as permitted under the Merger Agreement; (b) effect any changes in connection with its equity capitalization; or (c) conduct its banking operations other than in the ordinary course of business; (4) approval of the Merger Agreement and the Merger by the requisite vote of stockholders of CAPITAL Common Stock (see "MERGER-General" and "VOTING AND MANAGEMENT INFORMATION-Voting"); (5) receipt by CAPITAL and BANC ONE of the opinion relative to the Federal income tax consequences referred to under the caption "MERGER-Federal Income Tax Consequences"; (6) receipt by BANC ONE of an opinion from CAPITAL's counsel and receipt by CAPITAL of an opinion from counsel for BANC ONE and Banc One Arizona, which opinions are to be in the general form of those annexed to the Merger Agreement; (7) satisfaction by BANC ONE and CAPITAL of the respective earnings tests set forth in the Merger Agreement or as otherwise agreed between the parties; (8) fractional share interests in BANC ONE Common Stock to be paid to former holders of CAPITAL Common Stock in cash in the exchange (see "MERGER-Fractional Shares") and shares of BANC ONE Common Stock to which holders of CAPITAL Common Stock would have been entitled as of the consummation of the Merger, but who have taken steps to perfect their rights as dissenting stockholders pursuant to applicable law, shall not exceed 10% of the maximum aggregate number of shares of BANC ONE Common Stock which could be issued as a result of the Merger and Consolidation; (9) the shares of BANC ONE Common Stock to be issued in exchange for CAPITAL Common Stock shall have been listed on the NYSE; (10) receipt by BANC ONE of the written opinion of Coopers & Lybrand, independent certified public accountants, that the transaction contemplated by the Merger Agreement may be properly accounted for as a pooling-of-interests; (11) the total number of shares of CAPITAL Common Stock issued and outstanding shall not be more than 150,345 shares; and (12) Receipt of an opinion from an Investment Banker to the effect that the Merger and Consolidation are fair to the shareholders of CAPITAL and CCB, respectively, from a financial point of view. The provisions of the Merger Agreement, including the foregoing conditions, may be waived at any time by the party which is entitled to the benefits thereof. However, after the stockholders of CAPITAL have approved the Merger Agreement, CAPITAL may only amend the Merger Agreement if, in the opinion of CAPITAL's Board of Directors, such amendment will not have a material adverse effect on the benefits intended under the Merger Agreement for the stockholders of CAPITAL. The Merger Agreement may be terminated at any time prior to the Effective Time of the Merger, whether before or after approval by the stockholders of CAPITAL, by written notice from BANC ONE to CAPITAL, or from CAPITAL to BANC ONE, as the case may be, upon the occurrence of any of the following: (i) if any material condition to either party's obligations under the Merger Agreement is not satisfied or waived at the time or times contemplated thereby (each party's right to terminate under this clause (i) shall relate only to conditions to that party's obligations); (ii) in the event of a material breach by a party of any representation, warranty, condition or agreement contained in the Merger Agreement that is not cured within 30 days of the giving of notice to such party by the other party; or (iii) if the Merger shall not have been consummated on or before July 15, 1994. The Merger Agreement also may be terminated, and the Merger thereby abandoned, by the mutual consent of the Boards of Directors of CAPITAL and BANC ONE at any time prior to the effective date of the Merger. CAPITAL, by action of its Board of Directors, may elect to terminate the Merger Agreement, whether before or after approval of the Merger by the stockholders of CAPITAL, by giving written notice of such election to BANC ONE within two NYSE trading days after the Valuation Period (the ten consecutive days on which shares of BANC ONE Common are traded on the NYSE ending on the sixth NYSE trading day immediately prior to the consummation of the merger) provided that the average price during the Valuation Period is less than $31.82. If the Merger is not consummated other than by reason of a willful breach of any party to the Merger Agreement, CAPITAL, BANC ONE and Banc One Arizona will each pay all of its own expenses incurred incident to such transaction, except for printing expenses which will be paid by BANC ONE. Conditions to the Consolidation Consummation of the Consolidation is subject to certain conditions including (but not limited to) the following significant conditions: (1) approval of the Consolidation by the Utah Commissioner and the OCC; (2) ratification and confirmation of the Consolidation Agreement by the requisite vote of CCB shareholders and the Bank One Utah shareholder, Banc One Arizona, (see "Consolidation--General" and "Voting by CCB Shareholders"); (3) redemption of the preferred stock of CCB and the exercise of all outstanding options for CCB Common Stock; and (4) Consummation of the Merger. As a result of the Consolidation being conditioned upon consummation of the Merger, the conditions of the Merger could be viewed as indirect conditions of the Consolidation. The Consolidation Agreement may be amended at any time by agreement between Bank One Utah and CCB. The Consolidation may be terminated at any time by CCB and Bank One Utah and by either bank in the event the Merger Agreement is terminated. FEDERAL INCOME TAXES Federal Income Tax Consequences of the Merger The following is a summary of certain material U.S. Federal income tax consequences of the Merger, including certain consequences to holders of CAPITAL Common Stock who are citizens or residents of the United States and who hold their shares as capital assets. It does not discuss all tax consequences that may be relevant to CAPITAL stockholders subject to special Federal income tax treatment (such as insurance companies, dealers in securities, certain retirement plans, financial institutions, tax exempt organizations or foreign persons), or to CAPITAL stockholders who acquired their shares of CAPITAL Common Stock pursuant to the exercise of employee stock options or otherwise as compensation. The summary does not address the state, local or foreign tax consequences of the Merger, if any. Pursuant to the terms of the Merger Agreement, CAPITAL and BANC ONE will receive the opinion of Gerrish & McCreary, P.C., dated as of the Effective Time, to the effect that, for Federal income tax purposes: (1) The Merger will constitute a reorganization within the meaning of Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code; (2) No gain or loss will be recognized by BANC ONE or CAPITAL as a consequence of the transactions contemplated by the Merger Agreement; (3) No gain or loss will be recognized by the stockholders of CAPITAL on the exchange of their shares of CAPITAL Common Stock for shares of BANC ONE Common Stock, except as described below with respect to cash received pursuant to the exercise of statutory dissenters' rights or for fractional share interests; (4) The Federal income tax basis of the BANC ONE Common Stock (including fractional share interests) received by holders of CAPITAL Common Stock will be the same as the Federal income tax basis of the CAPITAL Common Stock surrendered in exchange therefor; and (5) The holding period of the BANC ONE Common Stock received by a holder of CAPITAL Common Stock will include the period for which the CAPITAL Common Stock exchanged therefor was held, provided the exchanged CAPITAL Common Stock was held as a capital asset by such holder on the date of the exchange. A CAPITAL stockholder who receives cash in lieu of a fractional share interest in BANC ONE Common Stock will be treated as having received the cash in redemption of the fractional share interest. The receipt of cash in lieu of a fractional share interest should generally result in capital gain or loss to the holder equal to the difference between the amount of cash received and the portion of the holder's Federal income tax basis in the CAPITAL Common Stock allocable to the fractional share interest. Such capital gain or loss will be long-term capital gain or loss if the holder's holding period for the BANC ONE Common Stock received, determined as set forth above, is longer than one year. A dissenting stockholder who receives cash in exchange for shares of CAPITAL Common Stock will recognize capital gain or loss equal to the difference between the amount of cash received and the holder's Federal income tax basis in the shares. Such capital gain or loss will be long-term capital gain or loss if the holder has held the shares for more than one year as of the Effective Time of the Merger. Federal Income Tax Consequences of the Consolidation A tax ruling from the Internal Revenue Service with respect to the tax consequences of the Consolidation has not been requested. Tax counsel for CAPITAL, CCB and BANC ONE have, however, advised CAPITAL and CCB that the exchange by CCB's minority shareholders of their shares of CCB Common Stock for shares of BANC ONE Common may result in a taxable event to such shareholders. It is uncertain whether the exchange of CCB Common Stock for shares of BANC ONE Common by the minority shareholders of CCB pursuant to the Consolidation Agreement will require such shareholders to recognize gain or loss equal to the difference of the tax basis of their shares of CCB Common Stock and the fair market value of the BANC ONE Common they receive pursuant to the Consolidation. Tax Consequences -- General THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED ON THE INTERNAL REVENUE CODE (AND AUTHORITIES THEREUNDER) AS IN EFFECT ON THE DATE OF THIS PROSPECTUS, WITHOUT CONSIDERATION OF THE PARTICULAR FACTS OR CIRCUMSTANCES OF ANY STOCKHOLDER. STOCKHOLDERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER IN THEIR PARTICULAR SITUATIONS, AS WELL AS CONSEQUENCES UNDER ANY APPLICABLE STATE, LOCAL OR FOREIGN TAX LAWS. Conversion of Shares and Exchange of Certificates Upon consummation of the Merger and the Consolidation, the outstanding shares of CAPITAL Common Stock and CCB Common Stock will be converted into shares of BANC ONE Common Stock at the Exchange Rate calculated as described under the captions "MERGER--Exchange Rate" and "Consolidation--Exchange Rate," respectively. Except in the event that CAPITAL, CCB or BANC ONE shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine their respective Common Stock or declare a dividend, or make a distribution, on their respective Common Stock in any security convertible into such Common Stock prior to the time the Merger and Consolidation become effective, no further adjustments will be made in the Exchange Rate or the Consolidation Exchange Rate. However, in the event of such a transaction, appropriate adjustment will be made in the Exchange Rate and the Consolidation Exchange Rate. The Exchange Rate and the Consolidation Exchange Rate have been adjusted to reflect the 5 shares for 4 shares common stock split declared by BANC ONE's Board of Directors on July 20, 1993 and payable August 31, 1993 to shareholders of record on August 3, 1993 and the 10% stock dividend declared by BANC ONE's Board of Directors on January 25, 1994 and payable on March 4, 1994 to shareholders of record on February 16, 1994. As soon as practicable after the Merger and Consolidation become effective, instructions and forms will be furnished to the stockholders of CAPITAL and CCB for use in exchanging their CAPITAL and CCB share certificates for certificates of BANC ONE Common Stock. If any certificate for shares of BANC ONE Common Stock is to be issued in a name other than that in which the certificate for shares of CAPITAL Common Stock or CCB Common Stock surrendered for exchange is registered, the certificate so surrendered must be properly endorsed or otherwise be in proper form for transfer and the person requesting such exchange must pay to BANC ONE or its transfer agent any applicable transfer or other taxes required by reason of the issuance of the certificate. Until so surrendered, certificates formerly representing shares of CAPITAL Common Stock and CCB Common Stock will be deemed for all purposes to evidence ownership of the number of shares of BANC ONE Common Stock into which such shares have been converted. Dividends and other distributions, if any, that become payable on BANC ONE Common Stock pending exchange of certificates representing shares of CAPITAL Common Stock and CCB Common Stock will be retained by BANC ONE until surrender of such certificates, at which time such dividends and distributions will be paid, without interest. In addition, after the Effective Time the holders of certificates formerly representing shares of CAPITAL Common Stock and CCB Common Stock shall cease to have rights with respect to such shares (except such rights, if any, as holders of certificates representing CAPITAL Common Stock or CCB Common Stock may have as dissenting stockholders), and, except as aforesaid, their sole rights shall be to exchange such certificates for shares of BANC ONE Common Stock in accordance with the Merger Agreement and Consolidation Agreement. Fractional Shares No fractional shares of BANC ONE Common Stock will be exchanged for shares of CAPITAL Common Stock or CCB Common Stock. In lieu thereof, each stockholder of CAPITAL and CCB having a fractional interest resulting from the exchange of CAPITAL Common Stock and CCB Common Stock for BANC ONE Common Stock will be paid by BANC ONE an amount in cash equal to the value of such fractional interest based upon the closing price of BANC ONE Common Stock on the NYSE on the fifth day immediately preceding the day on which the merger is consummated during which shares of BANC ONE Common Stock are traded on the NYSE as reported in The Wall Street Journal for NYSE Composite Transactions. Resales by Affiliates The shares of BANC ONE Common Stock issuable to CAPITAL and CCB stockholders upon consummation of the Merger and Consolidation, respectively, have been registered under the Securities Act, but such registration does not cover resales by affiliates of CAPITAL and CCB ("Affiliates"). BANC ONE Common Stock received and beneficially owned by those CAPITAL and CCB stockholders who are deemed to be Affiliates may be resold without registration as provided for by Rule 145 under the Securities Act, or as otherwise permitted. The term Affiliate is defined to include any person who, directly or indirectly, controls, or is controlled by, or is under common control with CAPITAL or CCB at the time the Merger Agreement is submitted for approval by a vote of the stockholders of CAPITAL Common Stock or CCB Common Stock. Each Affiliate who desires to resell the BANC ONE Common Stock received in the Merger must sell such BANC ONE Common Stock either (i) pursuant to an effective registration statement under the Securities Act, (ii) in accordance with the applicable provisions of Rule 145 under the Securities Act or (iii) in a transaction which, in the opinion of counsel for such Affiliate or as described in a "no-action" or interpretive letter from the Staff of the Commission, in each case reasonably satisfactory in form and substance to BANC ONE, states that such resale is exempt from the registration requirements of the Securities Act. Rule 145(d) requires that persons deemed to be Affiliates resell their BANC ONE Common Stock pursuant to certain of the requirements of Rule 144 under the Securities Act if such BANC ONE Common Stock is sold within the first two years after the receipt thereof. After two years, if such person is not an affiliate of BANC ONE and BANC ONE is current in the filing of its periodic securities law reports, a former Affiliate of CAPITAL or CCB may freely resell the BANC ONE Common Stock received in the Merger without limitation. After three years from the issuance of the BANC ONE Common Stock, if such person is not an affiliate of BANC ONE at the time of sale or for at least three months prior to such sale, such person may freely resell such BANC ONE Common Stock, without limitation, regardless of the status of BANC ONE's periodic securities law reports. CAPITAL and CCB have agreed to provide BANC ONE with a list of those persons who may be deemed to be Affiliates at the time of the CAPITAL Special Meeting and CCB Special Meeting. CAPITAL and CCB will use their best efforts to cause each such person to deliver to BANC ONE prior to the Effective Time a written agreement to the effect that no sale will be made of any shares of BANC ONE Common Stock received in the Merger or Consolidation by an Affiliate of CAPITAL or CCB except (i) in accordance with the Securities Act and (ii) if, as it expects to do, BANC ONE utilizes pooling-of-interests accounting in accounting for the Merger, until such time as BANC ONE shall first publish the financial results of at least 30 days of post-merger combined operations of CAPITAL and BANC ONE, and CCB and Bank One Utah, provided that BANC ONE shall publish such results not later than four months from the Effective Time. The certificates of BANC ONE Common Stock issued to Affiliates of CAPITAL and CCB in the Merger or Consolidation may contain an appropriate restrictive legend, and appropriate stop transfer orders may be given to the transfer agent for such certificates. Accounting Treatment BANC ONE expects to account for the acquisition of CAPITAL as a pooling of interests. BANC ONE does not expect to account for the acquisition of the minority of CCB shares not owned by CAPITAL as a pooling of interests. COMPARATIVE RIGHTS OF SHAREHOLDERS Description of BANC ONE Stock General. The authorized capital stock of BANC ONE consists of 600,000,000 shares of BANC ONE Common Stock and 35,000,000 shares of Preferred Stock, without par value ("Preferred Stock"), divided into 10,000,000 shares of Class A Preferred Stock, 1,000,000 shares of Class B Convertible Preferred Stock ("Class B Preferred Stock") and 24,000,000 shares of Class C Preferred Stock of which the $3.50 Cumulative Convertible Preferred Stock constitutes a series ("Series C Preferred Stock"). As of September 30, 1993, there were issued and outstanding 5,000,000 shares of Series C Preferred Stock and 341,046,391 shares of BANC ONE Common Stock, after giving effect to the 5 for 4 share stock split in BANC ONE Common Stock. The following summary of the terms of BANC ONE's capital stock does not purport to be complete and is qualified in its entirety by reference to the applicable provisions of the Ohio General Corporation Law and BANC ONE's Articles. Common Stock. Holders of BANC ONE Common Stock are entitled to receive dividends out of funds legally available therefor as and if declared by the Board of Directors, provided that, so long as any shares of Preferred Stock are outstanding, no dividends (other than dividends payable in BANC ONE Common Stock) or other distributions (including redemptions and purchases) may be made with respect to the BANC ONE Common Stock unless full cumulative dividends on the shares of Preferred Stock have been paid. Holders of shares of BANC ONE Common Stock are entitled to one vote for each share for the election of directors and on all other matters. Holders of BANC ONE Common Stock vote together as a class with holders of Class B Preferred Stock. Generally, holders of Series C Preferred Stock have no voting rights. The issued and outstanding shares of BANC ONE Common Stock are fully paid and nonassessable. The holders of BANC ONE Common Stock are not entitled to preemptive rights or conversion or redemption rights. The BANC ONE Common Stock does not have cumulative voting rights in the election of directors. In the event of the voluntary or involuntary dissolution, liquidation or winding up of BANC ONE, holders of BANC ONE Common Stock will be entitled to receive, pro rata, after satisfaction in full of the prior rights of creditors (including holders of BANC ONE's indebtedness) and holders of Preferred Stock, all the remaining assets of BANC ONE available for distribution. Preferred Stock. The Board of Directors has the authority to issue each class of Preferred Stock in one or more series and to fix the designations, number of shares, dividends, redemption rights, sinking fund requirements, liquidation prices, conversion rights and other rights, qualifications, limitations or restrictions thereon (except voting rights) as the Board of Directors may from time to time be permitted by law to fix or change. Currently, there are outstanding shares of Series C Preferred Stock. Holders of Series C Preferred Stock are entitled to receive out of funds legally available therefor cumulative cash dividends at the annual rate of $3.50 per share payable quarterly on the last day of March, June, September and December in each year. In the event that full cumulative dividends on outstanding shares of Series C Preferred Stock have not been paid, no dividends may be declared or paid on, and no amounts may be set aside or applied to the redemption or purchase of, any shares of BANC ONE Common Stock or any other shares of capital stock of BANC ONE ranking junior to shares of Series C Preferred Stock. Upon the voluntary or involuntary dissolution, liquidation or winding up of BANC ONE, holders of Series C Preferred Stock are entitled to receive a preferential distribution of $50 per share plus accrued and unpaid dividends, if any. Generally holders of shares of Series C Preferred Stock have no voting rights. The approval of a majority of the outstanding shares of Series C Preferred Stock voting together as a class is required in order to amend BANC ONE's Articles to affect adversely the rights of the holders of the Series C Preferred Stock or to take any action that would result in the creation of or an increase in the number of authorized shares senior or superior with respect to dividends or upon liquidation to the Series C Preferred Stock. Holders of Series C Preferred Stock also have the right to elect two additional directors during any period in which dividends on Series C Preferred Stock are cumulatively in arrears in the amount of six or more full quarterly dividends. At the option of the holder of any shares of Series C Preferred Stock, such shares may be converted into shares of BANC ONE Common Stock at the conversion rate then in effect. The present conversion rate is 1.75360 shares of BANC ONE Common Stock for each share of Series C Preferred Stock and is subject to adjustment for stock dividends, subdivisions, splits (the conversion rate has been adjusted to reflect the 5 shares for 4 shares common stock split declared by Banc One's Board of Directors on July 20, 1993 and payable August 31, 1993 to shareholders of record on August 3, 1993 and the 10% stock dividend declared by BANC ONE's Board of Directors on January 25, 1994 and payable March 4, 1994 to shareholders of record on February 16, 1994) and combinations and any distribution of rights or warrants to purchase BANC ONE Common Stock at a price per share less than the BANC ONE Common Stock's then-current market value. The issued shares of Series C Preferred Stock may be redeemed, in whole or in part, by BANC ONE at its election at any time after April 15, 1995, at a redemption price of [$52.10] per share during the period from April 15, 1995, to but not including March 31, 1996, and thereafter at the redemption prices during the 12-month periods beginning on March 31 of the years shown below, plus accrued and unpaid dividends, if any. Year Redemption Price 1996 . . . . . . . . . . . . . . . . $51.75 1997 . . . . . . . . . . . . . . . . $51.40 1998 . . . . . . . . . . . . . . . . $51.05 1999 . . . . . . . . . . . . . . . . $50.70 2000 . . . . . . . . . . . . . . . . $50.35 2001 and thereafter . . . . . . . . . $50.00 Special Voting Requirements for Certain Transactions Article Eleventh of BANC ONE's Articles incorporates, to a large extent, the provisions of the Ohio control share acquisition statute (Section 1701.831 of the Ohio Revised Code). Article Eleventh sets forth procedures for obtaining shareholder consent of "control share acquisitions" subject to the right of the Board of Directors to screen out proposals that do not meet certain standards set forth in Article Eleventh. Article Eleventh defines a "control share acquisition" as any acquisition, directly or indirectly, of shares of BANC ONE which, when added to all other shares of BANC ONE owned or controlled by the acquiror, would entitle the acquiror, alone or with others, to exercise or direct the exercise of voting power in BANC ONE in the election of directors within any of the following ranges of voting power: (a) one-fifth or more but less than one-third; (b) one-third or more but less than a majority; and (c) a majority or more. A bank, broker, nominee, trustee, or other person who acquires shares in the ordinary course of business for the benefit of others in good faith and not for the purpose of circumventing Article Eleventh shall, however, be deemed to have voting power only of shares in respect of which such person would be able to exercise or direct the exercise of votes without further instruction from others at a meeting of shareholders called under Article Eleventh. A control share acquisition which meets certain criteria set forth in Article Eleventh as determined by the Board of Directors must be presented to a meeting of the shareholders of BANC ONE and approved by the affirmative vote of both (a) a majority of the voting power represented at the meeting and (b) a majority of that portion of such voting power excluding any "interested shares"; that is, those shares held by the acquiring person, executive officers of BANC ONE and employees of BANC ONE who are also directors. Article Eleventh may be amended by a vote of 85% of the votes entitled to be cast by all holders of voting stock. BANC ONE's Articles also include a "fair price" provision which is designed to provide reasonable assurances to shareholders that in the event any shareholder or group of shareholders acquires 20% or more of BANC ONE's voting stock (the "Acquiror") and then seeks to acquire all or part of the remaining voting stock through a merger or other transaction which would force a change or termination of the other shareholders' ownership interests (a "Business Combination"), such other shareholders must receive consideration at least equivalent to that paid by the Acquiror in acquiring its 20% stock interest, unless the Business Combination is approved either (i) by a majority of directors who are unrelated to the Acquiror or (ii) by the affirmative vote of 75% of all the votes entitled to be cast by all holders of voting stock and 67% of the votes entitled to be cast by all holders of voting stock held by shareholders other than the Acquiror ("Special Shareholder Vote"). This provision operates by requiring that after an Acquiror emerges, any Business Combination which has the effect of requiring shareholders to surrender their shares must satisfy one of the following conditions: (a) Fair Consideration to Shareholders. The terms of the Business Combination must provide for payment of consideration which is at least equivalent to the highest price paid to other shareholders by the Acquiror in acquiring its 20% stock position and must be approved by shareholders as otherwise required by applicable law; or (b) Unrelated Director Approval. The Business Combination must be approved as fair to shareholders by a majority of the directors who are not affiliated with the Acquiror and who were directors before the Acquiror acquired its 20% stock position or who were nominated or elected to succeed such directors by the other unaffiliated directors ("Unrelated Directors") and must be approved by shareholders as otherwise required by applicable law; or (c) Special Shareholder Vote. The Business Combination must be approved by a Special Shareholder Vote. The Article containing this provision may be amended only by a vote of 85% of the votes entitled to be cast by all holders of voting stock, unless the amendment is approved unanimously by the Unrelated Directors, in which case only majority shareholder approval would be required. Chapter 1704 of the Ohio Revised Code (the "Ohio Statute") is similar to the "fair price" provision contained in BANC ONE's Articles. The Ohio Statute prohibits an "Issuing Public Corporation" from engaging in a "Chapter 1704 Transaction" with an "Interested Shareholder" for a period of three years following the date on which the person becomes an "Interested Shareholder" unless, prior to such date, the directors of the "Issuing Public Corporation" approve either the "Chapter 1704 Transaction" or the acquisition of shares pursuant to which such person became an "Interested Shareholder." An "Issuing Public Corporation" is an Ohio corporation with 50 or more shareholders which has its principal place of business, principal executive offices or substantial assets within the State of Ohio. BANC ONE is currently an Issuing Public Corporation. An "Interested Shareholder" is any person who is the beneficial owner of a sufficient number of shares to allow such person, directly or indirectly, alone or with others, including affiliates and associates, to exercise or direct the exercise of 10% of the voting power of the Issuing Public Corporation. A "Chapter 1704 Transaction" includes any merger, consolidation, combination or majority share acquisition between or involving an Issuing Public Corporation and an Interested Shareholder or an affiliate or associate of an Interested Shareholder. A Chapter 1704 Transaction also includes certain transfers of property, dividends and issuance or transfers of shares, from or by an Issuing Public Corporation or a subsidiary of an Issuing Public Corporation to, with or for the benefit of an Interested Shareholder or an affiliate or associate of an Interested Shareholder unless such transaction is in the ordinary course of business of the Issuing Public Corporation on terms no more favorable to the Interested Shareholder than those acceptable to third parties as demonstrated by contemporaneous transactions. Finally, Chapter 1704 Transactions include certain transactions which (i) increase the proportionate share ownership of an Interested Shareholder, (ii) result in the adoption of a plan or proposal for the dissolution, winding up of the affairs or liquidation of the Issuing Public Corporation if such plan is proposed by or on behalf of the Interested Shareholder, or (iii) pledge or extend the credit or financial resources of the Issuing Public Corporation to or for the benefit of the Interested Shareholder. After the initial three-year moratorium has expired, an Issuing Public Corporation may engage in a Chapter 1704 Transaction if (i) the acquisition of shares pursuant to which the person became an Interested Shareholder received the prior approval of the board of directors of the Issuing Public Corporation, (ii) the Chapter 1704 Transaction is approved by the affirmative vote of the holders of shares representing at least two-thirds of the voting power of the Issuing Public Corporation and by the holders of at least a majority of voting shares which are not beneficially owned by an Interested Shareholder or an affiliate or associate of an Interested Shareholder, or (iii) the Chapter 1704 Transaction meets certain statutory tests designed to ensure that it be economically fair to all shareholders. Comparison of BANC ONE Common Stock, CAPITAL Common Stock and CCB Common Stock The rights of shareholders of BANC ONE are governed by BANC ONE's Articles and Code of Regulations and the applicable provisions of the Ohio law, while the rights of the shareholders of CAPITAL and CCB are governed by their Articles and Bylaws and the applicable provisions of the Utah Code Annotated. If the holders of CAPITAL Common Stock approve the Merger Agreement and the Merger is subsequently consummated, holders of CAPITAL Common Stock will become holders of BANC ONE Common Stock. Likewise, if the holders of CCB Common Stock, other than CAPITAL, approve the Consolidation Agreement and the Consolidation Agreement is subsequently consummated, those holders of CCB Common Stock will become holders of BANC ONE Common Stock. The following comparison of the rights of holders of CAPITAL Common Stock, CCB Common Stock and BANC ONE Common Stock is based on current terms of the governing documents of the respective companies, and on the current provisions of applicable state law. The rights of holders of CAPITAL Common Stock, CCB Common Stock and holders of BANC ONE Common Stock are similar in several respects: each shareholder is entitled to one vote for each share held on all matters submitted to a vote of shareholders, each shareholder is entitled to receive pro rata any assets distributed to shareholders upon liquidation, dissolution or winding up of the affairs of the company (after all creditors have been satisfied and requisite preferential amounts are paid to the holders of outstanding preferred stock), each shareholder has no preemptive rights to subscribe for or purchase any stock or other securities in proportion to their respective holdings upon the offering or sale by BANC ONE, CCB or CAPITAL of such securities to others. Although it is impracticable to note all the differences between Ohio law and Utah law generally and all of the differences between the applicable governing documents of BANC ONE, CCB and CAPITAL, the following is intended to be a summary of certain significant differences between the rights of holders of BANC ONE Common Stock and the rights of holders of CAPITAL Common Stock and CCB Common Stock. Election and Removal of Directors. The directors of CCB, CAPITAL and BANC ONE are elected by the shareholders and may be removed with or without cause by the shareholders. Cumulative voting is not allowed in the election of directors of BANC ONE, Capital or CCB. Dividends. Under Ohio law, dividends may be paid out of surplus, including both earned surplus and capital surplus, in cash, property or shares of the corporation, provided that such dividend payments are not in violation of the rights of any other class of securities and are not made when the corporation is insolvent or there is reasonable ground to believe that by such payment it will be rendered insolvent. A Utah corporation may pay dividends, except that no such distribution if, after giving it effect (a) the corporation would not be able to pay its debts as they become due in the normal course of business or (b) the corporation's total assets would be less than the sum of its total liabilities plus the amount needed, if the corporation were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution. The payment of dividends by banks and bank holding companies also is subject to certain regulatory constraints. Dividends paid by both BANC ONE and CAPITAL are subject to Federal income tax. However, it is suggested that in connection with voting on the Merger or Consolidation, stockholders contact their tax advisors to determine the tax consequences of the Merger to them. Supermajority and Fair Price Provisions. Neither Utah law nor CAPITAL or CCB's Articles contain provisions similar to the provisions of BANC ONE's Articles relating to control share acquisitions and fair price provisions for business combinations. BANC ONE's Articles contain provisions requiring a supermajority vote for certain business combinations. See "COMPARATIVE RIGHTS OF SHAREHOLDERS- Special Voting Requirements for Certain Transactions." Utah law generally requires the affirmative vote of the holders of a majority of the shares of each class entitled to vote to approve a merger, consolidation, share exchange or sale, lease, exchange or other disposition of all or substantially all of CAPITAL's assets. No vote of CAPITAL shareholders is required to approve a merger if (a) CAPITAL is the surviving corporation of the merger, (b) the related plan of merger does not amend CAPITAL's Articles, (c) each share of CAPITAL stock outstanding immediately before the merger is to be an identical outstanding or treasury share of CAPITAL after the merger and (d) the number of shares of CAPITAL to be issued in the merger (or to be issuable upon conversion of any convertible instruments to be issued in the merger) does not exceed 20% of the voting stock of CAPITAL outstanding immediately before the merger. In addition to being subject to the laws of Utah and Ohio, respectively, CCB, CAPITAL and BANC ONE, as a bank and bank holding companies, are subject to various provisions of federal law with respect to mergers, consolidations and certain other corporate transactions. Evaluation of Tender Offers and Business Combinations. In evaluating an acquisition proposal, Ohio law includes a provision which permits directors, in determining whether any matter is in the best interests of the corporation, to take into consideration the interests of the corporation's employees, suppliers, creditors and customers, the economy of the state and the nation, community and societal considerations and the long-term and short-term interests of the corporation and its stockholders, including the possibility that such interests may be best served by the continued independence of the corporation. No similar applicable provision is included in the Utah Code Annotated or the Articles of CAPITAL or CCB. Amendment of Governing Documents. BANC ONE's Articles may be amended by the affirmative vote of the holders of a majority of the voting power of BANC ONE, except that amendments to the "control share acquisition" and "fair price" provisions require a supermajority vote. See "COMPARATIVE RIGHTS OF SHAREHOLDERS--Special Voting Requirements for Certain Transactions." The Code of Regulations of BANC ONE may only be amended by the affirmative vote of a majority of the voting power represented by the outstanding voting stock of BANC ONE present in person or by proxy at an annual or special meeting called for such purpose. Under Utah law, amendments to CAPITAL's Articles require the affirmative vote of a majority of the outstanding shares of CAPITAL's Common Stock. Appraisal Rights. Under Utah law, any shareholder of CAPITAL or CCB is entitled to receive payment of the fair value of such shareholder's shares of CAPITAL Common Stock or CCB Common Stock if such shareholder dissents from (a) any merger for which a vote of CAPITAL or CCB's shareholders is required or any consolidation to which CAPITAL or CCB is a party, (b) any share exchange to which CAPITAL or CCB is a party other than as the acquiring corporation or (c) any sale, lease, exchange or other disposition of all or substantially all of CAPITAL or CCB's assets not made in the regular course of business. Shareholders of CAPITAL or CCB may exercise dissenters' rights in connection with the Merger. See the more detailed discussion below under "VOTING AND MANAGEMENT INFORMATION - Rights of Dissenting Shareholders". Under Ohio Law, dissenting shareholders are entitled to appraisal rights in connection with the lease, sale, exchange, transfer or other disposition of all or substantially all of the assets of a corporation and in connection with certain amendments to its articles of incorporation. In addition, shareholders of an Ohio corporation being merged into a new corporation are also entitled to appraisal rights. Shareholders of an acquiring corporation are entitled to appraisal rights in a merger, combination or majority share acquisition in which such shareholders are entitled to voting rights. Indemnification; Limitation of Liability. Utah law provides that a corporation may indemnify a director against liability incurred in any proceeding if the director conducted himself in good faith and he reasonably believed (a) in the case of conduct in his official capacity with the corporation, that his conduct was in the corporation's best interests or (b) in all other cases, that his conduct was at least not opposed to the corporation's best interests. In the case of any criminal proceeding, it is further required that the director have no reasonable cause to believe his conduct was unlawful. A corporation must, unless otherwise limited by the articles of incorporation, indemnify a director as against reasonable expenses incurred by him when the director is wholly successful, on the merits or otherwise, in defense of any proceeding to which he was a party. Also, unless limited by the articles of incorporation, a director may apply for and a court may order indemnification by the corporation if the court determines the director is entitled to such mandatory indemnification. A corporation may also pay for or reimburse reasonable expenses incurred by a director in advance of the final disposition of the proceeding when certain criteria are met. A corporation may not indemnify a director in connection with a proceeding by or in the right of the corporation in which the director is adjudged liable to the corporation, or when the director is charged with improper personal benefit and he is adjudged liable on the basis that the personal benefit was improperly received by him. Unless limited by the articles of incorporation, a director may apply for and a court may order indemnification by the corporation if the court determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances (a) whether or not the standards of conduct described above are satisfied or (b) whether or not the director was adjudged liable with respect to a proceeding by or in the right of the corporation or in a proceeding charging improper personal benefit. Court-ordered indemnification in these last two situations is limited to reasonable expenses incurred in connection with the proceeding. Utah law also provides that a corporation's articles of incorporation may eliminate or limit the personal liability of directors to the corporation or its shareholders for any action taken or any failure to take any action, except for the amount of a financial benefit received by a director to which he is not entitled, an intentional infliction to harm on the corporation or shareholders, an intentional violation of criminal law or a violation of Utah Code Annotated Section 16-10a-842. CAPITAL and CCB's Articles do not provide for such limitations of director liability. A Utah corporation must indemnify an officer of the corporation who is not a director as to reasonable expenses incurred by the officer when the officer is wholly successful, on the merits or otherwise, in defense of any proceeding to which he was a party, unless otherwise limited by the articles of incorporation. An officer who is not a director may also apply for court-ordered indemnification to the same extent as a director. With regard to officers, employees or agents of the corporation who are not directors, a corporation may indemnify and advance expenses to the same extent as a director and, if provided for by its articles of incorporation, by-laws, resolution of its shareholders or directors, or in a contract, to a greater extent than to a director. Under Ohio law, Ohio corporations are authorized to indemnify directors, officers and agents within prescribed limits and must indemnify them under certain circumstances. Ohio law does not provide statutory authorization for a corporation to indemnify directors and officers for settlements, fines or judgments in the context of derivative suits. However, it provides that directors (but not officers) are entitled to mandatory advancement of expenses, including attorneys' fees, incurred in defending any action, including derivative actions, brought against the director, provided the director agrees to cooperate with the corporation concerning the matter and to repay the amount advanced if it is proved by clear and convincing evidence that his act or failure to act was one with deliberate intent to cause injury to the corporation or with reckless disregard for the corporation's best interests. Ohio law does not authorize payment of expenses or judgments to an officer or other agent after a finding of negligence or misconduct in a derivative suit absent a court order. Indemnification is required, however, to the extent such person succeeds on the merits. In all other cases, if a director or officer acted in good faith and in a manner he reasonably believed to be in (or not opposed to) the best interests of the corporation, indemnification is discretionary except as otherwise provided by a corporation's articles, code of regulations or by contract except with respect to the advancement of expenses of directors. The statutory right to indemnity is not exclusive in Ohio. Ohio law provides express authority for Ohio corporations to procure not only insurance policies, but also to furnish protection similar to insurance, including trust funds, letters of credit and self-insurance, or to provide similar protection such as indemnity against loss of insurance. Ohio law has codified the traditional business judgment rule. Ohio law provides that the business judgment presumption of good faith may only be overcome by clear and convincing evidence, rather than the preponderance of the evidence standard applicable in most states. Further, Ohio law provides specific statutory authority for directors to consider, in addition to the interests of the corporation's shareholders, other factors such as the interests of the corporation's employees, suppliers, creditors and customers; the economy of the state and nation; community and societal considerations; the long-term and short-term interests of the corporation and its shareholders; and the possibility that these interests may be best served by the continued independence of the corporation. MISCELLANEOUS INFORMATION Transfer and Exchange Agents Bank One, Indianapolis, N.A., Indianapolis, Indiana, serves as Transfer Agent and as Registrar for BANC ONE Common Stock. Bank One, Indianapolis, N.A. will act as Exchange Agent in connection with the Merger and Consolidation. CCB acts as Transfer Agent and as Registrar for CAPITAL and CCB Common Stock. Interests of Named Experts The consolidated financial statements of BANC ONE incorporated by reference in this Prospectus have been audited by Coopers & Lybrand, independent public accountants, to the extent and for the years included in their reports, which reports are included or are incorporated herein, and have been so included or incorporated in reliance upon their reports given on the authority of that firm as experts in accounting and auditing. The financial statements of CAPITAL and CCB as of December 31, 1992 and 1991, included herein and elsewhere in the registration statement have been included herein and in the registration statement in reliance upon the report of KPMG Peat Marwick, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. Certain legal matters will be passed upon for CAPITAL and CCB by counsel for CAPITAL, Gerrish & McCreary, P.C., Memphis, Tennessee. An opinion on the Federal income tax consequences of the proposed transaction will be issued by Gerrish & McCreary, P.C. An opinion on the validity of the BANC ONE Common Stock offered hereby has been passed upon by Roman J. Gerber, General Counsel of BANC ONE. Sources of Information The information concerning BANC ONE, CAPITAL and CCB has been supplied by the management of the respective companies. Registration Statement This Prospectus and Proxy Statement does not include all of the information set forth or incorporated by reference in the Registration Statement on Form S-4 and the exhibits thereto filed by BANC ONE with the Commission under the Securities Act. The Registration Statement may be inspected at the principal office of the Commission in Washington, D.C., and copies may be obtained upon payment of prescribed fees. See "AVAILABLE INFORMATION" for addresses of the Commission's offices. Reference is hereby made to the Registration Statement and exhibits thereto for further information pertaining to BANC ONE and CAPITAL. Other Matters The Board of Directors of CAPITAL does not know of any other matters which may come before the CAPITAL Special Meeting. The Board of Directors of CCB does not know of any other matters which may come before the CCB Special Meeting. B. INFORMATION ABOUT BANC ONE CORPORATION General -- Business. BANC ONE is a multi-bank holding company with bank subsidiaries in Arizona, California, Colorado, Illinois, Indiana, Kentucky, Michigan, Ohio, Texas, Utah, West Virginia and Wisconsin. At December 31, 1993, BANC ONE had consolidated total assets of $79.9 billion, consolidated total deposits of approximately $60.9 billion and consolidated total stockholders' equity of approximately $7.0 billion. At December 31, 1993, BANC ONE ranked eighth among the nation's publicly-owned bank holding companies in terms of period-end assets and at December 31, 1992, BANC ONE ranked sixth among the nation's publicly owned bank holding companies in terms of period-end common equity. For the year ended December 31, 1993, BANC ONE's return on average assets was 1.53%. As of December 31, 1993, BANC ONE owned indirectly all of the outstanding stock of 82 commercial banks (the "affiliate banks"). Except for Bank One, Texas, N.A., BANC ONE had no single affiliate bank comprising in excess of 20% of its consolidated assets at December 31, 1993. BANC ONE also owns subsidiaries which offer services in the areas of mortgage banking, credit card processing, consumer finance, equipment leasing, fiduciary and trust services, venture capital, credit life insurance, discount brokerage and data processing. Since its formation in 1968, BANC ONE has acquired over 125 banking institutions and the number of banking offices of its affiliate banks has increased from 24 to over 1,300. BANC ONE anticipates that it will continue to expand by acquisition in the future. BANC ONE is frequently in discussions regarding possible acquisitions. See "Recent Developments" for information with respect to pending and potential acquisitions. BANC ONE is a legal entity separate and distinct from its affiliate banks and its nonbanking subsidiaries. Accordingly, the right of BANC ONE, and thus the right of BANC ONE's creditors and shareholders, to participate in any distribution of the assets or earnings of any affiliate bank or other subsidiary is necessarily subject to the prior claims of creditors of the affiliate bank or subsidiary, except to the extent that claims of BANC ONE in its capacity as a creditor may be recognized. The principal source of BANC ONE's revenues is dividends and fees from its affiliates. See "Certain Regulatory Matters" for a discussion of regulatory restrictions on the ability of the affiliate banks to pay dividends to BANC ONE. Recent Developments. In recent years, BANC ONE has pursued an active acquisition program. The following is a list of announced significant acquisitions that have not been consummated as of the date of this Prospectus and Proxy Statement. Liberty National Bancorp, Inc., a multi-bank holding company headquartered in Louisville, Kentucky with assets of approximately $4.9 billion as of December 31, 1993, which BANC ONE will acquire for approximately 24 million shares of BANC ONE Common Stock. BANC ONE has also announced three other acquisitions which are not material in the aggregate. In addition, BANC ONE has recently terminated its pending acquisitions of FirsTier Financial, Inc., a multi-bank holding company headquartered in Omaha, Nebraska with assets of approximately $3.1 billion as of December 31, 1993, and Nebraska Capital Corporation, a single bank holding company headquartered in Lincoln, Nebraska with assets of approximately $95 million as of December 31, 1993. BANC ONE continues to explore opportunities to acquire banks and nonbank companies permitted by the Bank Holding Company Act of 1956. Discussions are continually being carried on relating to the acquisition of bank-related companies and other banks. It is not presently known whether, or on what terms, such discussions will result in further acquisitions. BANC ONE's acquisition strategy is flexible in that it does not require BANC ONE to effect specific acquisitions so as to enter certain markets or to attain specified growth levels. Rather than being market driven or size motivated, BANC ONE's acquisition strategy reflects BANC ONE's willingness to consider potential acquisitions wherever and whenever such opportunities arise based on the then-existing market conditions and other circumstances. Banks to be acquired must be of sufficient size to support and justify having management of a caliber capable of making lending and other management decisions at the local level under BANC ONE's operating philosophy. BANC ONE also is willing from time to time to acquire a smaller bank when it can be acquired through a reorganization into an existing affiliate. BANC ONE's interest in the acquisition of non-bank companies has been limited to bank-related services with which BANC ONE already has familiarity. BANC ONE's acquisitions may be made by the exchange of stock, through cash purchases, and with other consideration. Other than as described above, BANC ONE does not currently have any definite understandings or agreements for any acquisitions material to BANC ONE. However, BANC ONE anticipates that it will continue to expand by acquisition in the future. Certain Regulatory Matters General BANC ONE is subject to the supervision of, and to regular inspection by, the Federal Reserve. BANC ONE's principal banking subsidiaries are organized as national banking associations, which are subject to regulation by the Comptroller of the Currency (the "Comptroller"). In addition, various state authorities regulate BANC ONE's state banking subsidiaries. Furthermore, the various banking subsidiaries are subject to regulation by the Federal Deposit Insurance Corporation (the "FDIC") and other federal bank regulatory bodies. In addition to banking laws, regulations and regulatory agencies, BANC ONE and its subsidiaries and affiliates are subject to various other laws, regulations and regulatory agencies, all of which directly or indirectly affect BANC ONE's operations, management and ability to make distributions. The following discussion summarizes certain aspects of those laws and regulations that affect BANC ONE. Proposals to change the laws and regulations governing the banking industry are frequently raised in Congress, in the state legislatures and before the various bank regulatory agencies. The likelihood and timing of any changes and the impact such changes might have on BANC ONE and its subsidiaries are difficult to determine. According to Federal Reserve policy, bank holding companies are expected to act as a source of financial strength to each subsidiary bank and to commit resources to support each such subsidiary. This support may be required at times when a bank holding company may not be able to provide such support. Furthermore, in the event of a loss suffered or anticipated by the FDIC -- either as a result of default of a banking or thrift subsidiary of BANC ONE or related to FDIC assistance provided to a subsidiary in danger of default -- the other banking subsidiaries of BANC ONE may be assessed for the FDIC's loss, subject to certain exceptions. BANC ONE's banks are affected by various state and federal laws and by the fiscal and monetary policies of the federal government and its agencies, including the Federal Reserve. An important purpose of these policies is to curb inflation and control recessions through control of the supply of money and credit. The Federal Reserve uses its powers to regulate reserve requirements of its member banks, the discount rate on its member bank borrowings, interest rates on time and savings deposits of its member banks, and to conduct open market operations in United States government securities so as to exercise control over the supply of money and credit. These policies have a direct effect on the amount of bank loans and deposits and on the interest rates charged on loans and paid on deposits, with the result that federal policies have a material effect on bank earnings. Policies which are directed toward increasing the supply of money and credit and reducing interest rates may have an adverse effect on bank earnings. Future policies of the Federal Reserve and other authorities cannot be predicted, nor can their effect on future bank earnings be predicted. Similarly, future changes in state and federal laws and wage, price and other economic restraints of the federal government cannot be predicted nor can their effect on future bank earnings be predicted. Capital Requirements The Federal Reserve, the FDIC and the Comptroller have issued substantially similar minimum risk-based and leverage capital guidelines for United States banking organizations. In addition, those regulatory agencies may from time to time require that a banking organization maintain capital above the minimum levels, whether because of its financial condition or actual or anticipated growth. The Federal Reserve risk-based guidelines applicable to BANC ONE define a two-tier capital framework. Tier 1 capital consists of common and qualifying preferred shareholders' equity, minority interests less goodwill and certain other intangible assets, and one-half of investments in unconsolidated subsidiaries. Tier 2 capital consists of mandatory convertible debt, subordinated and other qualifying term debt, preferred stock not qualifying as Tier 1 capital and the allowance for credit losses, subject to certain limitations less one-half of investments in unconsolidated subsidiaries. The sum of Tier 1 and Tier 2 capital represents qualifying total capital, at least 50% of which must consist of Tier 1 capital. Risk-based capital ratios are calculated by dividing Tier 1 and total capital by the sum of four categories of risk-weighted assets, such risk weights based primarily on relative credit risk. The regulatory minimum qualifying total risk-based capital ratio is 8%, of which at least 4% must consist of Tier 1 capital. BANC ONE's Tier 1 and total risk-based capital ratios under these guidelines at December 31, 1993 were 10.45% and 14.19%, respectively. The leverage ratio is determined by dividing Tier 1 capital by adjusted total assets. Although the stated minimum ratio is 3%, most banking organizations are required to maintain ratios of at least 4% to 5%. BANC ONE's estimated leverage ratio at December 31, 1993 was 8.67%. Although BANC ONE has not been informed of any specific leverage ratio requirement applicable to it, management believes that BANC ONE meets its leverage ratio requirement. Dividend Restrictions Various Federal and state statutory provisions limit the amount of dividends BANC ONE's affiliate banks can pay to BANC ONE without regulatory approval. The approval of the appropriate bank regulator is required for any dividend by a national bank or state member bank if the total of all dividends declared by the bank in any calendar year would exceed the total of its net profits, as defined by regulatory agencies, for such year combined with its retained net profits for the preceding two years. In addition, a national bank or a state member bank may not pay a dividend in an amount greater than its net profits then on hand. Under these provisions and various state law restrictions, BANC ONE's affiliate banks could have declared, as of December 31, 1993, without obtaining prior regulatory approval, aggregate dividends of approximately $1.25 billion. In addition, federal bank regulatory authorities have authority to prohibit the affiliate banks from engaging in an unsafe or unsound practice in conducting their business. The payment of dividends, depending upon the financial condition of the bank in question, could be deemed to constitute such an unsafe or unsound practice. The ability of BANC ONE's affiliate banks to pay dividends in the future is presently, and could be further, influenced by bank regulatory policies and capital guidelines. FDICIA The Federal Deposit Insurance Corporation Improvement Act of 1991 (the "FDICIA"), which became law on December 19, 1991, revises several banking statutes, including the Federal Deposit Insurance Act, affecting bank regulation, deposit insurance and provisions for funding of the Bank Insurance Fund (the "BIF") administered by the FDIC. Under FDICIA the bank regulators' authority to intervene is linked to the deterioration of a bank's capital level. In addition, FDICIA places limits on real estate lending and brokered deposit activities, expands audit and reporting requirements, and imposes limitations and requirements on various banking functions. BANC ONE believes that the deposit insurance and brokered deposit limitations under FDICIA will not have any material impact on the liquidity or funding of BANC ONE or its affiliate banks. Deposit Insurance Assessments The deposits of each of BANC ONE's banks are insured up to regulatory limits by the FDIC. Accordingly, BANC ONE's banks are subject to deposit insurance assessments to maintain the Bank Insurance Fund (the "BIF") of the FDIC. Pursuant to FDICIA, the FDIC must establish a risk-based insurance assessment system by January 1, 1994. On September 14, 1992, the FDIC adopted regulations to implement a transitional risk-related insurance assessment system, starting January 1, 1993. Under this system, the FDIC will place each insured bank in one of nine risk categories based on its level of capital and other relevant information (such as supervisory evaluations). Each insured bank's insurance assessment rate will then be determined by the risk category in which it has been classified by the FDIC. Under this transitional system, the average insurance assessment rate will be .254% per $100 of deposits. However, there will be an eight basis point spread between the highest and lowest assessment rates, so that banks classified as strongest by the FDIC will be subject to a rate of $0.23 per $100 of deposits and banks classified as weakest by the FDIC will be subject to a rate of $0.31 per $100 of deposits. The FDIC has indicated that it expects that the majority of banks will be subject to an assessment rate of $0.23 per $100 of deposits (the same rate as under the current flat-rate assessment system). However, the FDIC has also indicated that it expects to recommend that the permanent risk-related premium system, to be implemented in 1994, incorporate a wider differential between the highest and lowest assessment rates. Market Prices of and Dividends Paid on BANC ONE Common Stock BANC ONE Common Stock is, and the shares offered hereby will be, listed on the New York Stock Exchange. The following table sets forth, for the periods indicated, the high and low reported closing sale prices per share of BANC ONE Common Stock on the New York Stock Exchange Composite Tape and cash dividends per share of BANC ONE Common Stock. Price Range of Common Stock High Low Dividends 1992 First Quarter . . . . . $36.36 $30.75 $.21 Second Quarter . . . . 34.55 30.73 .21 Third Quarter . . . . . 34.27 30.64 .24 Fourth Quarter . . . . 38.91 31.82 .24 1993 First Quarter . . . . . $42.27 $36.36 $.25 Second Quarter. . . . . 44.73 36.73 .26 Third Quarter . . . . . 42.19 34.55 .28 Fourth Quarter 39.77 32.27 .28 1994 First Quarter . . . . (through , 1994) BANC ONE intends to continue its present policy of paying quarterly cash dividends to its shareholders so that dividends as a percentage of income will average between 35 and 40 percent of net income. The timing and amount of future dividends will depend upon earnings, cash requirements, the financial condition of BANC ONE and its subsidiaries, applicable government regulations and other factors deemed relevant by the Board of Directors. Certain debt instruments to which BANC ONE is a party limit its ability to pay dividends on BANC ONE Common Stock. Under the most restrictive of these limitations, BANC ONE would have been permitted to pay cash dividends on BANC ONE Common Stock in excess of its $1.25 billion of retained earnings as of December 31, 1993. As described under "Certain Regulatory Matters," various state and federal laws limit the ability of affiliate banks to pay dividends to BANC ONE. Incorporation of Certain Information About BANC ONE By Reference BANC ONE's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, BANC ONE's Quarterly Reports on Form 10-Q for the quarter ended March 31, 1993, June 30, 1993 and September 30, 1993 and BANC ONE's Current Reports on Form 8-K, including both forms filed February 4, 1993, the Form 8-K filed February 16, 1993, the Form 8-K filed August 20, 1993, the Form 8-K filed November 9, 1993, the Form 8-K filed November 16, 1993, the Form 8-K filed November 24, 1993, the Form 8-K filed January 28, 1994, and the Form 8-K filed February 17, 1994, in each case filed with the Commission pursuant to Section 13 of the Exchange Act and the description of BANC ONE Common Stock which is contained in its registration statement filed under Section 12 of the Exchange Act, including any amendment or report filed for the purpose of updating such description, are incorporated into this Prospectus and Proxy Statement by reference. C. INFORMATION ABOUT CAPITAL BANCORP AND CAPITAL CITY BANK General Capital Bancorp ("CAPITAL") is a bank holding company organized under the laws of the State of Utah with its principal office in Salt Lake City, Utah. CAPITAL owns 86.39% (81.53% after the exercise of all outstanding options) of the outstanding common stock of Capital City Bank. Capital City Bank is an FDIC insured state-chartered banking institutions with its main offices in Salt Lake City, Utah. Capital City Bank ("Bank") operates seven branch offices in the Salt Lake City metropolitan area and one loan origination office in St. George, Utah. As of September 30, 1993 CAPITAL had total assets of $122,040,691 and deposits of $107,407,194. Dividends Paid on CAPITAL and Bank Common Stock As of September 30, 1993 there were approximately 50 holders of record of CAPITAL Common Stock and 60 holders of record of Bank Common Stock. In addition, there was one holder of record of Bank's noncumulative perpetual preferred stock. The shares of CAPITAL and Bank are not listed on any stock exchange nor is there an active market for the securities. In July 1992, 5,729 shares of CAPITAL Common Stock were sold by a single shareholder to another individual. The price paid for the stock was reported to be $49.00 per share. Neither the buyer nor the seller were insiders or principals of CAPITAL or Bank. Management is unaware of any other significant private transactions involving securities of CAPITAL or Bank during the last three years. Certain employee benefit plans require that an estimate of the fair market value of the common stock of CAPITAL and Bank be obtained annually. These valuation opinions are rendered by an independent third party solely for the purpose of valuing shares held by the plans. Based on the valuations performed the estimated fair market value per share of stock held by the employee benefit plans was as follows: Capital Common Bank Common As of December 31, 1992 $46.00 $61.00 As of December 31, 1991 $30.00 $46.00 In March 1992, Bank sold 6,114 shares on a pro rata basis to existing shareholders at an offering price of $46.00 per share. The total offering represented less than five percent of total shares outstanding. The offering was made in conjunction with the acquisition of United Bank of Murray. The following table sets forth the cash dividends paid per share for CAPITAL Common Stock and Bank Common Stock for the periods indicated: Capital Bancorp Capital City Bank 1991 First Quarter . . . . . . . . . . . . $.-- $1.25 Second Quarter . . . . . . . . . . . .-- .55 Third Quarter . . . . . . . . . . . . .-- .55 Fourth Quarter . . . . . . . . . . . .-- .80 1992 First Quarter . . . . . . . . . . . . . .80 Second Quarter . . . . . . . . . . . .-- .80 Third Quarter . . . . . . . . . . . . .-- .80 Fourth Quarter . . . . . . . . . . . .-- .80 1993 First Quarter . . . . . . . . . . . . .25 1.00 Second Quarter . . . . . . . . . . . .25 1.00 Third Quarter . . . . . . . . . . . . .25 1.00 Fourth Quarter . . . . . . . . . . . .25 1.00 1994 First Quarter . . . . . . . . . . . . (through ,1994) Beginning with the third calendar quarter of 1993, pursuant to the Merger Agreement, management has agreed not to pay quarterly cash dividends in excess of $1.00 on Bank common shares and $.25 on CAPITAL common shares through and until the effective date of the merger. CAPITAL and Bank will pay no dividends and will make no distributions during the quarter in which the Effective Date occurs, and in which the shareholders of CAPITAL and Bank Common Stock are entitled to receive the regular quarterly dividends on the shares of BANC ONE Common into which the common shares of CAPITAL and Bank are to be converted. CAPITAL BANCORP AND SUBSIDIARY Index to Consolidated Financial Statements Page Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . 46 Nine Months ended September 30, 1993 and 1992 . . . . . . . . . 46 Three Year Period ended December 31, 1992 . . . . . . . . . . . 47 Interim Consolidated Financial Statements (Unaudited) . . . . . . . . 61 Capital Bancorp and Subsidiary Consolidated Statements of Condition as of September 30, 1993 and 1992 (Unaudited) . . . . . . . . . . . 61 Consolidated Statements of Income for the nine months ended September 30, 1993 and 1992 (Unaudited) . . . . . . . . . 63 Consolidated Statements of Shareholders' Equity for the nine months ended September 30, 1993 and 1992 (Unaudited) . . . . . 65 Consolidated Statements of Cash Flows for the nine months ended September 30, 1993 and 1992 (Unaudited) . . . . . . . . . 66 Capital City Bank (A Subsidiary of Capital Bancorp) Consolidated Statements of Condition as of September 30, 1993 and 1992 (Unaudited) . . . . . . . . . . . 67 Consolidated Statements of Income for the nine months ended September 30, 1993 and 1992 (Unaudited) . . . . . . . . . 69 Consolidated Statements of Shareholders' Equity for the nine months ended September 30, 1993 and 1992 (Unaudited) . . . . . 70 Consolidated Statements of Cash Flows for the nine months ended September 30, 1993 and 1992 (Unaudited) . . . . . . . . . 71 Audited Annual Financial Statements: Capital Bancorp and Subsidiary Independent Auditors' Report . . . . . . . . . . . . . . . . . 73 Consolidated Statements of Condition as of December 31, 1992 and 1991 . . . . . . . . . . . . . . . . . . 74 Consolidated Statements of Income for the years ended December 31, 1992, 1991 and 1990 . . . . . . . . . . . . 76 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1992, 1991 and 1990 . . . . . . . 78 Consolidated Statements of Cash Flows for the years ended December 31, 1992, 1991 and 1990 . . . . . . . . . . . . 79 Notes to Consolidated Financial Statements . . . . . . . . . . 81 Capital city Bank Bank (A Subsidiary of Capital Bancorp) Independent Auditors' Report . . . . . . . . . . . . . . . . . 92 Consolidated Statements of Condition as of December 31, 1992 and 1991 . . . . . . . . . . . . . . . . . . 93 Consolidated Statements of Income for the years ended December 31, 1992, 1991 and 1990 . . . . . . . . . . . . 95 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1992, 1991 and 1990 . . . . . . . 97 Consolidated Statements of Cash Flows for the years ended December 31, 1992, 1991 and 1990 . . . . . . . . . . . . 98 Notes to Consolidated Financial Statements . . . . . . . . . . 100 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information about Capital Bancorp and subsidiary ("Capital"). Capital is a single bank holding company which owns 86.39 percent (81.53 percent after the exercise of all outstanding options) of the outstanding common stock of Capial city Bank (the "Bank"). Unless otherwise indicated the discussion and analysis refers to Capital as a consolidated entity. All material intercompany balances and transactions have been eliminated in consolidation. Comparisons and changes in financial condition and results of operations for the nine months ended September 30, 1993 and 1992 and the years ended December 31, 1992, 1991 and 1990 are included. The discussion and analysis should be reviewed in conjunction wiht the consolidated Financial Statements and statistical data presented elsewhere herein. Nine Months Ended September 30, 1993 and 1992 Capital's net income for the nine months ended September 30, 1993 was $1,162,230. This represented an increase of 34.2% or $296,375 over the comparable nine month period in 1992. The increase was due to continued strong loan origination and refinancing volume in the mortgage loan department, an increase in related loan servicing income as well as higher fee income in other areas. The results for 1993 include nine months of operations related to the former United Bank of Murray ("United") which was acquired in late March 1992. At September 30, 1993 Capital's total assets were $122,040,691 compared to $113,456,959 at September 30, 1992. Investment securities and federal funds sold accounted for $7,313,495 of the increase. Loans and other receivables increased by $2,989,401 or 5.3% from September 30, 1992 to September 30, 1993. Growth in commercial loans and mortgage construction loans was due to a combination of lower interest rates and stronger customer demand. Meanwhile consumers have been paying off higher rate installment loans contributing to a decrease of $818,586 in the installment loan category. Nonaccrual loans decreased by $185,000 or approximately 15% from September 30, 1992 to September 30, 1993. Capital had no other real estate owned as of September 30, 1993 as compared to $126,483 at September 30, 1992. The ratio of the allowance for loan losses to nonaccrual loans and other real estate owned was 86.3% and 64.3% at September 30, 1993 and 1992 respectively. Total deposits increased by $12,431,227 from September 30, 1992 to September 30, 1993. The growth occurred primarily in the noninterest-bearing demand category where customers involved in the mortgage refinance and housing markets have seen burgeoning growth. Total interest income increased from $6,109,932 to $6,846,063 for the nine months ended September 30, 1992 and 1993 respectively. The single reduction in the prime rate from 6.5% to 6.0% in July of 1992 had little impact on interest income. The increase is attributable to higher average loan balances and a shift out of fed funds into higher yielding investment securities. Other operating income increased from $1,126,237 for the nine months ended September 30, 1992 to $1,420,102 for the nine months ended September 30, 1993. The increase is due to an increase in fees from servicing mortgage loans originated and sold by Capital, higher bankcard volume, increases in service charge fees and sales of annuity products. Other expenses increased from $3,806,308 to $4,212,905 for the nine months ended September 30, 1992 and 1993, respectively. The increases are in part due to the operations of United being included for the full nine month period of 1993 versus approximately six months of the comparable period in 1992. Income tax expense for the first nine months of 1993 was $891,000 reflecting an effective tax rate of approximately 37%. During the same period in 1992 income tax expense totaled $492,500 or an effective tax rate of approximately 33%. The lower effective tax rate in 1992 was due to general business credits which were fully exhausted. On January 1, 1993, Capital adopted Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes." The cumulative effect of the change in method of accounting for income taxes was $60,000 and is reflected in the 1993 statement of income. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THREE YEAR PERIOD ENDED DECEMBER 31, 1992 The following analysis of Capital Bancorp and subsidiary's (Capital) financial condition and results of operations as of and for the years ended December 31, 1990 through 1992, should be read in conjunction with the Consolidated Financial Statements of Capital and the statistical data presented elsewhere herein. Overview Capital does not engage in any substantial business activity other than as a single bank holding company that holds 86.39 percent (81.53% after the exercise of all outstanding options) of the outstanding common stock of Capital City Bank (Bank). Unless otherwise noted, the following discussion relates to Capital and its subsidiary on a consolidated basis. Results of Operations Net Income. Capital reported net income of $1,336,317 for the year ended December 31, 1992, this represented an increase of $222,049 or 19.9% over net income for 1991 of $1,114,268. Net income for 1991 as compared to 1990 rose $494,606 or approximately 80%. Strong earnings during the past two years has been due to the declining interest rate environment which has increased net interest margins and has resulted in increased mortgage loan origination and refinancing volume. Net Interest Income. Net interest income is interest earned on loans and investments, less interest paid on deposits and debt. Net interest income increased during 1992 by $1,657,591 or 36.9% to $6,155,629. The change was due to an increase in average investments of $13,786,169 which more than offset the effect of lower yields, an increase in average loans of nearly $5 million, and a shift from higher paying certificates of deposit to lower interest bearing savings and demand accounts. Net interest income for 1991 and 1990 was $4,258,038 and $3,412,725 respectively, representing an increase of $845,313 or 24.8%. The effect of lower interest rates exceeded the impact of higher deposit volume resulting in a decrease in interest expense of $225,621. Higher volume of interest earning assets combined with lower rates resulted in an increase in interest income of $586,192. Other Operating Income. Other operating income increased by $311,119 or 25.6% during 1992 as compared to the same period in 1991. The increase was due to general growth in existing operations, the acquisition of United which was completed in March 1992 and an increase in gains on the sale of investment securities which totaled $114,543 in 1992 as compared to $44,159 in 1991. Other operating income increased 16.7% or $174,130 from 1990 to 1991. Included in the increase is a net change from sales of securities of $63,631. Other Expenses. Other expenses increased by $1,062,068 or 26% during 1992 as compared to 1991. Higher salaries, building and furniture and fixture costs were related to the acquisition of United. Additionally, approximately $125,000 of direct costs related to the acquisition were expensed during the year. From 1990 to 1991 other expenses increased by $366,958 or approximately 10%. The increases were primarily attributable to general growth in operations but also included an increase of $63,346 or 93% in the cost of FDIC insurance premiums. Income Taxes. The provision for income taxes totaled $799,240 for 1992 reflecting an effective income tax rate of 34%. The rate was lower than expected due to utilization of general business credits. Income tax expense in 1991 and 1990 included the tax benefit of net operating losses which were acquired through a merger with another financial institution in 1987. The extraordinary tax benefit from the tax loss carryforwards was $280,250 in 1991 and $210,800 in 1990. Financial Condition Investments. Investment securities held by Capital more than trebled during 1992 increasing by $28,979,602 to $43,026,430. Approximately $10 million of the increase was related to the acquisition of United which had a very low loan to deposit ratio. Weak loan demand and strong growth in deposits resulted in the additional increase in the investment portfolio. The majority of the funds were invested in U.S. treasury and government agency securities. During the year ended December 31, 1991 the investment portfolio increased by $1,557,659 or 12.5% to total $14,046,828. Corporate securities decreased by $3,630,904 during the period with increased holdings of U.S. treasury and government agency securities accounting for the difference. Loans. For the year ended December 31, 1992 loans and other receivables increased by nearly $9 million or 19%. During 1991 loans and other receivables experienced a small decrease of $268,521 or less than 1%. The increase during 1992 was primarily a result of the acquisition of United and an increase in mortgage loan and construction activity. Capital emphasizes lending to small businesses engaged in a variety of wholesale, manufacturing and retail industries. No single industry accounts for more than 10% of the commercial loan portfolio and Capital has no foreign or energy loan exposure. Commercial loans account for approximately 70-75% of the loan portfolio with real estate loans making up 15% and the remaining 10% of the portfolio being comprised of consumer; auto, home equity and personal loans. As of December 31, 1992, loans which were 90 days or more past due and accruing interest plus loans on nonaccrual status constituted 3.8% of the loan portfolio as compared to 2.2% as of December 31, 1991 and 2.4% as of December 31, 1990. The allowance for loan losses totaled $1,001,270 or 1.8% of total loans outstanding as of December 31, 1992. The loan loss allowance as a percentage of total loans was 1.6% and 1.4% for the years ended December 31, 1991 and 1990, respectively. The allowance for loan losses is an amount that management believes will be adequate to absorb losses in the existing portfolio. The allowance is based upon a combination of specific reserves for adversely graded loans and general reserves based on historical net charge off percentages for different categories of credits. The loan loss methodology also considers other factors such as changes in the mix of the loan portfolio, changes in underwriting conditions and current and forecasted changes in the general economy. Management considers the reserve to be adequate given its method of evaluating risk in the loan portfolio, economic conditions and prior loan loss experience. Deposits. Total deposits increased by $17.5 million or 24% for the year ended December 31, 1992. The increase in deposits for 1991 as compared to 1990 was $9.1 million or 14.7%. Most of the increase in 1992 was the result of the acquisition of United. The increase in 1991 was attributable to general growth of the Bank. During the past two years Capital as well as the overall banking industry has seen a dramatic change in the deposit mix. Certificates of deposit which comprised 25% of total deposits at December 31, 1990 had decreased to 12.3% of deposits at December 31, 1992. Savings accounts during the same period increased from 4.4% of total deposits at December 31, 1990 to 22.2% of deposits at December 31, 1992. Rates being lowered on certificates of deposit at a faster rate than on savings deposits accounts for the difference in deposit mix. Capital continues to maintain a high level of noninterest bearing deposits in its funding sources. Noninterest bearing demand deposits accounted for 35.7%, 41% and 28.1% of total deposits as of December 31, 1992, 1991 and 1990, respectively. Capital had no brokered deposits during the three years ended December 31, 1992. Capital. In order to facilitate the acquisition of United in 1992, Bank issued $1,200,000 of noncumulative perpetual preferred stock. Additionally, 6,114 shares of Bank common stock was issued in order to strengthen capital ratios. Effective December 31, 1992, banks are required to maintain minimum levels of capital to risk weighted assets. The Tier 1 minimum capital guideline is four percent and the Tier 2 minimum capital guideline is 8%. As of December 31, 1992 the Bank's Tier 1 risk weighted capital ratio was 12.93% and its Tier 2 ratio was 14.18%. The Bank's average equity to average quarterly assets was 7.01% at December 31, 1992 and 6.92% at December 31, 1991. Liquidity. Liquidity is the ability to meet cash flow requirements which may arise from existing or new commitments to lend money and meet fluctuating withdrawals from depository accounts. Capital's core deposit base spread over its seven branches has historically provided a stable, low cost source of funds. A portion of these funds have been invested in high credit quality securities of mixed maturities, providing a steady stream of maturing and reinvestable assets, which can be converted to cash without loss of value should the need arise. At December 31, 1992 approximately one half of the loan portfolio was due to mature within one year providing additional flexibility in managing cash flows. As a final measure Capital has available wholesale funding sources including the Federal Home Loan Bank where funding can be obtained on short notice for periods of overnight or up to twenty years. Inflation. Assets and liabilities of a financial institution are principally monetary in nature. Accordingly, interest rates, which generally correspond with changes in expected inflation, have potentially the most significant effect on Capital's net interest income. Capital attempts to mitigate the effects of inflation (changing interest rates) by matching maturities of interest bearing assets and liabilities as closely as possible. Income Taxes. For 1992 and prior Capital has computed its income tax liability using the deferred method wherein annual income tax expense is matched with pretax accounting income by providing deferred taxes at current tax rates on timing differences between the determination of net income for financial reporting and tax reporting purposes. Beginning in 1993 Capital was required to adopt Financial Accounting Standard No. 109. Standard No. 109 requires an asset and liability method to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of Capital's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. CAPITAL BANCORP AND SUBSIDIARY Statements of Condition Based on Average Balances Assets Years Ended December 31, 1992 1991 Cash and cash equivalents: -------------- -------------- Cash and due from banks, noninterest-bearing $7,003,449 5,902,063 Due from banks, interest-bearing 472,234 8,562 Federal funds sold 8,536,081 3,492,740 -------------- -------------- 16,011,764 9,403,365 Investment securities 27,680,368 13,894,199 Loans and other receivables: Commercial loans 38,135,386 36,329,226 Installment loans 6,626,904 5,539,727 Real estate loans and contracts 8,641,775 6,365,253 Accrued interest and other 1,054,035 976,116 Allowance for loan losses (894,807) (777,358) -------------- -------------- Total loans 53,563,293 48,432,964 Premises and equipment 1,881,419 1,820,610 Other real estate owned 154,143 187,177 Cash surrender value of life insurance 597,291 571,494 Other assets 519,397 319,154 -------------- -------------- $100,407,675 74,628,963 ============== ============== Liabilities and Shareholders' Equity Deposits: Demand deposits $29,329,738 18,736,889 Demand deposits, interest-bearing 12,387,436 7,941,128 Savings deposits 14,407,966 4,709,357 Money market investment accounts 12,866,027 18,903,738 Time deposits 12,578,995 15,459,972 -------------- -------------- 81,570,162 65,751,084 Securities sold under agreements to repurchase 10,237,640 3,081,762 Other borrowings 235,867 - Accrued liabilities 818,331 581,203 Income taxes payable 131,959 51,799 Notes payable 900,683 1,497,500 -------------- -------------- 93,894,642 70,963,348 Minority interest 1,698,195 686,905 Shareholders' equity: Common stock 1,437,067 1,100,000 Paid-in capital 312,183 - Undivided profits 3,128,028 1,941,038 Treasury stock (62,440) (62,328) -------------- -------------- Net shareholders' equity 4,814,838 2,978,710 -------------- -------------- $100,407,675 74,628,963 ============== ============== CAPITAL BANCORP AND SUBSIDIARY SELECTED CONSOLIDATED FINANCIAL DATA As of, and for the Nine Months Ended As of, and for the September 30, Year Ended December 31, 1993 1992 1992 1991 -------------- -------------- -------------- -------------- EARNINGS SUMMARY Net interest income $5,329,029 4,323,541 6,155,629 4,498,038 Provision for loan losses 101,000 147,500 200,000 240,000 Other operating income 1,420,102 1,126,237 1,525,964 1,214,845 Other operating expense 4,212,905 3,806,308 5,140,776 4,078,708 Net income 1,162,230 865,855 1,336,317 1,114,268 COMMON STOCK DATA Earnings per common share 7.73 5.76 8.89 8.22 Book value per share at end of period (fully diluted) 45.49 35.64 38.76 28.52 Weighted average common shares outstanding (fully diluted) 150,350 150,361 150,361 135,494 Common shares outstanding at end of period 150,345 150,361 150,361 107,211 AVERAGE BALANCE SHEET DATA Investment securities 38,992,317 23,976,668 27,680,368 13,894,199 Loans (net) 56,571,459 52,822,255 53,563,293 48,432,964 Total interest earning assets 100,444,359 85,378,037 90,092,748 65,629,707 Total assets 111,231,679 95,491,280 100,407,675 74,628,963 Interest-bearing deposits 55,708,163 50,733,616 52,240,424 47,014,195 Total deposits 90,752,894 78,470,120 81,570,162 65,751,084 Repurchase agreements 9,256,151 8,806,299 10,237,640 3,081,762 Long-term debt 1,076,933 1,163,767 1,136,550 1,497,500 Shareholders' equity 6,367,070 4,524,343 4,814,838 2,978,710 END OF PERIOD BALANCE SHEET DATA Investment securities 36,207,470 33,843,975 43,026,430 14,046,828 Loans (net) 58,904,429 55,947,229 56,343,178 47,347,917 Allowance for loan losses 912,191 879,990 1,001,270 738,021 Total assets 122,040,691 113,456,959 118,519,271 90,658,215 Total deposits 107,407,194 94,975,967 90,359,487 72,888,135 Repurchase agreements 3,667,308 9,331,201 18,365,294 11,545,385 Long-term debt 1,056,083 1,064,249 1,209,770 1,385,000 Shareholders' equity 6,839,763 5,358,160 5,828,622 3,538,305 Nonperforming assets: Nonaccrual loans 1,057,000 1,242,000 1,495,000 277,000 Other real estate owned 126,483 175,414 23,041 Total nonperforming assets 1,057,000 1,368,483 1,670,414 300,041 SELECTED RATIOS Net interest margin 7.07% 6.75% 6.83% 6.85% Return on average assets 1.39% 1.21% 1.33% 1.49% Return on average common equity 24.34% 25.52% 27.90% 37.41% Ratio of average common equity to average total assets 5.72% 4.74% 4.77% 3.99% Ratio of allowance for loan losses to net loans outstanding at period end 1.55% 1.57% 1.78% 1.56% Ratio of allowance for loan losses to nonperforming assets 86.30% 64.30% 59.94% 245.97%
CAPITAL BANCORP & SUBSIDIARY Analysis of Net Interest Earnings Years Ended December 31, 1992 and 1991 Interest 1992 Avg Amt & Fees Average Average Outstanding Earned Yield Rate Paid -------------- -------------- -------------- -------------- Assets: Due from banks, interest-bearing $472,234 15,853 3.36% Federal funds sold 8,536,081 290,965 3.41% U.S. Treasury obligations 13,673,090 863,521 6.32% U.S. Government agency obligations 10,788,592 645,065 5.98% Mortgage backed securities 1,172,968 64,866 5.53% Corporate securities 1,109,139 49,605 4.47% Municipal obligations 653,601 48,886 7.48% Federal Home Loan Bank stock 281,970 41,417 14.69% Loans 53,404,065 6,497,414 12.17% -------------- -------------- -------------- Total $90,091,740 8,517,592 9.45% ============== Liabilities: Interest bearing demand $12,387,436 432,869 3.49% Money market accounts 12,866,027 368,536 2.86% Savings accounts 14,407,966 549,367 3.81% Certificates of deposit 12,578,995 587,042 4.67% Repurchase agreements 10,237,640 330,336 3.23% Other borrowed money 235,867 17,344 7.35% Notes payable 900,683 76,469 8.49% -------------- -------------- -------------- Total $63,614,614 2,361,963 3.71% ============== -------------- -------------- Net interest income/net yield on average assets $6,155,629 6.83% ============== ============== 1991 Assets: Due from banks, interest-bearing $8,562 410 4.79% Federal funds sold 3,492,740 178,205 5.10% U.S. Treasury obligations 7,540,823 584,653 7.75% U.S. Government agency obligations 3,396,468 270,467 7.96% Mortgage backed securities 212,402 19,647 9.25% Corporate securities 2,077,114 188,411 9.07% Municipal obligations 413,014 36,480 8.83% Federal Home Loan Bank stock 254,378 16,854 6.63% Loans 48,234,206 5,953,903 12.34% -------------- -------------- -------------- Total $65,629,707 7,249,030 11.05% ============== Liabilities: Interest bearing demand $7,941,128 398,021 5.01% Money market accounts 18,903,738 834,120 4.41% Savings accounts 4,709,357 244,554 5.19% Certificates of deposit 15,459,972 958,993 6.20% Repurchase agreements 3,081,762 163,303 5.30% Other borrowed money - - - Notes payable 1,497,500 152,001 10.15% -------------- -------------- -------------- Total $51,593,457 2,750,992 5.33% ============== -------------- -------------- Net interest income/net yield on average assets $4,498,038 6.85% ============== ============== Non-accrual loans are included in the loan balances above, the effect on the analysis is not considered material. Fees on loans included in "Interest & Fees Earned" totaled $1,390,461 and $549,160 in 1992 and 1991, respectively.
CAPITAL BANCORP & SUBSIDIARY Analysis of Change in Interest Years Ended December 31, 1992 and 1991 Interest Change Change Change 1992 Change Due to Due to Due to 1992-1991 Volume Rates Rate/Volume -------------- -------------- -------------- -------------- Assets: Due from banks, interest-bearing $15,443 22,204 (123) (6,638) Federal funds sold 112,760 257,319 (59,150) (85,409) U.S. Treasury obligations 278,868 475,445 (108,414) (88,163) U.S. Government agency obligations 374,598 588,648 (67,387) (146,663) Mortgage backed securities 45,219 88,852 (7,901) (35,732) Corporate securities (138,806) (87,803) (95,514) 44,511 Municipal obligations 12,406 21,250 (5,589) (3,255) Federal Home Loan Bank stock 24,563 1,828 20,510 2,225 Loans 543,511 638,154 (85,481) (9,162) -------------- -------------- -------------- -------------- Total $1,268,562 2,005,897 (409,049) (328,286) ============== ============== ============== ============== Liabilities: Interest bearing demand $34,848 222,854 (120,525) (67,483) Money market accounts (465,584) (266,412) (292,639) 93,467 Savings accounts 304,813 503,643 (64,989) (133,841) Certificates of deposit (371,951) (178,709) (237,500) 44,258 Repurchase agreements 167,033 379,191 (63,864) (148,294) Other borrowed money 17,344 - - 17,344 Notes payable (75,532) (60,579) (24,862) 9,909 -------------- -------------- -------------- -------------- Total ($389,029) 599,988 (804,379) (184,640) ============== ============== ============== ============== Interest Change Change Change 1991 Change Due to Due to Due to 1991-1990 Volume Rates Rate/Volume Assets: -------------- -------------- -------------- -------------- Due from banks, interest-bearing ($881) (849) (94) 62 Federal funds sold 21,767 120,113 (55,632) (42,714) U.S. Treasury obligations 306,032 350,323 (19,621) (24,670) U.S. Government agency obligations 81,736 83,929 (1,518) (675) Mortgage backed securities 959 (1,133) 2,227 (135) Corporate securities (89,522) (88,283) (1,816) 577 Municipal obligations 5,658 97 5,544 17 Federal Home Loan Bank stock 16,854 - 4,525 12,329 Loans 243,589 323,863 (75,965) (4,309) -------------- -------------- -------------- -------------- Total $586,192 788,060 (142,350) (59,518) ============== ============== ============== ============== Liabilities: Interest bearing demand $69,166 87,430 (14,428) (3,836) Money market accounts (211,445) (15,721) (198,712) 2,988 Savings accounts 100,141 106,116 (3,444) (2,531) Certificates of deposit (247,653) (28,735) (224,258) 5,340 Repurchase agreements 115,154 165,548 (11,354) (39,040) Other borrowed money - - - - Notes payable (50,984) (30,601) (24,001) 3,618 -------------- -------------- -------------- -------------- Total ($225,621) 284,037 (476,197) (33,461) ============== ============== ============== ==============
CAPITAL BANCORP & SUBSIDIARY Investment Portfolio As of December 31, 1992 and 1991 1992 1991 Book Value Book Value -------------- -------------- U.S. Treasury obligations $17,882,822 8,730,890 U.S. Government agency obligations 15,332,656 4,343,791 Mortgage backed securities 7,096,433 208,247 Corporate securities 981,009 - Municipal obligations 1,440,310 500,000 Federal Home Loan Bank stock 293,200 263,900 -------------- -------------- $43,026,430 14,046,828 ============== ==============
CAPITAL BANCORP & SUBSIDIARY Investment Portfolio Maturity Schedule As of December 31, 1992 Within 1-5 6-10 After 1 Year Years Years 10 Years Total -------------- -------------- -------------- -------------- -------------- U.S. Treasury Obligations Carrying amount $1,334,480 16,293,062 255,280 - 17,882,822 Weighted average yield 7.41% 5.84% 7.36% - 5.98% U.S. Government agency obligations Carrying amount 521,068 13,922,463 626,417 262,708 15,332,656 Weighted average yield 5.61% 5.37% 4.45% 4.07% 5.32% Mortgage backed securities Carrying amount - 5,469,412 508,649 1,118,372 7,096,433 Weighted average yield - 5.54% 6.02% 4.97% 5.48% Corporate securities Carrying amount - 981,009 - - 981,009 Weighted average yield - 4.49% - - 4.49% Municipal obligations Carrying amount - 995,310 445,000 - 1,440,310 Weighted average yield - 4.35% 8.82% - 5.75% Federal Home Loan Bank stock Carrying amount - - - 293,200 293,200 Weighted average yield - - - 14.69% 14.69% -------------- -------------- -------------- -------------- -------------- Total carrying amount $1,855,548 37,661,256 1,835,346 1,674,280 43,026,430 ============== ============== ============== ============== ============== Yields on tax exempt obligations have not been computed on a tax equivalent basis.
CAPITAL BANCORP & SUBSIDIARY Loan Portfolio As of December 31, 1992 and 1991 1992 1991 -------------- -------------- Commercial $39,162,467 35,174,638 Real estate - construction 2,422,927 934,808 Real estate - permanent 6,705,146 4,786,090 Consumer loans 6,834,267 5,465,016 -------------- -------------- Total $55,124,807 46,360,552 ============== ==============
CAPITAL BANCORP & SUBSIDIARY Loan Portfolio Maturity Schedule As of December 31, 1992 Within 1-5 After 1 Year Years 5 Years Total -------------- -------------- -------------- -------------- Commercial Fixed rate $3,321,249 7,505,641 2,716,956 13,543,846 Adjustable rate 14,745,483 7,660,480 3,212,658 25,618,621 Real estate - construction Fixed rate 2,422,927 - - 2,422,927 Adjustable rate - - - - Real estate - permanent Fixed rate 1,974,750 1,418,879 2,139,843 5,533,472 Adjustable rate 339,842 706,612 125,220 1,171,674 Consumer Fixed rate 1,009,278 3,332,860 38,000 4,380,138 Adjustable rate 2,228,101 226,028 - 2,454,129 -------------- -------------- -------------- -------------- $26,041,630 20,850,500 8,232,677 55,124,807 ============== ============== ============== ==============
CAPITAL BANCORP & SUBSIDIARY Past Due and Nonaccrual Loans As of December 31, 1992 and 1991 1992 1991 -------------- -------------- Past due 90 days or more and still accruing $622,000 726,000 Nonaccrual loans 1,495,000 277,000 -------------- -------------- Total $2,117,000 1,003,000 ============== ============== Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. CAPITAL BANCORP & SUBSIDIARY Potential Problem Loans As of December 31, 1992 Loans classified as doubtful --------------------------------------------------- Commercial $590,000 ============== Loans with inherent weaknesses where collection or liquidation in full is highly questionable, are classified as doubtful. Weaknesses include cash flow deficiencies which would make payment on the loan difficult or insufficient collateral to cover the amount of the loan. CAPITAL BANCORP & SUBSIDIARY Nonaccrual Loan Detail As of December 31, 1992 1992 Interest 1992 Interest Income Earned Income If Accruing Recorded -------------- -------------- $90,817 43,602 ============== ============== CAPITAL BANCORP & SUBSIDIARY Analysis of the Allowance for Loan Losses Years Ended December 31, 1992 and 1991 1992 1991 -------------- -------------- Balance at beginning of period $738,021 637,107 Charge-offs: Commercial 299,141 285,339 Real estate - construction - - Real estate - permanent - - Consumer 60,981 60,764 -------------- -------------- Total 360,122 346,103 Recoveries: Commercial 305,197 194,002 Real estate - construction - - Real estate - permanent - - Consumer 13,650 13,015 -------------- -------------- Total 318,847 207,017 Net charge-offs 41,275 139,086 Additions charged to operations 200,000 240,000 Addition from acquisition 104,524 - -------------- -------------- Balance at end of period $1,001,270 738,021 ============== ============== Ratio of net charge-offs during the period to average loans outstanding during the period 0.08% 0.29% CAPITAL BANCORP & SUBSIDIARY Allocation of the Allowance for Loan Losses Years Ended December 31, 1992 and 1991 1992 1991 % of Loans % of Loans Per Category Per Category Amount To Total Loans Amount To Total Loans -------------- -------------- -------------- -------------- Commercial $812,227 71.04% 589,633 75.87% Real estate - construction 28,693 4.40% 12,894 2.02% Real estate - permanent 79,406 12.16% 66,018 10.32% Consumer 80,944 12.40% 69,476 11.79% ______________ ______________ ______________ ______________ $1,001,270 100.00% 738,021 100.00% ============== ============== ============== ==============
CAPITAL BANCORP & SUBSIDIARY Deposit Analysis Based on averages Years Ended December 31, 1992 and 1991 1992 1991 Average Average Average Average Amount Rate Paid Amount Rate Paid -------------- -------------- -------------- -------------- Noninterest bearing demand deposits $29,329,738 0.00% 18,736,889 0.00% Interest bearing demand deposits 12,387,436 3.49% 7,941,128 5.01% Money market accounts 12,866,027 2.86% 18,903,738 4.41% Savings accounts 14,407,966 3.81% 4,709,357 5.19% Certificates of deposit 12,578,995 4.67% 15,459,972 6.20% ______________ ______________ $81,570,162 2.38% 65,751,084 3.70% ============== ==============
CAPITAL BANCORP & SUBSIDIARY Time Deposit Maturity Schedule As of December 31, 1992 3 Months Over Or Less 3-6 Months 6-12 Months One Year Total -------------- -------------- -------------- -------------- -------------- Certificates of deposit greater than $100,000 $1,566,221 300,000 101,095 100,216 2,067,532 ============== ============== ============== ============== ==============
CAPITAL BANCORP & SUBSIDIARY Return on Equity and Assets Years Ended December 31, 1992 and 1991 1992 1991 -------------- -------------- Return on average assets 1.33% 1.49% Return on average equity 27.75% 37.41% Dividend payout ratio n/a n/a Average equity to average assets 4.80% 3.99% Capital did not instigate dividend payments until 1993 CAPITAL CITY BANK (subsidiary only) Return on Equity and Assets Years Ended December 31, 1992 and 1991 1992 1991 -------------- -------------- Return on average assets 1.51% 1.61% Return on average equity 21.35% 23.67% Dividend payout ratio 31.01% 20.08% Average equity to average assets 7.01% 6.92% CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Condition September 30, 1993 and 1992 (Unaudited) Assets 1993 1992 ------------- ------------- Cash and cash equivalents: Cash and due from banks, noninterest-bearing $10,722,600 11,107,590 Due from banks, interest-bearing 219,197 1,301,380 Federal funds sold 13,100,000 8,150,000 ------------- ------------- 24,041,797 20,558,970 Investment securities 36,207,470 33,843,975 Loans and other receivables: Commercial loans 41,712,174 39,840,122 Installment loans 6,127,561 6,946,147 Real estate loans and contracts 8,130,236 6,498,922 Loans held for sale at cost, which approximates market 2,894,155 2,496,275 Accrued interest and other 952,494 1,045,753 ------------- ------------- 59,816,620 56,827,219 Less allowance for loan losses 912,191 879,990 ------------- ------------- 58,904,429 55,947,229 Premises and equipment 1,653,678 1,937,501 Other real estate owned - 126,483 Cash surrender value of life insurance 626,832 603,191 Other assets 606,485 439,610 ------------- ------------- $122,040,691 113,456,959 ============= ============= CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Condition September 30, 1993 and 1992 (Unaudited) Liabilities and Shareholders' Equity 1993 1992 ------------- ------------- Deposits: Demand deposits $49,996,189 38,452,246 Demand deposits, interest-bearing 14,175,010 14,656,264 Savings deposits 21,910,271 17,350,290 Money market investment accounts 13,138,401 12,421,306 Time deposits 8,187,323 12,095,861 ------------- ------------- 107,407,194 94,975,967 Securities sold under agreements to repurchase 3,667,308 9,331,201 Other borrowings 727,483 410,649 Accrued liabilities 729,155 774,930 Income taxes payable 87,119 23,512 Notes payable 328,600 653,600 ------------- ------------- 112,946,859 106,169,859 Minority interest 2,254,069 1,928,940 Shareholders' equity: Common stock, par value, $10 per share; authorized 200,000 shares; issued and outstanding 153,150 shares in 1993 and 1992 1,531,500 1,531,500 Paid-in capital 522,500 522,500 Undivided profits 4,848,939 3,366,600 Treasury stock, at cost, 2,805 shares in 1993 and 2,789 shares in 1992 (63,176) (62,440) ------------- ------------- Net shareholders' equity 6,839,763 5,358,160 ------------- ------------- $122,040,691 113,456,959 ============= ============= CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Income Nine months ended September 30, 1993 and 1992 (Unaudited) 1993 1992 Interest income: ------------- ------------- Interest and fees on loans $5,044,258 4,732,013 Interest on federal funds sold 97,582 229,841 Interest and dividends on investment securities 1,704,223 1,148,078 ------------- ------------- Total interest income 6,846,063 6,109,932 ------------- ------------- Interest expense: Interest on demand deposits, 765,845 725,214 interest-bearing and savings deposits Interest on money market investment 232,613 288,506 accounts Interest on time accounts 269,667 464,196 Interest on securities sold under agreements to repurchase 174,469 236,492 Interest on other borrowings 54,833 6,268 Interest on notes payable 19,607 65,715 ------------- ------------- Total interest expense 1,517,034 1,786,391 ------------- ------------- Net interest income 5,329,029 4,323,541 Provision for loan losses 101,000 147,500 ------------- ------------- Net interest income after provision for loan losses 5,228,029 4,176,041 ------------- ------------- Other operating income: Service charges on deposit accounts 760,683 655,163 Bankcard discounts and fees 211,863 169,587 Investment securities gains, net 49,824 104,478 Other 397,732 197,009 ------------- ------------- 1,420,102 1,126,237 Other expenses: Salaries, wages, and benefits 2,156,841 1,822,303 Building 445,412 470,476 Furniture and equipment 324,187 281,100 Supplies and postage 208,670 197,341 Regulatory assessments 169,655 156,529 Advertising 144,637 96,640 Bankcard interchange discounts and fees 129,897 91,337 Professional and legal 126,597 187,181 Telephone 72,089 82,071 Other 434,920 421,330 ------------- ------------- 4,212,905 3,806,308 ------------- ------------- Income before income tax expense, cumulative effect of change in accounting principle and minority interest 2,435,226 1,495,970 Income tax expense 891,000 492,500 ------------- ------------- CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Income Continued Nine months ended September 30, 1993 and 1992 (Unaudited) Income before cumulative effect of change in accounting principle and minority interest 1,544,226 1,003,470 Cumulative effect of change in accounting principle 60,000 - ------------- ------------- Income before minority interest 1,484,226 1,003,470 Minority interest in net income of subsidiary (321,996) (137,615) ------------- ------------- Net income $1,222,230 865,855 ============= ============= Weighted average common and common equivalent shares outstanding during the period 150,350 150,361 ============= ============= Net Income per share applicable to common stock $7.44 5.59 ============= ============= CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Shareholders' Equity Nine months ended September 30, 1993 and 1992 (Unaudited) Common stock Treasury stock --------------------------- ------------------- Number Paid-in Undivided Number of Shares Amount capital profits of Shares Amount Total ------------------------------------------------------------------------------------ Balances at January 1, 1992 110,000 $1,100,000 - 2,500,745 2,789 ($62,440) 3,538,305 Exercise of stock options 43,150 431,500 318,500 - - - 750,000 Tax benefit from exercise of stock options - - 204,000 - - - 204,000 Net income - - - 865,855 - - 865,855 ------------------------------------------------------------------------------------ Balances at September 30, 1992 153,150 1,531,500 522,500 3,366,600 2,789 (62,440) 5,358,160 ==================================================================================== Balances at January 1, 1993 153,150 1,531,500 522,500 3,837,062 2,789 (62,440) 5,828,622 Purchase of treasury stock - - - - 16 (736) (736) Dividends declared - - - (150,353) - - (150,353) Net income - - - 1,162,230 - - 1,162,230 ------------------------------------------------------------------------------------ Balances at September 30, 1993 153,150 $1,531,500 522,500 4,848,939 2,805 ($63,176) 6,839,763 ====================================================================================
CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Cash Flows Nine months ended September 30, 1993 and 1992 (Unaudited) 1993 1992 ------------- ------------- Cash flows from operating activities: Income before minority interest $1,484,226 1,003,470 Adjustments to reconcile income before minority interest to net cash provided by operating activities: Provision for loan losses 101,000 147,500 Depreciation and amortization on premises an equipment 307,203 237,281 Amortization of net premium on investment securities 138,129 98,872 Amortization of intangible assets 5,895 5,895 Investment securities gains, net (49,824) (104,478) (Gain) loss on disposal of premises and equipment (7,800) 3,681 (Gain) loss on sale of other real estate owned (6,884) 8,828 Minority interest in net income of subsidiary (321,996) (137,615) Change in: Accrued interest and other receivables 265,877 95,436 Cash surrender value of life insurance (17,620) (19,626) Other assets (366,261) (58,024) Accrued liabilities 222,969 186,292 Income taxes payable (74,393) 116,978 Minority interest 165,669 (19,372) ------------- ------------- Net cash provided by operating activities 1,846,190 1,565,118 Cash flows from investing activities: Proceeds from sales of investment securities 7,591,268 4,639,445 Proceeds from maturities of investment securities 5,069,526 9,140,275 Purchases of investment securities (5,930,139) (26,726,121) Loans originated in excess of principle collected (3,997,799) (2,530,251) Proceeds from sales of premises and equipment 169,781 17,909 Purchases of premises and equipment (278,207) (265,451) Proceeds from sales of other real estate 285,411 180,713 Purchase of treasury stock (736) - Cash from acquisition, net of cash paid - 4,162,585 ------------- ------------- Net cash provided by (used in) investing activities 2,909,105 (11,380,896) Cash flows from financing activities: Net increase in demand deposits, savings deposits and money market investment accounts 19,968,196 11,127,551 Net decrease in certificates of deposit (2,920,489) (6,360,988) Increase in securities sold under agreements to repurchase (14,697,986) (2,214,184) Increase in other borrowings 3,000,000 415,000 Payments on other borrowings (3,028,687) (4,351) Proceeds from issuance of notes payable - 11,000 Payments on notes payable (125,000) (742,400) Payment of dividends (150,353) - Exercise of stock options - 750,000 ------------- ------------- Net cash provided by financing activities 2,045,681 2,981,628 Increase (decrease) in cash and cash equivalents 6,800,976 (6,834,150) Cash and cash equivalents at beginning of year 17,240,821 27,393,120 ------------- ------------- Cash and cash equivalents at end of nine month period $24,041,797 20,558,970 ============= ============= Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $1,548,586 1,811,885 Income taxes 890,393 365,522 Supplemental Schedule of Noncash Investing and Financing Activities Acquisitions of real property through foreclosure or in lieu of loan repayments $68,401 292,983 CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Condition September 30, 1993 and 1992 (Unaudited) Assets 1993 1992 ------------- ------------- Cash and cash equivalents: Cash and due from banks, noninterest-bearing $10,722,600 11,107,590 Due from banks, interest-bearing 219,197 1,301,380 Federal funds sold 13,100,000 8,150,000 ------------- ------------- 24,041,797 20,558,970 Investment securities 36,207,470 33,843,975 Loans and other receivables: Commercial loans 41,529,284 39,550,760 Installment loans 6,127,561 6,946,147 Real estate loans and contracts 8,130,236 6,498,922 Loans held for sale at cost, which approximates market 2,894,155 2,496,275 Accrued interest and other 950,049 1,041,884 ------------- ------------- 59,631,285 56,533,988 Less allowance for loan losses 912,191 879,990 ------------- ------------- 58,719,094 55,653,998 Premises and equipment 1,653,678 1,937,501 Other real estate owned - 126,483 Cash surrender value of life insurance 626,832 603,191 Other assets 566,104 391,370 ------------- ------------- $121,814,975 113,115,488 ============= ============= CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Condition September 30, 1993 and 1992 (Unaudited) Liabilities and Shareholders' Equity 1993 1992 ------------- ------------- Deposits: Demand deposits $49,996,189 38,452,246 Demand deposits, interest-bearing 14,394,431 14,708,435 Savings deposits 21,910,271 17,350,290 Money market investment accounts 13,138,401 12,421,306 Time deposits 8,187,323 12,095,861 ------------- ------------- 107,626,615 95,028,138 Securities sold under agreements to repurchase 3,667,308 9,331,201 Other borrowings 727,483 410,649 Accrued liabilities 802,067 765,227 Income taxes payable 47,000 48,000 ------------- ------------- 112,870,473 105,583,215 ------------- ------------- Shareholders' equity: Capital Stock: Noncumulative preferred stock, $50 par value; authorized 50,000 shares; issued and outstanding, 24,000 shares in 1993 and 1992 1,200,000 1,200,000 Common stock, par value, $10 per share; authorized 200,000 shares; issued and outstanding 132,850 shares in 1993 and 1992 1,328,500 1,328,500 Paid-in capital 2,522,500 2,522,500 Undivided profits 3,893,502 2,481,273 ------------- ------------- Total shareholders' equity 8,944,502 7,532,273 ------------- ------------- $121,814,975 113,115,488 ============= ============= CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Consolidated Statements of Income Nine months ended September 30, 1993 and 1992 (Unaudited) 1993 1992 Interest income: ------------- ------------- Interest and fees on loans $5,031,143 4,721,000 Interest on federal funds sold 97,582 229,841 Interest and dividends on investment securities 1,704,223 1,148,078 ------------- ------------- Total interest income 6,832,948 6,098,919 ------------- ------------- Interest expense: Interest on demand deposits, interest-bearing and savings deposits 768,208 729,591 Interest on money market investment accounts 232,613 288,506 Interest on time accounts 269,667 464,196 Interest on securities sold under agreements to repurchase 174,469 236,492 Interest on other borrowings 54,833 6,268 ------------- ------------- Total interest expense 1,499,790 1,725,053 ------------- ------------- Net interest income 5,333,158 4,373,866 Provision for loan losses 101,000 147,500 ------------- ------------- Net interest income after provision for loan losses 5,232,158 4,226,366 ------------- ------------- Other operating income: Service charges on deposit accounts 760,683 655,163 Bankcard discounts and fees 211,863 169,587 Investment securities gains, net 49,824 104,478 Other 397,732 197,009 ------------- ------------- 1,420,102 1,126,237 Other expenses: Salaries, wages, and benefits 2,156,841 1,822,303 Building 445,412 470,476 Furniture and equipment 324,187 281,100 Supplies and postage 208,670 197,341 Regulatory assessments 169,655 156,529 Advertising 144,637 96,640 Bankcard interchange discounts and fees 129,897 91,337 Professional and legal 126,597 187,181 Telephone 72,089 82,071 Other 392,890 408,755 ------------- ------------- 4,170,875 3,793,733 ------------- ------------- Income before income tax expense and cumulative effect of change in accounting principle 2,481,385 1,558,870 Income tax expense 894,000 549,000 ------------- ------------- Income before cumulative effect of change in accounting principle 1,587,385 1,009,870 Cumualtive effect of change in accounting principle 60,000 - ------------- ------------- Net income $1,527,385 1,009,870 ============= ============= Weighted average common and common equivalent shares outstanding during the period 140,767 137,631 ============= ============= Net income per share applicable to common stock (fully diluted) $10.49 7.13 ============= ============= CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Shareholders' Equity Nine months ended September 30, 1993 and 1992 (Unaudited) Noncumulative preferred stock Common stock ---------------------------- --------------------- Number Number Paid-in Undivided of Shares Amount of Shares Amount capital profits Total ---------------------------- -------------------------------------------------------- Balances at January 1, 1992 - $ - 126,736 $1,267,360 2,302,398 1,939,623 5,509,381 Preferred stock issued for business acquisitions 24,000 1,200,000 - - - - 1,200,000 Common stock sold - - 6,114 61,140 220,102 - 281,242 Net income - - - - - 1,009,870 1,009,870 Dividends declared: Common - - - - - (420,138) (420,138) Preferred - - - - - (48,082) (48,082) ---------------------------- --------------------------------------------------------- Balances at September 30, 1992 24,000 1,200,000 132,850 1,328,500 2,522,500 2,481,273 7,532,273 ============================ ========================================================= Balances at January 1, 1993 24,000 1,200,000 132,850 1,328,500 2,522,500 2,981,517 8,032,517 Net income - - - - - 1,527,385 1,527,385 Dividends declared: Common - - - - - (531,400) (531,400) Preferred - - - - - (84,000) (84,000) ---------------------------- --------------------------------------------------------- Balances at September 30, 1993 24,000 $1,200,000 132,850 $1,328,500 2,522,500 3,893,502 8,944,502 ============================ =========================================================
CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Cash Flows Nine months ended September 30, 1993 and 1992 (Unaudited) 1993 1992 ------------- ------------- Cash flows from operating activities: Net income $1,527,385 1,009,870 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 101,000 147,500 Depreciation and amortization on premises an equipment 307,203 237,281 Amortization of net premium on investment securities 138,129 98,872 Investment securities gains, net (49,824) (104,478) (Gain) loss on disposal of premises and equipment (7,800) 3,681 (Gain) loss on sale of other real estate owned (6,884) 8,828 Change in: Accrued interest and other receivables 265,517 99,305 Cash surrender value of life insurance (17,620) (19,626) Other assets (366,261) (57,964) Accrued liabilities 299,989 198,168 Income taxes payable (89,000) 44,250 ------------- ------------- Net cash provided by operating activities 2,101,834 1,665,687 Cash flows from investing activities: Proceeds from sales of investment securities 7,591,268 4,639,445 Proceeds from maturities of investment securities 5,069,526 9,140,275 Purchases of investment securities (5,930,139) (26,726,121) Loans originated in excess of principle collected (4,072,966) (2,240,889) Proceeds from sales of premises and equipment 169,781 17,909 Purchases of premises and equipment (278,207) (265,451) Proceeds from sales of other real estate 285,411 180,713 Cash from acquisition, net of cash paid - 4,162,585 ------------- ------------- Net cash provided by (used in) investing activities 2,834,674 (11,091,534) Cash flows from financing activities: Net increase in demand deposits, savings deposits and money market investment accounts 20,127,030 10,943,198 Net decrease in time deposits (2,920,489) (6,360,988) Decrease in securities sold under agreements to repurchase (14,697,986) (2,214,184) Increase in other borrowings 3,000,000 415,000 Payments on other borrowings (3,028,687) (4,351) Proceeds from issuance of common stock - 281,242 Dividends declared (615,400) (468,220) ------------- ------------- Net cash provided by financing activities 1,864,468 2,591,697 Increase (decrease) in cash and cash equivalents 6,800,976 (6,834,150) Cash and cash equivalents at beginning of year 17,240,821 27,393,120 ------------- ------------- Cash and cash equivalents at end of nine month period $24,041,797 20,558,970 ============= ============= Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $1,526,891 1,734,294 Income taxes 902,000 591,000 Supplemental Schedule of Noncash Investing and Financing Activities Acquisitions of real property through foreclosure or in lieu of loan repayments $68,401 292,963 CAPITAL BANCORP AND SUBSIDIARY Consolidated Financial Statements December 31, 1992 and 1991 (With Independent Auditors' Report Thereon) Independent Auditors' Report The Board of Directors and Shareholders Capital Bancorp: We have audited the accompanying consolidated statements of condition of Capital Bancorp and subsidiary as of December 31, 1992 and 1991, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1992. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Capital Bancorp and subsidiary as of December 31, 1992 and 1991, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1992 in conformity with generally accepted accounting principles. KPMG Peat Marwick Salt Lake City, Utah January 12, 1993 CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Condition December 31, 1992 and 1991 Assets 1992 1991 ----------- ---------- Cash and cash equivalents: Cash and due from banks, noninterest-bearing $ 7,094,441 6,882,706 Due from banks, interest-bearing 1,646,380 10,414 Federal funds sold 8,500,000 20,500,000 ----------- ---------- 17,240,821 27,393,120 Investment securities (note 2) 43,026,430 14,046,828 Loans and other receivables: Commercial loans 39,162,467 35,174,638 Installment loans 6,834,267 5,465,016 Real estate loans and contracts 7,198,402 5,720,898 Loans held for sale at cost, which approximates market 1,929,671 - Accrued interest and other 1,218,371 987,365 ---------- ---------- 56,343,178 47,347,917 Less allowance for loan losses (note 3) 1,001,270 738,021 ---------- ---------- 55,341,908 46,609,896 Premises and equipment (note 4) 1,887,167 1,730,903 Other real estate owned 175,414 23,041 Cash surrender value of life insurance 609,212 583,565 Other assets 238,319 270,862 ---------- ---------- $ 118,519,271 90,658,215 ============ ========== CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Condition (continued) December 31, 1992 and 1991 1992 1991 ----------- --------- Liabilities and Shareholders' Equity Deposits: Demand deposits $ 32,291,074 29,879,884 Demand deposits, interest-bearing 13,120,829 9,537,432 Savings deposits 20,080,760 8,385,167 Money market investment accounts 13,759,012 12,318,400 Time deposits, including deposits of $100,000 or more of $2,067,532 in 1992 and $3,983,504 in 1991 11,107,812 12,767,252 ----------- ---------- 90,359,487 72,888,135 Securities sold under agreements to repurchase 18,365,294 11,545,385 Other borrowings 756,170 - Accrued liabilities 506,186 442,544 Income taxes payable (note 5) 161,512 110,534 Notes payable (note 6) 453,600 1,385,000 ----------- ---------- Total liabilities 110,602,249 86,371,598 ----------- ---------- Minority interest 2,088,400 748,312 ----------- ---------- Shareholders' equity: Common stock, $10 par value; authorized 200,000 shares; issued and outstanding 153,150 shares in 1992 and 110,000 shares in 1991 1,531,500 1,100,000 Paid-in capital 522,500 - Undivided profits 3,837,062 2,500,745 Treasury stock, at cost, 2,789 shares (62,440) (62,440) ---------- ----------- Net shareholders' equity 5,828,622 3,538,305 ---------- ---------- Commitments and contingencies (notes 4, 6, 8, 10, 11, and 12) $ 118,519,271 90,658,215 ============ ========== See accompanying notes to consolidated financial statements. CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Income Years ended December 31, 1992, 1991, and 1990 1992 1991 1990 ----------- --------- ---------- Interest income: Interest and fees on loans $ 6,497,413 5,953,903 5,710,314 Interest on federal funds sold 290,965 178,205 156,438 Interest and dividends on investment securities 1,729,214 1,116,922 796,086 ---------- ---------- --------- Total interest income 8,517,592 7,249,030 6,662,838 ---------- ---------- --------- Interest expense: Interest on demand deposits, interest-bearing, and savings deposits 982,236 642,575 473,268 Interest on money market investment accounts 368,536 834,120 1,045,565 Interest on time accounts, including interest on deposits of $100,000 or more of $85,060 in 1992, $272,586 in 1991, and $404,597 in 1990 587,042 958,993 1,206,646 Interest on securities sold under agreements to repurchase 330,336 163,303 48,149 Interest on other borrowings 17,344 - - Interest on notes payable 76,469 152,001 202,985 ---------- --------- --------- Total interest expense 2,361,963 2,750,992 2,976,613 ---------- --------- --------- Net interest income 6,155,629 4,498,038 3,686,225 Provision for loan losses (note 3) 200,000 240,000 273,500 --------- --------- --------- Net interest income after provision for loan losses 5,955,629 4,258,038 3,412,725 --------- --------- --------- Other operating income: Service charges on deposit accounts 887,185 760,865 684,186 Bankcard discounts and fees 231,123 189,171 179,125 Investment securities gains (losses), net 114,543 44,159 (19,472) Other 293,113 220,650 196,876 --------- -------- -------- 1,525,964 1,214,845 1,040,715 --------- --------- --------- Other expenses: Salaries, wages, and benefits 2,467,770 2,088,282 1,872,538 Building 629,433 483,732 449,915 Furniture and equipment 389,105 299,160 305,314 Supplies and postage 268,156 207,246 204,852 Professional and legal 217,057 123,981 97,584 Regulatory assessments 212,116 147,294 78,738 Advertising 162,939 84,535 98,370 Bankcard interchange discounts and fees 127,598 111,830 105,057 Telephone 109,244 82,054 86,490 Other 557,358 450,594 412,892 --------- --------- --------- 5,140,776 4,078,708 3,711,750 --------- --------- --------- CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Income (continued) Years ended December 31, 1992, 1991, and 1990 1992 1991 1990 ---------- ---------- ---------- Income before income tax expense and extraordinary item $ 2,340,817 1,394,175 741,690 Income tax expense (note 5) 799,240 396,822 217,307 Income before extraordinary item 1,541,577 997,353 524,383 Extraordinary tax benefit of net operating loss carryforward (note 5) - 280,250 210,800 Income before minority interest 1,541,577 1,277,603 735,183 Minority interest in net income of subsidiary (205,260) (163,335) (115,521) --------- --------- -------- Net income $ 1,336,317 1,114,268 619,662 ========== ========= ======== Weighted average common and common equivalent shares outstanding during the year 150,361 135,494 103,149 ========== ========= ======== Per share applicable to common stock: Income before extraordinary item $ 8.72 6.13 3.86 ====== ===== ===== Net income $ 8.72 8.22 6.01 ====== ===== ===== See accompanying notes to consolidated financial statements. CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Shareholders' Equity Years ended December 31, 1992, 1991, and 1990 Common stock Treasury stock -------------------- ------------------- Number Paid-in Undivided Number of shares Amount capital profits of shares Amount Total --------- -------- -------- ---------- --------- ------ ----- Balances at December 31, 1989 110,000 $ 1,110,000 23,541 786,635 8,551 $ (1,015) 1,909,161 Sale of subsidiary stock at less than book value - - (23,541) (19,820) - - (43,361) Sale of common stock - - - - (3,400) - - Payment to subsidiary for common stock held in parent - - - - - (60,750) (60,750) Net income - - - 619,662 - - 619,662 -------- --------- -------- -------- ------- ------- ------- Balances at December 31, 1990 110,000 1,100,000 - 1,386,477 5,151 (61,765) 2,424,712 Sale of common stock - - - - (2,362) - - Payment to subsidiary for common stock held in parent - - - - - (675) (675) Net income - - - 1,114,268 - - 1,114,268 -------- --------- -------- --------- -------- ------ --------- Balances at December 31, 1991 110,000 1,100,000 - 2,500,745 2,789 (62,440) 3,538,305 Exercise of stock options (note 8) 43,150 431,500 318,500 - - - 750,000 Tax benefit from exercise of stock options (note 8) - - 204,000 - - - 204,000 Net income - - - 1,336,317 - - 1,336,317 -------- ----------- --------- -------- -------- -------- --------- Balances at December 31, 1992 153,150 $ 1,531,500 522,500 3,837,062 2,789 $ (62,440) 5,828,622 ======== =========== ========= ========= ======= ======== ========= See accompanying notes to consolidated financial statements.
CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Cash Flows Years ended December 31, 1992, 1991, and 1990 1992 1991 1990 ---------- -------- -------- Cash flows from operating activities: Income before extraordinary item $ 1,541,577 997,353 524,383 Adjustments to reconcile income before extraordinary item to net cash provided by operating activities: Provision for loan losses 200,000 240,000 273,500 Depreciation and amortization on premises and equipment 330,553 287,484 297,939 Tax benefit from exercise of stock options 204,000 - - Amortization of net premium on investment securities 116,927 59,389 21,095 Amortization of intangible assets 7,860 7,860 7,860 Extraordinary tax benefit of net operating loss carryforward - 280,250 210,800 Write-down of other real estate owned - 53,750 32,570 Investment securities (gains) losses, net (114,543) (44,159) 19,472 (Gain) loss on disposal of premises and equipment (3,758) (17,663) 6,945 Loss on sales of other real estate owned 8,828 24,869 30,139 Minority interest in net income of subsidiary (205,260) (163,335) (115,521) Sale of subsidiary stock at less than book value - - (43,361) Change in: Accrued interest and other receivables (77,182) 290,173 (17,177) Income taxes receivable - 6,058 (6,058) Cash surrender value of life insurance (25,647) (26,409) (40,765) Other assets 141,302 (15,248) (6,359) Accrued liabilities (82,452) (45,987) 4,202 Dividends payable - (21,892) 21,892 Income taxes payable 50,978 110,534 (7,049) Minority interest 140,088 119,348 206,143 Net cash provided by operating activities 2,233,271 2,142,375 1,490,650 Cash flows from investing activities: Proceeds from sales of investment securities 4,950,226 3,867,218 1,313,071 Proceeds from maturities of investment securities 10,484,141 4,231,567 3,000,000 Purchases of investment securities (37,571,213) (9,671,674)(9,919,971) Loans originated in excess of principal collected (1,804,812) (160,738)(2,930,396) Proceeds from sales of premises and equipment 25,559 17,879 4,590 Purchases of premises and equipment (357,531) (119,251) (228,549) Proceeds from sales of other real estate owned 180,713 202,631 429,616 Purchase of treasury stock - (675) (60,750) Cash from acquisition, net of cash paid (note 8) 4,162,585 - - Net cash used in investing activities (19,930,332) (1,633,043)(8,392,389)
CAPITAL BANCORP AND SUBSIDIARY Consolidated Statements of Cash Flows (continued) Years ended December 31, 1992, 1991, and 1990 1992 1991 1990 ------------ ----------- ------------ Cash flows from financing activities: Net increase in demand deposits, savings deposits, and money market investment accounts $ 7,499,120 12,059,440 6,043,724 Net (decrease) increase in certificates of deposit (7,349,037) (2,996,000) 868,936 Increase in securities sold under agreements to repurchase 6,819,909 8,706,884 2,838,501 Increase in other borrowings 765,000 - - Payments on other borrowings (8,830) - - Proceeds from issuance of notes payable 11,000 32,000 1,544,400 Payments on notes payable (942,400) (282,000) (1,766,900) Exercise of stock options 750,000 - - ----------- ---------- --------- Net cash provided by financing activities 7,544,762 17,520,324 9,528,661 ----------- ---------- --------- Increase (decrease) in cash and cash equivalents (10,152,299) 18,029,656 2,626,922 Cash and cash equivalents at beginning of year 27,393,120 9,363,464 6,736,542 ----------- ----------- --------- Cash and cash equivalents at end of year $ 17,240,821 27,393,120 9,363,464 =========== =========== ========= Supplemental Disclosures of Cash Flow Information Cash paid during the year for: Interest $ 2,405,352 2,811,054 2,961,124 Income taxes 484,522 - 12,678 Supplemental Schedule of Noncash Investing and Financing Activities Acquisition of real property through foreclosure or in lieu of loan repayments $ 292,983 - 252,641 Other real estate owned exchanged for advertising - - 48,532 See accompanying notes to consolidated financial statements.
CAPITAL BANCORP AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1992, 1991, and 1990 (1) Summary of Significant Accounting Policies (a) Description of the Business Capital Bancorp and its subsidiary (the Company) operate seven banking locations in the Salt Lake City metropolitan area. The Company grants commercial, residential, and installment loans to customers located primarily in Salt Lake County. The Company emphasizes lending to small businesses that offer a wide range of products and services. (b) Principles of Consolidation The consolidated financial statements include accounts of Capital Bancorp and its subsidiary. The Company owns 86.39 percent of Capital City Bank's (the Bank) common stock. All material intercompany balances and transactions have been eliminated in consolidation. (c) Investment Securities Nonequity investment securities are carried at cost, adjusted for amortization of premiums or accretion of discounts. Because it is generally management's intention to hold securities to maturity, they are not adjusted to lower of cost or market. Equity securities are stated at the lower of cost or market. Gain or loss on the sale of an investment is recognized when realized, based upon specific identification. (d) Allowance for Loan Losses The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely. The allowance is an amount that management believes will be adequate to absorb losses in the existing portfolio. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect the borrower's ability to pay. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowances for losses on loans and real estate owned. Such agencies may require the Company to recognize additions to the allowances based on their judgments of information available to them at the time of their examination. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. (e) Premises and Equipment Premises and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over lives of from 5 to 35 years. Leasehold improvements are amortized over the terms of related leases or the estimated useful lives of the improvements, whichever is shorter. CAPITAL BANCORP AND SUBSIDIARY Notes to Consolidated Financial Statements (f) Other Real Estate Owned Other real estate owned is carried at the lower of cost or fair market value. For real estate acquired in the settlement of loans, cost includes the uncollected loan balance. Costs relating to the development and improvement of property are capitalized, whereas those relating to holding the property are charged to expense. (g) Income Taxes The Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes," which supersedes SFAS No. 96. The Company elected not to adopt SFAS No. 96 prior to its required effective date. SFAS No. 109 will change the Company's method of accounting for income taxes from the deferred method to the asset and liability method. Under the deferred method, annual income tax expense is matched with pretax accounting income by providing deferred taxes at current tax rates on timing differences between the determination of net income for financial reporting and tax purposes. The objective of the asset and liability method is to establish deferred tax a liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The provisions of SFAS No. 109, will be adopted by the Company as of January 1, 1993. SFAS No. 109 may be adopted by (a) cumulative catch-up adjustment to operations in the earliest year of adoption, (b) restatement of prior year statements with cumulative catch-up adjustments to operations in the earliest year of restatement, or (c) restatement of prior year statements with an adjustment of beginning retained earnings if the earliest year of restate- ment is earlier than years presented. The Company has not decided which method will be adopted, nor has it performed a detailed analysis of the actual effects of SFAS No. 109. (h) Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks interest-bearing deposits in other banks, and federal funds sold. (i) Loan Origination and Commitment Fees Nonrefundable fees and related direct costs associated with the origination of loans are deferred. The net deferred fees and costs are recognized in "interest and fees on loans" over the loan term using methods that generally produce a level yield on the unpaid loan balance. Other nonrefundable fees related to lending activities other than direct loan origination are recognized as other operating income and/or expense over the period the related service is provided. (j) Off Balance Sheet Financial Instruments In the ordinary course of business the Company has entered into off balance sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, performance standby letters of credit, and home equity lines of credit. Such financial instruments are recorded in the financial statements when they become payable. CAPITAL BANCORP AND SUBSIDIARY Notes to Consolidated Financial Statements (k) Per Share Applicable to Common Stock Per share applicable to common stock is based on the weighted average outstanding common shares during each year, including common stock equivalents, if applicable. (l) Reclassifications Certain amounts in the prior years' financial statements have been reclassified to conform with the 1992 presentation. (2) Investment Securities Investment securities are summarized as follows: 1992 --------------------------------------------- Gross Gross Estimated Amortized unrealized unrealized market cost gains losses value --------- ---------- ---------- --------- U.S. treasury securities $17,882,822 373,825 74,099 18,182,548 U.S. government agencies and corporations 15,332,656 173,904 50,506 15,456,054 Corporate securities 981,009 - 1,878 979,131 Obligations of states and political subdivisions 1,440,310 1,042 3,765 1,437,587 Mortgage-backed securities 7,096,433 16,143 47,623 7,064,953 Federal Home Loan Bank stock 293,200 - - 293,200 ---------- ------- ------- ---------- $ 43,026,430 564,914 177,871 43,413,473 =========== ======== ======= ========== 1991 --------------------------- Gross Gross Estimated Amortized unrealized unrealized market cost gains losses value ---------- ---------- ---------- --------- U.S. treasury securities $ 8,730,890 335,511 2,811 9,063,590 U.S. government agencies and corporations 4,343,791 177,172 - 4,520,963 Obligations of states and political subdivisions 500,000 - - 500,000 Mortgage-backed securities 208,247 144 - 208,391 Federal Home Loan Bank stock 263,900 - - 263,900 ----------- -------- ------- ---------- $ 14,046,828 512,827 2,811 414,556,844 =========== ======== ====== =========== Interest income (including nontaxable interest of $8,085, $-0-, and $11,366, respectively) on investment securities totaled $1,687,797, $1,100,700, and $794,795 for the years ended December 31, 1992, 1991, and 1990, respectively. Dividends on equity securities totaled $41,417, $14,042, and $-0- for the years ended December 31, 1992, 1991, and 1990, respectively. CAPITAL BANCORP AND SUBSIDIARY Notes to Consolidated Financial Statements (2) Investment Securities (continued) The amortized cost and estimated market value of investment securities at December 31, 1992, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Estimated Amortized market cost value ---------- ---------- Due in one year or less $1,855,548 1,903,968 Due after one year through five years 37,661,256 38,000,214 Due after five years through ten years 1,835,346 1,839,994 Due after ten years 1,381,080 1,376,097 Equity securities 293,200 293,200 ---------- ---------- $43,026,430 43,413,473 ========== ========== Proceeds from sales of investment securities for the years ended December 31, 1992, 1991, and 1990 were $4,950,226, $3,867,218, and $1,313,071, respectively. Gross gains of $114,543, $48,399, and $11,421, and gross losses of $-0-, $4,240, and $30,893, were realized on those sales for the years ended December 31, 1992, 1991, and 1990, respectively. Investment securities with a carrying value of $1,620,000 and $1,350,000 were pledged to secure public deposits as required by law as of December 31, 1992 and 1991, respectively. In addition, U.S. treasury and U.S. government agency securities with a carrying value of $18,462,000 and $11,724,000 as of December 31, 1992 and 1991, respectively, were pledged as collateral for securities sold overnight under agreements to repurchase. (3) Allowance for Loan Losses The allowance for loan losses is summarized as follows: 1992 1991 1990 -------- ------- ------ Balance at beginning of year $ 738,021 637,107 674,277 Additions: Provision for loan losses 200,000 240,000 273,500 Recoveries 318,847 207,017 316,215 Acquisition 104,524 - - Deduction, loan charge-offs (360,122) (346,103) (626,885) ---------- ------- ------- Balance at end of year $ 1,001,270 738,021 637,107 ========== ======= ======= CAPITAL BANCORP AND SUBSIDIARY Notes to Consolidated Financial Statements (3) Allowance for Loan Losses (continued) Loans on which the accrual of interest has been discontinued or reduced amounted to approximately $1,495,000, $277,000, and $464,000 at December 31, 1992, 1991, and 1990, respectively. At the original contract rates, additional interest income of approximately $43,500, $11,500, and $48,000 would have been recognized for the years ended December 31, 1992, 1991, and 1990, respectively, had these loans performed as originally agreed. (4) Premises and Equipment Premises and equipment are summarized as follows: 1992 1991 ----------- ---------- Land $ 451,319 451,319 Bank premises 355,117 339,501 Furniture and equipment 2,263,476 1,812,156 Leasehold improvements 848,523 824,367 --------- --------- 3,918,435 3,427,343 Less accumulated depreciation 2,031,268 1,696,440 --------- --------- Net book value $ 1,887,167 1,730,903 ========== ========= The Company leases its main office building and certain office facilities under operating lease agreements that expire at various times through December 31, 2009. The Company has an option to purchase the main office building on or about July 15, 1994 for $960,000. The schedule of future minimum operating lease payments as of December 31, 1992 is summarized as follows: Year ending December 31, 1993 $ 289,000 1994 298,000 1995 254,000 1996 254,000 1997 254,000 Thereafter 1,948,000 --------- Total minimum lease payments $ 3,297,000 ========== Aggregate rental expense amounted to approximately $330,000, $238,000, and $221,000 for the years ended December 31, 1992, 1991, and 1990, respectively. CAPITAL BANCORP AND SUBSIDIARY Notes to Consolidated Financial Statements (5)Income Taxes The Company files a consolidated income tax return with the Bank. For financial reporting purposes the Company utilized approximately $749,000 and $579,000 of net operating loss carryforwards and has reflected the related tax benefit of $280,250 and $210,800 as an extraordinary credit in the accompanying statements of income for the years ended December 31, 1991 and 1990, respectively. The remaining tax expense for 1992, 1991, and 1990 results from application of regular and alternative minimum tax rules. The provision for income taxes consists of the following: 1992 1991 1990 -------- -------- -------- Currently payable: Federal $ 656,090 79,036 6,407 State 107,150 33,786 100 -------- ------- ------ 763,240 112,822 6,507 Deferred federal and state 36,000 3,750 - $799,240 116,572 6,507 ======== ======= ====== A reconciliation of income taxes based on applying the federal statutory rate of 34 percent in 1992, 1991, and 1990, is as follows: 1992 1991 1990 --------- -------- -------- Tax based on federal statutory rate $ 796,000 474,000 252,000 Effect of tax-exempt income (7,000) - (10,500) State taxes, net of federal tax benefit 88,000 46,000 24,500 General business credits (71,000) (140,000) - Alternative minimum tax (credit) (24,500) 41,000 4,500 Other 17,740 (24,178) (53,193) --------- -------- -------- 799,240 396,822 217,307 Extraordinary tax benefit of net operating loss carryforward - 280,250 210,800 -------- ------- ------- $ 799,240 116,572 6,507 ======== ======= ======== CAPITAL BANCORP AND SUBSIDIARY Notes to Consolidated Financial Statements (5) Income Taxes (continued) The components of deferred income taxes and their tax effects are as follows: 1992 1991 1990 -------- -------- -------- Depreciation $ (8,500) (4,000) 5,750 Provision for loan losses 40,500 8,750 4,250 Employee benefits (10,000) (10,000) (10,000) Dividends on Federal Home Loan Bank stock 14,000 9,000 - ------- ------ ------- $ 36,000 3,750 - ======= ====== ======= (6) Notes Payable Notes payable are summarized as follows: 1992 1991 -------- -------- Prime plus 1-1/2% (7.5% at December 31, 1992) note payable to a director of the Company, quarterly interest payments and annual payments of principal; due 1993 $ 125,000 1,017,400 Prime plus 1-1/2% (7.5% at December 31, 1992) notes payable to various directors of the Company, quarterly interest payments; principal due August 1994 328,600 337,600 Prime rate capital debentures (9% floor, 14% ceiling) payable to various individuals, including directors, annual interest payments; principal due July 1994 - 30,000 -------- -------- $ 453,600 1,385,000 ======== ========= The note payable to a director of the Company at December 31, 1992 is secured by 114,768 shares of Bank stock and 76,630 shares of Capital Bancorp stock. The note agreement contains certain restrictive covenants. The note agreement also specifies that certain financial ratios must be maintained. At December 31, 1992, the Company is in substantial compliance with the note covenants. The notes payable to various directors of the Company are subordinate to the note payable to the individual director, and are secured by the same collateral which secures the note payable to such director. Current contractual maturities are as follows: 1993, $125,000 and 1994, $328,600. CAPITAL BANCORP AND SUBSIDIARY Notes to Consolidated Financial Statements (7) Employee Benefit Plans The Company has adopted an employee stock ownership plan. Contributions to the plan are determined by the Board of Directors and are not to exceed 15 percent of eligible wages. Employees become eligible for the plan after one year of service. Benefits vest under the plan at 3 vesting after seven years of service. Contributions to the plan amounted to $50,000 for each of the years ended December 31, 1992, 1991, and 1990, respectively. The Company also has a 401(k) plan whereby the Company matches 50 percent of employee contributions up to five percent of each participant's compensation. Employer contributions to the plan amounted to approximately $20,000, $17,200, and $15,700 for the years ended December 31, 1992, 1991, and 1990, respectively. (8) Stock Options In 1987, the Company granted stock options to certain key employees and directors for their personal guarantees on a portion of the Company's debt. The option price was set at the fair market value of the Company's common stock on the date of grant and became exercisable after the original debt to which the guarantees apply was reduced by $1,000,000. During 1992, all options related to the guarantee of the Company's debt were exercised. Proceeds from the exercise of the options totaled $750,000 and resulted in the issuance of 43,150 shares of the Company's common stock. The Company realized a tax benefit from the exercise of the options of approximately $204,000, which is reflected as paid-in capital. (9) Other Borrowings Other borrowings consist of loans from the Federal Home Loan Bank of Seattle. The borrowings require equal monthly payments of $3,188 plus interest, have an average interest rate of 7.23 percent and mature in 2012. (10) Acquisition On March 19, 1992, the Bank acquired approximately 97 percent of the outstanding common shares and all of the outstanding preferred stock of United Bank, a single branch banking operation located in Murray, Utah. The assets and liabilities of United Bank at the date of were approximately $19,000,000 and $17,400,000, respectively. The acquisition was completed through the issuance of 24,000 shares of the Bank's $50 par value; noncumulative, nonvoting preferred stock and approximately $800,000 in cash. The acquisition was accounted for using the purchase method of accounting. The dividend rate on the preferred stock is reset quarterly, at prime plus one percent. In connection with the acquisition, options to purchase 7,917 shares of the Bank's common stock at $60 per share were granted. The options are currently exercisable and expire on March 19, 1997. Payment for the options shall be in cash, or the exchange of preferred stock at par value. CAPITAL BANCORP AND SUBSIDIARY Notes to Consolidated Financial Statements (11) Contingent Liabilities and Commitments The Company's financial statements do not reflect various commitments and contingent liabilities that arise in the normal course of business and that involve elements of credit risk, interest rate risk, and liquidity risk. These commitments and contingent liabilities are commitments to extend credit, commitments under credit card arrangements, performance standby letters of credit, and home equity lines of credit. A summary of the Company's commitments and contingent liabilities at December 31, 1992 and 1991, is as follows: 1992 1991 -------- -------- Commitments to extend credit $ 11,713,000 10,541,000 Credit card arrangements 3,182,000 2,808,000 Performance standby letters of credit 2,277,000 1,884,000 Home equity lines of credit 382,000 229,000 Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because these instruments have fixed maturity dates and because many of them expire without being drawn upon, they do not generally present any significant liquidity risk to the Company. The Company evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained is based on management's credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, and 1-4 family residential properties. Performance standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company generally holds cash equivalents as collateral supporting those commitments for which collateral is deemed necessary. The Company is party to litigation and claims arising in the normal course of business. Management, after consultation with legal counsel, believes that the liabilities, if any, arising from such litigation and claims will result in no material liability to the Bank. (12) Regulatory Requirements Regulatory authorities require that banks maintain cash balances as reserves based on a percentage of deposits. Cash reserve requirements were $963,000 and $730,000 at December 31, 1992 and 1991, respectively. Effective December 31, 1992, banks are required to maintain minimum levels of capital to risk weighted assets. The Tier 1 minimum capital guideline is four percent and the Tier 2 minimum capital guideline is eight percent. As of December 31, 1992, the Bank's Tier 1 risk weighted capital ratio was 12.93 percent and its Tier 2 ratio was 14.18 percent. The Bank's leverage ratio (Tier 1 capital to total average quarterly assets) was 7.01 percent and 6.92 percent at December 31, 1992 and 1991, respectively (unaudited). CAPITAL BANCORP AND SUBSIDIARY Notes to Consolidated Financial Statements (13) Loans to Related Parties The following is an analysis for the year ended December 31, 1992, of the aggregate loans made by the Company to directors, executive officers, or principal shareholders of the Company. Balance at Balance at December 31, New December 31, 1991 loans Repayments 1992 ------------ --------- ------------ ----------- $ 206,000 459,000 225,000 440,000 ========= ======= ======= ======= CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Financial Statements December 31, 1992 and 1991 (With Independent Auditors' Report Thereon) Independent Auditors' Report The Board of Directors and Shareholders Capital City Bank: We have audited the accompanying statements of condition of Capital City Bank (a subsidiary of Capital Bancorp) as of December 31, 1992 and 1991, and the related statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1992. These financial statements are theresponsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Capital City Bank (a subsidiary of Capital Bancorp) as of December 31, 1992 and 1991, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1992 in conformity with generally accepted accounting principles. KPMG Peat Marwick Salt Lake City, Utah January 12, 1993 CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Condition December 31, 1992 and 1991 1992 1991 --------- --------- Assets: Cash and cash equivalents: Cash and due from banks, noninterest-bearing $ 7,094,441 6,882,706 Due from banks, interest-bearing 1,646,380 10,414 Federal funds sold 8,500,000 20,500,000 17,240,821 27,393,120 Investment securities (note 2) 43,026,430 14,046,828 Loans and other receivables: Commercial loans 38,904,410 35,174,638 Installment loans 6,834,267 5,465,016 Real estate loans and contracts 7,198,402 5,720,898 Loans held for sale at cost, which approximates market 1,929,671 - Accrued interest and other 1,215,566 987,365 ---------- ---------- 56,082,316 47,347,917 Less allowance for loan losses (note 3) 1,001,270 738,021 55,081,046 46,609,896 Premises and equipment (note 4) 1,887,167 1,730,903 Other real estate owned 175,414 23,041 Cash surrender value of life insurance 609,212 583,565 Other assets 192,043 216,787 ----------- ---------- $ 118,212,133 90,604,140 =========== ========== CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Condition (continued) December 31, 1992 and 1991 Liabilities and Shareholders' Equity 1992 1991 Deposits: Demand deposits $ 32,291,074 29,879,884 Demand deposits, interest-bearing 13,181,416 9,773,956 Savings deposits 20,080,760 8,385,167 Money market investment accounts 13,759,012 12,318,400 Time deposits, including deposits of $100,000 or more of $2,067,532 in 1992 and $3,983,504 in 1991 11,107,812 12,767,252 ---------- ---------- 90,420,074 73,124,659 Securities sold under agreements to repurchase 18,365,294 11,545,385 Other borrowings 756,170 - Accrued liabilities 502,078 420,965 Income taxes payable (note 5) 136,000 3,750 ---------- --------- Total liabilities 110,179,616 85,094,759 ----------- ---------- Shareholders' equity: Capital Stock: Noncumulative preferred stock, $50 par value; authorized 50,000 shares; issued and outstanding, 24,000 shares in 1992 1,200,000 - Common stock, $10 par value; authorized 200,000 shares; issued and outstanding 132,850 shares in 1992 and 126,736 shares in 1991 1,328,500 1,267,360 Paid-in capital 2,522,500 2,302,398 Undivided profits 2,981,517 1,939,623 --------- --------- Net shareholders' equity 8,032,517 5,509,381 --------- --------- Commitments and contingencies (notes 4, 8, 9, and 10) $ 118,212,133 90,604,140 ============ ========== See accompanying notes to financial statements. CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Income Years ended December 31, 1992, 1991, and 1990 1992 1991 1990 -------- -------- -------- Interest income: Interest and fees on loans $ 6,480,916 5,953,903 5,710,314 Interest on federal funds sold 290,965 178,205 156,438 Interest and dividends on investment securities 1,729,214 1,114,742 794,795 --------- --------- --------- Total interest income 8,501,095 7,246,850 6,661,547 --------- --------- --------- Interest expense: Interest on demand deposits, interest-bearing, and savings deposits 987,061 643,850 473,268 Interest on money market investment accounts 368,536 834,120 1,045,565 Interest on time accounts, including interest on deposits of $100,000 or more of $85,060 in 1992, $272,586 in 1991, and $404,597 in 1990 587,042 958,993 1,206,646 Interest on securities sold under agreements to repurchase 330,336 163,303 48,149 Interest on other borrowings 17,344 - - --------- --------- --------- Total interest expense 2,290,319 2,600,266 2,773,628 --------- --------- --------- Net interest income 6,210,776 4,646,584 3,887,919 Provision for loan losses (note 3) 200,000 240,000 273,500 --------- --------- --------- Net interest income after provision for loan losses 6,010,776 4,406,584 3,614,419 --------- --------- --------- Other operating income: Service charges on deposit accounts 887,185 760,865 684,186 Bankcard discounts and fees 231,123 189,171 179,125 Investment securities gains (losses), net 114,543 44,159 (19,472) Other 293,113 220,650 196,876 ------- ------- ------- 1,525,964 1,214,845 1,040,715 --------- --------- --------- Other expenses: Salaries, wages, and benefits 2,467,770 2,088,282 1,872,538 Building 629,433 483,732 449,915 Furniture and equipment 389,105 299,160 305,314 Supplies and postage 268,156 207,246 204,852 Professional and legal 217,057 123,981 97,584 Regulatory assessments 212,116 147,294 78,738 Advertising 162,939 84,535 98,370 Bankcard interchange discounts and fees 127,598 111,830 105,057 Telephone 109,244 82,054 93,972 Other 541,468 440,488 392,314 -------- -------- -------- 5,124,886 4,068,602 3,698,654 --------- --------- --------- CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Income (continued) Years ended December 31, 1992, 1991, and 1990 1992 1991 1990 -------- -------- -------- Income before income tax expense and extraordinary item $ 2,411,854 1,552,827 956,480 Income tax expense (note 5) 901,740 379,250 342,000 --------- ---------- ------- Income before extraordinary item 1,510,114 1,173,577 614,480 Extraordinary tax benefit of net operating loss carryforward (note 5) - 25,500 333,400 --------- --------- ------- Net income $ 1,510,114 1,199,077 947,880 ========== ========= ======= Weighted average common and common equivalent shares outstanding during the year 138,429 126,736 123,986 ======= ======= ======= Per share applicable to common stock: Income before extraordinary item $ 10.70 9.26 4.96 ======= ===== ===== Net income $ 10.70 9.46 7.65 ======= ===== ===== See accompanying notes to financial statements. CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Shareholders' Equity Years ended December 31, 1992, 1991, and 1990 Noncumulative preferred stock Common stock -------------------- ----------------- Number Number Paid-in Undivided of shares Amount of shares Amount capital profits Total --------- -------- --------- -------- ------- --------- ----- Balances at December 31, 1989 - $ - 121,236 $ 1,212,360 2,205,513 727,437 4,145,310 Common stock issued for cash - - 5,500 55,000 96,885 - 151,885 Net income - - - - - 947,880 947,880 Dividends declared - - - - - (693,973) (693,973) -------- ------- ------- -------- ------- ------- -------- Balances at December 31, 1990 - - 126,736 1,267,360 2,302,398 981,344 4,551,102 Net income - - - - - 1,199,077 1,199,077 Dividends declared - - - - - (240,798) (240,798) -------- ------- ------ -------- -------- --------- --------- Balances at December 31, 1991 - - 126,736 1,267,360 2,302,398 1,939,623 5,509,381 Preferred stock issued for business acquisition (note 8) 24,000 1,200,000 - - - - 1,200,000 Common stock sold - - 6,114 61,140 220,102 - 281,242 Net income - - - - - 1,510,114 1,510,114 Dividends declared: Common - - - - - (420,138) (420,138) Preferred - - - - - (48,082) (48,082) ------- ------- ------ ------ ------ --------- --------- Balances at December 31, 1992 24,000 $ 1,200,000 132,850 $ 1,328,500 2,522,500 2,981,517 8,032,517 ======= ========== ======= ========== ========= ========= ========= See accompanying notes to financial statements.
CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Cash Flows Years ended December 31, 1992, 1991, and 1990 1992 1991 1990 -------- -------- -------- Cash flows from operating activities: Income before extraordinary item $ 1,510,114 1,173,577 614,480 Adjustments to reconcile income before extraordinary item to net cash provided by operating activities: Provision for loan losses 200,000 240,000 273,500 Depreciation and amortization on premises and equipment 330,553 287,484 297,939 Amortization of net premium on investment securities 116,927 59,389 21,095 Extraordinary tax benefit of net operating loss carryforward - 25,500 333,400 Write-down of other real estate owned - 53,750 32,570 Investment securities (gains) losses, net (114,543) (44,159) 19,472 (Gain) loss on disposal of premises and equipment (3,758) (17,663) 6,945 Loss on sales of other real estate owned 8,828 24,869 30,139 Change in: Accrued interest and other receivables (74,377) 350,923 (77,927) Income taxes receivable - 7,800 (7,800) Cash surrender value of life insurance (25,647) (26,409) (40,765) Other assets 141,363 (16,307 (6,631) Accrued liabilities (64,981) (35,295) 80,586 Dividends payable - (158,420) 158,420 Income taxes payable 132,250 3,750 (16,325) ------- ------- ------- Net cash provided by operating activities 2,156,729 1,928,789 1,719,098 --------- --------- --------- Cash flows from investing activities: Proceeds from sales of investment securities 4,950,226 3,867,218 1,313,071 Proceeds from maturities of investment securities 10,484,141 4,231,567 3,000,000 Purchases of investment securities (37,571,213)(9,671,674)(9,919,971) Loans originated in excess of principal collected (1,546,755) (160,738)(2,930,396) Proceeds from sales of premises and equipment 25,559 17,879 4,590 Purchases of premises and equipment (357,531) (119,251) (228,549) Proceeds from sales of other real estate owned 180,713 202,631 429,616 Cash from acquisition, net of cash paid (note 8) 4,162,585 - - --------- ------- ------- Net cash used in investing activities (19,672,275)(1,632,368)(8,331,639) ========== ========= =========
CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Statements of Cash Flows (continued) Years ended December 31, 1992, 1991, and 1990 1992 1991 1990 -------- -------- -------- Cash flows from financing activities: Net increase in demand deposits, savings deposits, and money market investment accounts $ 7,323,183 12,295,964 6,043,724 Net (decrease) increase in certificates of deposit (7,349,037) (2,996,000) 868,936 Increase in securities sold under agreements to repurchase 6,819,909 8,706,884 2,838,501 Increase in other borrowings 765,000 - - Payments on other borrowings (8,830) - - Proceeds from issuance of common stock 281,242 - 151,885 Dividends declared (468,220) (240,798) (693,973) ------- ------- ------- Net cash provided by financing activities 7,363,247 17,766,050 9,209,073 --------- ---------- --------- Increase (decrease) in cash and cash equivalents (10,152,299) 18,062,471 2,596,532 Cash and cash equivalents at beginning of year 27,393,120 9,330,649 6,734,117 ---------- --------- --------- Cash and cash equivalents at end of year $ 17,240,821 27,393,120 9,330,649 =========== ========== ========= Supplemental Disclosures of Cash Flow Information Cash paid during the year for: Interest $ 2,311,412 2,648,362 2,751,828 Income taxes 710,000 342,200 32,725 Supplemental Schedule of Noncash Investing and Financing Activities Acquisition of real property through foreclosure or in lieu of loan repayments $ 292,983 - 252,641 Other real estate owned exchanged for advertising - - 48,532 See accompanying notes to financial statements. CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Notes to Financial Statements December 31, 1992, 1991, and 1990 (1) Summary of Significant Accounting Policies (a) Description of the Business Capital City Bank (Bank) has seven banking locations in the Salt Lake City metropolitan area. The Bank grants commercial, residential, and installment loans to customers located primarily in Salt Lake City metropolitan area. The Bank emphasizes lending to small businesses that offer a wide range of products and services. (b) Ownership Capital Bancorp (Parent) owns 86.39 percent of the Bank's common stock. (c) Investment Securities Nonequity investment securities are carried at cost, adjusted for amortization of premiums or accretion of discounts. Because it is generally management's intention to hold securities to maturity, they are not adjusted to lower of cost or market. Equity securities are stated at the lower of cost or market. Gain or loss on the sale of an investment is recognized when realized, based upon specific identification. (d) Allowance for Loan Losses The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely. The allowance is an amount that management believes will be adequate to absorb losses in the existing portfolio. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect the borrower's ability to pay. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank's allowance for losses on loans and real estate owned. Such agencies may require the Bank to recognize additions to the allowances based on their judgments of information available to them at the time of their examination. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. (e) Premises and Equipment Premises and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over lives of from 5 to 35 years. Leasehold improvements are amortized over the terms of related leases or the estimated useful lives of the improvements, whichever is shorter. CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Notes to Financial Statements (f) Other Real Estate Owned Other real estate owned is carried at the lower of cost or fair market value. For real estate acquired in the settlement of loans, cost includes the uncollected loan balance. Costs relating to the development and improvement of property are capitalized, whereas those relating to holding the property are charged to expense. (g) Income Taxes The Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes," which supersedes SFAS No. 96. The Bank elected not to adopt SFAS No. 96 prior to its required effective date. SFAS No. 109 will change the Bank's method of accounting for income taxes from the deferred method to the asset and liability method. Under the deferred method, annual income tax expense is matched with pretax accounting income by providing deferred taxes at current tax rates on timing differences between the determination of net income for financial reporting and tax purposes. The objective of the asset and liability method is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Bank's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The provisions of SFAS No. 109, will be adopted by the Bank as of January 1, 1993. SFAS No. 109 may be adopted by (a) cumulative catch-up adjustment to operations in the earliest year of adoption, (b) restatement of prior year statements with cumulative catch-up adjustments to operations in the earliest year of restatement, or (c) restatement of prior year statements with an adjustment of beginning retained earnings if the earliest year of restatement is earlier than years presented. The Bank has not decided which method will be adopted, nor has it performed a detailed analysis of the actual effects of SFAS No. 109. (h) Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, interest-bearing deposits in other banks, and federal funds sold. (i) Loan Origination and Commitment Fees Nonrefundable fees and related direct costs associated with the origination of loans are deferred. The net deferred fees and costs are recognized in "interest and fees on loans" over the loan term using methods that generally produce a level yield on the unpaid loan balance. Other nonrefundable fees related to lending activities other than direct loan origination are recognized as other operating income and/or expense over the period the related service is provided. (j) Off Balance Sheet Financial Instruments In the ordinary course of business the Bank has entered into off balance sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, performance standby letters of credit, and home equity lines of credit. Such financial instruments are recorded in the financial statements when they become payable. (k) Per Share Applicable to Common Stock Per share applicable to common stock is based on the weighted average outstanding common shares during each year, including common stock equivalents, if applicable. CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Notes to Financial Statements (l) Reclassifications Certain amounts in the prior years' financial statements have been reclassified to conform with the 1992 presentation. (2) Investment Securities Investment securities are summarized as follows: 1992 ----------------------------------- Gross Gross Estimated Amortized unrealized unrealized market cost gains losses value -------- ---------- ---------- -------- U.S. treasury securities $17,882,822 373,825 74,099 18,182,548 U.S. government agencies and corporations 15,332,656 173,904 50,506 15,456,054 Corporate securities 981,009 - 1,878 979,131 Obligations of states and political subdivisions 1,440,310 1,042 3,765 1,437,587 Mortgage-backed securities 7,096,433 16,143 47,623 7,064,953 Federal Home Loan Bank stock 293,200 - - 293,200 --------- ------ ------ --------- $ 43,026,430 564,914 177,871 43,413,473 ========== ======= ======= ========== 1991 ----------------------------------------- Gross Gross Estimated Amortized unrealized unrealized market cost gains losses value --------- --------- --------- ------- U.S. treasury securities $ 8,730,890 335,511 2,811 9,063,590 U.S. government agencies and corporations 4,343,791 177,172 - 4,520,963 Obligations of states and political subdivisions 500,000 - - 500,000 Mortgage-backed securities 208,247 144 - 208,391 Federal Home Loan Bank stock 263,900 - - 263,900 ---------- -------- ------ ---------- $ 14,046,828 512,827 2,811 14,556,844 ========== ======= ===== ========== Interest income (including nontaxable interest of $8,085, $-0-, and $11,366, respectively) on investment securities totaled $1,687,797, $1,100,700, and $794,795 for the years ended December 31, 1992, 1991, and 1990, respectively. Dividends on equity securities totaled $41,417, $14,042, and $-0- for the years ended December 31, 1992, 1991, and 1990, respectively. CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Notes to Financial Statements (2) Investment Securities (continued) The amortized cost and estimated market value of investment securities at December 31, 1992, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Estimated Amortized market cost value --------- --------- Due in one year or less $1,855,548 1,903,968 Due after one year through five years 37,661,256 38,000,214 Due after five years through ten years 1,835,346 1,839,994 Due after ten years 1,381,080 1,376,097 Equity securities 293,200 293,200 ---------- --------- $43,026,430 43,413,473 ========== ========== Proceeds from sales of investment securities for the years ended December 31, 1992, 1991, and 1990 were $4,950,226, $3,867,218, and $1,313,071, respectively. Gross gains of $114,543, $48,399, and $11,421, and gross losses of $-0-, $4,240, and $30,893, were realized on those sales for the years ended December 31, 1992, 1991, and 1990, respectively. Investment securities with a carrying value of $1,620,000 and $1,350,000 were pledged to secure public deposits as required by law as of December 31, 1992 and 1991, respectively. In addition, U.S. treasury and U.S. government agency securities with a carrying value of $18,462,000 and $11,724,000 as of December 31, 1992 and 1991, respectively, were pledged as collateral for securities sold overnight under agreements to repurchase. (3) Allowance for Loan Losses The allowance for loan losses is summarized as follows: 1992 1991 1990 -------- -------- -------- Balance at beginning of year $ 738,021 637,107 674,277 Additions: Provision for loan losses 200,000 240,000 273,500 Recoveries 318,847 207,017 316,215 Acquisition 104,524 - - Deduction, loan charge-offs (360,122) (346,103) (626,885) ------- ------- ------- Balance at end of year $ 1,001,270 738,021 637,107 ========= ======= ======= CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Notes to Financial Statements (3) Allowance for Loan Losses (continued) Loans on which the accrual of interest has been discontinued or reduced amounted to approximately $1,495,000, $277,000, and $464,000 at December 31, 1992, 1991, and 1990, respectively. At the original contract rates, additional interest income of approximately $43,500, $11,500, and $48,000 would have been recognized for the years ended December 31, 1992, 1991, and 1990, respectively, had these loans performed as originally agreed. (4) Premises and Equipment Premises and equipment are summarized as follows: 1992 1991 -------- -------- Land $ 451,319 451,319 Bank premises 355,117 339,501 Furniture and equipment 2,263,476 1,812,156 Leasehold improvements 848,523 824,367 ------- ------- 3,918,435 3,427,343 Less accumulated depreciation 2,031,268 1,696,440 --------- --------- Net book value $ 1,887,167 1,730,903 ========== ========= The Bank leases its main office building and certain office facilities under operating lease agreements that expire at various times through December 31, 2009. The Bank has an option to purchase the main office building on or about July 15, 1994 for $960,000. The schedule of future minimum operating lease payments as of December 31, 1992 is summarized as follows: Year ending December 31, 1993 $ 289,000 1994 298,000 1995 254,000 1996 254,000 1997 254,000 Thereafter 1,948,000 --------- Total minimum lease payments $ 3,297,000 ========= Aggregate rental expense amounted to approximately $330,000, $238,000, and $221,000 for the years ended December 31, 1992, 1991, and 1990, respectively. CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Notes to Financial Statements (5) Income Taxes Federal and state income tax expense have been provided in the accompanying financial statements on a stand-alone basis as though the Bank filed separate income tax returns. However, the Bank files a consolidated return with Capital Bancorp, its majority stockholder. The Bank pays the current portion of its calculated tax to or receives a refund from Capital Bancorp. For financial reporting purposes the Bank utilized approximately $-0-, $70,000, and $910,000 of net operating loss carryforwards and has reflected the related tax benefit of $-0-, $25,500, and $333,400 as an extraordinary credit in the accompanying statements of income for the years ended December 31, 1992, 1991, and 1990, respectively. The remaining tax expense for 1992, 1991, and 1990 results from application of regular and alternative minimum tax rules. The provision for income taxes consists of the following: 1992 1991 1990 ------ ------ ------ Currently payable: Federal $ 747,240 276,200 8,500 State 118,500 73,800 100 -------- ------- ------ 865,740 350,000 8,600 Deferred federal and state 36,000 3,750 - ------- ------- ------ $ 901,740 353,750 8,600 ======== ======= ===== A reconciliation of income taxes based on applying the federal statutory rate of 34 percent in 1992, 1991, and 1990, is as follows: 1992 1991 1990 ------ ------ ------ Tax based on federal statutory rate $ 820,000 528,000 325,200 Effect of tax-exempt income (7,000) - (10,500) State taxes, net of federal tax benefit 85,000 51,200 31,600 General business credits (18,190) (152,800) - Alternative minimum tax (credit) - (20,000) 7,800 Other 21,930 (27,150) (12,100) ------ ------ ------ 901,740 379,250 342,000 Extraordinary tax benefit of net operating loss carryforward - 25,500 333,400 ------- ------- ------- $ 901,740 353,750 8,600 ======= ======= ===== CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Notes to Financial Statements (5) Income Taxes (continued) The components of deferred income taxes and their tax effects are as follows: 1992 1991 1990 ------ ------ ------ Depreciation $ (8,500) (4,000) 5,750 Provision for loan losses 40,500 8,750 4,250 Employee benefits (10,000) (10,000) (10,000) Dividends on Federal Home Loan Bank stock 14,000 9,000 - ------ ----- ----- $ 36,000 3,750 - ======= ===== ===== (6) Employee Benefit Plans The Bank has adopted an employee stock ownership plan. Contributions to the plan are determined by the Board of Directors and are not to exceed 15 percent of eligible wages. Employees become eligible for the plan after one year of service. Benefits vest under the plan at 30 percent after three years of service, with full vesting after seven years of service. Contributions to the plan amounted to $50,000 for each of the years ended December 31, 1992, 1991, and 1990, respectively. The Bank also has a 401(k) plan whereby the Bank matches 50 percent of employee contributions up to five percent of each participant's compensation. Employer contributions to the plan amounted to approximately $20,000, $17,200, and $15,700 for the years ended December 31, 1992, 1991, and 1990, respectively. (7) Other Borrowings Other borrowings consist of loans from the Federal Home Loan Bank of Seattle. The borrowings require equal monthly payments of $3,188 plus interest, have an average interest rate of 7.23 percent and mature in 2012. (8) Acquisition On March 19, 1992, the Bank acquired approximately 97 percent of the outstanding common shares and all of the outstanding preferred stock of United Bank, a single branch banking operation located in Murray, Utah. The assets and liabilities of United Bank at the date of acquisition were approximately $19,000,000 and $17,400,000, respectively. The acquisition was completed through the issuance of 24,000 shares of the Bank's $50 par value; noncumulative, nonvoting preferred stock and approximately $800,000 in cash. The acquisition was accounted for using the purchase method of accounting. The dividend rate on the preferred stock is reset quarterly, at prime plus one percent. In connection with the acquisition, options to purchase 7,917 shares of the Bank's common stock at $60 per share were granted. The options are currently exercisable and expire on March 19, 1997. Payment for the options shall be in cash, or the exchange of preferred stock at par value. CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Notes to Financial Statements (9) Contingent Liabilities and Commitments The Bank's financial statements do not reflect various commitments and contingent liabilities that arise in the normal course of business and that involve elements of credit risk, interest rate risk, and liquidity risk. These commitments and contingent liabilities are commitments to extend credit, commitments under credit card arrangements, performance standby letters of credit, and home equity lines of credit. A summary of the Bank's commitments and contingent liabilities at December 31, 1992 and 1991, is as follows: 1992 1991 -------- -------- Commitments to extend credit $ 11,713,000 10,541,000 Credit card arrangements 3,182,000 2,808,000 Performance standby letters of credit 2,277,000 1,884,000 Home equity lines of credit 382,000 229,000 Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because these instruments have fixed maturity dates and because many of them expire without being drawn upon, they do not generally present any significant liquidity risk to the Bank. The Bank evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained is based on management's credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, and 1-4 family residential properties. Performance standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Bank generally holds cash equivalents as collateral supporting those commitments for which collateral is deemed necessary. The Bank is party to litigation and claims arising in the normal course of business. Management, after consultation with legal counsel, believes that the liabilities, if any, arising from such litigation and claims will result in no material liability to the Bank. (10) Regulatory Requirements Regulatory authorities require that banks maintain cash balances as reserves based on a percentage of deposits. Cash reserve requirements were $963,000 and $730,000 at December 31, 1992 and 1991, respectively. Effective December 31, 1992, banks are required to maintain minimum levels of capital to risk weighted assets. The Tier 1 minimum capital guideline is four percent and the Tier 2 minimum capital guideline is eight percent. As of December 31, 1992, the Bank's Tier 1 risk weighted capital ratio was 12.93 percent and its Tier 2 ratio was 14.18 percent. The Bank's leverage ratio (Tier 1 capital to total average quarterly assets) was 7.01 percent and 6.92 percent at December 31, 1992 and 1991, respectively (unaudited). CAPITAL CITY BANK (A Subsidiary of Capital Bancorp) Notes to Financial Statements (11) Loans to Related Parties The following is an analysis for the year ended December 31, 1992, of the aggregate loans made by the Bank to directors, executive officers, or principal shareholders of the Bank. Balance at Balance at December 31, New December 31, 1991 loans Repayments 1992 ---------- ------ ---------- --------- $ 206,000 68,000 92,000 182,000 D. VOTING AND MANAGEMENT INFORMATION BANC ONE will pay the costs of preparing and printing this Prospectus and Joint Proxy Statement and CAPITAL and CCB will bear the cost of soliciting proxies for the CAPITAL Special Meeting and the CCB Special Meeting. Solicitation of proxies will be made in person, by mail, or by telephone or telegraph by present and former directors, officers and employees of CAPITAL and CCB for which no additional compensation will be paid. CAPITAL will bear the cost of solicitation of proxies from its stockholders. CCB will bear the cost of solicitation of proxies from its stockholders. Copies of the form of proxy and Notice and this Prospectus will be mailed to stockholders on or about , 1994. Voting The proxy accompanying this Prospectus is solicited by the Boards of Directors of CAPITAL and CCB and, if properly executed and returned, will be voted in accordance with the instructions given therein. IF NO INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED IN FAVOR OF THE PROPOSAL TO APPROVE THE MERGER AGREEMENT. Any proxy may be revoked at any time before it is voted by furnishing CAPITAL with either written notice of revocation or a subsequently dated proxy or appearing at the Special Meeting and electing to vote in person. The CAPITAL and CCB Boards have fixed the close of business on February 28, 1994, as the record date for the determination of stockholders entitled to notice of and to vote at the CAPITAL Special Meeting and the CCB Special Meeting. As of the record date, 150,345 shares of CAPITAL Common Stock were outstanding, each of which entitled its holder to one vote at the CAPITAL Special Meeting. As of the record date, 132,850 shares of CCB Common Stock were outstanding, each of which entitled its holder to one vote at the CCB Special Meeting. The affirmative vote of a majority of the outstanding shares of CAPITAL Common Stock entitled to vote thereon is required for approval of the Merger Agreement. The affirmative vote of a majority of the outstanding shares of CCB Common Stock entitled to vote thereon is required for approval of the Consolidation Agreement. The Directors of CAPITAL and CCB have unanimously approved the Merger Agreement and Consolidation Agreement. Each director has indicated an intention to vote all of his shares in favor of the Merger Agreement and CAPITAL intends to vote its shares of CCB in favor of the Consolidation Agreement. Rights of Dissenting Stockholders The following summary does not purport to be a complete statement of the procedures to be followed by CAPITAL and CCB shareholders desiring to exercise dissenters' rights and is qualified in its entirety by reference to the provisions of Sections 16-10a-1301 and 16-10a-1331 of the Utah Code Annotated, the full texts of which are attached hereto as Exhibit B. As the preservation and the exercise of dissenters' rights require strict adherence to the provisions of these laws, each CAPITAL and CCB shareholder who might desire to exercise such rights should review such laws carefully, timely consult his own legal advisor and strictly adhere to the provisions thereof. Any shareholder of CAPITAL and CCB may, as an alternative to receiving BANC ONE Common Stock, dissent from the Merger or Consolidation, respectively, and obtain payment of the fair value of such shareholder's shares of CAPITAL Common Stock and CCB Common Stock pursuant to Section 16-10a-1302 and 16-10a-1303 of the Utah Code Annotated. "Fair value" means the value of the shares immediately before the Effective Time, excluding any appreciation or depreciation in anticipation of the Merger, unless such exclusion would be inequitable. A shareholder of record may assert dissenters' rights as to fewer than all of the shares registered in such shareholder's name only if such shareholder dissents with respect to all of the shares beneficially owned by any one person and discloses to CAPITAL or CCB, as the case may be, the name and address of the person or persons on whose behalf such shareholder dissents. In that event, such shareholder's rights shall be determined as if the shares as to which such shareholder has dissented and such other shares were registered in the names of different shareholders. A beneficial owner of shares who is not the record holder may assert dissenters' rights with respect to shares held on such owner's behalf and shall be treated as a dissenting shareholder if a written consent of the shareholder of record of such shares is submitted at the time of or before dissenters' rights are asserted. Any CAPITAL or CCB shareholder who wishes to dissent must file with CAPITAL or CCB, respectively, prior to the vote on the Merger Agreement or Consolidation Agreement, respectively, a written notice of such shareholder's intent to demand payment of the fair value of such shareholder's shares if the Merger or Consolidation, respectively, is effectuated. In addition, the CAPITAL or CCB shareholder must refrain from voting in favor of the Merger Agreement or Consolidation Agreement, respectively. A shareholder who fails to file the notice on time or who votes in favor of the Merger Agreement will not have any dissenters' rights. If a shareholder returns a signed proxy but does not specify a vote against approval of the Merger Agreement or a direction to abstain, the proxy will be voted for approval of the Merger Agreement and Consolidation Agreement, which will have the effect of waiving that shareholder's dissenters' rights. If the Merger Agreement is approved by the required vote, CAPITAL will mail a notice to all shareholders who gave a timely notice of intent to demand payment and who did not vote in favor of the Merger Agreement. If the Consolidation Agreement is approved by the required vote, CCB will mail a notice to all shareholders who gave a timely notice of intent to demand payment and who did not vote in favor of the Consolidation Agreement. These notices will state where and when dissenting shareholders' demands for payment should be sent and stock certificates should be deposited, and a time at least 30 days after the mailing of the notice by which such demand and deposit must be made. A shareholder who fails to demand payment and deposit stock certificates as required in the notice will lose dissenters' rights. Except as described in the following paragraph, CAPITAL and CCB are required, immediately after the later of the Effective Time of the Merger and Consolidation, respectively, and their receipt of the demand and stock certificate in accordance with their notices, to send to the dissenting shareholder a check in the amount of their estimate of the fair value of the dissenter's shares, plus interest from the Effective Time, and certain financial information concerning CAPITAL or CCB, respectively. If CAPITAL or CCB fails to make this payment, or if the dissenting shareholder believes that the amount remitted is less than the fair value of such shareholder's shares or that the interest is not correctly determined, such shareholder may object within 30 days after CAPITAL or CCB mails the payment, by mailing to CAPITAL or CCB such shareholder's own estimate of the fair value of such shares or of the interest and a demand (a "Demand") for payment of the deficiency. If a Demand is not so mailed, the dissenting shareholder is entitled to no more than the amount initially sent by CAPITAL or CCB. Notwithstanding the foregoing, CAPITAL may elect to withhold payment from any dissenter with respect to shares of which the dissenter or the person on whose behalf the dissenter acts was not the beneficial owner on August 11, 1993, the date of the first announcement to news media of the terms of the Merger and Consolidation. After the Effective Time of the Merger and Consolidation, respectively, CAPITAL and CCB are required to furnish to such dissenters a statement of its estimate of the fair value of the shares and the rate of interest (and the basis for the proposed rate of interest) with an offer to pay that amount. If the dissenter does not accept these amounts, the dissenter must mail an estimate and demand for payment (also a "Demand") within 30 days after the date of mailing of CAPITAL or CCB's offer. Otherwise, the dissenting shareholder is entitled to no more than CAPITAL or CCB's offer. Within 60 days after any Demand is submitted by a shareholder, if the Demand remains unsettled, CAPITAL or CCB is required to file in an appropriate court in Utah a petition requesting that the fair value of the shares and the interest be determined by the court. All dissenting shareholders making such demand, wherever residing, shall be parties to the proceedings. All dissenting shareholders who are made parties to the petition are entitled to judgment for the amount by which the fair value of their shares is found to exceed the amount previously sent to them, with interest. If CAPITAL or CCB fails to file a petition as required, each dissenting shareholder who has made a demand and who has not already settled such shareholder's claim against CAPITAL or CCB shall be paid by CAPITAL or CCB the amount previously demanded by such shareholder with interest. The costs and expenses of any such court proceedings will be assessed against CAPITAL or CCB except that the court may assess any part of those costs and expenses against dissenters who are parties to the proceedings and whose action in demanding supplemental payment the court finds to be arbitrary, vexatious or not in good faith. Fees and expenses of counsel and experts for the respective parties may be assessed as the court deems equitable against CAPITAL or CCB and in favor of any or all dissenters if CAPITAL or CCB fails to comply substantially with the statutory requirements and may be assessed against either CAPITAL or CCB or a dissenter in favor of any other party, if the court finds that party against whom the fees and expenses are assessed acted arbitrarily, vexatiously or not in good faith. If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated and should not be assessed against CAPITAL or CCB, it may award to the counsel reasonable fees to be paid out of the amounts awarded to the dissenters who were benefitted. Shareholders considering exercising dissenters' rights should bear in mind that the fair value of their stock determined under Sections 16-10a-1328 and 16-10a-1330 of the Utah Code Annotated could be more than, the same as, or less than the value of the consideration they will receive pursuant to the Merger Agreement and Consolidation Agreement if they do not exercise dissenters' rights, and that investment banking opinions as to fairness are not necessarily opinions as to fair value under Sections 16-10a-1328 and 16-10a-1330 of the Utah Annotated Code. Management and Principal Shareholders of BANC ONE Information concerning the directors and executive officers of BANC ONE, compensation of directors and executive officers of BANC ONE and any related transactions in which they have an interest, together with information related to principal shareholders of BANC ONE, is set forth in BANC ONE's Proxy Statement, dated March 11, 1993, incorporated herein by reference to BANC ONE's Annual Report on Form 10-K for the year ended December 31, 1992. See "Incorporation by Reference." MANAGEMENT AND PRINCIPAL SHAREHOLDERS OF CAPITAL AND CCB The names and ages of the present directors and executive officers of CAPITAL and CCB, their business experience during the last five years and certain other information, together with their ownership of stock as of December 31, 1993, are set forth in the following table: Name, Year of Birth, Year Principal Occupations Annual Shares of Became Director & Positions for Past Five Years Amount CAPITAL & Offices w/CAPITAL or CCB & Other Information Income and CCB Norton Parker -- 1926 Banking $156,000 18,853 Director Capital -- 1980 600 3,079 Director CCB -- 1977 4,800 Chairman Capital Chairman & President CCB John M. Rapp -- 1928 Retired Director Capital -- 1980 600 12,809 Director CCB -- 1977 4,800 56 Carman E. Kipp -- 1927 Attorney Director Capital -- 1980 600 12,524 Director CCB -- 1977 4,800 52 Martin T. Hart -- 1936 Investments Director Capital -- 1980 600 12,809 52 G. Mitchell Morris -- 1920 Travel Industry Director Capital -- 1980 Consultant 600 12,809 Director CCB -- 1977 4,800 52 Ray S. Robinson -- 1926 Building Products Director Capital -- 1980 600 8,838 Director CCB -- 1977 4,800 58 McNeil S. Fiske -- 1934 President, MacCourt Products Director Capital -- 1980 600 7,721 Director CCB -- 1977 4,800 52 Michael A. Allem -- 1942 Banking 95,000 Director Capital -- 1986 600 7,242 Director CCB -- 1986 4,800 1,211 Senior Executive Vice President CCB Donald E. Foulger -- 1928 Equipment Broker Director Capital -- 1980 600 5,731 50 Charles Ehin -- 1935 Professor of Business Director CCB -- 1990 4,800 50 Allen C. Barbieri -- 1958 Banking/Savings & Loan President Capital 70,000 Ronald Leatham -- 1952 Banking Senior Vice President CCB 56,000 Kent R. Jones -- 1962 Banking/Public Accounting Chief Financial Officer CCB 57,000 EXHIBIT A GERRISH & MCCREARY, P.C. Attorneys Washington Square 222 Second Avenue North, Suite 424 Nashville, Tennessee 37201 February 11, 1994 Shareholders of Capital Bancorp Capital Bancorp 2200 South State Street Salt Lake, Utah 84115 Banc One Corporation 100 East Broad Street Columbus, Ohio 43271-0152 Ladies and Gentlemen: You have requested our opinion as to certain federal income tax consequences resulting from the merger of Capital Bancorp ("Capital") with and into Banc One Arizona Corporation ("Banc One Arizona") as set forth and more fully described in the Agreement and Plan of Merger between Capital and Banc One Arizona and joined in by Banc One CORPORATION ("Banc One"), dated September 17, 1993, as amended (the "Agreement") including exhibits attached thereto. We have acted as special counsel to Capital with respect to the merger of Capital into Banc One Arizona (the "Holding Company Merger"). In this capacity, we have examined the Agreement and the Registration Statement (Form S-4) pursuant to which Banc One is issuing additional shares of its common stock, without par value, to the stockholders of Capital pursuant to the merger of Capital with and into Banc One Arizona. All capitalized terms used herein shall, except where the context indicates otherwise, be deemed to have the meanings assigned to such terms in the Registration Statement and the Agreement. In reaching our opinion, we have relied on certain representations made by the management of Banc One, Banc One Arizona, and Capital Bancorp, including the representations and warranties and undertakings in the Agreement, and have examined such documents, records and other instruments as we have deemed necessary or appropriate, including, without limitations, the Registration Statement and the Agreement. We have assumed that Banc One has previously been and will be in the future maintained and operated in conformance with the laws of the State of Ohio and the terms of the aforementioned documents. We have also assumed that Banc One Arizona has previously been and will be in the future maintained and operated in conformance with the laws of the State of Arizona and the terms of the aforementioned documents. Banc One is a registered bank holding company organized and existing under the laws of the State of Ohio. Banc One has authorized capital stock consisting of 635,000,000 shares consisting of 600,000,000 shares of common stock without par value ("Banc One Common Stock") of which 341,965,620 shares were issued and outstanding at September 17, 1993 and 35,000,000 shares of preferred stock of which 5,000,000 were issued and outstanding as of such date. Up to 4,405,854 shares of Banc One Common Stock are subject to options. It is anticipated that not more than approximately 353,461 shares of Banc One Common Stock will be issued pursuant to the Holding Company Merger. In addition, it is anticipated that not more than approximately 80,389 shares of Banc One Common Stock will be issued in connection with the Merger of Capital City Bank with and into Bank One, Utah, N.A. (the "Bank Merger"). Capital is a bank holding company duly organized and existing under the laws of the State of Utah and has authorized capital stock consisting of 200,000 shares of common stock, par value $10.00 per share ("Capital Common Stock"), of which 150,345 shares are issued and outstanding and 2,805 of which are shares of treasury stock owned by Capital. Banc One Arizona is an Arizona corporation duly organized and existing under the laws of the State of Arizona. Banc One owns 100% of the outstanding shares of stock of Banc One Arizona. Other than noted above, there are no outstanding securities or obligations which are convertible into shares of stock or options, warrants, rights, calls or any other commitments of any nature relating to the unissued shares of Banc One, Capital, or Banc One Arizona. Pursuant to the Agreement at the Effective Date of the Merger, the following transactions will be consummated: 1. Capital shall merge with and into Banc One Arizona whereby each share of $10.00 par value Capital Common Stock issued and outstanding, other than shares whose holders have perfected their rights to dissent from the Merger, shall be converted into and exchanged for up to 353,461 shares of newly issued Banc One Common Stock without par value. Banc One Arizona shall survive the Merger and the former stockholders of Capital shall become stockholders of Banc One. No fractional shares of Banc One Common Stock shall be issued. The former Capital stockholders entitled to fractional shares of Banc One Common Stock shall be paid cash by Banc One for such fractional shares, the value of which shall be computed by multiplying the fraction thereof by the "Average Price" of Banc One Common Stock. The "Banc One Average Price" is the average of the daily market price of Banc One Common Stock during a ten (10) day period preceding the Effective Time of the Merger as set forth in Section 7(a) of the Agreement. 2. The Merger is subject to various conditions including, among others, approval by a majority of the stockholders of Capital at the Capital Special Meeting and approval by all applicable regulatory authorities. This opinion is conditioned on the following assumptions and representations being made by the management of Banc One, Banc One Arizona and Capital in connection with the Merger transaction at or before closing: 1. The Merger shall be consummated pursuant to and in accordance with the Agreement. 2. The fair market value of newly issued Banc One Common Stock without par value to be received by Capital stockholders will be, in each instance, approximately equal to the fair market value of the Capital Common Stock to be surrendered in exchange therefor. 3. After consummation of the Merger transaction, Banc One Arizona will continue its historical business in a substantially unchanged manner. 4. The management of Capital knows of no plan or intention by the stockholders of Capital who own 5% or more of the Capital Common Stock or on the part of the remaining stockholders of Capital to sell or otherwise dispose of a number of shares of Banc One Common Stock to be received in the Merger transaction that would reduce the Capital stockholders' ownership of Banc One Common Stock to a number of shares having a value as of the date of the Merger, of less than fifty (50) percent of the value of the formerly outstanding Capital Common Stock as of the same date. For purposes of this representation, shares of Capital Common Stock exchanged for cash or other property, surrendered by dissenters or exchanged for cash in lieu of fractional shares of Banc One Common Stock will be treated as outstanding Capital Common Stock on the date of the transaction. Moreover, shares of Capital Common Stock and shares of Banc One Common Stock held by Capital stockholders and otherwise sold, redeemed, or disposed of prior or subsequent to the merger transaction will be considered in making this representation. 5. Banc One Arizona will acquire at least 90% of the fair market value of the net assets and at least 70% of the fair market value of the gross assets held by Capital immediately prior to the Effective Date of the Merger. For purposes of this representation, amounts paid by Capital to dissenters, amounts paid by Capital to stockholders who receive cash or other property, Capital assets used to pay its reorganization expenses, and all redemptions and other distributions (except for regular, normal dividends) made by Capital immediately preceding the transfer, will be included as assets of Capital held immediately prior to the transaction. 6. Prior to the transaction, Banc One will be in control of Banc One Arizona within the meaning of Section 268(c) of the Internal Revenue Code. 7. Following the transaction, Banc One Arizona will not issue additional shares of its stock that would result in Banc One losing control of Banc One Arizona within the meaning of Section 368(c) of the Code. 8. Banc One has no plan or intention to reacquire any of its stock issued in this transaction. 9. Banc One has no plan or intention to liquidate Banc One Arizona, to merge Banc One Arizona with and into another corporation, to sell or otherwise dispose of the stock of Banc One Arizona or to cause Banc One Arizona to sell or otherwise dispose of any of the assets of Capital acquired in the transaction, except for dispositions made in the ordinary course of business or transfers described in Section 368(a)(2)(c) of the Code. 10. The liabilities of Capital assumed by Banc One Arizona and the liabilities to which the transferred assets of Capital are subject were incurred by Capital in the ordinary course of its business. 11. Following the transaction, Banc One Arizona will continue the historic business of Capital or use a significant portion of Capital's historical business assets in its business. 12. Each Party to the Agreement will pay its own expenses incurred in connection with the Merger including the cost of soliciting proxies for the Capital Special Meeting. Printing costs and expenses incurred in connection with the Proxy Statement/Prospectus and the associated Banc One Registration Statement to be filed with the Securities and Exchange Commission of which the Proxy Statement/Prospectus forms a part will be paid by Banc One and/or Banc One Arizona. If the Merger is not consummated for any reason, except if one Party breaches the agreement, Banc One and Capital each agree to pay the expenses arising from the negotiation and preparation of, and filings and solicitations with respect to the Agreement and the transactions contemplated by such Agreement as follows: Each party will pay its own expenses, except that Banc One will pay the costs of printing the proxy material. 13. There is no intercorporate indebtedness existing between Banc One and Capital or between Banc One Arizona and Capital that was issued, acquired, or will be settled at a discount. 14. No two parties to the transaction are investment companies as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code. 15. Capital, Banc One or Banc One Arizona is not under the jurisdiction of a court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code. 16. The fair market value of the assets of Capital transferred to Banc One Arizona will equal or exceed the sum of the liabilities assumed by Banc One Arizona, plus the amount of liabilities, if any, to which the transferred assets are subject. 17. No stock of Banc One Arizona will be issued in the transaction. 18. None of the compensation received by any stockholder-employee of Capital will be separate consideration for, or allocable to, any of their shares of Capital stock; none of the shares of Banc One stock received by any stockholder-employee will be separate consideration for, or allocable to, any employment agreement; and the compensation paid to any stockholder- employee will be for services actually rendered and will be commensurate with amounts paid to third parties bargaining at arm's-length for similar services. Based solely on the information submitted and on the representations set forth above our opinion is as follows: 1. Provided the proposed merger of Capital with and into Banc One Arizona qualifies under Utah and Arizona law, the acquisition by Banc One Arizona of substantially all of the assets of Capital solely in exchange for Banc One Common Stock and the assumption by Banc One Arizona of the liabilities, will qualify as a reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code. For purposes of this opinion, "substantially all" means at least 90% of the fair market value of the net assets and at least 70% of the fair market value of the gross assets of Capital held immediately prior to the proposed transaction. Capital, Banc One and Banc One Arizona will each be "a party to a reorganization" within the meaning of Section 368(b). 2. No gain or loss will be recognized by Capital upon the transfer of substantially all of its assets to Banc One Arizona in exchange for Banc One Common Stock and the assumption of Capital's liabilities by Banc One Arizona (Sections 361 and 357(a)). 3. No gain or loss will be recognized by either Banc One or Banc One Arizona upon the acquisition by Banc One Arizona of substantially all of the assets of Capital in exchange for Banc One's Common Stock and the assumption of Capital's liabilities (Rev. Rul. 57-278, 1957-1 C.B. 124). 4. The federal income tax basis of the assets of Capital acquired by Banc One Arizona will be the same in the hands of Banc One Arizona as the basis of such assets in the hands of Capital immediately prior to the exchange (Section 362(b)). 5. The basis of the Banc One Arizona Common Stock in the hands of Banc One will be increased by an amount equal to the basis of the Capital assets in the hands of Banc One Arizona and decreased by the sum of the amount of the liabilities of Capital assumed by Banc One Arizona and the amount of liabilities to which the assets of Capital are subject. 6. The holding period of the assets of Capital received by Capital will, in each instance, include the period for which such assets were held by Capital (Section 1223(2)). 7. No gain or loss will be recognized to the stockholders of Capital upon the exchange of Capital stock solely for Banc One Common Stock (Section 354(a)(1). 8. The basis of the Banc One Common Stock received by the stockholders of Capital will be the same as the basis of the Capital stock surrendered in exchange therefor (Section 358(a)(1)). 9. The holding period of the Banc One Common Stock received by the stockholders of Capital will include the period during which Capital stock surrendered therefor was held, provided the stock of Capital is a capital asset in the hands of the stockholders of Capital on the date of the exchange (Section 1223(1)). 10. As provided by Section 381(c)(2) of the Code and Section 1.381(c)(2)-1 of the Income Tax Regulations, Banc One Arizona will succeed to and take into account the earnings and profits, or deficit in earnings and profits, of Capital as of the date of transfer. Any deficit in the earnings and profits of Capital or Banc One Arizona will be used only to offset the earnings and profits accumulated after the date of transfer. 11. Where a dissenting Capital stockholder receives cash in exchange for his or her stock, such cash will be treated as having been received by the stockholder as a distribution in redemption of his or her stock subject to the provisions and limitations of Section 302 of the Code. Rev. Rul. 74-515, 1974-2 C.B. 118. No opinion in expressed about the tax treatment of the Merger transaction under other provisions of the Code and regulations or about the federal income tax or state income tax treatment of any conditions existing at the time of, or other tax consequences resulting from the Merger transaction that are not specifically covered above. No opinion is expressed herein with regard to the tax treatment of the merger of Capital City Bank into Bank One, Utah, N.A. This opinion is addressed only to you and concerns only the transaction described above. This opinion may be relied upon only by Capital, Banc One, Banc One Arizona and the stockholders of Capital. We consent to the inclusion of this opinion in the Registration Statement (Form S-4) of Banc One relating to the Merger and to the reference to our firm under the caption "Legal Matters" in the Prospectus/Proxy Statement which is part of the Registration Statement. Very truly yours, GERRISH & McCREARY, P.C. GERRISH & MCCREARY, P.C. EXHIBIT B Utah Code Annotated Part 13 DISSENTERS' RIGHTS 16-10a-1301. Definitions. For purposes of Part 13: (1) "Beneficial shareholder" means the person who is a beneficial owner of shares held in a voting trust or by a nominee as the record shareholder. (2) "Corporation" means the issuer of the shares held by a dissenter before the corporate action, or the survivor or acquiring corporation by merger or share exchange of that issuer. (3) "Dissenter" means a shareholder who is entitled to dissent from corporate action under Section 16-10a-1302 and who exercises that right when and in the manner required by Sections 16-10a-1320 through 16-10a-1328. (4) "Fair Value" with respect to a dissenter's shares, means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action. (5) "Interest" means interest from the effective date of the corporate action until the date of payment, at the statutory rate set forth in Section 15-1-1, compounded annually. (6) "Record shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares that are registered in the name of a nominee to the extent the beneficial owner is recognized by the corporation as the shareholder as provided in Section 16-10a-723. (7) "Shareholder" means the record shareholder or the beneficial shareholder. 16-10a-1302. Rights to dissent. (1) A shareholder, whether or not entitled to vote, is entitled to dissent from, and obtain payment of the fair value of shares held by him in the event of, any of the following corporate actions: (a) consummation of a plan of merger to which the corporation is a party if: (i) shareholder approval is required for the merger by Section 16-10a-1103 or the articles of incorporation; or (ii) the corporation is a subsidiary that is merged with its parent under Section 16-10a-1104; (b) consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired; (c) consummation of a sale, lease, exchange, or other disposition of all, or substantially all, of the property of the corporation for which a shareholder vote is required under Subsection 16-10a-1202(1), but not including a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within one year after the date of sale; and (d) consummation of a sale, lease, exchange, or other disposition of all, or substantially all, of the property of an entity controlled by the corporation if the shareholders of the corporation were entitled to vote upon the consent of the corporation to the disposition pursuant to Subsection 16-10a-1202(2). (2) A shareholder is entitled to dissent and obtain payment of the fair value of his shares in the event of any other corporate action to the extent the articles of incorporation, bylaws, or a resolution of the board of directors so provides. (3) Notwithstanding the other provisions of this part, except to the extent otherwise provided in the articles of incorporation, bylaws, or a resolution of the board of directors, and subject to the limitations set forth in Subsection (4), a shareholder is not entitled to dissent and obtain payment under Subsection (1) of the fair value of the shares of any class or series of shares which either were listed on a national securities exchange registered under the federal Securities Exchange Act of 1934, as amended, or on the National Market System of the National Association of Securities Dealers Automated Quotation System, or were held of record by more than 2,000 shareholders, at the time of: (a) the record date fixed under Section 16-10a-707 to determine the shareholders entitled to receive notice of the shareholders' meeting at which the corporate action is submitted to a vote; (b) the record date fixed under Section 16-10a-704 to determine shareholders entitled to sign writings consenting to the proposed corporate action; or (c) the effective date of the corporate action if the corporate action is authorized other than by a vote of shareholders. (4) The limitation set forth in Subsection (3) does not apply if the shareholder will receive for his shares, pursuant to the corporate action, anything except: (a) shares of the corporation surviving the consummation of the plan of merger or share exchange; (b) shares of a corporation which at the effective date of the plan of merger or share exchange either will be listed on a national securities exchange registered under the federal Securities Exchange Act of 1934, as amended, or on the National Market System of the National Association of Securities Dealers Automated Quotation System, or will beheld of record by more than 2,000 shareholders; (c) cash in lieu of fractional shares; or (d) any combination of the shares described in Subsection (4), or cash in lieu of fractional shares. (5) A shareholder entitled to dissent and obtain payment for his shares under this part may not challenge the corporate action creating the entitlement unless the action is unlawful or fraudulent with respect to him or to the corporation. 16-10a-1303. Dissent by nominees and beneficial owners. (1) A record shareholder may assert dissenters' rights as to fewer than all the shares registered in his name only if the shareholder dissents with respect to all shares beneficially owned by any one person and causes the corporation to receive written notice which states the dissent and the name and address of each person on whose behalf dissenters' rights are being asserted. The rights of a partial dissenter under this subsection are determined as if the shares as to which the shareholder dissents and the other shares held of record by him were registered in the names of different shareholders. (2) A beneficial shareholder may assert dissenters' rights as to shares held on his behalf only if: (a) the beneficial shareholder causes the corporation to receive the record shareholder's written consent to the dissent not later than the time the beneficial shareholder asserts dissenters' rights; and (b) the beneficial shareholder dissents with respect to all shares of which he is the beneficial shareholder. (3) The corporation may require that, when a record shareholder dissents with respect to the shares held by any one or more beneficial shareholders, each beneficial shareholder must certify to the corporation that both he and the record shareholders of all shares owned beneficially by him have asserted, or will timely assert, dissenters' rights as to all the shares unlimited on the ability to exercise dissenters' rights. The certification requirement must be stated in the dissenters' notice given pursuant to Section 16-10a-1322. 16-10a-1320. Notice of dissenters' rights. (1) If a proposed corporate action creating dissenters' rights under Section 16-10a-1302 is submitted to a vote at a shareholders' meeting, the meeting notice must be sent to all shareholders of the corporation as of the applicable record date, whether or not they are entitled to vote at the meeting. The notice shall state that shareholders are or may be entitled to assert dissenters' rights under this part. The notice must be accompanied by a copy of this part and the materials, if any that under this chapter are required to be given the shareholders entitled to vote on the proposed action at the meeting. Failure to give notice as required by this subsection does not affect any action taken at the shareholders' meeting for which the notice was to have been given. (2) If a proposed corporate action creating dissenters' rights under Section 16-10a-1302 is authorized without a meeting of shareholders pursuant to Section 16-10a-704, any written or oral solicitation of a shareholder to execute a written consent to the action contemplated by Section 16-10a-704 must be accompanied or preceded by a written notice stating that shareholders are or may be entitled to assert dissenters' rights under this part, by a copy of this part, and by the materials, if any, that under this chapter would have been required to be given to shareholders entitled to vote on the proposed action if the proposed action were submitted to a vote at a shareholders' meeting. Failure to give written notice as provided by this subsection does not affect any action taken pursuant to Section 16-10a-704 for which the notice was to have been given. 16-10a-1321. Demand for payment--Eligibility and notice of intent. (1) If a proposed corporate action creating dissenters' rights under Section 16-10a-1302 is submitted to a vote at a shareholders' meeting, a shareholder who wishes to assert dissenters' rights: (a) must cause the corporation to receive, before the vote is taken, written notice of his intent to demand payment for shares if the proposed action is effectuated; and (b) may not vote any of his shares in favor of the proposed action. (2) If a proposed corporate action creating dissenters' rights under Section 16-10a-1302 is authorized without a meeting of shareholders pursuant to Section 16-10a-704, a shareholder who wishes to assert dissenters' rights may not execute a writing consenting to the proposed corporate action. (3) In order to be entitled to payment for shares under this part, unless otherwise provided in the articles of incorporation, bylaws, or a resolution adopted by the board of directors, a shareholder must have been a shareholder with respect to the shares for which payment is demanded as of the date the proposed corporate action creating dissenters' rights under Section 16-10a-1302 is approved by the shareholders, if shareholder approval is required, or as of the effective date of the corporate action if the corporate action is authorized other than by a vote of shareholders. (4) A shareholder who does not satisfy the requirements of Subsections (1) through (3) is not entitled to payment for shares under this part. 16-10a-1322. Dissenters' notice. (1) If proposed corporate action creating dissenters' rights under Section 16-10a-1302 is authorized, the corporation shall give a written dissenters' notice to all shareholders who are entitled to demand payment for their shares under this part. (2) The dissenters' notice required by Subsection (1) must be sent no later than ten days after the effective date of the corporate action creating dissenters' rights under Section 16-10a-1302, and shall: (a) state that the corporate action was authorized and the effective date or proposed effective date of the corporate action; (b) state an address at which the corporation will receive payment demands and an address at which certificates for certified shares must be deposits; (c) inform holders of uncertified shares to what extent transfer of the shares will be restricted after the payment demand is received; (d) supply a form for demanding payment, which form requests a dissenter to state an address to which payment is to be made; (e) set a date by which the corporation must receive the payment demand and by which certificates for certificated shares must be deposited at the address indicated in the dissenters' notice, which dates may not be fewer than 30 nor more than 70 days after the date the dissenters' notice required by Subsection (1) is given; (f) state the requirement contemplated by Subsection 16-10a-1303(3), if the requirement is imposed; and (g) be accompanied by a copy of this part. 16-10a-1323. Procedure to demand payment. (1) A shareholder who is given a dissenters' notice described in Section 16-10a-1322, who meets the requirements of Section 16-10a-1321, and wishes to assert dissenters' rights must, in accordance with the terms of the dissenters' notice: (a) cause the corporation to receive a payment demand, which may be the payment demand form contemplated in Subsection 16-10a-1322(2)(d), duly completed, or may be stated in another writing. (b) deposit certificates for his certificated shares in accordance with the terms of the dissenters' notice; and (c) if required by the corporation in the dissenters' notice described in Section 16-10a-1322, as contemplated by Section 16-10a-1327, certify in writing, in or with the payment demand, whether or not he or the person on whose behalf he asserts dissenters' rights acquired beneficial ownership of the shares before the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action creating dissenters' rights under Section 16-10a-1302. (2) A shareholder who demands payment in accordance with Subsection (1) retains all rights of a shareholder except the right to transfer the shares until the effective date of the proposed corporate action giving rise to the exercise of dissenters' rights and has only the right to receive payment for the shares after the effective date of the corporate action. (3) A shareholder who does not demand payment and deposit share certificates as required, by the date or dates set in the dissenters' notice, is not entitled to payment for shares under this part. 16-10a-1324. Uncertificated shares. (1) Upon receipt of a demand for payment under Section 16-10a-1323 from a shareholder holding uncertificated shares, and in lieu of the deposit of certificates representing the shares, the corporation may restrict the transfer of the shares until the proposed corporate action is taken or the restrictions are released under Section 16-10a-1326. (2) In all other respects, the provisions of Section 16-10a-1323 apply to shareholders who own uncertified shares. 16-10a-1325. Payment. (1) Except as provided in Section 16-10a-1327, upon the later of the effective date of the corporate action creating dissenters' rights under Section 16-10a-1302, and receipt by the corporation of each payment demand pursuant to Section 16-10a-1323, the corporation shall pay the amount the corporation estimates to be the fair value of the dissenter's shares, plus interest to each dissenter who has complied with Section 16-10a-1323, and who meets the requirements of Section 16-10a-1321, and who has not yet received payment. (2) Each payment made pursuant to Subsection (1) must be accompanied by: (a) (i) (A) the corporation's balance sheet as of the end of its most recent fiscal year, or if not available, a fiscal year ending not more than 16 months before the date of payment; (B) an income statement for that year; (C) a statement of changes in shareholders' equity for that year and a statement of cash flow for that year, if the corporation customarily provides such statements to shareholders; and (D) the latest available interim financial statements, if any; (ii) the balance sheet and statements referred to in Subsection (i) must be audited if the corporation customarily provides audited financial statements to shareholders; (b) a statement of the corporation's estimate of the fair value of the shares and the amount of interest payable with respect to the shares; (c) a statement of the dissenter's right to demand payment under Section 16-10a-1328; and (d) a copy of this part. 16-10a-1326. Failure to take action. (1) If the effective date of the corporate action creating dissenters' rights under Section 16-10a-1302 does not occur within 60 days after the date set by the corporation as the date by which the corporation must receive payment demands as provided in Section 16-10a-1322, the corporation shall return all deposits certificates and release the transfer restrictions imposed on uncertificated shares, and all shareholders who submitted a demand for payment pursuant to Section 16-10a-1323 shall thereafter have all rights of a shareholder as if no demand for payment had been made. (2) If the effective date of the corporate action creating dissenters' rights under Section 16-10a-1302 occurs more than 60 days after the date set by the corporation as the date by which the corporation must receive payment demands as provided in Section 16-10a-1322, then the corporation shall send a new dissenters' notice, as provided in Section 16-10a-1322, and the provisions of Sections 16-10a-1323 through 16-10a-1328 shall again be applicable. 16-10a-1327. Special provisions relating to shares acquired after announcement of proposed corporate action. (1) A corporation may, with the dissenters' notice given pursuant to Section 16-10a-1322, state the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action creating dissenters' rights under Section 16-10a-1302 and state that a shareholder who asserts dissenters' rights must certify in writing, in or with the payment demand, whether or not he or the person on whose behalf he asserts dissenters' rights acquired beneficial ownership of the shares before that date. With respect to any dissenter who does not certify in writing, in or with the payment demand that he or the person on whose behalf the dissenters' rights are being asserted, acquired beneficial ownership of the shares before that date, the corporation may, in lieu of making the payment provided in Section 16-10a-1325, offer to make payment if the dissenter agrees to accept it in full satisfaction of his demand. (2) An offer to make payment Subsection (1) shall include or be accompanied by the information required by Subsection 16-10a-1325(2). 16-10a-1328. Procedure if shareholder dissatisfied with payment or offer. (1) A dissenter who has not accepted an offer made by a corporation under Section 16-10a-1327 may notify the corporation in writing of his own estimate of the fair value of his shares and demand payment of the estimated amount, plus interest, less any payment made under Section 16-10a-1325; if: (a) the dissenter believes that the amount paid under Section 16-10a-1325 or offered under Section 16-10a-1327 is less than the fair value of the shares; (b) the corporation fails to make payment under Section 16-10a-1325 within 60 days after the date set by the corporation as the date by which it must receive the payment demand; or (c) the corporation, having failed to take the proposed corporate action creating dissenters' rights, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares as required by Section 16-10a-1326. (2) A dissenter waives the right to demand payment under this section unless he causes the corporation to receive the notice required by Subsection (1) within 30 days after the corporation made or offered payment for his shares. 16-10a-1330. Judicial appraisal of shares -- Court action. (1) If a demand for payment under Section 16-10a-1328 remains unresolved, the corporation shall commence a proceeding within 60 days after receiving the payment demand contemplated by Section 16-10a-1328, and petition the court to determine the fair value of the shares and the amount of interest. If the corporation does not commence the proceeding within the 60-day period, it shall pay each dissenter whose demand remains unresolved the amount demanded. (2) The corporation shall commence the proceeding described in Subsection (1) in the district court of the county in this state where the corporation's principal office, or if it has no principal office in this state, the county where its registered office is located. If the corporation is a foreign corporation without a registered office in this state, it shall commence the proceeding in the county in this state where the registered office of the domestic corporation merged with, or whose shares were acquired by, the foreign corporation was located. (3) The corporation shall make all dissenters who have satisfied the requirements of Sections 16-10a-1321, 16-10a-1323, and 16-10a-1328, whether or not they are residents of this state whose demands remain unresolved, parties to the proceeding commenced under Subsection (2) as an action against their shares. All such dissenters who are named as parties must be served with a copy of the petition. Service on each dissenter may be by registered or certified mail to the address stated in his payment demand made pursuant to Section 16-10a-1328. If no address is stated in the payment demand, service may be made at the address stated in the payment demand given pursuant to Section 16-10a-1323. If no address is stated in the payment demand, service may be made at the address shown on the corporation's current record of shareholders for the record shareholder holding the dissenter's shares. Service may also be made otherwise as provided by law. (4) The jurisdiction of the court in which the proceeding is commenced under Subsection (2) is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The appraisers have the powers described in the order appoint them, or in any amendment to it. The dissenters are entitled to the same discovery rights as parties in other civil proceedings. (5) Each dissenter made a party to the proceeding commenced under Subsection (2) is entitled to judgment: (a) for the amount, if any, by which the court finds that the fair value of his shares, plus interest, exceeds the amount paid by the corporation pursuant to Section 16-10a-1325; or (b) for the fair value, plus interest, of the dissenter's after-acquired shares for which the corporation elected to withhold payment under Section 16-10a-1327. 16-10a-1331. Court costs and counsel fees. (1) The court in an appraisal proceeding commenced under Section 16-10a-1330 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds that the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding payment under Section 16-10a-1328. (2) The court may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable: (a) against the corporation and in favor of any or all dissenters if the court finds the corporation did not substantially comply with the requirements of Section 16-10a-1320 through 16-10a-1328; or (b) against either the corporation or one or more dissenters, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this part. (3) If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to those counsel reasonable fees to be paid out of the amounts awarded the dissenters who were benefited. PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20. Indemnification of Officers and Directors. Section 1701.13(E) of the Ohio General Corporation Law sets forth provisions which define the extent to which a corporation may indemnify directors, officers, and employees. Those provisions have been adopted by the Registrant in Article V of Registrant's Code of Rights. Article V provides for the indemnification or the purchase of insurance for the benefit of the directors, officers, employees and agents of the Registrant in the event such persons are subject to legal action as a result of actions in their capacities as directors, officers, employees or agents of the Registrant. Registrant has entered into indemnification agreements with its directors and executive officers that provide for indemnification unless the indemnitee's conduct is finally adjudged by a court to be knowingly fraudulent, deliberately dishonest or willful misconduct. Registrant indemnifies other officers, employees or agents provided such persons acted in good faith and in a manner which they reasonably believed to be in or not opposed to the best interest of the Registrant or, with respect to criminal actions, had no reason to believe was unlawful. Item 21. Exhibits and Financial Statement Schedules. The following exhibits are filed herewith except those indicated which have been filed previously as shown below and which are incorporated herein by reference. 2.1 Merger Agreement dated September 17, 1993, by and among CAPITAL BANCORP, Banc One Arizona Corporation and BANC ONE CORPORATION, as amended, including the Bank Merger Agreement dated December 14, 1993, by and among Bank One, Utah, N.A. and Capital City Bank. 2.3 Form of Proxies to be used by CAPITAL BANCORP and Capital City Bank 3.1 Amended Articles of Incorporation of the Registrant (incorporated by reference from Exhibit 3-1 of the Annual Report of the Registrant on Form 10-K for the year ended December 31, 1991.) 3.2 Code of Regulations of the Registrant (incorporated by reference from Exhibit 3-2 of the Annual Report of the Registrant on Form 10-K for the year ended December 31, 1991). 4.1 Form of Common Stock Certificate of the Registrant (incorporated by reference from Exhibit 4.1 to the Annual Report of the Registrant on Form 10-K for the year ended December 31, 1989). 5 Opinion of Roman J. Gerber, General Counsel for BANC ONE CORPORATION, regarding the legality of securities being offered, including consent. 8 Opinion of Gerrish & McCreary, P.C. regarding the Federal income tax consequences of the Merger, including consent. 23 Consents of Coopers & Lybrand and KPMG Peat Marwick 25 Power of attorney is included elsewhere in Part II of this Registration Statement. Item 22. Undertakings. (a) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) The undersigned Registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this Registration Statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. (c) The Registrant hereby undertakes that every prospectus (i) that is filed pursuant to paragraph (a) above, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the Registration Statement and will not be used until such amendment has become effective, and that for the purpose of determining liabilities under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (d) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (e) The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the Prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (f) The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. (g) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement: (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus, State of Ohio, on February 25, 1994. BANC ONE CORPORATION By: ROMAN J. GERBER Roman J. Gerber Executive Vice President POWER OF ATTORNEY We, the undersigned officers and directors of BANC ONE CORPORATION, hereby severally constitute and appoint Roman J. Gerber, George R. L. Meiling and William C. Leiter, our true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for us and in our stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and all documents relating thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or advisable to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. WITNESS our hands and common seal on the dates set forth below. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated: Signature Title Date JOHN B. MCCOY Chairman of the Board February 25, 1994 John B. McCoy (Principal Executive Officer & Director) DONALD L. MCWHORTER President and Director February 25, 1994 Donald L. McWhorter FREDERICK L. CULLEN Senior Vice President February 25, 1994 Frederick L. Cullen (Principal Financial Officer) WILLIAM C. LEITER Controller (Principal February 25, 1994 William C. Leiter Accounting Officer) CHARLES E. EXLEY Director February 25, 1994 Charles E. Exley E. GORDON GEE Director February 25, 1994 E. Gordon Gee JOHN R. HALL Director February 25, 1994 John R. Hall LABAN P. JACKSON, JR. Director February 25, 1994 Laban P. Jackson, Jr. JOHN G. MCCOY Director February 25, 1994 John G. McCoy RENE C. MCPHERSON Director February 25, 1994 Rene C. McPherson THEKLA R. SHACKELFORD Director February 25, 1994 Thekla R. Shackelford FREDERICK P. STRATTON, JR. Director February 25, 1994 Frederick P. Stratton, Jr. Director Romeo J. Ventres ROBERT D. WALTER Director February 25, 1994 Robert D. Walter LESLIE H. WEXNER Director February 25, 1994 Leslie H. Wexner EX-2 2 EXH 2.1 MERGER AGREEMENT AGREEMENT and PLAN OF MERGER between CAPITAL BANCORP and BANC ONE ARIZONA CORPORATION and joined in by BANC ONE CORPORATION AGREEMENT and PLAN OF MERGER AGREEMENT and PLAN OF MERGER dated September 17, 1993 (hereinafter called the "Merger Agreement"), between Capital Bancorp (hereinafter called "CAPITAL") and Banc One Arizona Corporation (hereinafter called "BANC ONE ARIZONA") and joined in by BANC ONE CORPORATION (hereinafter called "BANC ONE"). WITNESSETH: CAPITAL is a corporation duly organized under the laws of the State of Utah. Its principal office is located at 2200 South State Street, Salt Lake City, Utah 84115. As of June 30, 1993, CAPITAL had authorized capital stock consisting of 200,000 shares of common stock with par value of $10.00 per share ("CAPITAL Common"), 150,345 of which shares were issued and outstanding and 2,805 of which were shares of treasury stock owned by CAPITAL. CAPITAL is the principal shareholder of Capital City Bank (hereinafter "CCB"). As of June 30, 1993, the authorized capital stock of CCB consisted of 200,000 shares of common stock with par value of $10.00 each ("CCB Common"), 132,850 of which were issued and outstanding and none of which were treasury shares of CCB, and 50,000 shares of noncumulative, nonvoting preferred stock of $50.00 par value each ("CCB Preferred"), 24,000 of which were issued and outstanding and none of which were treasury shares of CCB. CCB has granted outstanding options to purchase 7,917 share of CCB Common (the "CCB Options"). Of the 132,850 issued and outstanding shares of CCB Common, 114,768 were owned by CAPITAL and 18,082 of such shares were owned by other shareholders of CCB. CAPITAL's subsidiaries, including CCB, are set forth and listed on Exhibit A to this Agreement. BANC ONE ARIZONA is a corporation duly organized under the laws of the State of Arizona. Its principal office is located at 241 North Central Avenue, Phoenix, Arizona 85004. As of June 30, 1993, BANC ONE ARIZONA had capital stock of $500 divided into 500 shares of common stock without par value ("BANC ONE ARIZONA Common") all of which were issued and outstanding. As of June 30, 1993, BANC ONE ARIZONA had surplus of $187,094,356 and undivided profits, including capital reserves, of $447,385,608 and total consolidated assets of $11,513,538. BANC ONE ARIZONA is a wholly owned subsidiary of BANC ONE and, indirectly, holds all the issued and outstanding shares of Bank One, Utah, National Association (hereinafter referred to as "BANK ONE UTAH"). BANC ONE is a corporation duly organized under the laws of the State of Ohio. Its principal office is located at 100 East Broad Street, Columbus, Franklin County, Ohio. As of June 30, 1993, after giving effect to the five share for four share stock split on shares of BANC ONE Common Stock declared July 20, 1993 and payable August 31, 1993 to shareholders of record as of August 3, 1993 (the "Stock Split"), BANC ONE had capital stock of $1,705,328,000, divided into 600,000,000 shares of common stock, without par value ("BANC ONE Common"), 341,065,620 of which shares of BANC ONE Common were issued and outstanding and none of which were shares of treasury stock owned by BANC ONE, and 35,000,000 shares of preferred stock without par value, of which 5,000,000 shares were issued and outstanding as Series C $3.50 Cumulative Convertible Preferred Stock. As of June 30, 1993, BANC ONE had surplus of $2,642,869,000, undivided profits, including capital reserves, of $1,990,508,000, and total consolidated assets of $75,466,373,000. The respective Boards of Directors of CAPITAL, BANC ONE ARIZONA and BANC ONE have each approved this Merger Agreement and the consummation of the transactions hereby and have approved the execution and delivery of this Merger Agreement. This Merger Agreement provides for the merger of CAPITAL with and into BANC ONE ARIZONA upon the terms and conditions of this Merger Agreement (the "Holding Company Merger"). BANC ONE ARIZONA will be the surviving corporation of the Holding Company Merger. From and after the Effective Time, as defined in Section 4 of this Merger Agreement, and as and when required by this Merger Agreement, BANC ONE will issue shares of BANC ONE Common in exchange for all of the issued and outstanding shares of CAPITAL Common (excluding any shares held by CAPITAL as treasury shares). It is understood by each of the parties hereto that BANC ONE seeks to acquire CAPITAL and CCB and all of their respective operating assets and liabilities through the Holding Company Merger and the related merger of CCB with and into BANK ONE UTAH (the "Bank Merger"). Subject to the terms and conditions of this Merger Agreement, all parties will exert their reasonable best efforts to obtain such regulatory approvals and to effect such other actions as are necessary or appropriate to consummate the Holding Company Merger. Immediately following the Holding Company Merger, BANC ONE ARIZONA will direct the transfer of assets and liabilities of the Bank to BANK ONE UTAH by means of the Bank Merger in accordance with the terms of the Merger Agreement between Bank and BANK ONE UTAH substantially in the form attached hereto as Exhibit B (the "Bank Merger Agreement"). Except as may be required upon application of Sections 7(e) and/or 7(f) of this Merger Agreement, but after giving effect to the Stock Split, BANC ONE will issue not more than 456,850 shares of BANC ONE Common in connection with the transactions contemplated by this Merger Agreement, including not more than 372,104 shares of BANC ONE Common in connection with the Holding Company Merger and not more than 84,746 shares of BANC ONE Common in connection with the Bank Merger. In consideration of the premises, CAPITAL, BANC ONE and BANC ONE ARIZONA hereby make this Merger Agreement and prescribe the terms and conditions of the Holding Company Merger and the mode of carrying the Holding Company Merger into effect as follows: 1. Holding Company Merger. Subject to the terms and conditions hereinafter set forth, CAPITAL shall be merged with and into BANC ONE ARIZONA pursuant to and in accordance with applicable provisions of the General Corporation Law of the State of Arizona (the "Arizona GCL") and the Utah Revised Business Corporation Act (the "Utah BCA"). 2. Name. The name of the surviving corporation (hereinafter called the "Surviving Corporation" whenever reference is made to it as of the Effective Time or thereafter) shall be "BANC ONE ARIZONA CORPORATION." 3. Business. The business of BANC ONE ARIZONA as the Surviving Corporation shall be that of a bank holding company. The Surviving Corporation shall exist by virtue of, and be governed by the laws of the State of Arizona and shall have its principal office at 241 North Central Avenue, Phoenix, Arizona. 4. Effective Time of Holding Company Merger; Articles of Incorporation. The Holding Company Merger shall become effective in accordance with the provisions of Section 10-077 of the Arizona GCL and Section 16-10a-1101 et. seq. of the Utah BCA, upon the later to occur of (a) completion of the filing of Articles of Merger with the Corporation Commission of the State of Arizona and (b) completion of the filing of articles of merger with the Department of Commerce, Division of Corporations and Commercial Code of the State of Utah (the "Effective Time"). Attached to this Merger Agreement as Exhibit C is a Plan of Merger (the "Plan of Merger") containing certain of the terms of this Merger Agreement, which shall be set forth in substantially the form of such Exhibit C (as the "plan of merger" with respect to the Holding Company Merger referred to in Section 10-077 and the other applicable provisions of the Arizona GCL) in the Articles of Merger filed by CAPITAL and BANC ONE ARIZONA with the Secretary of State of the State of Arizona in order to make the Holding Company Merger effective. The Articles of Incorporation of BANC ONE ARIZONA in effect as of the Effective Time shall be the Articles of Incorporation of the Surviving Corporation, and the By-laws of BANC ONE ARIZONA in effect as of the Effective Time shall be the By-laws of the Surviving Corporation. 5. Effect of Holding Company Merger. At the Effective Time, the separate corporate existence of CAPITAL and BANC ONE ARIZONA, respectively, shall, as provided in applicable provisions of the Utah BCA and the Arizona GCL, be merged into and continued in BANC ONE ARIZONA as the Surviving Corporation, which shall be deemed to be the same corporation as CAPITAL and BANC ONE ARIZONA. All rights, franchises and interests of CAPITAL and BANC ONE ARIZONA, respectively, in and to every type of property, real, personal and mixed, and chooses in action, shall be transferred to and vested in BANC ONE ARIZONA as the Surviving Corporation by virtue of the Holding Company Merger without any deed or other transfer in the same manner and to the same extent as such rights, franchises and interests were held or enjoyed by CAPITAL and BANC ONE ARIZONA, respectively, at the Effective Time, as provided in applicable provisions of the Utah BCA and Arizona GCL. 6. Liabilities upon Holding Company Merger; Service of Process. The Surviving Corporation shall be responsible for all of the liabilities of every kind and description of CAPITAL and BANC ONE ARIZONA existing as of the Effective Time, including, but not limited to, employment agreements and severance agreements, except as may be specifically provided otherwise in this Merger Agreement. The filing with the Utah Department of Commerce, Division of Corporations and Commercial Code (the "Utah Division") of an appropriate certificate of merger, articles of merger or other appropriate document as required by the Utah BCA shall operate as a consent by the Surviving Corporation that it may be sued and served with process in the State of Utah in any suit, action or proceeding for the enforcement of any obligation or liability of CAPITAL or BANC ONE ARIZONA including any amount payable to any dissenting shareholder; as the consent by the Surviving Corporation to service upon and by the Utah Division as agent of the Surviving Corporation to accept service of process in any such suit, action or proceeding for the enforcement of any such obligation or liability; and as an appointment by the Surviving Corporation of Rand D. Haddock, whose address is 241 North Central Avenue, Phoenix, Arizona 85004, as agent of the Surviving Corporation for service of process in any action, suit or proceeding to enforce any such obligation or liability of CAPITAL or BANC ONE ARIZONA, to whom the Utah Division may mail a copy of any such process served upon the Utah Division. 7. Conversion of Shares. (a) At the Effective Time: (i) Each of the not more than 150,345 shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time (excluding any shares held by CAPITAL as treasury shares) shall thereupon and without further action be converted into shares of BANC ONE Common at the Exchange Rate which shall be calculated as set forth in this Section 7(a)(i). CAPITAL's shareholders of record at the Effective Time for the shares of CAPITAL Common then held by them, respectively, shall be allocated and entitled to receive (upon surrender of certificates representing said shares for cancellation) shares of BANC ONE Common, which total number of shares of BANC ONE Common shall have a market value as of the Valuation Period (as hereinafter defined) equal to the product of (x) the number of shares of CAPITAL Common that shall be issued and outstanding (not including treasury shares) immediately prior to the Effective Time, times (y) $100.35 (hereinafter the amount so-calculated pursuant to this Section 7(a)(i) is referred to as the "Market Value"), subject, however, to (A) the provisions of this Section 7(a)(i) with respect to the minimum and maximum number of shares to be exchanged, (B) the anti-dilution provisions of Sections 7(e) and 7(f) of this Merger Agreement, and (C) provisions set forth in Section 7(c) herein relative to fractional shares. The term "Valuation Period" shall mean the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") ending on the sixth NYSE trading day immediately prior to the proposed Effective Time, as designated by BANC ONE pursuant to Section 10(c) of this Merger Agreement. For purposes of establishing the "Exchange Rate," (the number of shares of BANC ONE Common into which each share of CAPITAL Common shall be converted at the Effective Time), each share of BANC ONE Common shall be valued at the average of the daily closing trade prices of BANC ONE Common on the NYSE during the Valuation Period as reported in The Wall Street Journal for NYSE Composite Transactions (the "BANC ONE Average Price"); provided, however, that for purposes of Section 7 of this Merger Agreement and the calculations herein required, said BANC ONE Average Price will be deemed not to be greater than $49.00 nor less than $40.54 per share. Such BANC ONE Average Price shall then be divided into the Market Value (as calculated pursuant to this Section 7(a)(i), above) to establish (to the nearest whole share) the aggregate number of shares of BANC ONE Common into which all of the then issued and outstanding shares of CAPITAL Common shall be converted at the Effective Time. Such number of shares of BANC ONE Common shall then be divided by the number of shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time with the quotient therefrom, carried to three decimal places, being the number of shares of BANC ONE Common into which each share of CAPITAL Common shall be converted at the Effective Time. In the event the BANC ONE Average Price is below $40.54, the total number of shares of BANC ONE Common into which the shares of CAPITAL Common shall be converted will be the number of BANC ONE Common shares calculated by multiplying (x) 2.475 times (y) the number of shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time (not including treasury shares). In the event the BANC ONE Average Price is above the $49.00, the total number of shares of BANC ONE Common into which the shares of CAPITAL Common shall be converted will be the number of BANC ONE Common shares calculated by multiplying (x) 2.048 times (y) the number of shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time (not including treasury shares). The maximum and minimum total number of shares of BANC ONE Common for which the shares of CAPITAL Common shall be exchanged shall be subject to adjustment in accordance with the anti-dilution provisions of Section 7(e) of this Merger Agreement. The Exchange Rate shall be subject to adjustment in accordance with the anti-dilution provisions of Section 7(f) of this Merger Agreement. (ii) The 500 shares of BANC ONE ARIZONA Common issued and outstanding immediately prior to the Effective Time shall continue to be issued and outstanding shares of common stock without par value of the Surviving Corporation. (iii) All of the shares of CAPITAL Common held by CAPITAL as treasury shares immediately prior to the Effective Time shall be cancelled and shall not represent capital stock of the Surviving Corporation and shall not be exchanged for shares of BANC ONE Common. (b) At the Effective Time, stock issued by reason of the Holding Company Merger shall be allocated to the shareholders of record of CAPITAL as of the Effective Time with such shares of BANC ONE Common to be equal to the number of shares of CAPITAL Common outstanding immediately prior to the Effective Time multiplied by the Exchange Rate as calculated pursuant to Section 7(a). Such allocation of BANC ONE Common for each share of CAPITAL Common held of record at the Effective Time made on the basis of the Exchange Rate is subject to limitations relative to fractional shares as set forth in Section 7(c) herein and to adjustments pursuant to the anti-dilution provisions of Sections 7(e) and 7(f). (c) No certificate for fractional shares of BANC ONE Common will be issued by BANC ONE in connection with the exchange contemplated by the Holding Company Merger, but in lieu thereof, any holder of CAPITAL Common shall, upon surrender of the certificate or certificates representing such CAPITAL Common, be paid cash, without interest, by BANC ONE for such fractional shares on the basis of the BANC ONE Average Price. (d) At the Effective Time, holders of certificates formerly representing shares of CAPITAL will tender such certificates to BANC ONE and subject to the provisions set forth above relating to fractional shares, BANC ONE, or Bank One, Indianapolis, N.A., as Exchange Agent for BANC ONE, will distribute to the holders of certificates formerly representing shares of CAPITAL Common in exchange for and upon surrender for cancellation by such holders of a certificate or certificates formerly representing shares of CAPITAL Common the certificate(s) for shares of BANC ONE Common in accordance with the Exchange Rate. Each certificate formerly representing CAPITAL Common (other than certificates representing shares of CAPITAL Common subject to the rights of dissenting shareholders) shall be deemed for all purposes to evidence the ownership of the number of shares of BANC ONE Common and cash for fractional shares into which such shares have been converted, except, however, and notwithstanding the foregoing, that, until such surrender of the certificate or certificates formerly representing shares of CAPITAL Common, the holder thereof shall not be entitled to receive any dividend or other payment or distribution payable to holders of BANC ONE Common. Upon such surrender (or in lieu of surrender other provisions reasonably satisfactory to BANC ONE as are made as set forth in the next following paragraph), there shall be paid to the person entitled thereto the aggregate amount of dividends or other payments or distributions (in each case without interest) which became payable after the Effective Time on the whole shares of BANC ONE Common represented by the certificates issued upon such surrender and exchange or in accordance with such other provisions, as the case may be. After the Effective Time, the holders of certificates formerly representing shares of CAPITAL Common shall cease to have rights with respect to such shares (except such rights, if any, as they may have as dissenting shareholders), and except as aforesaid, their sole rights shall be to exchange said certificates for shares of BANC ONE Common and cash for fractional shares in accordance with this Merger Agreement. Certificates representing shares of CAPITAL Common surrendered for cancellation by each shareholder entitled to exchange shares of CAPITAL Common for shares of BANC ONE Common by reason of the Holding Company Merger shall be appropriately endorsed or accompanied by such appropriate instruments of transfer as BANC ONE may reasonably require; provided, however, that if there be delivered to BANC ONE by any person who is unable to produce any such certificate formerly representing shares of CAPITAL Common for transfer (i) evidence to the reasonable satisfaction of BANC ONE that any such certificate has been lost, wrongfully taken or destroyed, (ii) such security or indemnity as reasonably may be requested by BANC ONE to save it harmless, and (iii) evidence to the reasonable satisfaction of BANC ONE that such person is the owner of the shares theretofore represented by each certificate claimed by him or her to be lost, wrongfully taken or destroyed and that he or she is the person who would be entitled to present each such certificate and to receive shares of BANC ONE Common pursuant to this Merger Agreement, then BANC ONE, in the absence of actual notice to it that any shares theretofore represented by any such certificate have been acquired by a bona fide purchaser, shall deliver to such person the certificate(s) representing shares of BANC ONE Common which such person would have been entitled to receive upon surrender of each such lost, wrongfully taken or destroyed certificate of CAPITAL Common. (e) Except for BANC ONE's Stock Split, which has been taken into account in this Merger Agreement, if prior to the Effective Time BANC ONE or CAPITAL shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its shares of common stock or declare a dividend or make a distribution on its common stock in any security convertible into its common stock, appropriate ratable adjustment or adjustments will be made in the Exchange Rate. (f) Except for BANC ONE's Stock Split, which has been taken into account in this Merger Agreement, if prior to the Effective Time BANC ONE or CAPITAL shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its shares of common stock in any security convertible into its common stock, and the "Ex-Dividend Date" (as herein defined) established for the shares being so divided or otherwise diluted (if an "Ex-Dividend Date" is established by the NYSE) or the "Record Date" (as herein defined) established for the shares being so divided or otherwise diluted (if an "Ex-Dividend Date" is not established by the NYSE), whichever is applicable, is subsequent to the Valuation Period (as defined in Section 7(a) of this Merger Agreement), appropriate ratable adjustment or adjustments will be made in the Exchange Rate. The "Ex-Dividend Date" is that date established by the NYSE for such distribution. The "Record Date" is that date established by resolution of the Board of Directors of the distributing party as the time as of which record ownership of the distributing securities will entitle the record owner(s) to such distribution. 8. Board of Directors; Employees; and Name Changes. The directors of BANC ONE ARIZONA immediately prior to the Effective Time shall continue to serve as the directors of the Surviving Corporation immediately following the Effective Time and until the next annual meeting of shareholders at which their respective successors are elected and qualified. The officers and employees of the Surviving Corporation immediately following the Effective Time shall be the officers and employees of BANC ONE ARIZONA immediately before the Effective Time with each such person to hold the same office in the Surviving Corporation as held by such person in BANC ONE ARIZONA. The directors, officers and employees of the Bank resulting from the Bank Merger shall be as set forth in the Bank Merger Agreement. CAPITAL will cooperate with BANC ONE in the procurement of requisite corporate and regulatory approvals and, if requested by BANC ONE, will use its reasonable best efforts to take such other steps as are appropriate and necessary to effect a change in the name of CCB to include the words "BANK ONE" so that such name change will become effective at the Effective Time. 9. Employee Benefits. At or following the Effective Time, all employee benefit programs of CAPITAL and CCB will be terminated, grandfathered or merged into BANC ONE benefit plans and programs and BANC ONE benefit plans and programs will be made available and applicable to the employees of CAPITAL and CCB following the Effective Time as described in and governed by the Benefits Letter Agreement dated September 15, 1993 between CAPITAL and BANC ONE (the "Benefits Agreement"). 10. Undertakings of the Parties. CAPITAL, BANC ONE ARIZONA and BANC ONE further agree as follows: (a) This Merger Agreement and the Plan of Merger shall be submitted to the shareholders of CAPITAL for approval at a meeting to be called and held in accordance with applicable law and the Certificate of Incorporation and By-laws of CAPITAL. Such shareholders' meeting will be scheduled to be held approximately 30 days following the mailing by CAPITAL of its proxy statement to its shareholders promptly following the effective date of the registration statement to be filed by BANC ONE with the Securities and Exchange Commission (the "SEC") as provided in Section 10(d). CAPITAL and BANC ONE will cooperate with each other in order to facilitate the preparation, filing and clearance of the registration statement and the proxy statement under Federal and State securities laws to be used with respect to such shareholders' meeting and the exchange of shares as contemplated by this Merger Agreement. (b) BANC ONE will promptly prepare and file an application (believed in good faith by BANC ONE to be substantially complete in form and substance) to the Board of Governors of the Federal Reserve System (the "Board") under appropriate provisions of Section 3 of the Bank Holding Company Act of 1956, as amended, and an application to the Commissioner of the Utah Department of Financial Institutions (the "Utah Commissioner") under appropriate provisions of the Utah Bank Holding Company Act for prior approval of the proposed acquisition of CAPITAL and the Subsidiaries by BANC ONE and/or BANC ONE ARIZONA. BANC ONE will cause BANK ONE UTAH to file an application with the Office of the Comptroller of the Currency (the "OCC") for prior approval of the Bank Merger. CAPITAL will furnish BANC ONE such information and documents and will cooperate as may be reasonably requested by BANC ONE in connection therewith. BANC ONE will use its reasonable best efforts to cause such applications to be approved by the Board, the OCC and the Utah Commissioner, respectively, and to obtain such other regulatory consents and approvals as may be necessary to facilitate the Holding Company Merger and the Bank Merger and will provide CAPITAL and its counsel with an opportunity to review drafts of all such applications and to comment on the portions of such applications that contain information about CAPITAL. BANC ONE will provide CAPITAL and its counsel with copies of the public portions of all such applications as filed, together with correspondence to or from the Board, the OCC and Utah Commissioner related thereto. (c) After receipt of the Board's prior approval of BANC ONE's and BANC ONE ARIZONA's acquisition of CAPITAL, after approval of the acquisition by the Utah Commissioner, after approval of the Bank Merger by the OCC and after the approval of the shareholders of CAPITAL, as provided in Section 10(a), BANC ONE shall designate the date as of which BANC ONE desires the Holding Company Merger to become effective and the Effective Time shall occur at the time and on the date so designated, subject to Section 25 of this Merger Agreement. In no event will the date designated by BANC ONE as the Effective Time be sooner than the day following the day on which all approvals of the Board, the OCC and the Utah Commissioner have been received and any required waiting periods with respect thereto have expired, nor will the date designated by BANC ONE as the Effective Time be later than 31 days following the date at which all approvals of the Board, the OCC and the Utah Commissioner have been received and any required waiting periods with respect thereto have expired. (d) BANC ONE will prepare and file with the SEC and use its reasonable best efforts to cause to become effective, a registration statement, including the related prospectus and proxy statement referred to in Section 10(a), above ("Proxy Statement"), and any required amendments thereto or supplements to any prospectus contained therein, relating to the exchange of BANC ONE Common contemplated by this Merger Agreement and/or the Bank Merger Agreement. Such registration statement will not cover resales by any persons who may be considered "underwriters" under Rule 145(c) of the Securities Act of 1933, as amended (the "1933 Act"). BANC ONE shall use its reasonable best efforts to have the shares of BANC ONE Common qualified or exempted from qualification under all applicable state securities laws prior to the mailing of the Proxy Statement. In the event that a stop order has been issued, or threatened, by the SEC, that suspends or would suspend the effectiveness of the registration statement, BANC ONE shall use its reasonable best efforts to promptly remove, or cause not to be issued, any such stop order. (e) BANC ONE and/or BANC ONE ARIZONA will assume and pay all expenses incident to the obtaining of the requisite regulatory consents and approvals. Without limiting the generality of the foregoing, the expenses to be assumed and paid by BANC ONE shall include (i) all legal and other expenses and taxes incurred by BANC ONE incident to the consummation of the Holding Company Merger contemplated by this Merger Agreement and the Bank Merger contemplated by the Bank Merger Agreement, (ii) all legal and other expenses incurred by BANC ONE incident to the preparation and filing of the applications to the Board, the OCC, the Utah Commissioner, and other requests for regulatory consents and approvals with the appropriate bank regulatory agencies as set forth in or contemplated by this Merger Agreement, and (iii) all legal and other expenses, if any, incurred in connection with the registration of BANC ONE Common under the Federal and State securities laws. The expenses to be assumed and paid by BANC ONE and/or BANC ONE ARIZONA shall not include any legal or other expenses incurred by CAPITAL in the negotiation of the Holding Company Merger, the Bank Merger, the examination or review of documents for its own benefit, in connection with its own corporate proceedings or to any investment banker or advisor for services rendered on its behalf. BANC ONE will pay the expenses of reproducing the Proxy Statement. CAPITAL shall be responsible for its legal and accounting fees associated with the Proxy Statement. Any fees and expenses assumed and paid by BANC ONE and/or BANC ONE ARIZONA pursuant to this Section 10(e), whether directly or indirectly incurred, shall not reduce or otherwise effect the Exchange Rate. (f) All information furnished by one party to another party in connection with this Merger Agreement (whether before or after the date of this Merger Agreement) and the transactions contemplated hereby which is regarded by such furnishing party as confidential (and is so designated not later than the time of delivery or the date of this Merger Agreement) will be kept confidential by such other party and will be used only in connection with this Merger Agreement and the transactions contemplated hereby, except to the extent that such information (i) is already known to such other party when received, (ii) thereafter becomes lawfully obtainable from other sources, otherwise than in violation of this paragraph or similar duties or provisions regarding confidentiality, or (iii) is, in the reasonable opinion of legal counsel for BANC ONE, required to be disclosed in any document filed with the SEC, the Board, the OCC, the Utah Commissioner or any other governmental agency or authority. The provisions of this Merger Agreement shall be in addition to the provisions of the Confidentiality Agreement dated June 16, 1993 between BANC ONE and CAPITAL and shall not be deemed to supersede nor to terminate said Confidentiality Agreement. (g) BANC ONE will provide CAPITAL and its counsel with copies of all filings made by BANC ONE with the SEC under the Securities Exchange Act of 1934, as amended, (the "1934 Act") and the 1933 Act and the respective rules and regulations of said Commission thereunder at the time such filings are made at any time prior to the Effective Time. (h) BANC ONE and BANC ONE ARIZONA will furnish to CAPITAL all information concerning BANC ONE and BANC ONE ARIZONA reasonably required by CAPITAL in connection with the preparation of proxy solicitation materials for use in soliciting proxies in connection with the meeting of CAPITAL's shareholders called for the purpose of voting on the Holding Company Merger and the meeting of CCB's shareholders called for the purpose of voting on the Bank Merger and will promptly advise CAPITAL if BANC ONE determines that any of such information is or becomes false or misleading in any material respect. CAPITAL will furnish to BANC ONE all information concerning CAPITAL and CCB reasonably required by BANC ONE in connection with BANC ONE's preparation of the registration statement (including the related prospectus) and any required amendments or supplements thereto, or in connection with other filings by BANC ONE relating to the registration of its shares and will promptly advise BANC ONE if CAPITAL determines that any such information is or becomes false or misleading in any material respect. (i) No press release or other public disclosure of matters related to this Merger Agreement or any of the transactions contemplated hereby shall be made by CAPITAL or BANC ONE unless the other party shall have provided its prior consent to the form and substance thereof; provided, however, that nothing herein shall be deemed to prohibit any party hereto from making any disclosure which its counsel deems necessary or advisable in order to fulfill such party's disclosure obligations imposed by law. (j) Prior to the Effective Time, BANC ONE will vote all the shares of BANC ONE ARIZONA to approve and adopt the proposal to merge BANC ONE ARIZONA and CAPITAL at a meeting of the shareholders of BANC ONE ARIZONA held for such purpose or by means of a unanimous written consent of BANC ONE ARIZONA shareholders adopted in lieu of a meeting to approve the Holding Company Merger and approve this Merger Agreement. (k) For not less than the two-year period immediately following the Effective Time, BANC ONE shall make available adequate current public information about itself as that terminology is used in and as required by Rule 144(c) of the SEC under the 1933 Act. Additionally, BANC ONE will publish financial results of at least 30 days of post-merger combined operations reflecting the Merger, in accordance with SEC Accounting Series Release No. 130, as amended by Release No. 135, not later than four months following the Effective Time. (l) Each of BANC ONE, BANC ONE ARIZONA and CAPITAL will use its reasonable best efforts to cause the Holding Company Merger to qualify for pooling-of-interests accounting treatment. (m) CAPITAL will use its reasonable best efforts to cause each person who, in the joint opinion of counsel for BANC ONE and CAPITAL is at the Effective Time or was, at the time of CAPITAL's shareholders' meeting referred to in Section 10(a) hereof, an "affiliate" of CAPITAL and/or CCB (as that term is used in Rules 144 and 145 promulgated by the SEC under the 1933 Act), to execute and deliver to BANC ONE the written undertakings in the form attached hereto as Exhibit D. (n) BANC ONE will initiate a pre-acquisition investigation and review of the books, records and facilities of CAPITAL and CCB and will complete such pre-acquisition investigation not later than 60 days following the date of this Merger Agreement. BANC ONE shall advise CAPITAL at the conclusion of such pre-acquisition investigation of all matters then known to BANC ONE which BANC ONE shall in good faith determine to be either (i) inconsistent in any material and adverse respect with any of the representations and warranties of CAPITAL or CCB contained in this Merger Agreement or in the Bank Merger Agreement or (ii), in the reasonable judgment of the Board of Directors of BANC ONE, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of CAPITAL and CCB on a consolidated basis or (y) to deviate materially and adversely from CAPITAL's audited financial statements for the year ended December 31, 1992. BANC ONE shall have the right to terminate this Merger Agreement as set forth in Section 25(c). (o) CAPITAL will initiate a pre-acquisition investigation and review of the books, records and facilities of BANC ONE and its subsidiaries and will complete such pre-acquisition investigation not later than 10 business days following the date of this Merger Agreement. CAPITAL shall advise BANC ONE at the conclusion of such pre-acquisition investigation of all matters then known to CAPITAL which CAPITAL shall in good faith determine to be either (i) inconsistent in any material and adverse respect with any of the representations and warranties of BANC ONE contained in this Merger Agreement or (ii) in the reasonable judgment of the Board of Directors of CAPITAL, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of BANC ONE and its subsidiaries on a consolidated basis or (y) to deviate materially and adversely from BANC ONE's audited financial statements for the year ended December 31, 1992. CAPITAL shall have the right to terminate this Merger Agreement as set forth in Section 25(d). (p) In addition to BANC ONE's pre-acquisition investigation of CAPITAL and CCB and CAPITAL's pre-acquisition investigation of BANC ONE and its subsidiaries, BANC ONE and CAPITAL shall each provide the other with adequate opportunity to conduct such further reviews and examinations of the business, properties and conditions (financial and otherwise) of the other as BANC ONE and CAPITAL, respectively, shall deem prudent, provided that such investigations shall not interfere unreasonably with the normal operations of the party being reviewed. (q) BANC ONE will use its reasonable best efforts to cause the shares of BANC ONE Common to be issued to the shareholders of CAPITAL and/or CCB pursuant to this Merger Agreement or the Bank Merger Agreement to be listed on the NYSE as of the Effective Time. (r) BANC ONE ARIZONA will cause appropriate officers of BANK ONE UTAH to execute the Bank Merger Agreement or a document similar to the Bank Merger Agreement when and as requested by BANC ONE. BANC ONE ARIZONA will vote all the shares of BANK ONE UTAH to ratify and confirm the Bank Merger at a meeting of the shareholders of BANK ONE UTAH held to ratify and confirm the Bank Merger or by means of a unanimous written consent of BANK ONE UTAH shareholders adopted in lieu of a meeting to approve the Bank Merger and approve the Bank Merger Agreement. (s) CAPITAL will cause appropriate officers of the Bank to execute the Bank Merger Agreement or a document similar to the Bank Merger Agreement when and as requested by BANC ONE. CAPITAL will vote all its shares of the Bank to ratify and confirm the Bank Merger at a meeting of the shareholders of the Bank to ratify and confirm the Bank Merger Agreement. (t) Notwithstanding anything in this Merger Agreement to the contrary, BANC ONE may, at its sole discretion, elect not to consummate the Bank Merger or may elect to modify the terms of the Bank Merger Agreement in any respect. In the event BANC ONE for any reason does not consummate the Bank Merger or modifies the terms of the Bank Merger Agreement, the parties hereto shall nonetheless consummate the Holding Company Merger upon satisfaction or waiver of all conditions thereto in this Merger Agreement. In the event that BANC ONE modifies the terms of the Bank Merger Agreement, BANC ONE shall indemnify and hold harmless the directors of the Bank against all claims and causes of action attributable to and arising out of such modifications to the Bank Merger Agreement. Notwithstanding the foregoing, BANC ONE and BANC ONE ARIZONA presently anticipate effecting the Bank Merger and are not aware of any conditions suggesting that the Bank Merger might not be consummated. (u) As soon as reasonably practicable, CAPITAL shall take appropriate action to cause all the issued and outstanding CCB Options to be exercised and converted into and exchanged for not more than 7,917 shares of CCB Common so that at the time the Proxy Statement is mailed to CCB's shareholders, CCB's capital stock shall consist of 200,000 authorized shares of CCB Common, 140,767 of which shall be issued and outstanding, including 114,768 of which issued and outstanding shares shall be owned by CAPITAL. CAPITAL shall also, prior to the Effective Time, cause CCB to redeem all 24,000 issued and outstanding shares of CCB Preferred, at the redemption price of $50.00 per share plus accrued and unpaid dividends thereon to the date of redemption. 11. Dissenting Shareholders. Shareholders of CAPITAL Common who do not vote their shares in favor of the Holding Company Merger and otherwise perfect applicable dissenters' rights will be entitled to dissenters or appraisal rights, if any, pursuant to applicable provisions of the Utah BCA. 12. Tax Opinion. BANC ONE and CAPITAL shall use their respective best efforts to obtain from Gerrish & McCreary, P.C., Memphis, Tennessee, a written opinion addressed to CAPITAL, its shareholders and BANC ONE, that, based upon the Internal Revenue Code of 1986, as amended (the "Code"), the regulations thereunder, and rulings issued by the Internal Revenue Service in transactions similar to those contemplated by this Merger Agreement, for Federal income tax purposes: (a) The statutory merger of CAPITAL with and into BANC ONE ARIZONA will constitute a reorganization within the meaning of Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code; (b) No gain or loss will be recognized by BANC ONE or CAPITAL as a consequence of the transactions herein contemplated; (c) No gain or loss will be recognized to the shareholders of CAPITAL on the exchange of their shares of CAPITAL Common for shares of BANC ONE Common (disregarding for this purpose any cash received pursuant to the exercise of statutory dissenters' rights or for fractional share interests to which they may be entitled); (d) The Federal income tax basis of the BANC ONE Common (including fractional share interests to which they may be entitled) received by the shareholders of CAPITAL Common for their shares of CAPITAL Common will be the same as the Federal income tax basis of the CAPITAL Common surrendered in exchange therefor; and (e) The holding period of the BANC ONE Common received by a shareholder of CAPITAL will include the period for which the CAPITAL Common exchanged therefor was held, provided the exchanged CAPITAL Common was held as a capital asset by such shareholder on the date of the exchange. The Bank Merger is not expected to qualify as a tax-free transaction and the tax opinion of Gerrish & McCreary, P.C. will not address the Bank Merger. 13. Representations and Warranties of BANC ONE. BANC ONE represents and warrants to CAPITAL that, except as set forth in BANC ONE's disclosure letter to CAPITAL dated September 15, 1993 and delivered to CAPITAL not later than the time of the execution of this Merger Agreement (the "BANC ONE Disclosure Letter"), and except as otherwise indicated below: (a) BANC ONE is a corporation duly organized and validly existing in good standing under the laws of the State of Ohio, is a registered bank holding company under the Bank Holding Company Act of 1956, as amended, and is qualified to do business and is in good standing in the State of Ohio, together with all other jurisdictions where it is both required to so qualify and where the failure to so qualify would have a material adverse effect on the business, operations, financial condition or results of operations of such party and its subsidiaries, taken as a whole, or on the ability of such party to consummate the transactions contemplated hereby, and BANC ONE has full power and authority (including all licenses, franchises, permits and other governmental authorizations which are legally required) to engage in the businesses and activities now conducted by it and its subsidiaries. BANC ONE is not subject to any formal or informal agreement or understanding with, nor is it subject to any order of, any bank regulatory authority restricting or prohibiting or attempting to restrict or prohibit any activities or conduct of BANC ONE. As of June 30, 1993, after giving effect to the Stock Split, the authorized capital stock of BANC ONE consisted of (i) 600,000,000 shares of BANC ONE Common Stock without par value, of which a total of 341,065,620 shares were issued and outstanding and none of which were shares held by BANC ONE as treasury stock and (ii) 35,000,000 shares of preferred stock without par value, of which 5,000,000 shares were issued and outstanding as Series C $3.50 Cumulative Convertible Preferred Stock. All of the issued and outstanding shares of BANC ONE's capital stock are duly authorized, validly issued, fully paid, nonassessable and subject to no pre-emptive rights. Subject only to obtaining the required regulatory approvals, BANC ONE is, and at all times after the date of this Merger Agreement to and including the Effective Time will be, authorized to effect the Holding Company Merger under applicable law. (b) BANC ONE has furnished to CAPITAL copies of the following financial statements relating to BANC ONE and its consolidated subsidiaries: (i) the audited Consolidated Balance Sheets of BANC ONE as of December 31, 1992 and 1991 and the Consolidated Statements of Income, Shareholders' Equity and Cash Flows for the years then ended, together with the notes thereto, as audited by Coopers & Lybrand, independent auditors together with the notes thereto; and (ii) the unaudited Consolidated Balance Sheet of BANC ONE as at June 30, 1993 and the unaudited Consolidated Statements of Income and Shareholders' Equity for the period then ended, together with the notes thereto, which unaudited financial statements give effect to the Stock Split. Each of the aforementioned financial statements present fairly, in accordance with generally accepted accounting principles (applied on a consistent basis except as disclosed in the footnotes thereto), the consolidated financial position and results of operations of BANC ONE as of the dates and for the periods therein set forth. Such financial statements do not, as of the dates thereof, include any material asset or omit any material liability, absolute or contingent, or other fact, the inclusion or omission of which renders such financial statements, in light of the circumstances under which they were made, misleading in any material respect. Since June 30, 1993, there has not been any change in the financial condition, results of operations or business of BANC ONE and its subsidiaries that has had a material adverse effect on the financial condition or results of operations of such party and its subsidiaries, taken as a whole, or on the ability of such party to consummate the transaction contemplated hereby (a "Material Adverse Effect"). Since June 30, 1993, BANC ONE has not issued additional shares of BANC ONE Common, not including the approximately 68,213,124 shares issued or to be issued by reason of the Stock Split and which shares are reflected in the number of shares of BANC ONE Common as of June 30, 1993, as set forth above. (c) The Boards of Directors of BANC ONE and BANC ONE ARIZONA have duly authorized the execution and delivery of this Merger Agreement and approved the Holding Company Merger as contemplated by said Merger Agreement. No authorization of this Merger Agreement or of the transactions hereby contemplated is required by the shareholders of BANC ONE. BANC ONE and BANC ONE ARIZONA have all requisite power and authority to enter into this Merger Agreement and, after its vote of the shares of BANC ONE ARIZONA in favor of the Holding Company Merger as contemplated by Section 10(j), BANC ONE and BANC ONE ARIZONA will have the authority to consummate the transactions contemplated hereby. This Merger Agreement constitutes the valid and legally binding and enforceable obligation of each of BANC ONE and BANC ONE ARIZONA and this Merger Agreement and the consummation of the Holding Company Merger have been duly authorized and approved on behalf of BANC ONE and BANC ONE ARIZONA by all requisite corporate action. Provided the required approvals are obtained from the Board, the OCC and the Utah Commissioner, neither the execution and delivery of this Merger Agreement nor the consummation of the Holding Company Merger will conflict with, result in the breach of, constitute a default under or accelerate the performance provided by the terms of any law, or any rule or regulation of any governmental agency or authority or any judgment, order or decree of any court, bank regulatory agency or other governmental agency to which BANC ONE or BANC ONE ARIZONA is subject, any contract, agreement or instrument to which BANC ONE or BANC ONE ARIZONA is a party or by which BANC ONE or BANC ONE ARIZONA is bound or committed, or the Articles of Incorporation or Regulations of BANC ONE or the Articles of Incorporation or By-laws of BANC ONE ARIZONA, or constitute an event which with the lapse of time or action by a third party, could, to the best of BANC ONE's knowledge, result in the default under any of the foregoing or result in the creation of any lien, charge or encumbrance upon any of the assets or properties of BANC ONE or BANC ONE ARIZONA or upon any of the stock of BANC ONE or BANC ONE ARIZONA or adversely affect the ability of BANC ONE to consummate the transactions contemplated hereby, except, in the case of contracts, agreements or instruments, such defaults, conflicts or breaches which either (i) will be cured or waived prior to the Effective Time or (ii) if not so cured or waived would not, in the aggregate, have a Material Adverse Effect. (d) The reserve for possible loan and lease losses shown on the June 30, 1993 Consolidated Balance Sheet of BANC ONE and its subsidiaries is adequate in all material respects under the requirements of generally accepted accounting principles to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including, without limitation, accrued interest receivable) as of June 30, 1993. (e) Except as disclosed in the financial statements referred to in Section 13(b), there is no litigation, action, suit, investigation or proceeding pending or, to the best of the knowledge after due inquiry of BANC ONE and its executive officers, overtly threatened, against or affecting BANC ONE or any of its subsidiaries or involving any of their respective properties or assets, at law or in equity, before any federal, state, municipal, local or other governmental authority, which is reasonably likely to be resolved adversely to the interest of BANC ONE or its subsidiaries and, if so resolved, would have a Material Adverse Effect or materially impair its ability, or that of BANC ONE ARIZONA, to perform under this Merger Agreement, and to the best of the knowledge and belief after due inquiry of BANC ONE and its executive officers, no one has reasonable or valid grounds on which it reasonably can be expected that anyone will assert or initiate any such litigation, action, suit, investigation or proceeding against BANC ONE or any of its subsidiaries based upon the wrongful action or inaction of BANC ONE or any of its subsidiaries or any of their respective officers, directors or employees. (f) At the Effective Time and on such subsequent dates when the former shareholders of CAPITAL and CCB surrender their CAPITAL share certificates or CCB share certificates for cancellation, the shares of BANC ONE Common to be exchanged with former shareholders of CAPITAL and CCB will have been duly authorized and validly issued by BANC ONE and will be fully paid and nonassessable and subject to no pre-emptive rights. (g) BANC ONE and each of its subsidiaries have good and marketable title to all their respective assets and properties, whether real or personal, tangible or intangible, including without limitation the capital stock of its subsidiaries and all other assets and properties reflected in BANC ONE's Consolidated Balance Sheet as of June 30, 1993 or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of for fair value in the ordinary course of business since June 30, 1993). Such assets and properties are subject to no liens, mortgages, security interests, encumbrances, pledges or charges of any kind, except (i) as noted in said Consolidated Balance Sheet or the notes thereto; (ii) statutory liens for taxes not yet delinquent; (iii) landlord's liens; and (iv) minor defects and irregularities in title and encumbrances which do not materially impair the use thereof for the purposes for which they are held; and such liens, mortgages, security interests, encumbrances and charges do not, in the aggregate, have a Material Adverse Effect. BANC ONE and its subsidiaries as lessees have the unqualified right under valid and subsisting leases to occupy, use, possess and control all property leased by BANC ONE and its subsidiaries. (h) To the best of the knowledge after due inquiry of BANC ONE and its executive officers, BANC ONE and its subsidiaries have complied with all laws, regulations and orders applicable to them and to the conduct of their businesses, including without limitation, all statutes, rules and regulations pertaining to the conduct of banking activities except for violations which together with any penalty which results therefrom has not had and will not have a Material Adverse Effect. Neither BANC ONE nor any of its subsidiaries is in default under, and no event has occurred which, to the best of BANC ONE's knowledge, after due inquiry, is likely to result in the default under the terms of any judgment, decree, order, writ, rule or regulation of any governmental authority or court, whether federal, state or local and whether at law or in equity, in each case where the default has had or is likely to have a Material Adverse Effect. (i) BANC ONE and BANC ONE ARIZONA have not incurred and will not incur directly or indirectly any liability for brokerage, finders', agents' or investment bankers' fees or commissions in connection with this Merger Agreement or the transactions contemplated hereby. (j) Each pension, stock bonus or purchase, profit-sharing, retirement, health and welfare plan maintained by or covering employees of BANC ONE or any subsidiary of BANC ONE other than a multiemployer plan (for purposes of this paragraph hereinafter referred to collectively as the "Plans") which purports to be a qualified plan under Section 401(a) of the Code is so qualified. All of the Plans which constitute employee pension benefit or employee welfare benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), have been maintained in compliance in all material respects with the applicable requirements of ERISA. All material notices, reports and other filings required under applicable law to be given or made to or with any governmental agency with respect to the Plans have been timely filed or delivered. BANC ONE has no knowledge of any circumstances which would adversely affect the qualification of the Plans or their compliance with the applicable requirements of ERISA, would result or have resulted in liability under Title IV of ERISA or of any "reportable event" (as such term is defined in Section 4043(b) of ERISA) or any "prohibited transaction" (as such term is defined in Section 406 of ERISA and Section 4975(c) of the Code) which has occurred since the date on which said sections became applicable to the Plans and which could reasonably be expected to result in any material liability of BANC ONE or any subsidiary to the Pension Benefit Guaranty Corporation (the "PBGC"), the Department of Treasury, the Department of Labor or any multiemployer plan. Those Plans which are defined benefit plans within the meaning of ERISA meet the minimum funding standards set forth in the Code and ERISA and the assets of such Plans equal or exceed the present value of accrued benefits on a termination basis under such Plans as of the most recent plan valuation date. There are no pending or threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been asserted or instituted against the Plans, any fiduciaries thereof with respect to their duties to the Plans or the assets of any of the trusts under any of the Plans which could reasonably be expected to result in any material liability of BANC ONE or any subsidiary to the PBGC, Department of Treasury, Department of Labor or any multiemployer plan. (k) BANC ONE and/or its subsidiaries have duly filed all federal, state, county and local income, franchise, bank, excise, real and personal property and other tax returns and reports (including, but not limited to, those relating to social security, withholding, unemployment insurance, and occupation, sales and use taxes and those filed on a consolidated, combined or unitary basis) required to have been filed by BANC ONE or its subsidiaries up to the date hereof. All of the foregoing returns are true and correct in all material respects, and BANC ONE and its subsidiaries have paid or, prior to the Effective Time, will pay all taxes, interest, additions to tax, and penalties shown on such returns or reports as being due or (except to the extent the same are contested in good faith and, if material, summarized in the BANC ONE Disclosure Letter) claimed to be due to any federal, state, county, local or other taxing authority, and there is, and at the Effective Time will be, no basis for any additional claim or assessment which might materially and adversely affect BANC ONE and its subsidiaries, except for those being contested in good faith and summarized in the BANC ONE Disclosure Letter. BANC ONE and its subsidiaries have paid or made adequate provision in their financial statements or on their books and records for all taxes payable in respect of all periods ending on or before the date hereof. BANC ONE and its subsidiaries have, or at the Effective Time will have, no liability for any taxes, interest, additions to tax, or penalties of any nature whatsoever, except for those taxes which may have arisen up to the Effective Time in the ordinary course of business and are properly accrued on the books of BANC ONE and its subsidiaries as of the Effective Time or are being contested in good faith and have, if material, been summarized in the BANC ONE Disclosure Letter. (l) BANC ONE and its subsidiaries have in effect insurance coverage with reputable insurers, which in respect of amounts, premiums, types and risks insured, constitutes reasonably adequate coverage against all risks customarily insured against by bank holding companies and their subsidiaries comparable in size and operations to BANC ONE and its subsidiaries. (m) Neither the Proxy Statement nor the related registration statement nor any amendment or supplement thereto that is filed with the SEC in connection with the transactions contemplated hereby (except for any information which has been or shall be supplied by CAPITAL for inclusion in the Proxy Statement and registration statement and is so included as so supplied) shall contain (in the case of information relating to the Proxy Statement, at the time it is mailed and in the case of information relating to the registration statement at the time it becomes effective and at the time of CAPITAL's and CCB's respective shareholders' meetings) any untrue statement of a material fact or shall omit to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. The registration statement and any amendments or supplements thereto that are filed with the SEC in connection with the transactions contemplated hereby will comply as to form in all material respects with the provisions of the 1933 Act and the rules and regulations promulgated thereunder. (n) No employee of BANC ONE or any of its subsidiaries is represented, for purposes of collective bargaining, by a labor organization of any type. BANC ONE is unaware of any efforts during the past five years to unionize or organize any employees of BANC ONE or any of its subsidiaries, and no claim related to such employees under the Fair Labor Standards Act, National Labor Relations Act, Civil Rights Act of 1964, Walsh-Healy Act, Davis Bacon Act, Civil Rights Act of 1866, Age Discrimination in Employment Act, Equal Pay Act of 1963, Executive Order No. 11246, Federal Unemployment Tax Act, Vietnam Era Veterans Readjustment Act, Occupational Safety and Health Act, or any state or local employment related law, order, ordinance or regulation, no unfair labor practice, discrimination or wage-and-hour claim is pending or, to the best of BANC ONE's knowledge, threatened against BANC ONE or any of its subsidiaries which claim has had or is reasonably likely to have a Material Adverse Effect. (o) To the actual knowledge of BANC ONE and its executive officers: (i) with respect to any contaminant, pollutant, hazardous substance, hazardous waste, hazardous pollutant, toxic pollutant, toxic waste or toxic substance ("Contaminant"), there are no material actions, proceedings or investigations pending or threatened before any federal or state environmental regulatory body, or before any federal or state court, alleging non-compliance with or liability in connection with, by BANC ONE or any of its subsidiaries, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq. ("RCRA"), the Clean Water Act, 33 U.S.C. Sections 1251 et seq. ("CWA"), or the Clean Air Act, 42 U.S.C. Sections 7401 et seq. ("CAA"), as each is amended from time to time, or any other federal, state, local or municipal statute, ordinance or regulation, or order, ruling or other decision of any court, administrative agency or other governmental authority relating to health or safety or environmental protection (such statutes, ordinances, regulations, orders, rulings and decisions, together, "Environmental Laws"); (ii) there is no reasonable basis for the institution of any material action, proceeding or investigation against BANC ONE or any of its subsidiaries under any Environmental Law; (iii) neither BANC ONE nor any of its subsidiaries is responsible in any material respect under any Environmental Law for any release by any person at or in the vicinity of real property of any Contaminant, caused by the spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of any such hazardous substance into the environment (collectively "Release"); (iv) neither BANC ONE nor any of its subsidiaries is responsible for any material costs of any response action required by virtue of any Release of any Contaminant into the environment including, without limitation, costs arising from investigation, removal or remediation of Contaminants, security fencing, alternative water supplies, temporary evacuation and housing and other emergency assistance undertaken by any environmental regulatory body or any other person; (v) BANC ONE and each of its subsidiaries are, in all material respects, in compliance with all applicable Environmental Laws; and (vi) no real property owned or used by BANC ONE or any of its subsidiaries contains any Contaminant including, without limitation, any asbestos, PCBs or petroleum products or byproducts in any form, the presence, location or condition of which (a) could require remediation or other corrective action pursuant to any Environmental Law in any material respect, or (b) otherwise would pose any significant health or safety risk unless remedial measures were taken. (p) BANC ONE and/or its subsidiaries (i) have surveyed the facilities where BANC ONE and its subsidiaries conduct their businesses including, without limitation, automatic teller machines (collectively, the "BANC ONE Facilities") for compliance with the Americans with Disabilities Act and the regulations issued thereunder (collectively, "ADA"); (ii) have developed action plans to remove architectural barriers including communication barriers that are structural in nature from existing BANC ONE Facilities (collectively, the "BANC ONE Barriers") when such removal is "readily achievable," as that term is defined in ADA; (iii) will finalize action plans for automatic teller machines ("ATMs") upon clarification by the Architectural and Transportation Barriers Compliance Board ("ATBCB"); (iv) have developed or will develop schedules for BANC ONE Barrier removal from BANC ONE Facilities in such action plans so that BANC ONE Barrier removal was completed on January 26, 1992 or will be completed as soon as practicable; and (v) have removed all BANC ONE Barriers in BANC ONE Facilities or will cause all BANC ONE Barriers to be removed in accordance with such action plans. All "alterations" (as such term is defined in ADA) to BANC ONE Facilities undertaken after January 26, 1992 comply with ADA and the ATBCB Accessibility Guidelines for Buildings and Facilities ("ADAAG"). Effective January 26, 1992, all plans and designs for new construction to be utilized by BANC ONE and its subsidiaries comply with ADA and ADAAG. To the best of BANC ONE's knowledge, after due inquiry, no material investigations, proceedings, or complaints, formal or informal, are pending or threatened against BANC ONE and/or its subsidiaries in connection with BANC ONE Facilities under ADA, ADAAG, or any other state or federal law concerning accessibility for individuals with disabilities. (q) The statements made in the BANC ONE Disclosure Letter and any attachments thereto shall be deemed to constitute representations and warranties of BANC ONE under this Merger Agreement to the same extent as if herein set forth in full. Anything disclosed in the BANC ONE Disclosure Letter or the attachments thereto shall be considered to have been disclosed for purposes of all representations, warranties and covenants under this Merger Agreement. (r) BANC ONE has filed all reports, statements, forms and documents with the SEC that it was required to file since December 31, 1988 (the "SEC Filings"), all of which have complied in all material respects with all applicable requirements of the 1933 Act and the 1934 Act. As of their respective dates, each such SEC Filing did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 14. Representations and Warranties of BANC ONE ARIZONA. BANC ONE ARIZONA represents and warrants to CAPITAL that, except as set forth in the BANC ONE Disclosure Letter, and except as otherwise indicated below: (a) BANC ONE ARIZONA is a corporation duly organized and validly existing under the laws of the State of Arizona, is a registered bank holding company under the Bank Holding Company Act of 1956, as amended, and is qualified to do business and is in good standing in the State of Arizona together with all other jurisdictions where it is both required to so qualify and the failure to so qualify would have a Material Adverse Effect, and BANC ONE ARIZONA has full power and authority (including all licenses, franchises, permits and other governmental authorizations which are legally required) to engage in the business and activities now conducted by it and its subsidiaries. The authorized capital stock of BANC ONE ARIZONA is, and at the Effective Time will be, 500 shares of common stock, no par value, of which 500 shares are issued and outstanding, all of which are owned by BANC ONE free and clear of all liens, security interests or other encumbrances. (b) The Board of Directors of BANC ONE ARIZONA has authorized execution of this Merger Agreement and approved the acquisition of CAPITAL as contemplated by said Merger Agreement. BANC ONE ARIZONA has all requisite power and authority to enter into this Merger Agreement and, after approval of the Holding Company Merger by BANC ONE, the sole shareholder of BANC ONE ARIZONA, BANC ONE ARIZONA will have the authority to consummate the transactions contemplated hereby. Subject to shareholder approval, this Merger Agreement constitutes the valid and legally binding obligation of BANC ONE ARIZONA and this Merger Agreement and the consummation hereof have been duly authorized and approved on behalf of BANC ONE ARIZONA by all requisite corporate action. Subject to shareholder approval and provided the required approvals are obtained from the Board, the OCC and the Utah Commissioner, neither the execution and delivery of this Merger Agreement nor the consummation of the Holding Company Merger will conflict with, result in the breach of, constitute a default under or accelerate the performance provided by the terms of any law, or any rule or regulation of any governmental agency or authority or any judgment, order or decree of any court, bank regulatory agency or other governmental agency to which BANC ONE ARIZONA may be subject, any contract, agreement or instrument to which BANC ONE ARIZONA is a party or by which BANC ONE ARIZONA is bound or committed, or the Articles of Incorporation or By-laws of BANC ONE ARIZONA, or constitute an event which with the lapse of time or action by a third party, could to the best of BANC ONE ARIZONA' knowledge, result in the default under any of the foregoing or result in the creation of any lien, charge or encumbrance upon any of the assets or properties of BANC ONE ARIZONA or adversely affect the ability of BANC ONE ARIZONA to consummate the transactions contemplated hereby. 15. Representations and Warranties of CAPITAL. CAPITAL represents and warrants to BANC ONE that, except as set forth in CAPITAL's disclosure letter to BANC ONE dated September , 1993 and delivered to BANC ONE not later than the time of the execution of this Merger Agreement (the "CAPITAL Disclosure Letter"), and except as otherwise indicated below: (a) CAPITAL is a corporation duly organized and validly existing in good standing under the laws of the State of Utah, is a registered bank holding company under the Bank Holding Company Act of 1956, as amended, and is qualified to do business and is in good standing in all jurisdictions where it is both required to so qualify and where the failure to so qualify would have a Material Adverse Effect, and CAPITAL has full power and authority (including all licenses, franchises, permits and other governmental authorizations which are legally required) to engage in the businesses and activities now conducted by it and the Subsidiaries. CAPITAL is not subject to any formal or informal agreement or understanding with, nor is it subject to any order of, any bank regulatory authority restricting or prohibiting or attempting to restrict or prohibit any activities or conduct of CAPITAL. As of June 30, 1993 and as of the date of this Merger Agreement, the authorized capital stock of CAPITAL consists of 200,000 shares of CAPITAL Common, 150,345 of which shares are issued and outstanding, 2,805 of which are treasury shares owned by CAPITAL. All of the issued and outstanding shares of CAPITAL Common are duly authorized, validly issued, fully paid and nonassessable and none are issued in violation of the pre-emptive rights of any shareholder. As of the date of this Merger Agreement, there are no outstanding options, warrants or commitments of any kind related to CAPITAL's capital stock. (b) CAPITAL has furnished to BANC ONE copies of the following financial statements relating to CAPITAL and CCB on a consolidated basis: (i) the audited Consolidated Balance Sheet of CAPITAL as of December 31, 1992 and 1991, and the Consolidated Statements of Income, Stockholders' Equity and Cash Flows for the years then ended, together with the notes thereto, as audited by [KPMG Peat Marwick], Certified Public Accountants; and (ii) the unaudited Consolidated Balance Sheet of CAPITAL as at June 30, 1993 and the unaudited Consolidated Statements of Income and Cash Flows for the period then ended, together with the notes thereto. Each of the aforementioned financial statements presents fairly, in accordance with generally accepted accounting principles (applied on a consistent basis except as disclosed in the footnotes thereto), the consolidated financial position and results of operations of CAPITAL as of the dates and for the periods therein set forth. Such financial statements do not, as of the dates thereof, include any material asset or omit any material liability, absolute or contingent, or other fact, the inclusion or omission of which renders such financial statements, in light of the circumstances under which they were made, misleading in any material respect. Since June 30, 1993, there has not been any change in the financial condition, results of operations or business of CAPITAL and CCB that has had a Material Adverse Effect. (c) The Board of Directors of CAPITAL has duly authorized the execution and delivery of this Merger Agreement and approved the Holding Company Merger as contemplated by the Merger Agreement and will recommended it to the CAPITAL shareholders for adoption. Subject to the approval by the shareholders of CAPITAL and the contemplated regulatory approvals, this Merger Agreement constitutes the valid, legally binding and enforceable obligation of CAPITAL and CAPITAL has all requisite power and authority to enter into this Merger Agreement and CAPITAL has the authority to consummate the transactions contemplated hereby so that, provided all required corporate and regulatory approvals are obtained, neither the execution and delivery of this Merger Agreement nor the consummation of the Holding Company Merger will conflict with, result in the breach of, constitute a default under or accelerate the performance provided by the terms of any law, or any rule or regulation of any governmental agency or authority or any judgment, order or decree of any court, bank regulatory agency or other governmental agency to which CAPITAL is subject, any contract, agreement or instrument to which CAPITAL is a party or by which CAPITAL is bound or committed, or the Certificate of Incorporation or By-laws of CAPITAL, or constitute an event which with the lapse of time or action by a third party, could, to the best of CAPITAL's knowledge, result in the default under any of the foregoing or result in the creation of any lien, charge or encumbrance upon any of the assets or properties of CAPITAL or upon any of CAPITAL's capital stock; except, in the case of contracts, agreements or instruments, such defaults, conflicts or breaches which either (i) will be cured or waived prior to the Effective Time or (ii) if not so cured or waived would not, in the aggregate, have a Material Adverse Effect. (d) The reserve for possible loan and lease losses shown on the June 30, 1993 Consolidated Balance Sheet of CAPITAL and CCB is adequate in all material respects under the requirements of generally accepted accounting principles to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including, without limitation, accrued interest receivable) as of June 30, 1993. (e) Except as disclosed in the financial statements referred to in Section 15(b), there is no litigation, action, suit, investigation or proceeding pending or, to the best of the knowledge after due inquiry of CAPITAL and its executive officers, overtly threatened, against or affecting CAPITAL or CCB or involving any of their respective properties or assets, at law or in equity, before any federal, state, municipal, local or other governmental authority which is reasonably likely to be resolved adversely to the interest of CAPITAL or CCB and, if so resolved, would have a Material Adverse Effect, and to the best of the knowledge and belief after due inquiry of CAPITAL and its executive officers, no one has reasonable or valid grounds on which it reasonably can be expected that anyone will assert or initiate any such litigation, action, suit, investigation or proceeding against CAPITAL or CCB based upon the wrongful action or inaction of CAPITAL or CCB or any of their respective officers, directors or employees. (f) CAPITAL and CCB have good and marketable title to all their respective assets and properties, whether real or personal, tangible or intangible, including without limitation the capital stock of CCB owned by CAPITAL and all other assets and properties reflected in CAPITAL's Consolidated Balance Sheet as of June 30, 1993 or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of for fair value in the ordinary course of business since June 30, 1993). Such assets and properties are subject to no liens, mortgages, security interests, encumbrances, pledges or charges of any kind, except (i) as reflected in said Balance Sheet or the notes thereto; (ii) statutory liens for taxes not yet delinquent; (iii) landlord's liens; and (iv) minor defects and irregularities in title and encumbrances which do not materially impair the use thereof for the purposes for which they are held; and such liens, mortgages, security interests, encumbrances and charges do not, in the aggregate, have a Material Adverse Effect. CAPITAL and CCB as lessee have the right under valid and subsisting leases to occupy, use, possess and control all property leased by CAPITAL and CCB. At the Effective Time all limitations affecting such properties will not, in the aggregate, have a Material Adverse Effect. (g) To the best of the knowledge after due inquiry of CAPITAL and its executive officers, CAPITAL and CCB have complied with all laws, regulations and orders applicable to them and to the conduct of their businesses, including without limitation, all statutes, rules and regulations pertaining to the conduct of banking activities except for violations which together with any penalty which results therefrom has not had and will not have a Material Adverse Effect. Neither CAPITAL nor CCB is in default under, and no event has occurred which, to the best of CAPITAL's knowledge, after due inquiry, is likely to result in the default under the terms of any judgment, decree, order, writ, rule or regulation of any governmental authority or court, whether federal, state or local and whether at law or in equity, in each case where the default has had or is likely to have a Material Adverse Effect. (h) CAPITAL has not, since June 30, 1993 to the date hereof, (i) sold or issued any corporate debt securities or sold, issued, reissued or increased its shares of its capital stock; (ii) granted any option for the purchase of capital stock; (iii) declared or set aside or paid any dividend or other distribution in respect of its capital stock, except as permitted pursuant to Section 16(a) hereof or as incurred in carrying out the transactions contemplated by this Merger Agreement, or directly or indirectly, purchased, redeemed or otherwise acquired any shares of such stock; (iv) incurred any obligation or liability (absolute or contingent) except obligations or liabilities incurred in the ordinary course of business, or mortgaged, pledged or subjected to lien or encumbrance (other than landlord's liens and statutory liens for taxes not yet delinquent and banking transactions conducted in the ordinary course of business) on any of its material assets or properties; (v) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability (absolute or contingent), other than current liabilities included in CAPITAL's financial statements as of June 30, 1993, current liabilities incurred since the date thereof in the ordinary course of business and liabilities incurred in carrying out the transactions contemplated by this Merger Agreement; (vi) sold, exchanged or otherwise disposed of any material capital assets; (vii) made any extraordinary officers' salary increase or wage increase, entered into any employment contract with any officer or salaried employee or instituted any employee welfare, bonus, stock option, profit-sharing, retirement or similar plan or arrangement; (viii) suffered any damage, destruction or loss, whether or not covered by insurance, that has had a Material Adverse Effect or waived any rights of value which, in the aggregate, have had a Material Adverse Effect; (ix) entered or agreed to enter into any agreement or arrangement granting any preferential right to purchase any of its material assets, properties or rights or requiring the consent of any party to the transfer and assignment of any such material assets, properties or rights; or (x) entered into any other material transaction (other than in the ordinary course of business) except as expressly contemplated by this Merger Agreement. (i) Except as set forth in the CAPITAL Document List (the "CAPITAL Document List") attached to the CAPITAL Disclosure Letter, neither CAPITAL nor CCB is a party to or bound by any written or oral (i) employment or consulting contract which is not terminable by CAPITAL or CCB on 60 days or less notice, (ii) employee bonus, deferred compensation, pension, stock bonus or purchase, profit-sharing, retirement or stock option plan, (iii) other employee benefit or welfare plan, or (iv) other executory material agreements as defined by the instructions to Exhibit 10 under Item 601 of SEC Regulation S-K. All such pension, stock bonus or purchase, profit-sharing, retirement, health and welfare plans (other than any multiemployer plans) set forth in the CAPITAL Document List are in this section hereinafter referred to collectively as the "Plans." Those Plans intended to be qualified plans under Section 401(a) of the Code meet any applicable requirements for favorable tax treatment under the Code. All of the Plans which constitute employee pension benefit plans or employee welfare plans subject to ERISA have been maintained in compliance in all material respects with the applicable requirements of ERISA. All material notices, reports and other filings required under applicable law to be given or made to or with any governmental agency with respect to the Plans have been timely filed or delivered. CAPITAL has no knowledge of any circumstances which would adversely affect the qualification of the Plans or their compliance with the applicable requirements of ERISA, would result or have resulted in liability under Title IV of ERISA or of any unreported "reportable event" (as such term is defined in Section 4043(b) of ERISA) or any "prohibited transaction" (as such term is defined in Section 406 of ERISA and Section 4975(c) of the Code) which has occurred since the date on which said sections became applicable to the Plans and which could reasonably be expected to result in any material liability of CAPITAL or CCB to the PBGC, the Department of Treasury, the Department of Labor or any multiemployer plan. Those Plans which are defined benefit plans within the meaning of ERISA meet the minimum funding standards set forth in the Code and ERISA and the assets of such Plans equal or exceed the present value of accrued benefits on a termination basis under such Plans as of the most recent plan valuation date. There are no pending or threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been asserted or instituted against the Plans, any fiduciaries thereof with respect to their duties to the Plans or the assets of any of the trusts under any of the Plans which could reasonably be expected to result in any material liability of CAPITAL or CCB to the PBGC, the Department of Treasury, the Department of Labor or any multiemployer plan. (j) CAPITAL and/or CCB have duly filed all federal, state, county and local income, franchise, bank, excise, real and personal property and other tax returns and reports (including, but not limited to, those relating to social security, withholding, unemployment insurance, and occupation, sales, and use taxes and those filed on a consolidated, combined or unitary basis) required to have been filed by CAPITAL or CCB up to the date hereof. CAPITAL has made available to BANC ONE a copy of its Federal income tax return for the years 1991 and 1992. All of the foregoing returns are true and correct in all material respects, and CAPITAL and CCB have paid or, prior to the Effective Time, will pay all taxes, interest, additions to tax, and penalties shown on such returns or reports as being due or (except to the extent the same are contested in good faith and, if material, summarized in the CAPITAL Disclosure Letter) claimed to be due to any federal, state, county, local or other taxing authority, and there is, and at the Effective Time will be, no basis for any additional claim or assessment which might materially and adversely affect CAPITAL and CCB, except for those being contested in good faith and summarized in the CAPITAL Disclosure Letter. CAPITAL and CCB have paid or made adequate provision in their financial statements or on their books and records for all taxes payable in respect of all periods ending on or before the date hereof. CAPITAL and CCB have, or at the Effective Time will have, no liability for any taxes, interest, additions to tax, or penalties of any nature whatsoever, except for those taxes which may have arisen up to the Effective Time in the ordinary course of business and are properly accrued on the books of CAPITAL and CCB as of the Effective Time or are being contested in good faith and have, if material, been summarized in the CAPITAL Disclosure Letter. (k) CAPITAL and CCB have in effect insurance coverage with reputable insurers which in respect of amounts, premiums, types and risks insured, constitutes reasonably adequate coverage against all risks customarily insured against by bank holding companies and their subsidiaries comparable in size and operations to CAPITAL and CCB. (l) CAPITAL has not incurred and will not incur any liability for brokerage, finders', agents', or investment bankers' fees or commissions in connection with this Merger Agreement or the transactions contemplated hereby except for fees, in an amount which BANC ONE, in good faith, deems reasonable and appropriate, to an independent investment banker or adviser of recognized expertise in the banking field (the "Investment Banker"), to be selected by CAPITAL, acceptable to BANC ONE, in connection with such investment banker's written opinion regarding the fairness of the Holding Company Merger to the shareholders of CAPITAL and of the Bank Merger to the minority shareholders of CCB from a financial point of view. (m) CAPITAL has annexed to the CAPITAL Disclosure Letter a loan schedule identifying certain loan agreements, notes and borrowing arrangements (the "CAPITAL Loan Schedule") between CCB and its borrowers, as of the date hereof. Except as specifically noted on the CAPITAL Loan Schedule, CCB is not, (i) as of the date hereof, a party to any written or, to CAPITAL's actual knowledge, oral (A) loan agreement, note or borrowing arrangement which has been classified as "substandard," "doubtful," "loss," "other loans especially mentioned" or any comparable classifications by CAPITAL, CCB or banking regulator; (B) loan agreement, note, or borrowing arrangement, including any loan guaranty, with any director, executive officer or ten percent shareholder of CAPITAL, or to the actual knowledge of CAPITAL and its executive officers, after due inquiry, any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing; or, (C) to the best of CAPITAL's knowledge, loan agreement, note or borrowing arrangement in violation of any law, regulation or rule of any governmental authority and which violation could, to the best of CAPITAL's knowledge after due inquiry, have a Material Adverse Effect, and (ii), as of the close of business on July 31, 1993, except for loans with an unpaid principal balance of $500,000 or more (which loans are set forth on the CAPITAL Loan Schedule as of the date hereof), a party to any written or, to CAPITAL's actual knowledge, oral loan agreement, note or borrowing arrangement, other than credit card loans and other loans the unpaid balance of which does not exceed $50,000 per loan, under the terms of which the obligor is over 60 days delinquent in payment of principal or interest or, to the best of CAPITAL's knowledge, in default of any other provision as of the dates shown thereon. (n) None of the information provided by CAPITAL or CCB to BANC ONE for inclusion in the Proxy Statement or related registration statement or any amendment or supplement thereto (to the extent so included as so provided) shall contain (in the case of information relating to the Proxy Statement, at the time it is mailed and in the case of information relating to the registration statement, at the time it becomes effective) any untrue statement of a material fact or shall omit to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. (o) CAPITAL has annexed a contracts schedule (the "CAPITAL Contracts Schedule") to the CAPITAL Disclosure Letter setting forth certain material contracts, including credit agreements, on which CAPITAL or CCB is the obligor, maker, issuer or guarantor as of the date hereof. Except as specifically disclosed on the CAPITAL Contracts Schedule, neither CAPITAL nor CCB is, as of the date hereof, a party to any material contract and/or any material credit agreement as obligor, maker, issuer or guarantor and which contract or agreement contains covenants which make the acquisition of CAPITAL or CCB by or merger with another entity a condition of default or acceleration. (p) Attached hereto as Exhibit A is CAPITAL's Subsidiaries List which sets forth the complete legal name of CCB and of each other entity, if any, in which CAPITAL or CCB own or control 5% or more of its capital or voting stock (a "Subsidiary"), a designation of the laws under which CCB and each Subsidiary is incorporated, the activities conducted by CCB and each Subsidiary and the regulatory approvals, if any, requested and/or obtained by CAPITAL, CCB and/or each Subsidiary in connection with the acquisition of such entity and/or the regulatory approvals received by CAPITAL, CCB and any Subsidiary necessary to engage in such activities. Except for CCB and as set forth in Exhibit A, CAPITAL and CCB have no Subsidiaries. Except as may be set forth in Exhibit A, CAPITAL owns beneficially and of record all the outstanding shares of capital stock of CCB and of each Subsidiary listed thereon, which stock is fully paid and non-assessable, except as provided by law. Neither CAPITAL, CCB or any other Subsidiary listed on Exhibit A is a party to any partnership or joint venture except as may be set forth and described in Exhibit A. CCB is a corporation duly organized and validly existing in good standing under the laws of the State of Utah and has full power and authority (including all licenses, franchises, permits and other governmental authorizations which are legally required) to engage in the businesses and activities now conducted by it and is duly qualified to do business and is in good standing in all jurisdictions where the failure to so qualify (together with all such failures) would have a Material Adverse Effect. As of June 30, 1993, the authorized capital stock of CCB consisted of 200,000 shares of CCB Common, 132,850 of which were issued and outstanding and none of which were treasury shares of CCB, and 50,000 shares of CCB Preferred, 24,000 of which were issued and outstanding and none of which were treasury shares of CCB. CCB has granted and there is outstanding CCB Options related to 7,917 shares of CCB Common. Of the 132,850 issued and outstanding shares of CCB Common, 114,768 were owned by CAPITAL and 18,082 of such shares were owned by minority shareholders of CCB. (q) No employee of CAPITAL or CCB is represented, for purposes of collective bargaining, by a labor organization of any type. CAPITAL is unaware of any efforts during the past five years to unionize or organize any employees of CAPITAL or CCB, and no claim related to such employees under the Fair Labor Standards Act, National Labor Relations Act, Civil Rights Act of 1964, Walsh-Healy Act, Davis Bacon Act, Civil Rights Act of 1866, Age Discrimination in Employment Act, Equal Pay Act of 1963, Executive Order No. 11246, Federal Unemployment Tax Act, Vietnam Era Veterans Readjustment Act, Occupational Safety and Health Act, or any state or local employment related law, order, ordinance or regulation, no unfair labor practice, discrimination or wage-and-hour claim is pending or, to the best of CAPITAL's knowledge, threatened against CAPITAL or CCB, which claim has had or is reasonably likely to have a Material Adverse Effect. (r) To the actual knowledge of CAPITAL and its executive officers: (i) with respect to any Contaminant, there are no material actions, proceedings or investigations pending or threatened before any federal or state environmental regulatory body, or before any federal or state court, alleging non-compliance with or liability in connection with, by CAPITAL or CCB, CERCLA or any other Environmental Laws; (ii) there is no reasonable basis for the institution of any material action, proceeding or investigation against CAPITAL or CCB under any Environmental Law; (iii) neither CAPITAL nor CCB is responsible in any material respect under any Environmental Law for any Release; (iv) neither CAPITAL nor CCB is responsible for any material costs of any response action required by virtue of any Release of any Contaminant into the environment including, without limitation, costs arising from investigation, removal or remediation of Contaminants, security fencing, alternative water supplies, temporary evacuation and housing and other emergency assistance undertaken by any environmental regulatory body or any other person; (v) CAPITAL and CCB is, in all material respects, in compliance with all applicable Environmental Laws; and (vi) no real property owned or used by CAPITAL or CCB contains any Contaminant including, without limitation, any asbestos, PCBs or petroleum products or byproducts in any form, the presence, location or condition of which (a) could require remediation or other corrective action pursuant to any Environmental Law in any material respect, or (b) otherwise would pose any significant health or safety risk unless remedial measures were taken. (s) CAPITAL and/or the CCB (i) have surveyed the facilities where CAPITAL and CCB conduct their businesses including, without limitation, ATMs (collectively, the "CAPITAL Facilities") for compliance with ADA; (ii) have developed action plans to remove architectural barriers including communication barriers that are structural in nature from existing CAPITAL Facilities (collectively, the "CAPITAL Barriers") when such removal is "readily achievable," as that term is defined in ADA; (iii) will finalize action plans for ATMs upon clarification by the ATBCB; (iv) have developed or will develop schedules for CAPITAL Barrier removal from CAPITAL Facilities in such action plans so that CAPITAL Barrier removal was completed on January 26, 1992 or will be completed as soon as practicable; and (v) have removed all CAPITAL Barriers in CAPITAL Facilities or will cause all CAPITAL Barriers to be removed in accordance with such action plans. All "alterations" (as such term is defined in ADA) to CAPITAL Facilities undertaken after January 26, 1992 comply with ADA and the ADAAG. Effective January 26, 1992, all plans and designs for new construction to be utilized by CAPITAL and CCB comply with ADA and ADAAG. To the best of CAPITAL's knowledge, after due inquiry, no material investigations, proceedings, or complaints, formal or informal, are pending or threatened against CAPITAL and/or CCB in connection with CAPITAL Facilities under ADA, ADAAG, or any other state or federal law concerning accessibility for individuals with disabilities. (t) The statements made and the information included in the CAPITAL Disclosure Letter and any attachments thereto shall be deemed to constitute representations and warranties of CAPITAL under this Merger Agreement to the same extent as if herein set forth in full. Anything disclosed in the CAPITAL Disclosure Letter or the attachments thereto shall be considered to have been disclosed for purposes of all representations, warranties and covenants under this Merger Agreement. (u) There are no credit agreements on which CAPITAL or CCB is the maker, issuer or guarantor and which contain provisions which make the acquisition of CAPITAL or CCB by or merger into another entity a condition of default or acceleration. 16. Action by CAPITAL Pending Effective Time. CAPITAL agrees that from the date of this Merger Agreement until the earlier of the Effective Time or the time that this Merger Agreement is terminated, except with the prior written permission of BANC ONE, which, in any case covered by Section 16(d) hereof, shall not be unreasonably withheld: (a) Beginning with the third calendar quarter of 1993 and for each succeeding calendar quarter thereafter prior to that calendar quarter in which the Effective Time shall occur, CAPITAL (i) will not declare or pay any dividends or make any distributions on shares of CAPITAL Common, except cash dividends of $0.25 per share per quarter; (ii) except as hereinbelow provided, will not declare or pay any dividends or make any distributions in any amount on its CAPITAL Common in the quarter in which the Effective Time shall occur and in which the shareholders of CAPITAL Common are entitled to receive regular quarterly dividends on the shares of BANC ONE Common into which the shares of CAPITAL Common have been converted. It is the intent of this part (ii) to provide that the holders of CAPITAL Common will receive either the payment of cash dividends on their shares of CAPITAL Common or the payment of cash dividends as the holders of shares of BANC ONE Common received in exchange for the shares of CAPITAL Common for the calendar quarter during which the Effective Time shall occur, but will not receive and will not become entitled to receive for the same calendar quarter both the payment of a cash dividend as shareholders of CAPITAL and the payment of a cash dividend as the holders of the shares of BANC ONE Common received in exchange for the shares of CAPITAL Common. In the event that CAPITAL does not declare and pay cash dividends on its CAPITAL Common in a particular calendar quarter because of CAPITAL's reasonable expectation that the Effective Time would occur in said calendar quarter wherein the holders of CAPITAL Common would have become entitled to receive cash dividends for such calendar quarter on the shares of BANC ONE Common to have been exchanged for the shares of CAPITAL Common, and the Effective Time does not in fact occur effective in said calendar quarter, then, as a result thereof, CAPITAL shall be entitled to declare and pay a cash dividend (within the limitations of this Section 16) on said shares of CAPITAL Common for said calendar quarter as soon as reasonably practicable. The declaration of any dividends within the limitations of this paragraph shall remain within the discretion of the Board of Directors of CAPITAL. (b) Neither CAPITAL or CCB will issue, sell, grant any option for, or acquire for value any shares of its capital stock or otherwise effect any change in connection with its equity capitalization, except that (i) CCB may issue up to 7,917 shares of CCB Common in connection with the exercise of all the CCB Options and (ii) CCB may redeem all 24,000 shares of CCB Preferred at its par value of $50.00 per share plus accrued and unpaid dividends thereon to the date of redemption. (c) Except as otherwise set forth in or contemplated by this Merger Agreement, CAPITAL will carry on its businesses in substantially the same manner as heretofore, use its reasonable best efforts to keep in full force and effect insurance comparable in amount and scope of coverage to that now maintained by it and use its reasonable best efforts to maintain and preserve its business organization intact. (d) Except as may be otherwise provided in the Benefits Agreement, neither CAPITAL nor CCB will (i) enter into any new line of business or incur or agree to incur any obligation or liability except liabilities and obligations (including corporate debt issuances) incurred in the ordinary course of business, except as may be directed by any regulatory agency; (ii) except as may be directed by any regulatory agency, change its or the Subsidiaries' lending, investment, liability management and other material banking policies in any material respect; (iii) except in the ordinary course of business and consistent with prior practice, grant any general or uniform increase in the rates of pay of employees; (iv) establish any new employee benefit plan or amend any existing plan (except as required by law or permitted in the Benefits Letter) so as to increase by any significant amount the benefits payable thereunder; (v) incur or commit to any capital expenditures other than in the ordinary course of business (which will in no event include the establishment of new branches or any other facilities or any capital expenditures in excess of $50,000 for any individual project for any purpose); or (vi) merge into, consolidate with or permit any other corporation to be merged or consolidated with it or any of its Subsidiaries or acquire outside of the ordinary course of business part of or all the assets or stock of any other corporation or person. (e) CAPITAL will not change its or CCB's methods of accounting in effect at December 31, 1992, except as required by changes in generally accepted accounting principles as concurred in by KPMG Peat Marwick, or change any of its methods of reporting income and deductions for Federal income tax purposes from those employed in the preparation of CAPITAL's Federal income tax returns for the taxable years ending December 31, 1992 and 1991, except as required by changes in law or regulation. (f) CAPITAL will afford BANC ONE, its officers and other authorized representatives, such access to all books, records, bank examination reports (as permitted by law), tax returns, leases, contracts and documents of CAPITAL and CCB and will furnish to BANC ONE such information with respect to the assets and business of CAPITAL and CCB as BANC ONE may from time to time reasonably request in connection with this Merger Agreement and the transactions contemplated hereby. (g) CAPITAL will promptly advise BANC ONE in writing of all material corporate actions taken by the directors and shareholders of CAPITAL and/or CCB, furnish BANC ONE with copies of all monthly and other interim financial statements of CAPITAL and CCB as they become available, and keep BANC ONE fully informed concerning all trends and developments which in the opinion of CAPITAL may have a Material Adverse Effect on CAPITAL and/or CCB. (h) CAPITAL, CCB and their respective officers, directors and employees will not contract for or acquire, at the expense of CAPITAL or CCB, a policy or policies providing for insurance coverage for directors, officers and/or employees of CAPITAL and/or CCB for any period subsequent to the Effective Time for events occurring before or after the Effective Time; provided, however, that CAPITAL may renew, extend or replace existing policies in the ordinary course consistent with past practices for periods of not greater than one year. 17. Action by BANC ONE Pending Effective Time. BANC ONE agrees that from the date of this Merger Agreement until the Effective Time, except with prior written permission of CAPITAL: (a) BANC ONE will not adopt or implement any amendment to its Articles of Incorporation or any plan of reorganization which would affect in any manner the terms and provisions of the shares of BANC ONE Common or the rights of the holders of such shares or reclassify the BANC ONE Common. (b) Except as otherwise set forth in or contemplated by this Merger Agreement, BANC ONE will carry on its businesses in substantially the same manner as heretofore, use its reasonable best efforts to keep in full force and effect insurance comparable in amount and scope of coverage to that now maintained by it and use its reasonable best efforts to maintain and preserve its business organization intact. (c) BANC ONE will not change its or its subsidiaries' methods of accounting in effect at December 31, 1992, except as required by changes in generally accepted accounting principles as concurred with by Coopers & Lybrand, its independent auditors, or change any of its methods of reporting income and deductions for Federal income tax purposes from those employed in the preparation of the Federal income tax returns of BANC ONE for the taxable years ending December 31, 1992 and 1991, except as required by changes in law or regulation. (d) BANC ONE will afford CAPITAL, its officers and other authorized representatives, such access to all books, records, bank examination reports (as permitted by law), tax returns, leases, contracts and documents of BANC ONE and its subsidiaries and will furnish to CAPITAL such information with respect to the assets, earnings and business of BANC ONE and its subsidiaries as CAPITAL may from time to time reasonably request in connection with this Agreement and the transactions contemplated hereby. 18. Conditions to Obligations of BANC ONE and BANC ONE ARIZONA. The obligations of BANC ONE and BANC ONE ARIZONA to effect the Holding Company Merger are subject, unless waived by BANC ONE, to the satisfaction of the following conditions on or prior to the Effective Time: (a) There shall not have been any change in the consolidated financial condition, aggregate net assets, shareholders' equity, business or operating results of CAPITAL and CCB, taken as a whole, from June 30, 1993 to the Effective Time that has had a Material Adverse Effect. (b) CAPITAL shall not have paid cash dividends from June 30, 1993 to the Effective Time, except as permitted under this Merger Agreement. (c) All representations by CAPITAL contained in this Merger Agreement shall be true in all material respects at, or as of, the Effective Time as though such representations were made at and as of said date, except for changes contemplated by the Merger Agreement, and except also for representations as of a specified time other than the Effective Time, which shall be true in all material respects at such specified time; provided, however, that the representation of CAPITAL contained in Section 15(d) shall be true in all material respects as applied to the Balance Sheet of CAPITAL included in the most recently available quarterly or annual report to CAPITAL shareholders as of the close of the most recent calendar quarter prior to the Effective Date (as hereinafter defined) and the reserve for possible loan and lease losses included therein, as though each reference to "June 30, 1993" in such section were a reference to the last day of the most recent calendar quarter prior to the day of the Effective Time (the "Effective Date"). (d) BANC ONE shall have received the opinion of legal counsel for CAPITAL, dated as of the Effective Time, substantially to the effect set forth in Exhibit E hereto, together with a copy of the Certificate of Incorporation, as amended, of CAPITAL certified by the Utah Division of Banking and a copy of the charter documents, as amended, of CCB and, for Certificates of Good Standing for both CAPITAL and CCB dated as a date not more than 20 days prior to the Effective Time from the Secretary of State or Utah Division of Corporations or other appropriate governmental or regulatory entities, as applicable. (e) CAPITAL shall have performed in all material respects all agreements and conditions required by this Merger Agreement to be performed and satisfied by it at or prior to the Effective Time. (f) As of the close of the most recent calendar quarter (or if the Effective Time shall occur within 20 days following the close of a calendar quarter, then as of the next preceding calendar quarter) cumulative earnings reported by CAPITAL since June 30, 1993 shall be greater than or equal to the amount calculated by multiplying (a) $400,000 by (b) the number of full calendar quarters which have passed since June 30, 1993 and for which earnings have been reported as of such date, times (c) 0.9. As used in this Section "reported" means reported on CAPITAL's financial statements prepared in accordance with generally accepted accounting principles applied on a basis consistent with CAPITAL's financial statements for the years ended December 31, 1992 and 1991, as included in CAPITAL's annual reports to shareholders subject to any subsequent adjustments required to be reported to the SEC whether or not such adjustments have, as yet, been reported with the following adjustments, if any, net of related tax savings and costs which were reflected in net income for the relevant period(s) added back into or deducted from net income for the applicable period: (i) investment banking expenses, outside legal and accounting fees, or other costs associated with the Holding Company Merger, (ii) gains or losses on sales of assets outside of the ordinary course of business, (iii) any other expenses upon which BANC ONE and CAPITAL shall mutually agree, and (iv) any other reserves or adjustments requested by BANC ONE or referenced in the CAPITAL Disclosure Letter. (g) The total number of shares of CAPITAL Common issued and outstanding shall not be more than 150,345 shares and there shall be no options, warrants or commitments of any kind related to CAPITAL's capital stock. (h) The aggregate of (i) the fractional share interests of BANC ONE Common to be paid in cash pursuant to Section 7(c), and (ii) the shares of BANC ONE Common to which holders of CAPITAL Common would have been entitled as of the Effective Time but who, as of the Effective Time, have taken steps to perfect their rights as dissenting shareholders pursuant to the provisions of applicable law, shall not be more than 10% of the maximum aggregate number of shares of BANC ONE Common which could be issued as a result of the Holding Company Merger and the Bank Merger. (i) There shall be no exercisable CCB Options or CCB Preferred issued and outstanding immediately prior to the Effective Time. CCB's capital stock shall consist solely of 140,767 shares of CCB Common, not fewer than 114,768 of which shall be owned by CAPITAL. (j) CAPITAL shall have furnished BANC ONE a certificate, signed on its behalf by the Chairman or President and the Secretary or an Assistant Secretary of CAPITAL and dated as of the Effective Time, certifying as to the form of and adoption of resolutions of the Board and shareholders of CAPITAL approving the Merger Agreement and the Holding Company Merger, respectively, and to the effect that the conditions described in Paragraphs (a), (b), (c), (e), (f) (g) and (i) of this Section 18 have been fully satisfied. 19. Conditions to Obligations of CAPITAL. The obligations of CAPITAL to effect the Holding Company Merger are subject, unless waived by CAPITAL, to the satisfaction on or prior to the Effective Time of the following conditions: (a) There shall not have been any change in the consolidated financial condition, aggregate net assets, shareholders' equity, business, or operating results of BANC ONE and its subsidiaries, taken as a whole, from June 30, 1993 to the Effective Time that has had a Material Adverse Effect. (b) All representations by BANC ONE and BANC ONE ARIZONA contained in this Merger Agreement shall be true in all material respects at, or as of, the Effective Time as though such representations were made at and as of said date, except for changes contemplated by this Merger Agreement, and except also for representations as of a specified time other than the Effective Time, which shall be true in all material respects at such specified time; provided, however, that the representation of BANC ONE contained in Section 13(d) shall be true in all material respects as applied to the Consolidated Balance Sheet of BANC ONE included in the most recently available quarterly or annual report to BANC ONE's shareholders and/or BANC ONE's report to the SEC on Form 10-Q or Form 10-K as of the close of the most recent calendar quarter prior to the Effective Date and the reserve for possible loan and lease losses included therein, as though each reference to "June 30, 1993" in such section were a reference to the last day of the most recent calendar quarter prior to the Effective Date. (c) CAPITAL shall have received the opinion of counsel for BANC ONE and BANC ONE ARIZONA (i) on and dated the date on which the registration statement described in Section 10(d) of this Merger Agreement shall have become effective as described in Section 19(b) of this Merger Agreement substantially to the effect of paragraphs numbered 7, 8 and 9 of Exhibit F hereto and (ii) on and dated as of the Effective Time substantially to the effect set forth in Exhibit F hereto, together with a copy of the Articles of Incorporation of BANC ONE certified by the Secretary of State of the State of Ohio and a copy of the Articles of Incorporation of BANC ONE ARIZONA certified by the Secretary of State of the State of Arizona and copies of such other charter documents and Certificates of Good Standing of BANC ONE and BANC ONE ARIZONA dated as of a date not more than 20 days prior to the day of the Effective Time from the Ohio and Arizona Secretaries of State, respectively, as CAPITAL shall reasonably require. (d) BANC ONE and BANC ONE ARIZONA shall have performed all agreements and conditions required by this Merger Agreement to be performed and satisfied by it at or prior to the Effective Time. (e) As of the close of the most recent calendar quarter (or if the Effective Time shall occur within 20 days following the close of a calendar quarter, then as of the close of the next preceding calendar quarter) cumulative per share earnings reported by BANC ONE since June 30, 1993 shall be greater than or equal to the amount calculated by multiplying (a) $0.77 by (b) the number of full calendar quarters which have passed since June 30, 1993 and for which earnings have been reported as of such date, times (c) 0.9. As used in this Section, "reported" means reported on BANC ONE's consolidated financial statements prepared in accordance with generally accepted accounting principles applied on a basis consistent with BANC ONE's consolidated financial statements for the years ended December 31, 1992 and 1991, as included in BANC ONE's reports to the SEC on Forms 10-K or BANC ONE's annual reports to shareholders subject to any subsequent adjustments required to be reported to the SEC whether or not such adjustments have, as yet, been reported. (f) BANC ONE shall have furnished CAPITAL a certificate, signed by the Chairman or President or an Executive Vice President and by the Secretary or Assistant Secretary of BANC ONE and dated as of the Effective Time certifying as to the form of and adoption of the resolutions of the Boards of BANC ONE and of BANC ONE ARIZONA approving the Merger Agreement and the Holding Company Merger, and to the effect that the conditions described in Paragraphs (a), (b), (d) and (e) of this Section 19 have been fully satisfied. (g) The shares of BANC ONE Common to be issued to the holders of CAPITAL Common and CCB Common shall be listed on the NYSE. (h) CAPITAL shall have received an opinion from the Investment Banker dated as of a date not more than five days prior to the date of the Proxy Statement, to the effect that, in the opinion of the Investment Banker, the Holding Company Merger is fair to the shareholders of CAPITAL Common and the Bank Merger is fair to the shareholders of CCB Common (except for CAPITAL) from a financial point of view, and such opinion shall have been confirmed in writing by the Investment Banker as of a date not more than five days prior to the Effective Time. 20. Conditions to Obligations of All Parties. In addition to the provisions of Sections 18 and 19 hereof, the obligations of BANC ONE and CAPITAL to effect the Holding Company Merger shall be subject to the satisfaction of the following conditions on or prior to the Effective Time: (a) The parties hereto shall have received all necessary approvals of governmental agencies and authorities of the transactions contemplated by this Merger Agreement and each of such approvals shall remain in full force and effect at the Effective Time. BANC ONE shall notify CAPITAL promptly upon receipt of all necessary governmental approvals. At the Effective Time, (i) no party hereto shall be subject to any order, decree or injunction of a court or governmental agency of competent jurisdiction which enjoins or prohibits the consummation of the Holding Company Merger or the Bank MERGER; and (ii) no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any governmental authority which prohibits or makes illegal consummation of the Holding Company Merger or the Bank Merger. (b) The registration statement required to be filed by BANC ONE pursuant to Section 10(d) of this Merger Agreement shall have become effective by an order of the SEC, the shares of BANC ONE Common to be exchanged in the Holding Company Merger and the Bank Merger shall have been qualified or exempted under all applicable state securities laws, and there shall have been no stop order issued or threatened by the SEC that suspends or would suspend the effectiveness of the registration statement, and no proceeding by the SEC shall have been commenced, pending or overtly threatened for such purpose and the BANC ONE Common to be issued in the Holding Company Merger or the Bank Merger will be authorized for trading on the NYSE. (c) This Merger Agreement and the Holding Company Merger shall have been duly approved and adopted by the requisite affirmative vote of the shareholders of CAPITAL and BANC ONE ARIZONA and the Bank Merger and the Bank Merger Agreement shall have been duly ratified and approved by the requisite vote of the shareholders of BANK ONE UTAH and CCB. (d) Gerrish & McCreary, P.C. shall have issued its written opinion, dated as of the day of the Effective Time, satisfactory to CAPITAL and BANC ONE, respectively, substantially to the effect set forth in clauses (a) through (e) of Section 12 of this Merger Agreement and there shall exist as of, at or immediately prior to the Effective Time no facts or circumstances which would render such opinion inapplicable in any respect to the transactions to be consummated hereunder. (e) Coopers & Lybrand shall have issued its written opinion, dated as of a date not later than the Effective Time, satisfactory, in good faith, to BANC ONE, advising that the transaction herein contemplated may be properly accounted for as a pooling-of-interests; provided, however, that this condition shall be deemed to have been waived by BANC ONE if the inability to obtain such opinion arises out of, or results directly or indirectly from, any action taken by BANC ONE, BANC ONE ARIZONA or any of their respective subsidiaries contrary to that contemplated by this Merger Agreement. 21. Indemnification. (a) In the event of any threatened or actual claim, action, suit, proceeding or investigation, whether formal or informal and whether civil, administrative or criminal, including, without limitation, any such claim, action, suit, proceeding or investigation in which any person who is now, or has been at any time prior to the date hereof, or who becomes prior to the Effective Time, a director, officer, employee, fiduciary or agent of CAPITAL or CCB (the "Indemnified Parties") is, or is threatened to be, made a party or a witness, based in whole or in part on, or arising in whole or in part out of, or pertaining to, this Merger Agreement or any of the transactions contemplated hereby (a "Merger Related Event"), whether in any case asserted or arising before or after the Effective Time, the parties hereto agree to cooperate and use their reasonable best efforts to defend against and respond to such claim, action, suit, proceedings or investigation. It is understood and agreed that, provided that, with regard to any Merger Related Event, and conditioned upon the Holding Company Merger becoming effective, BANC ONE shall indemnify and hold harmless, as and to the fullest extent permitted by applicable law, each Indemnified Party against any and all losses, claims, damages, liabilities, costs, expenses (including attorneys' fees and expenses), judgments and fines, and amounts paid in settlement, in connection with any such threatened or actual claim, action, suit, proceedings or investigation; provided, however, that BANC ONE shall not be liable for any settlement effected without its prior written consent (which consent shall not be unreasonably withheld). In the event of any such threatened or actual claim, action, suit, proceedings or investigation (whether asserted or arising before or after the Effective Time), (i) BANC ONE shall pay expenses (including attorney's fees and expenses) in advance of the final disposition of any claim, suit, proceedings or investigation to each Indemnified Party to the fullest extent permitted by applicable law, and (ii) BANC ONE shall use its reasonable best efforts to assist in the vigorous defense of any such matter; provided, however, that BANC ONE's obligations as herein set forth shall not apply to any losses, claims, damages, liabilities, costs, expenses, judgments, fines and amounts paid in settlement by any Indemnified Party involving the fraud, bad faith and/or reckless disregard of such Indemnified Party or related to any threatened or actual claim, action, suit, proceedings or investigation brought by BANC ONE against any Indemnified Party. Any Indemnified Party wishing to claim indemnification under this Section 21(a) shall, upon learning of or having reason to anticipate any such claim, action, suit, proceedings or investigation, immediately notify BANC ONE thereof. (b) BANC ONE shall insure that all rights to indemnification and all limitations of liability existing in favor of the Indemnified Parties as provided in CAPITAL's Certificate of Incorporation and By-laws or similar governing documents of CCB, as in effect as of July 1, 1993, or as otherwise provided for or allowed under applicable law as in effect as of the date hereof or as amended at a time prior to the Effective Time, with respect to claims or liabilities arising from facts or events existing or occurring prior to the Effective Time, shall survive the Holding Company Merger and the Bank Merger and shall continue in full force and effect, without any amendment thereto, for a period of six (6) years from the Effective Time; provided, however, that all rights to indemnification in respect of any claim asserted or made within such period shall continue until the final disposition of such claim. (c) From and after the Effective Time, persons who, immediately prior to the Effective Time, served as the directors, officers and employees of CAPITAL and CCB, who, following the Effective Time, continue as directors, officers and/or employees of the Surviving Corporation or one of its subsidiaries, shall have indemnification rights having prospective application only, except, however, for the indemnification rights set forth in paragraphs (a) and (b) of this Section 21. These prospective indemnification rights shall consist of (i) such rights to which directors, officers and employees are entitled under the provisions of the Certificate of Incorporation, Bylaws or similar governing documents of the Surviving Corporation and its subsidiaries, as applicable, as in effect from time to time after the Effective Time, as applicable, and provisions of applicable law as in effect from time to time after the Effective Time and (ii) those indemnification rights set forth in agreements, if any, between BANC ONE and the directors and executive officers of the Surviving Corporation and its subsidiaries. Such agreements, if any, which shall be executed as soon as practicable following the Effective Time, shall provide certain indemnification rights that are comparable to those provided to directors, officers and employees of BANC ONE and its subsidiaries generally, but which rights may be greater or lesser than the indemnification rights available in clause (i) above. (d) The obligations of BANC ONE provided under paragraphs (a) and (b) this Section 21 are intended to be the joint and several obligations of BANC ONE and the Surviving Corporation and to benefit, and be enforceable against BANC ONE and the Surviving Corporation directly by, the Indemnified Parties, and shall be binding on all respective successors and permitted assigns of BANC ONE and the Surviving Corporation. (e) In the event BANC ONE or the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of BANC ONE or the Surviving Corporation, as the case may be, assume the obligations set forth in this Section 21. 22. Non-Survival of Representations and Warranties. The respective representations and warranties of CAPITAL, BANC ONE and BANC ONE ARIZONA contained in this Merger Agreement shall not survive the Effective Time; provided, however, that BANC ONE's obligation to pay certain expenses pursuant to Section 10(e) of this Merger Agreement and to indemnify pursuant to Section 21 of this Agreement shall survive the Effective Time. 23. Governing Law. This Merger Agreement shall be construed and interpreted according to the applicable laws of the State of Utah, except as the laws of the State of Arizona are expressly applicable to the Holding Company Merger. 24. Assignment. This Merger Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Merger Agreement nor any of the rights, interest, or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. 25. Satisfaction of Conditions; Termination. (a) BANC ONE and BANC ONE ARIZONA agree to use their reasonable best efforts to obtain satisfaction of the conditions of this Merger Agreement insofar as they relate to BANC ONE and BANC ONE ARIZONA, and CAPITAL agrees to use its reasonable best efforts to obtain the satisfaction of the conditions of this Merger Agreement insofar as they relate to CAPITAL, in each case as soon as possible. (b) This Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after approval of the Holding Company Merger by the shareholders of BANC ONE ARIZONA or by CAPITAL's shareholders, upon the occurrence of any of the following by written notice from BANC ONE to CAPITAL (authorized by the Board of Directors of BANC ONE), or by written notice from CAPITAL to BANC ONE (authorized by the Board of Directors of CAPITAL), as the case may be: (i) If any material condition to the obligations of BANC ONE and/or BANC ONE ARIZONA set forth in Section 18 or 20 is not substantially satisfied at the time or times contemplated thereby and such condition is not waived by BANC ONE or if any material condition to the obligations of CAPITAL as set forth in Section 19 or 20 is not substantially satisfied at the time or times contemplated thereby and such condition is not waived by CAPITAL, it being understood that each party's right to terminate under this Section 25 (b)(i) shall relate only to conditions to that party's obligations; (ii) In the event of a material breach by the other of any representation, warranty, condition or agreement contained in this Merger Agreement that is not cured within 30 days of the time that written notice of such breach is received by such other party from the party giving notice; or (iii) If the Holding Company Merger shall not have been consummated on or before July 15, 1994. (c) In the event that BANC ONE's pre-acquisition investigation and review of CAPITAL as described in Section 10(n) of this Merger Agreement discloses matters which BANC ONE in good faith believes to be either (i) inconsistent in any material respect with any of the representations and warranties of CAPITAL contained in this Agreement or (ii), in the reasonable judgment of the Board of Directors of BANC ONE, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of CAPITAL and CCB on a consolidated basis or (y) to deviate materially and adversely from CAPITAL's audited financial statements for the year ended December 31, 1992, BANC ONE shall have the right to terminate this Merger Agreement as set forth in this Section 25(c) as supplemented by the CAPITAL Disclosure Letter by giving written notice of termination to CAPITAL within seven days of the conclusion of such pre-acquisition investigation. (d) In the event that CAPITAL's pre-acquisition investigation and review of BANC ONE as described in Section 10(o) of this Merger Agreement discloses matters which CAPITAL in good faith believes to be either (i) inconsistent in any material respect with any of the representations and warranties of BANC ONE contained in this Agreement, or (ii) in the reasonable judgment of the Board of Directors of CAPITAL, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of BANC ONE and its subsidiaries on a consolidated basis or (y) to deviate materially and adversely from BANC ONE's audited financial statements for the year ended December 31, 1992, CAPITAL may elect to terminate this Merger Agreement by giving written notice of termination to BANC ONE within seven days of the conclusion of such pre-acquisition investigation. (e) In the event the BANC ONE Average Price (as defined in Section 7 of this Merger Agreement) is less than $35.00 per share (the "Termination Price"), CAPITAL, by action of its Board of Directors, in its sole discretion, may, but is not required to, elect to terminate this Merger Agreement, whether before or after approval of the Merger by the shareholders of BANC ONE ARIZONA or by CAPITAL's shareholders, by giving written notice of such election to BANC ONE within two NYSE trading days after the Valuation Period (as defined in Section 7 of this Merger Agreement). In determining whether to terminate this Merger Agreement pursuant to this Section 25(e), the Board of Directors of CAPITAL may consider whether the fact that the BANC ONE Average Price is less than $35.00 per share is attributable to general market conditions, reflects an inability of BANC ONE Common to earn and/or maintain an acceptable level of return in the future, the relative stock prices of CAPITAL, BANC ONE and other national and regional bank holding companies or selected groups thereof, and any other pertinent factors, including, without limitation, general economic and market conditions. In the event that BANC ONE shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine BANC ONE Common or declare a dividend, or make a distribution on BANC ONE Common in any security convertible into BANC ONE Common (except for the Stock Split which was taken into account herein), appropriate adjustment will be made in the Termination Price. A termination resulting from CAPITAL's election under this Section 25(e) shall be deemed to have been a termination by mutual consent of the parties. (f) This Merger Agreement may be terminated and abandoned (whether before or after approval of the Holding Company Merger by the shareholders of BANC ONE ARIZONA or by CAPITAL's shareholders) by mutual written consent of CAPITAL, BANC ONE ARIZONA and BANC ONE authorized by their respective Boards of Directors. (g) In the event of termination of this Merger Agreement (i) caused otherwise than by a willful breach of this Merger Agreement by any of the parties hereto or (ii) pursuant to Section 25(c) or (d), this Merger Agreement shall cease and terminate, the acquisition of CAPITAL as provided herein shall not be consummated, and none of BANC ONE, BANC ONE ARIZONA nor CAPITAL shall have any liability to any other party under this Merger Agreement of any nature whatever, except for BANC ONE's obligations related to the printing of the proxy solicitation materials, including any liability for damages, provided, however, that the duties of the parties with respect to confidential information as set forth in Section 10(f) shall survive any such termination. If the Holding Company Merger is not consummated as the result of termination of this Merger Agreement caused otherwise than by willful breach of a party hereto, BANC ONE, BANC ONE ARIZONA and CAPITAL each shall pay its own fees and expenses incident to the negotiation, preparation and execution of this Merger Agreement, the respective shareholders' meetings and actions of the parties and all other acts incidental to, contemplated by or in pursuance of the transactions contemplated by this Merger Agreement, including fees and expenses of their respective counsel, accountants and other experts and advisors. (h) If termination of this Merger Agreement shall be judicially determined to have been caused by willful breach of this Merger Agreement, then, in addition to other remedies at law or equity for breach of this Merger Agreement, the party so found to have willfully breached this Merger Agreement shall indemnify the other parties for their respective costs, fees and expenses of their counsel, accountants and other experts and advisors as well as fees and expenses incident to negotiation, preparation and execution of this Merger Agreement and related documentation and their shareholders' meetings and consents. 26. Waivers; Amendments. Any of the provisions of this Merger Agreement may be waived at any time by the party which is, or the shareholders of which are, entitled to the benefit thereof, provided, however, such waiver, if material to CAPITAL or its shareholders, may be made only following due authorization by the Board of Directors of CAPITAL. This Merger Agreement may be amended or modified in whole or in part by an agreement in writing executed in the same manner (but not necessarily by the same persons) as this Merger Agreement and which makes reference to this Merger Agreement, provided, however, such amendment or modification may be made only following due authorization by the respective Boards of Directors of CAPITAL, BANC ONE ARIZONA and BANC ONE; provided, further, however, that after a favorable vote by the shareholders of CAPITAL any such action shall be taken by CAPITAL only if, in the opinion of its Board of Directors, such amendment or modification will not have any material adverse effect on the benefits intended under this Merger Agreement for the shareholders of CAPITAL and will not require resolicitation of any proxies from such shareholders. 27. Entire Agreement. Subject to the exceptions noted in the next following sentence, this Agreement supersedes any other agreement, whether written or oral, that may have been made or entered into by CAPITAL, BANC ONE ARIZONA and BANC ONE or by any officer or officers of such parties relating to the acquisition of the business or the capital stock of CAPITAL and/or its Subsidiaries by BANC ONE or BANC ONE ARIZONA. Except for the BANC ONE Disclosure Letter and any attachment thereto, the CAPITAL Disclosure Letter and any attachments thereto, the Benefits Agreement, this Merger Agreement constitutes the entire agreement by the parties, and there are no agreements or commitments except as set forth herein and therein. 28. Captions; Counterparts. The captions in this Merger Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Merger Agreement. This Merger Agreement may be executed in several counterparts, each of which shall constitute one and the same instrument. 29. Notices. All notices and other communications hereunder may be made by mail, hand-delivery or by courier service. If notices and other communications are made by nationally recognized overnight courier service for overnight delivery, such notice shall be deemed to have been given one business day after being forwarded to such a nationally recognized overnight courier service for overnight delivery and otherwise when received. All notices and other communications hereunder given to any party shall be communicated to the remaining party to this Merger Agreement by mail or by hand-delivery in the same manner as herein provided. (a) If to BANC ONE, to: BANC ONE CORPORATION Attention of: Chief Executive Officer 100 East Broad Street Columbus, Ohio 43271 With a copy to: BANC ONE CORPORATION Attention of: Roman J. Gerber General Counsel 100 East Broad Street Columbus, Ohio 43271 (b) If to CAPITAL, to: CAPITAL BANCORP Attention of: Allen Barbieri President 2200 South State Street Salt Lake City, Utah 84115 With a copy to: Gerrish & McCreary, P.C. Attention of: Jeffrey C. Gerrish, Esq. 700 Colonial Road, Suite 200 Memphis, Tennessee 38117 (c) If to BANC ONE ARIZONA, to: BANC ONE ARIZONA CORPORATION Attention of: Richard J. Lehmann Chairman of the Board 241 North Central Phoenix, Arizona 85004 With a copy to: BANC ONE ARIZONA CORPORATION Attention of: Rand D. Haddock General Counsel 241 North Central Phoenix, Arizona 85004 Notwithstanding the foregoing, it is understood that delivery by CAPITAL of the CAPITAL Disclosure Letter to Phillip L. Weaver shall constitute delivery of said CAPITAL Disclosure Letter to BANC ONE. IN WITNESS WHEREOF, this Merger Agreement has been executed the day and year first above written. BANC ONE CORPORATION ATTEST: CHARLES F. ANDREWS By: ROMAN J. GERBER Charles F. Andrews Roman J. Gerber Assistant Secretary Executive Vice President CAPITAL BANCORP ATTEST: KENT R. JONES By: NORTON PARKER Kent R. Jones Assistant Secretary BANC ONE ARIZONA CORPORATION ATTEST: R. D. HADDOCK By: JOHN W. WESTMAN TABLE OF CONTENTS TO MERGER AGREEMENT Page RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Holding Company Merger . . . . . . . . . . . . . . . . . . . 3 Section 2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 3. Business . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 4. Effective Time of Holding Company Merger; Articles of Incorporation . . . . . . . . . . . . . . . . 4 Section 5. Effect of Holding Company Merger . . . . . . . . . . . . . . 4 Section 6. Liabilities upon Holding Company Merger; Service of Process . . . . . . . . . . . . . . . . . . . 5 Section 7. Conversion of Shares . . . . . . . . . . . . . . . . . . . . 5 Section 8. Board of Directors; Employees; and Name Change . . . . . . . 11 Section 9. Employee Benefits . . . . . . . . . . . . . . . . . . . . . 11 Section 10. Undertakings of the Parties . . . . . . . . . . . . . . . . 12 Section 11. Dissenting Shareholders . . . . . . . . . . . . . . . . . . 20 Section 12. Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 13. Representations and Warranties of BANC ONE . . . . . . . . . 21 Section 14. Representations and Warranties of BANC ONE ARIZONA . . . . . 32 Section 15. Representations and Warranties of CAPITAL . . . . . . . . . 33 Section 16. Action by CAPITAL Pending Effecting Time . . . . . . . . . . 45 Section 17. Action by BANC ONE Pending Effective Time . . . . . . . . . 49 Section 18. Conditions to Obligations of BANC ONE and BANC ONE ARIZONA . . . . . . . . . . . . . . . . . . . . . 50 Section 19. Conditions to Obligations of CAPITAL . . . . . . . . . . . . 52 Section 20. Conditions to Obligations of All Parties . . . . . . . . . . 55 Section 21. Indemnification . . . . . . . . . . . . . . . . . . . . . . 56 Section 22. Non-Survival of Representations and Warranties . . . . . . . 59 Section 23. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 60 Section 24. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 60 Section 25. Satisfaction of Conditions; Termination . . . . . . . . . . 60 Section 26. Waivers; Amendments . . . . . . . . . . . . . . . . . . . . 64 Section 27. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 64 Section 28. Captions; Counterparts . . . . . . . . . . . . . . . . . . . 64 Section 29. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 65 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 EXHIBIT A - CAPITAL Subsidiaries List EXHIBIT B - Bank Merger Agreement EXHIBIT C - Form of Plan of Merger EXHIBIT D - Form of Undertaking by Affiliates EXHIBIT E - Opinion of Counsel for CAPITAL EXHIBIT F - Opinion of Counsel for BANC ONE and BANC ONE ARIZONA EXHIBITS TO AGREEMENT AND PLAN OF MERGER Exhibit A - CAPITAL Subsidiaries List Exhibit B - Bank Merger Agreement Exhibit C - Form of Plan of Merger Exhibit D - Form of Undertaking by Affiliates Exhibit E - Opinion of Counsel for CAPITAL Exhibit F - Opinion of Counsel for BANC ONE and BANC ONE ARIZONA EXHIBIT A CAPITAL SUBSIDIARIES LIST Other Activities for Incorporated Activities Which Regulatory Name Under Conducted Approval Obtained Capital City Bank * Utah law commercial None bank * Capital Bancorp owns beneficially and of record 86.39% of the issued and outstanding common stock of Capital City Bank ("CCB") which is Capital Bancorp's sole subsidiary. CCB has issued options for 7,917 shares of common stock which are currently exercisable at $60.00 per share; and 24,000 shares of $50 par value, noncumulative, nonvoting preferred stock. Neither the options, the preferred stock, nor the remaining 13.61% of CCB's common stock are held by Capital Bancorp. EXHIBIT B BANK MERGER AGREEMENT This Bank Merger Agreement made as of this day of , 1993 between Bank One, Utah, National Association, Salt Lake City, Utah ("BANK ONE UTAH") and Capital City Bank, South Salt Lake City, Utah ("CCB"). WITNESSETH WHEREAS, BANK ONE UTAH is a national banking association with its principal office located in Salt Lake City, Salt Lake County, Utah. BANK ONE UTAH is a wholly owned direct subsidiary of Banc One Arizona Corporation, Phoenix, Arizona ("BANC ONE ARIZONA") and a wholly owned indirect subsidiary of BANC ONE CORPORATION ("BANC ONE"). As of the date hereof, BANK ONE UTAH has 870,919 shares of authorized capital stock consisting solely of common stock with par value of $35.00 per share ("BANK ONE UTAH Common"), all of which are issued and outstanding. As of June 30, 1993, BANK ONE UTAH had capital of $28,277,165, surplus of $28,277,165 and undivided profits of $14,217,508; and WHEREAS, CCB is a corporation organized under the laws of the State of Utah with its principal office located in South Salt Lake City, Salt Lake County, Utah. At the present time, CCB is a subsidiary of Capital Bancorp ("CAPITAL"). At the effective time of the merger provided for herein, CAPITAL will merge with BANC ONE ARIZONA and CCB will be a wholly owned subsidiary of BANC ONE ARIZONA. As of June 30, 1993 and as of the date hereof, CCB has 200,000 shares of authorized capital stock consisting solely of common stock having a par value of $10.00 per share ("CCB Common") and 50,000 shares of non-voting, non-cumulative preferred stock with a par value of $50.00 per share ("CCB Preferred"). As of June 30, 1993 and as of the date hereof, there were 132,850 shares of CCB Common issued and outstanding and 24,000 of CCB Preferred issued and outstanding. As of June 30, 1993, CCB had common capital of $1,328,500, surplus of $2,522,500, undivided profits of $3,659,134 and preferred stock of $1,200,000. As of June 30, 1993 and as of the date hereof, CCB had outstanding options for 7,917 shares of CCB Common (the "CCB Options"). As of the date of this Agreement, 114,768 shares of CCB Common is owned by CAPITAL, a Utah corporation and registered bank holding company. WHEREAS, BANC ONE ARIZONA and CAPITAL have entered into a Merger Agreement dated , 1993, joined in by BANC ONE (the "Holding Company Merger Agreement") providing for the merger of CAPITAL with and into BANC ONE ARIZONA (the "Holding Company Merger"); WHEREAS, it is desirable that following the Holding Company Merger, CCB, as an affiliate of BANC ONE ARIZONA and BANC ONE, be merged with and into BANK ONE UTAH; WHEREAS, BANK ONE UTAH and CCB have each adopted this Bank Merger Agreement by the concurrence of at least a majority of their respective Boards of Directors pursuant to the authority set forth in the National Banking Act, as amended (12 U.S.C. Section 215a); NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and for the purpose of prescribing the terms and conditions of the merger of CCB with and into BANK ONE UTAH (the "Bank Merger"), the manner of carrying the same into effect, the manner and basis of converting the CCB Common and BANK ONE UTAH Common and such other details and provisions as are deemed necessary or desirable, the parties hereby agree as follows: ARTICLE I GENERAL SECTION 1.1. THE BANK MERGER. Pursuant to the terms and conditions hereinafter set forth and the provisions of 12 U.S.C. Section 215a, CCB shall be merged with and into BANK ONE UTAH, with BANK ONE UTAH to survive the Bank Merger as the Continuing Bank under the Charter and Articles of Association of BANK ONE UTAH. SECTION 1.2. EFFECTIVE TIME. Subject to and upon satisfaction of all requirements of law and the terms and conditions specified in this Bank Merger Agreement, including, among other conditions, receipt of the approval of the Comptroller of the Currency and, if appropriate, approvals of other bank regulatory agencies, the Bank Merger shall become effective at the time specified in the Bank Merger approval to be issued by the Comptroller of the Currency. The time of such effectiveness is hereinafter referred to as the "Effective Time." Not later than the Effective Time, the participating banks shall file appropriate documents, if so required, with the Utah Department of Financial Institutions, the Utah Secretary of State or the Utah Department of Commerce as required to effect the Bank Merger pursuant to Utah law. SECTION 1.3. NAME, OFFICES, ARTICLES OF ASSOCIATION AND BY-LAWS OF THE CONTINUING BANK. (a) The name of BANK ONE UTAH (hereinafter sometimes called the "Continuing Bank" when reference is made to it as of the time of the Bank Merger or thereafter) shall not be changed as a result of the Bank Merger; (b) The principal office and place of business of BANK ONE UTAH, 80 West Broadway, Salt Lake City, Utah 84101, shall be the established and authorized principal office and place of business of the Continuing Bank. The main office of CCB shall be operated as a branch of Continuing Bank and the branch offices of BANK ONE UTAH and CCB shall be established and authorized branch offices of the Continuing Bank; (c) The Articles of Association of the Continuing Bank shall be as set forth in Schedule 1, annexed hereto. The Bylaws of the Continuing Bank shall be the Bylaws of BANK ONE UTAH in effect immediately prior to the Effective Time, until amended. SECTION 1.4. BOARD OF DIRECTORS. The Board of Directors of the Continuing Bank shall consist of those persons whose names and addresses are as set forth in Schedule 2, attached hereto, who are currently Directors of BANK ONE UTAH or CCB. Each Director shall hold office from and after the time of his qualification as Director of the Continuing Bank and until his successor is elected and has qualified. SECTION 1.5. OFFICERS. The officers of BANK ONE UTAH in office immediately prior to the Effective Time shall, at the Effective Time, continue as officers of the Continuing Bank, each to hold office in accordance with the Bylaws of the Continuing Bank as in effect at and after the Effective Time. Following the Bank Merger, officers of CCB immediately prior to the Effective Time shall become officers of Continuing Bank with titles and responsibilities to be determined. ARTICLE II MANNER AND BASIS OF CONVERTING COMMON STOCK AND CAPITALIZATION OF THE CONTINUING BANK SECTION 2.1. CONVERSION OF CAPITAL STOCK. Subject to the conditions and limitations set forth in this Bank Merger Agreement and the Holding Company Merger Agreement, by virtue of the Bank Merger and without any action on the part of any holder of shares of CCB Common: (a) At the Effective Time: (i) The aggregate dollar amount and number of shares of BANK ONE UTAH Common of the par value of Thirty-five Dollars ($35) per share issued and outstanding immediately prior to the Effective Time (specifically, $30,482,165 divided into 870,919 shares) shall be continue as 870,919 issued and outstanding shares of common stock of the par value of Thirty-five Dollars ($35) per share of BANK ONE UTAH as the Continuing Bank. (ii) Each of the not more than 114,768 shares of CCB Common which shall be owned by CAPITAL or BANC ONE ARIZONA immediately prior to the Effective Time shall be cancelled and shall not represent or continue as capital stock of the Continuing Bank and shall not be exchanged for shares of BANC ONE Common. All of the shares of CCB Common held by CCB as treasury shares immediately prior to the Effective Time shall be cancelled and shall not represent capital stock of the Continuing Bank and shall not be exchanged for shares of BANC ONE Common. (iii) Each of the not more than 25,999 shares of CCB Common that shall be issued and outstanding immediately prior to the Effective Time and which is held by a shareholder other than CAPITAL or BANC ONE ARIZONA (hereinafter, the "CCB Minority Shares" and which shall include not only the 18,082 shares of CCB Common owned by minority shareholders of CCB as of the date of this Bank Merger Agreement but also the not more than 7,917 shares of CCB Common which are acquired by a minority shareholder and received upon the exercise of the CCB Options prior to the Effective Time) shall be cancelled and shall not represent or continue as capital stock of the Continuing Bank, and at the Effective Time, and without further action, shall be converted into shares of BANC ONE Common at the Bank Exchange Rate which shall be calculated as set forth in this Section 2.1(a)(iii). CCB's shareholders of record at the Effective Time (other than CAPITAL or BANC ONE ARIZONA and which shareholders other than CAPITAL or BANC ONE ARIZONA are hereinafter sometimes referred to as the "Minority Shareholders) for the CCB Minority Shares then held by them, respectively, shall be allocated and entitled to receive (upon surrender of certificates representing said shares for cancellation) shares of BANC ONE Common, which total number of shares of BANC ONE Common shall have a market value as of the Valuation Period (as hereinafter defined) equal to the product of (x) the number of CCB Minority Shares that shall be issued and outstanding immediately prior to the Effective Time, times (y) $132.00 (hereinafter the amount so-calculated pursuant to this Section 2.1(a)(iii) is referred to as the "Market Value"), subject, however, to (A) the provisions of this Section 2.1(a)(iii) with respect to the minimum and maximum number of shares to be exchanged, (B) the anti-dilution provisions of Sections 7(e) and 7(f) of this Merger Agreement, and (C) provisions set forth in Section 2.1(c) herein relative to fractional shares. The term "Valuation Period" shall mean the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") ending on the sixth NYSE trading day immediately prior to the proposed Effective Time, as designated by BANC ONE pursuant to Section 10(c) of the Holding Company Merger Agreement. For purposes of establishing the "Bank Exchange Rate," (the number of shares of BANC ONE Common into which each CCB Minority Share shall be converted at the Effective Time), each share of BANC ONE Common shall be valued at the average of the daily closing trade prices of BANC ONE Common on the NYSE during the Valuation Period as reported in The Wall Street Journal for NYSE Composite Transactions (the "BANC ONE Average Price"); provided, however, that for purposes of Section 2.1 of this Merger Agreement and the calculations herein required, said BANC ONE Average Price will be deemed not to be greater than $49.00 nor less than $40.54 per share. Such BANC ONE Average Price shall then be divided into the Market Value (as calculated pursuant to this Section 2.1(a)(iii), above) to establish (to the nearest whole share) the aggregate number of shares of BANC ONE Common into which all of the then issued and outstanding CCB Minority Shares shall be converted at the Effective Time. Such number of shares of BANC ONE Common shall then be divided by the number of CCB Minority Shares issued and outstanding immediately prior to the Effective Time with the quotient therefrom, carried to three decimal places, being the number of shares of BANC ONE Common into which each such CCB Minority Share shall be converted at the Effective Time. In the event the BANC ONE Average Price is below $40.54, the total number of shares of BANC ONE Common into which the CCB Minority Shares shall be converted will be the number of BANC ONE Common shares calculated by multiplying (x) 3.255 times (y) the number of CCB Minority Shares issued and outstanding immediately prior to the Effective Time. In the event the BANC ONE Average Price is above the $49.00, the total number of shares of BANC ONE Common into which such CCB Minority Shares shall be converted will be the number of BANC ONE Common shares calculated by multiplying (x) 2.693 times (y) the number of CCB Minority Shares that shall be issued and outstanding immediately prior to the Effective Time (not including treasury shares). The maximum and minimum total number of shares of BANC ONE Common for which all of the CCB Minority Shares shall be exchanged shall be subject to adjustment in accordance with the anti-dilution provisions of Section 2.1(e) of this Merger Agreement. The Bank Exchange Rate shall be subject to adjustment in accordance with the anti-dilution provisions of Section 2.1(f) of this Merger Agreement. In no event, however, will more than 84,746 shares of BANC ONE Common be exchanged for all the shares of CCB Common held by Minority Shareholders. (b) At the Effective Time, stock issued by reason of the Bank Merger shall be allocated to the Minority Shareholders as of the Effective Time with such shares of BANC ONE Common to be equal to the number of CCB Minority Shares outstanding immediately prior to the Effective Time multiplied by the Bank Exchange Rate as calculated pursuant to Section 2.1(a). Such allocation of BANC ONE Common for each CCB Minority Share held of record at the Effective Time made on the basis of the Bank Exchange Rate is subject to limitations relative to fractional shares as set forth in Section 2.1(c) herein and to adjustments pursuant to the anti-dilution provisions of Sections 2.1(e) and 2.1(f). (c) No certificate for fractional shares of BANC ONE Common will be issued by BANC ONE in connection with the exchange contemplated by the Bank Merger, but in lieu thereof, any holder of CCB Minority Shares shall, upon surrender of the certificate or certificates representing such CCB Minority Shares, be paid cash, without interest, by BANC ONE for such fractional shares on the basis of the BANC ONE Average Price. (d) At the Effective Time, holders of certificates formerly representing CCB Minority Shares will tender such certificates to BANC ONE and subject to the provisions set forth above relating to fractional shares, BANC ONE, or Bank One, Indianapolis, N.A., as Exchange Agent for BANC ONE, will distribute to the holders of certificates formerly representing CCB Minority Shares in exchange for and upon surrender for cancellation by such holders of a certificate or certificates formerly representing CCB Minority Shares the certificate(s) for shares of BANC ONE Common in accordance with the Bank Exchange Rate. Each certificate formerly representing CCB Minority Shares (other than certificates representing CCB Minority Shares subject to the rights of dissenting shareholders) shall be deemed for all purposes to evidence the ownership of the number of shares of BANC ONE Common and cash for fractional shares into which such shares have been converted, except, however, and notwithstanding the foregoing, that, until such surrender of the certificate or certificates formerly representing CCB Minority Shares, the holder thereof shall not be entitled to receive any dividend or other payment or distribution payable to holders of BANC ONE Common. Upon such surrender (or in lieu of surrender other provisions reasonably satisfactory to BANC ONE as are made as set forth in the next following paragraph), there shall be paid to the person entitled thereto the aggregate amount of dividends or other payments or distributions (in each case without interest) which became payable after the Effective Time on the whole shares of BANC ONE Common represented by the certificates issued upon such surrender and exchange or in accordance with such other provisions, as the case may be. After the Effective Time, the holders of certificates formerly representing CCB Minority Shares shall cease to have rights with respect to such shares (except such rights, if any, as they may have as dissenting shareholders), and except as aforesaid, their sole rights shall be to exchange said certificates for shares of BANC ONE Common and cash for fractional shares in accordance with this Bank Merger Agreement. Certificates representing CCB Minority Shares surrendered for cancellation by each shareholder entitled to exchange shares of CCB Minority Shares for shares of BANC ONE Common by reason of the Bank Merger shall be appropriately endorsed or accompanied by such appropriate instruments of transfer as BANC ONE may reasonably require; provided, however, that if there be delivered to BANC ONE by any person who is unable to produce any such certificate formerly representing CCB Minority Shares for transfer (i) evidence to the reasonable satisfaction of BANC ONE that any such certificate has been lost, wrongfully taken or destroyed, (ii) such security or indemnity as reasonably may be requested by BANC ONE to save it harmless, and (iii) evidence to the reasonable satisfaction of BANC ONE that such person is the owner of the shares theretofore represented by each certificate claimed by him or her to be lost, wrongfully taken or destroyed and that he or she is the person who would be entitled to present each such certificate and to receive shares of BANC ONE Common pursuant to this Bank Merger Agreement, then BANC ONE, in the absence of actual notice to it that any shares theretofore represented by any such certificate have been acquired by a bona fide purchaser, shall deliver to such person the certificate(s) representing shares of BANC ONE Common which such person would have been entitled to receive upon surrender of each such lost, wrongfully taken or destroyed certificate for CCB Minority Shares. (e) Except for BANC ONE's Stock Split, which has been taken into account in this Bank Merger Agreement, if prior to the Effective Time BANC ONE shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its shares of common stock or declare a dividend or make a distribution on its common stock in any security convertible into its common stock, appropriate ratable adjustment or adjustments will be made in the Bank Exchange Rate. (f) Except for BANC ONE's Stock Split, which has been taken into account in this Bank Merger Agreement, if prior to the Effective Time BANC ONE shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its shares of common stock in any security convertible into its common stock, and the "Ex-Dividend Date" (as herein defined) established for the shares being so divided or otherwise diluted (if an "Ex-Dividend Date" is not established by the NYSE) or the "Record Date" (as herein deferred) established for the shares being so divided or otherwise diluted (if an "Ex-Dividend Date" is not established by the NYSE, whichever is applicable, is subsequent to the Valuation Period (as defined in Section 2.1(a) of this Bank Merger Agreement), appropriate ratable adjustment or adjustments will be made in the Bank Exchange Rate. The "Ex-Dividend Date" is that date established by the NYSE for such distribution. The Record Date is that date established by resolution of the Board of Directors of the distributing party as the time as of which record ownership of the distributing securities will entitle the record owner(s) to such distribution. SECTION 2.2. CAPITALIZATION OF THE CONTINUING BANK. The Continuing Bank shall have capital stock of $30,482,165 divided into 870,919 shares of common stock, each of $35 par value. Following the Bank Merger, all of the capital and surplus of CCB will be added to the surplus of BANK ONE UTAH as the surplus of the Continuing Bank. At the Effective Time, the Continuing Bank shall have undivided profits, including capital reserves, which when combined with the capital and surplus will be equal to the combined capital structures of BANK ONE UTAH and CCB as set forth in the preamble of this Agreement, adjusted, however, for normal earnings and expenses between the date of this Agreement and the Effective Time. Pursuant to the Articles of Association of the Continuing Bank as set forth in Schedule 1, annexed hereto, BANK ONE UTAH will have authorized capital stock of 870,919 shares of common stock. ARTICLE III EFFECT OF THE BANK MERGER UPON CCB AND BANK ONE UTAH SECTION 3.1. GENERAL. Except as specifically set forth herein, at the Effective Time, the identity, existence, purposes, powers, objects, franchises, privileges, rights and immunities of BANK ONE UTAH shall continue unaffected and unimpaired by the Bank Merger and the corporate franchises, existence and rights of CCB shall be merged with and into the Continuing Bank. The separate existence and corporate organization of CCB, except insofar as it may be continued by statute, shall cease at the Effective Time. The Continuing Bank shall at and after the Effective Time possess all of the rights, privileges, immunities, powers and franchises, including appointments, designations and nominations, and all other rights and interests as trustee, executor, administrator, registrar or transfer agent of stocks and bonds, guardian, conservator, assignee, receiver, and in every other fiduciary capacity, in the same manner and to the same extent as was held or enjoyed by CCB or BANK ONE UTAH at the Effective Time. SECTION 3.2. PROPERTIES OF THE CONTINUING BANK. At the Effective Time, all property, real, personal and mixed, and all debts due on whatever account and all other chooses in action and all and every other interest, of or belonging to, or due to, CCB shall be taken and deemed to be transferred to and vested in the Continuing Bank without further act or deed, and the title to all real estate, or any interest therein, under the laws of Utah or of any other state or of the United States, vested in CCB shall vest in the Continuing Bank and shall not revert or be in any way impaired by reason of the Bank Merger. CCB shall execute all such instruments of transfer, if any, as shall be necessary under the laws of the State of Utah or of any other state or of the United States to vest all the right, title and interest of CCB in and to its assets in the Continuing Bank. SECTION 3.3. LIABILITIES OF CONTINUING BANK. The Continuing Bank at and after the Effective Time shall be responsible and liable for and assume all of the liabilities, deposits, contracts and obligations of CCB in the same manner and to the same extent as if the Continuing Bank had itself incurred the same or contracted therefor, and any claim existing or action or proceeding pending by or against CCB may be prosecuted to judgment as if the Bank Merger had not taken place, or the Continuing Bank may be substituted in place of CCB. Neither the rights of creditors nor any liens upon the property of CCB or BANK ONE UTAH shall be impaired by reason of the Bank Merger, but such liens shall be limited to the property upon which they were liens immediately prior to the Effective Time. The filing of this Bank Merger Agreement with the Secretary of State of the State of Utah, accompanied by such other documents as are required by Utah law shall operate as a consent by the Continuing Bank that it may be sued and served with process in the State of Utah in any suit, action or proceeding for the enforcement of any obligation or liability of CCB including any amount payable to any dissenting shareholder; as an irrevocable consent by the Continuing Bank to service upon and by the Utah Secretary of State as agent of the Continuing Bank to accept service of process in any such suit, action or proceeding for the enforcement of any such obligation or liability; as an appointment by the Continuing Bank of , Bank One, Utah, N.A., whose address is 80 West Broadway, Salt Lake City, Utah 84101, as agent of the Continuing Bank for service of process in any action, suit or proceeding to enforce any such obligation or liability of CCB, to whom the Utah Secretary of State or Department of Commerce may mail a copy of any such process served upon the Utah Secretary of State or Department of Commerce; and as an agreement by the Continuing Bank that it will promptly pay to dissenting shareholders of CCB the amounts, if any, to which they shall be entitled under applicable law. ARTICLE IV CONDITIONS This Bank Merger Agreement is subject to, and consummation of the Bank Merger herein provided for is conditioned upon the fulfillment prior to the Effective Time of each of the following conditions: (a) approval of this Bank Merger Agreement by the affirmative vote of not less than two-thirds of the outstanding shares of CCB Common and by the affirmative vote of all of the outstanding shares of BANK ONE UTAH Common; and (b) procurement of all other actions, consents, approvals or rulings, governmental or otherwise, and satisfaction of all other requirements of law (including without limitation the approval of the Office of the Comptroller of the Currency) which are, or in the opinion of counsel for CCB or BANK ONE UTAH may be, necessary to permit or enable the Continuing Bank, upon and after the Bank Merger, to conduct all or any part of the business and activities of CCB in the manner in which such business and activities were conducted by it prior to the Bank Merger. ARTICLE V TERMINATION Notwithstanding anything herein to the contrary, this Bank Merger Agreement may be terminated by (a) agreement of the parties, (b) by any party in the event the Holding Company Merger Agreement shall have been terminated and (c) by BANC ONE in accordance with Section 10(t) of the Holding Company Merger Agreement. ARTICLE VI MISCELLANEOUS SECTION 6.1. EXPENSES. The parties to this Bank Merger Agreement shall pay expenses incurred by each of them, respectively, in connection with the transactions contemplated herein. SECTION 6.2. COUNTERPARTS; CAPTIONS. This Bank Merger Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. The title of this Bank Merger Agreement and the headings herein set out are for convenience of reference only and shall not be deemed a part of this Bank Merger Agreement. SECTION 6.3. AMENDMENT. At any time before or after approval and adoption hereof by the respective shareholders of CCB and BANK ONE UTAH, this Bank Merger Agreement may be amended by agreement among CCB and BANK ONE UTAH. SECTION 6.4. GOVERNING LAW. This Bank Merger Agreement and the legal relations among the parties hereto shall be governed by and construed in accordance with the laws of the United States and of the State of Utah, except as otherwise required. SECTION 6.5. DIVIDENDS. CCB shall continue to pay dividends in accordance with its regular practices during the period between the date this Bank Merger Agreement is executed and the date of the consummation of the Bank Merger contemplated herein. IN WITNESS WHEREOF, CCB and BANK ONE UTAH have caused this Bank Merger Agreement to be executed in counterparts by their duly authorized officers and their corporate seals to be hereunto affixed as of the date first above written. BANK ONE, UTAH, NATIONAL ASSOCIATION [SEAL] By: ATTEST: CAPITAL CITY BANK [SEAL] By: ATTEST: Schedule 1 Articles of Association of Bank One, Utah, National Association Schedule 2 DIRECTORS OF THE CONTINUING BANK EXHIBIT C FORM OF PLAN OF MERGER This Plan of Merger dated as of , 199 sets forth certain of the terms relating to the merger (the "Merger") of BANC ONE ARIZONA Corporation, an Arizona corporation ("BANC ONE ARIZONA") and Capital Bancorp, a Utah corporation ("Capital"); 1. Merger and the Surviving Corporation. (a) Subject to the terms and conditions of the Agreement and Plan of Merger dated as of , 1993 (the "Merger Agreement") among CAPITAL, BANC ONE ARIZONA and BANC ONE CORPORATION, an Ohio corporation ("BANC ONE") and the sole shareholder of BANC ONE ARIZONA, CAPITAL shall be merged with and into BANC ONE ARIZONA (which shall be the surviving corporation in the Merger) in accordance with the Arizona Business Corporation Act (the "Arizona BCA"). The Merger shall become effective upon the issuance by the Secretary of State of the State of Arizona of articles of merger with respect thereto. For purposes hereof, the term "Effective Time" shall mean the time when such articles of merger is issued by the Secretary of State of the State of Arizona, and the term "Surviving Corporation" shall mean BANC ONE ARIZONA as the corporation surviving the Merger. (b) At the Effective Time, by virtue of the Merger, the Surviving Corporation shall have all the rights, privileges, immunities and powers, and shall be subject to all the duties and liabilities, of a corporation organized under the Arizona BCA, and the Surviving Corporation shall thereupon and thereafter possess all the rights, privileges, immunities, and franchises, of a public as well as of a private nature, of each of BANC ONE ARIZONA and CAPITAL; and all property, real, personal, and mixed, and all debts due on whatever account, and all other chooses in action, and all and every other interest, of or belonging to or due to each of BANC ONE ARIZONA and CAPITAL, shall be taken and deemed to be transferred to and vested in the Surviving Corporation without further act or deed; and the title to any real estate, or any interest therein, vested in either BANC ONE ARIZONA or CAPITAL shall not revert or be in any way impaired by reason of the Merger, and the Surviving Corporation shall be responsible and liable for all the liabilities and obligations of each of BANC ONE ARIZONA and CAPITAL, all with the full effect provided for in the Arizona BCA. (c) The Surviving Corporation shall be governed by the laws of the State of Arizona. The Articles of Incorporation of BANC ONE ARIZONA in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation at and after the Effective Time. (d) The By-laws of BANC ONE ARIZONA in effect immediately prior to the Effective Time shall be the By-laws of the Surviving Corporation at and after the Effective Time, until altered, amended or repealed as provided therein and in the Articles of Incorporation of the Surviving Corporation. (e) The directors of BANC ONE ARIZONA in office immediately prior to the Effective Time shall be the directors of the Surviving Corporation at and after the Effective Time, until the next annual meeting of shareholders at which their respective successors are elected and qualified in accordance with the By-laws of the Surviving Corporation. (f) The officers of BANC ONE ARIZONA in office immediately prior to the Effective Time shall be the officers of the Surviving Corporation at and after the Effective Time, holding the offices in the Surviving Corporation which they held in BANC ONE ARIZONA immediately prior thereto, until their successors are elected or appointed in accordance with the By-laws of the Surviving Corporation and shall have duly qualified. 2. Conversion of Stock. (a) At the Effective Time: (i) Each of the not more than 150,345 shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time (excluding any shares held by CAPITAL as treasury shares) shall thereupon and without further action be converted into shares of BANC ONE Common at the Exchange Rate which shall be calculated as set forth in this Section 2(a)(i). CAPITAL's shareholders of record at the Effective Time for the shares of CAPITAL Common then held by them, respectively, shall be allocated and entitled to receive (upon surrender of certificates representing said shares for cancellation) shares of BANC ONE Common, which total number of shares of BANC ONE Common shall have a market value as of the Valuation Period (as hereinafter defined) equal to the product of (x) the number of shares of CAPITAL Common that shall be issued and outstanding (not including treasury shares) immediately prior to the Effective Time, times (y) $100.35 (hereinafter the amount so-calculated pursuant to this Section 2(a)(i) is referred to as the "Market Value"), subject, however, to (A) the provisions of this Section 2(a)(i) with respect to the minimum and maximum number of shares to be exchanged, (B) the anti-dilution provisions of Sections 2(e) and 2(f) of this Plan of Merger, and (C) provisions set forth in Section 2(c) herein relative to fractional shares. The term "Valuation Period" shall mean the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") ending on the sixth NYSE trading day immediately prior to the proposed Effective Time, as designated by BANC ONE pursuant to Section 10(c) of the Merger Agreement. For purposes of establishing the "Exchange Rate," (the number of shares of BANC ONE Common into which each share of CAPITAL Common shall be converted at the Effective Time), each share of BANC ONE Common shall be valued at the average of the daily closing trade prices of BANC ONE Common on the NYSE during the Valuation Period as reported in The Wall Street Journal for NYSE Composite Transactions (the "BANC ONE Average Price"); provided, however, that for purposes of Section 2 hereof and the calculations herein required, said BANC ONE Average Price will be deemed not to be greater than $49.00 nor less than $40.54 per share. Such BANC ONE Average Price shall then be divided into the Market Value (as calculated pursuant to this Section 2(a)(i), above) to establish (to the nearest whole share) the aggregate number of shares of BANC ONE Common into which all of the then issued and outstanding shares of CAPITAL Common shall be converted at the Effective Time. Such number of shares of BANC ONE Common shall then be divided by the number of shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time with the quotient therefrom, carried to three decimal places, being the number of shares of BANC ONE Common into which each share of CAPITAL Common shall be converted at the Effective Time. In the event the BANC ONE Average Price is below $40.54, the total number of shares of BANC ONE Common into which the shares of CAPITAL Common shall be converted will be the number of BANC ONE Common shares calculated by multiplying (x) 2.475 times (y) the number of shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time (not including treasury shares). In the event the BANC ONE Average Price is above the $49.00, the total number of shares of BANC ONE Common into which the shares of CAPITAL Common shall be converted will be the number of BANC ONE Common shares calculated by multiplying (x) 2.048 times (y) the number of shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time (not including treasury shares). The maximum and minimum total number of shares of BANC ONE Common for which the shares of CAPITAL Common shall be exchanged shall be subject to adjustment in accordance with the anti-dilution provisions of Section 2(e) of this Plan of Merger. The Exchange Rate shall be subject to adjustment in accordance with the anti-dilution provisions of Section 2(f) of this Plan of Merger. (ii) The 500 shares of BANC ONE ARIZONA Common issued and outstanding immediately prior to the Effective Time shall continue to be issued and outstanding shares of common stock without par value of the Surviving Corporation. (iii) All of the shares of CAPITAL Common held by CAPITAL as treasury shares immediately prior to the Effective Time shall be cancelled and shall not represent CAPITAL stock of the Surviving Corporation and shall not be exchanged for shares of BANC ONE Common. (b) CAPITAL's shareholders of record at the Effective Time, for the shares of CAPITAL Common then held by them, respectively, shall be allocated and be entitled to receive (upon surrender of certificates formerly representing shares of CAPITAL Common for cancellation) certificates for shares of BANC ONE Common as shall be equal to the number of shares of CAPITAL Common outstanding immediately prior to the Effective Time multiplied by the Exchange Rate. (c) No certificate for fractional shares of BANC ONE Common will be issued by BANC ONE in connection with the exchange contemplated by the Merger, but in lieu thereof, any holder of CAPITAL Common shall, upon surrender of the certificate or certificates representing such CAPITAL Common, be paid cash, without interest, by BANC ONE for such fractional shares on the basis of the BANC ONE Average Price. (d) Except for the 5 shares for 4 shares stock split declared on BANC ONE Common by the Board of Directors of BANC ONE on July 20, 1993 and payable August 31, 1993 to shareholders of record on August 3, 1993, which stock split has been taken into account in this Plan of Merger, if prior to the Effective Time BANC ONE or CAPITAL shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its shares of common stock or declare a dividend or make a distribution on its common stock in any security convertible into its common stock, appropriate ratable adjustment or adjustments will be made in the Exchange Rate. (e) Except for the 5 shares for 4 shares stock split declared on BANC ONE Common by the Board of Directors of BANC ONE on July 20, 1993 and payable August 31, 1993 to shareholders of record on August 3, 1993, which stock split has been taken into account in this Plan of Merger, if prior to the consummation of this Merger BANC ONE or CAPITAL shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its shares of common stock in any security convertible into its common stock, and the "Ex-Dividend Date" (as herein defined) established for the shares being so divided or otherwise diluted (if an "Ex-Dividend Date" is established by the NYSE) or the "Record Date" (as herein defined established for the shares being so divided or otherwise diluted (if an "Ex-Dividend Date" is not established by the NYSE), whichever is applicable, is subsequent to the Valuation Period (as defined in Section 2.1(a) of this Merger Agreement), appropriate ratable adjustment or adjustments will be made in the Exchange Rate. The "Ex-Dividend Date" is that date established by the NYSE for such distribution. The Record Date is that date established by resolution of the Board of Directors of the distributing party as the time as of which record ownership of the distributing securities will entitle the record owner(s) to such distribution. 3. Dissenting Shares. Shareholders of CAPITAL Common who do not vote their shares of CAPITAL Common in favor of the Merger and otherwise perfect applicable dissenters' rights and shareholders of CAPITAL Preferred who perfect applicable dissenters' rights will be entitled to dissenters or appraisal rights, if any, pursuant to applicable provisions of the Utah BCA. 4. Surrender of Certificates. (a) Prior to the Effective Time, BANC ONE shall appoint Bank One, Indianapolis, N.A. to act as exchange agent in respect of the Merger (said bank, in its capacity as such exchange agent, being hereinafter called the "Exchange Agent"). (b) Promptly following the Effective Time, BANC ONE shall provide to Exchange Agent shares of BANC ONE Common and funds necessary to pay for the shares of CAPITAL Common pursuant to Section 2. (c) As soon as practicable after the Effective Time, and subject to the provisions of Section 2 relating to fractional shares, BANC ONE, or Bank One, Indianapolis, N.A., as Exchange Agent for BANC ONE, will distribute to the former holders of CAPITAL Common, in exchange for and upon surrender for cancellation by such holders of a certificate or certificates formerly representing shares of CAPITAL Common, the certificate(s) for shares of BANC ONE Common in accordance with the Common Exchange Rate. Each certificate formerly representing CAPITAL Common (other than certificates representing shares of CAPITAL Common subject to the rights of dissenting shareholders) shall be deemed for all purposes to evidence the ownership of the number of shares of BANC ONE Common and cash for fractional shares into which such shares have been converted, except, however, and notwithstanding the foregoing, that, until such surrender of the certificate or certificates formerly representing shares of CAPITAL Common, the holder thereof shall not be entitled to receive any dividend or other payment or distribution payable to holders of BANC ONE Common. Upon such surrender (or in lieu of surrender other provisions reasonably satisfactory to BANC ONE as are made as set forth in the next following paragraph), there shall be paid to the person entitled thereto the aggregate amount of dividends or other payments or distributions (in each case without interest) which became payable after the Effective Time on the whole shares of BANC ONE Common represented by the certificates issued upon such surrender and exchange or in accordance with such other provisions, as the case may be. After the Effective Time, the holders of certificates formerly representing shares of CAPITAL Common shall cease to have rights with respect to such shares (except such rights, if any, as they may have as dissenting shareholders), and except as aforesaid, their sole rights shall be to exchange said certificates for shares of BANC ONE Common and cash for fractional shares in accordance with this Merger Agreement. Certificates representing shares of CAPITAL Common surrendered for cancellation by each shareholder entitled to exchange shares of CAPITAL Common for shares of BANC ONE Common by reason of the Merger shall be appropriately endorsed or accompanied by such appropriate instruments of transfer as BANC ONE may reasonably require; provided, however, that if there be delivered to BANC ONE by any person who is unable to produce any such certificate formerly representing shares of CAPITAL Common for transfer (i) evidence to the reasonable satisfaction of BANC ONE that any such certificate has been lost, wrongfully taken or destroyed, (ii) such security or indemnity as reasonably may be requested by BANC ONE to save it harmless, and (iii) evidence to the reasonable satisfaction of BANC ONE that such person is the owner of the shares theretofore represented by each certificate claimed by him or her to be lost, wrongfully taken or destroyed and that he or she is the person who would be entitled to present each such certificate and to receive shares of BANC ONE Common pursuant to this Merger Agreement, then BANC ONE, in the absence of actual notice to it that any shares theretofore represented by any such certificate have been acquired by a bona fide purchaser, shall deliver to such person the certificate(s) representing shares of BANC ONE Common which such person would have been entitled to receive upon surrender of each such lost, wrongfully taken or destroyed certificate of CAPITAL Common. EXHIBIT D (FORM OF UNDERTAKING BY AFFILIATES) UNDERTAKING OF AFFILIATE , 199 In consideration and anticipation of the receipt by the undersigned of Common Stock of BANC ONE CORPORATION ("BANC ONE") upon consummation of a proposed merger (the "Merger") of CAPITAL BANCORP ("CAPITAL") and BANC ONE ARIZONA CORPORATION, a subsidiary of BANC ONE, pursuant to the terms of a certain Agreement and Plan of Merger dated , 1993, (the "Merger Agreement"), or of the related merger of CAPITAL's subsidiary, Capital City Bank ("CCB") with and into Bank One, Utah, National Association, and in view of the fact that the undersigned has, pursuant to the Merger Agreement, been identified as a possible "affiliate" of CAPITAL and/or CCB within the meaning of Rules 144 and 145 ("Rule 144" and "Rule 145," respectively), as amended, of the General Rules and Regulations under the Securities Act of 1933, as amended (the "1933 Act"), the undersigned (the "Affiliate") represents and undertakes as follows: The Affiliate shall not offer, sell or otherwise dispose of or transfer any of the shares of the Common Stock of BANC ONE to be received by him upon consummation of the Merger, including shares of BANC ONE Common Stock acquired by the Affiliate within the two year period following the Merger as a result of the Affiliate's exercise of options on BANC ONE Common Stock acquired in substitution for unexercised options on CAPITAL common stock, (the "Shares"), except the Affiliate may offer, sell or transfer the Shares (1) in a manner and to the extent permitted by the applicable provisions of Rule 145, (2) pursuant to an effective registration statement relating to the Shares under the 1933 Act, or (3) in a transaction which, in the opinion of counsel for the Affiliate or as described in a "no-action" or interpretive letter from the staff of the Securities and Exchange Commission, in each case reasonably satisfactory in form and substance to BANC ONE, is exempt from the registration requirements of the 1933 Act. BANC ONE's transfer agents may be given appropriate instructions prohibiting transfer of the Shares unless these provisions are complied with and the certificate(s) for the Shares may bear a restrictive legend in substantially the following form: The shares represented by this certificate have been issued to the registered holder as a result of a transaction to which Rule 145 under the Securities Act of 1933, as amended (the "1933 Act") applies. The shares represented by this certificate may not be sold, transferred or assigned, and the issuer shall not be required to give effect to any attempted sale, transfer or assignment, except pursuant to (i) a registration statement then in effect under the 1933 Act, (ii) a transaction permitted by Rule 145 as to which the issuer has received evidence of compliance with the provisions of said Rule 145 reasonably satisfactory to it or (iii) a transaction which, in the opinion of counsel for the Affiliate or as described in a 'no action' or interpretive letter from the staff of the Securities and Exchange Commission, in each case reasonably satisfactory in form and substance to the issuer, is exempt from the registration requirements of the 1933 Act. The restrictions of this paragraph shall become null and void and this paragraph shall have no effect on and after . The undersigned undertakes to take such action as shall be necessary to cause the Shares to be received by the undersigned to be registered in a manner that will allow for the placement of a restrictive legend on the certificate(s) representing such Shares. The undersigned further undertakes that, if it is necessary in order to preserve pooling-of-interests accounting treatment, none of the Shares to be received by the undersigned, directly or indirectly, will be sold or otherwise disposed of during a period of time beginning with the effective date of the Merger and ending with a date upon which financial results of at least 30 days of post-merger combined operations have been first published by BANC ONE in accordance with SEC Accounting Series Release No. 130 as amended by Release No. 135 (the "Releases"), provided that BANC ONE hereby agrees that such financial results will be published not later than four months from the Merger. I hereby acknowledge that pursuant to the provisions of Rules 144 and 145 certain other persons or entities related to me are, or may be, subject to the foregoing restrictions on the resale of BANC ONE Common Stock received by them pursuant to the Merger, which persons include (i) any of my relatives or my spouse, or any relative of my spouse, who has the same home as me; (ii) any trust or estate in which I or any of the persons specified in the preceding clause collectively own ten percent (10%) or more of the total beneficial interest, or of which I or any of such persons serve as trustee, executor, or in any similar capacity; and (iii) any corporation or other organization (other than BANC ONE) in which I or any of the persons specified above are the beneficial owners, collectively, of ten percent (10%) or more of the equity interest therein. I hereby further acknowledge that I have advised any and all of such persons that they are, or may be, subject to the provisions of said Rules 144 and 145, and I hereby represent that I will use my best efforts to ensure that such persons comply with the provisions of this letter and Rules 144 and 145, as applicable, upon the resale of any Common Stock of BANC ONE. This Undertaking is conditioned upon BANC ONE fulfilling its commitment that (i) during the two-year period immediately following the Merger, BANC ONE shall make available adequate current public information about BANC ONE, as that terminology is used in and as required by SEC Rule 144(c), and (ii) it will publish financial results of at least 30 days of post-merger combined operations in accordance with the Releases not later than four months from the Merger. IN WITNESS WHEREOF, the Affiliate has made this undertaking as of the day and year first above written. EXHIBIT E (OPINION OF COUNSEL FOR CAPITAL) , 1993 BANC ONE CORPORATION 100 East Broad Street Columbus, Ohio 43271 Gentlemen: We are special counsel to CAPITAL BANCORP, a Utah corporation and a registered bank holding company ("CAPITAL"), and to CAPITAL CITY BANK ("CCB"), a Utah corporation. We have acted as counsel for CAPITAL in connection with the merger (the "Merger") of CAPITAL with and into BANC ONE ARIZONA CORPORATION ("BANC ONE ARIZONA"), an Arizona corporation and a wholly-owned subsidiary of BANC ONE CORPORATION ("BANC ONE"), pursuant to which each of the issued and outstanding shares of CAPITAL's Common Stock will be converted into shares of BANC ONE Common Stock. The Merger is to be consummated pursuant to the terms of an Agreement and Plan of Merger dated , 1993 ("Merger Agreement"), between BANC ONE ARIZONA and CAPITAL and joined in by BANC ONE. We have also acted as counsel for CCB in connection with the merger (the "Bank Merger") of CCB with and into BANK ONE, UTAH, NATIONAL ASSOCIATION ("BANK ONE UTAH"), a national banking association and a wholly-owned subsidiary of BANC ONE ARIZONA, pursuant to which each of the issued and outstanding shares of CCB's Common Stock not owned by CAPITAL will be converted into shares of BANC ONE Common Stock. Bank Merger is to be consummated pursuant to the terms of a Bank Merger Agreement dated , 1993 between CCB and BANK ONE UTAH. This opinion is furnished to you pursuant to Section 18(d) of the Merger Agreement. Except as otherwise indicated herein, capitalized terms used in this Opinion Letter are defined in the Merger Agreement and/or Bank Merger Agreement or the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991), respectively. In the event of any inconsistency between the definition of any such term in the Merger Agreement and/or the Bank Merger Agreement and the Accord, the definition set forth in the Accord shall govern. This Opinion Letter is governed by, and is to be interpreted in accordance with, the Accord. As a consequence, it is subject to a number of qualifications, exceptions, definitions, limitations on coverage, and other limitations, all as more particularly described in the Accord, and this Opinion Letter should be read in conjunction therewith. The law covered by the opinions expressed herein is limited solely to the laws of the State of Utah and the Federal Law of the United States generally. While we are not licensed in Utah, we have familiarized ourselves with Utah law and have relied upon the opinions of Utah Counsel to the extent we deem necessary to render this opinion as special counsel. Based upon and subject to the foregoing, we are of the opinion that: 1. The Merger Agreement is enforceable against CAPITAL. 2. The Bank Merger Agreement is enforceable against CCB. 3. Except as set forth in the CAPITAL Disclosure Letter, the execution and delivery by CAPITAL of, and the performance by CAPITAL of its agreements in, the Merger Agreement and the execution and delivery by CCB of, and the performance by CCB of its agreements in the Bank Merger Agreement do not (a) violate the respective Constituent Documents of CAPITAL and CCB; (b) violate applicable provisions of statutory law or regulation; (c) breach or otherwise violate any existing obligation of CAPITAL or CCB under any Court Orders of which we have knowledge; or (d) breach, or result in a default under, any obligation of CAPITAL or CCB under an Other Agreement of which we have actual knowledge. 4. Insofar as we are aware, the conditions to obligations of BANC ONE and BANC ONE ARIZONA as set forth in the Merger Agreement have been satisfied or waived by BANC ONE and the representations and warranties of CAPITAL as set forth in the Merger Agreement were true as of the date of the Merger Agreement and are, to the extent required by Section 18(c) of the Merger Agreement, true as of the date hereof. The General Qualifications apply to each of the opinions set forth above. We are rendering this opinion solely for the benefit of BANC ONE, BANC ONE ARIZONA and BANK ONE UTAH in connection with the transactions described in the Merger Agreement and Bank Merger Agreement. It may not be relied upon by any other person or for any other person, or quoted or filed with any regulatory agency without our prior approval. Very truly yours, EXHIBIT F (OPINION OF COUNSEL FOR BANC ONE CORPORATION AND BANC ONE ARIZONA CORPORATION) , 1993 Capital Bancorp 2200 South State Street Salt Lake City, Utah 84115 Attention: Chairman Gentlemen: I am counsel for BANC ONE CORPORATION, an Ohio corporation and a registered bank holding company ("BANC ONE"), BANC ONE ARIZONA CORPORATION ("BANC ONE ARIZONA"), an Arizona corporation, a registered bank holding company and wholly owned subsidiary of BANC ONE, and BANK ONE, UTAH, NATIONAL ASSOCIATION ("BANK ONE UTAH"), a national banking association and wholly owned subsidiary of BANC ONE ARIZONA. I have acted as counsel for BANC ONE and BANC ONE ARIZONA in connection with the merger (the "Merger") of CAPITAL BANCORP ("CAPITAL") and BANC ONE ARIZONA pursuant to which each of the issued and outstanding shares of CAPITAL Common will be converted into shares of BANC ONE Common. Such Merger is to be consummated pursuant to the terms of an Agreement and Plan of Merger dated , 1993 ("Merger Agreement") between CAPITAL, BANC ONE ARIZONA and joined in by BANC ONE. I have also acted as counsel for BANK ONE UTAH in connection with the merger (the "Bank Merger) of CAPITAL CITY BANK ("CCB"), a subsidiary of CAPITAL, pursuant to which each of the issued and outstanding shares of CCB Common which is not owned by CAPITAL will be converted into shares of BANC ONE Common. Such Bank Merger is to be consummated pursuant to the terms of a Bank Merger Agreement dated , 1993 (the "Bank Merger Agreement") between CCB and BANK ONE UTAH. This opinion is furnished to you pursuant to Section 19(c) of the Merger Agreement. Except as otherwise indicated herein, capitalized terms used in this Opinion Letter are defined in the Merger Agreement and/or Bank Merger Agreement or the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991), respectively. In the event of any inconsistency between the definition of any such term in the Merger Agreement and/or the Bank Merger Agreement and the Accord, the definition set forth in the Accord shall govern. This Opinion Letter is governed by, and is to be interpreted in accordance with, the Accord. As a consequence, it is subject to a number of qualifications, exceptions, definitions, limitations on coverage, and other limitations, all as more particularly described in the Accord, and this Opinion Letter should be read in conjunction therewith. The law covered by the opinions expressed herein is limited solely to the laws of the State of Ohio, except as it relates to the status of BANC ONE ARIZONA under Arizona law, the status of BANK ONE UTAH under Utah law and the Federal Law of the United States generally. Based upon and subject to the foregoing, I am of the opinion that: 1. The Merger Agreement is enforceable against BANC ONE. 2. The Merger Agreement is enforceable against BANC ONE ARIZONA. 3. The Bank Merger Agreement is enforceable against BANK ONE UTAH. 4. Except as set forth in the BANC ONE Disclosure Letter, the execution and delivery by BANC ONE and BANC ONE ARIZONA of, and the performance by BANC ONE and BANC ONE ARIZONA of their agreements in, the Merger Agreement and the execution and delivery by BANK ONE UTAH and the performance by BANK ONE UTAH of its agreements in the Bank Merger Agreement, do not (a) violate the respective Constituent Documents of BANC ONE, BANC ONE ARIZONA and BANK ONE UTAH; (b) violate applicable provisions of statutory law or regulation; (c) breach or otherwise violate any existing obligation of BANC ONE, BANC ONE ARIZONA or BANK ONE UTAH under any Court Orders of which I am aware; or (d) breach, or result in a default under, any obligation of BANC ONE, BANC ONE ARIZONA, or BANK ONE UTAH under an Other Agreement of which I am aware. 5. Insofar as I am aware, the conditions to obligations of CAPITAL as set forth in the Merger Agreement have been satisfied or waived by CAPITAL and the representations and warranties of BANC ONE as set forth in the Merger Agreement were true as of the date of the Merger Agreement and are, to the extent required by Section 19(b) of the Merger Agreement, true as of the date hereof. 6. I hereby confirm to you, pursuant to the requirements of Section 13(e) of the Merger Agreement, that there are no actions or proceedings against BANC ONE or any of its subsidiaries, pending or overtly threatened in writing, before any court, governmental agency or arbitrator which (i) seek to affect the enforceability of the Merger Agreement or (ii) come within the objective standard established in the Merger Agreement for disclosure, except as set forth in the BANC ONE Disclosure Letter. 7. I have participated in the preparation of the Registration Statement on Form S-4 or other appropriate registration statement form (No. ) of BANC ONE ("Registration Statement"), and in rendering this opinion have limited my review of the facts concerning the Registration Statement to discussions with and inquiry of Directors, officers and employees of BANC ONE, and Coopers & Lybrand, the independent accountants who examined certain of the financial statements of BANC ONE included in the Registration Statement, and based thereon and subject to the General Qualifications, I am of the opinion that such Registration Statement, and the Prospectus included in the Registration Statement (except as to financial statements, other financial data and any information concerning CAPITAL included therein, as to which I express no opinion) at the time the Registration Statement became effective under the Securities Act of 1933 (the "1933 Act") complied as to form in all material respects with the 1933 Act and the rules and regulations of the Securities and Exchange Commission thereunder. 8. I confirm that the Registration Statement has become effective under the 1933 Act, and to the best of my Actual Knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the 1933 Act. 9. I have not checked the accuracy or completeness of, or otherwise verified, any statement of fact contained in the Registration Statement and Prospectus. Based on the participations, discussions and inquiries described above, however, I have no reason to believe that the Registration Statement (except as to financial statements, other financial data and any information concerning CAPITAL included therein, as to which no view is expressed) at the time it became effective and as of the date of this letter contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (except as to financial statements, other financial data and any information concerning CAPITAL included therein, as to which no view is expressed) at such times contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or that since the effective date of the Registration Statement, any event has occurred which should have been set forth in an amendment or supplement to the Registration Statement or the Prospectus which has not been set forth in such an amendment or supplement. The General Qualifications apply to all of the opinions set forth above. I am rendering this opinion solely for the benefit of CAPITAL in connection with the transactions described in the Merger Agreement. It may not be relied upon by any other person or for any other person. Very truly yours, FIRST AGREEMENT AMENDING AGREEMENT and PLAN OF MERGER This First Agreement Amending Agreement and Plan of Merger is dated as of November 23, 1993 between Capital Bancorp (hereinafter called "CAPITAL") and Banc One Arizona Corporation (hereinafter called "BANC ONE ARIZONA") and joined in by BANC ONE CORPORATION (hereinafter called "BANC ONE"). W I T N E S S E T H WHEREAS, the parties hereto have entered into an Agreement and Plan of Merger dated as of September 17, 1993 (hereinafter called the "Merger Agreement") providing for the merger of CAPITAL into BANC ONE ARIZONA and the exchange of shares of BANC ONE Common Stock for the shares of CAPITAL Common Stock; WHEREAS, Section 10(n) of the Merger Agreement provides that BANC ONE will initiate a pre-acquisition investigation and review of the books, records and facilities of CAPITAL and CAPITAL's subsidiary, Capital City Bank ("CCB"), which investigation will be completed not later than 60 days following the date of said Merger Agreement; WHEREAS, Section 25(c) of the Merger Agreement provides BANC ONE a period of seven days following such investigation to terminate the Merger Agreement in the event such investigation discloses matters which BANC ONE in good faith believes to be either (i) inconsistent in any material respect with any of the representations and warranties of CAPITAL contained in the Merger Agreement or (ii), in the reasonable judgment of the Board of Directors of BANC ONE, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of CAPITAL and CCB on a consolidated basis or (y) to deviate materially and adversely from CAPITAL's audited financial statements for the year ended December 31, 1992; WHEREAS, the parties wish to extend the period during which BANC ONE may perform an additional pre-acquisition investigation. STATEMENT OF AMENDMENT NOW THEREFORE, the parties hereby agree that Section 10(n) of the Merger Agreement is amended to read in its entirety as follows: (n) BANC ONE will initiate a pre-acquisition investigation and review of the books, records and facilities of CAPITAL and CCB and will complete such pre-acquisition investigation not later than the close of business on December 3, 1993. BANC ONE shall advise CAPITAL at the conclusion of such pre-acquisition investigation of all matters then known to BANC ONE which BANC ONE shall in good faith determine to be either (i) inconsistent in any material and adverse respect with any of the representations and warranties of CAPITAL or CCB contained in this Merger Agreement or in the Bank Merger Agreement or (ii), in the reasonable judgment of the Board of Directors of BANC ONE, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of CAPITAL and CCB on a consolidated basis or (y) to deviate materially and adversely from CAPITAL's audited financial statements for the year ended December 31, 1992. BANC ONE shall have the right to terminate this Merger Agreement as set forth in Section 25(c). Except as amended by this Agreement, the Merger Agreement and the exhibits thereto remain in full force and effect without alteration or change. IN WITNESS WHEREOF, the parties hereto have set their hands on the date and in the year first above written. BANC ONE CORPORATION ATTEST: By: ROMAN J. GERBER CHARLES F. ANDREWS Roman J. Gerber Charles F. Andrews Executive Vice President Assistant Secretary CAPITAL BANCORP ATTEST: By: NORTON PARKER KENT R. JONES Norton Parker Kent R. Jones Chairman of the Board Assistant Secretary BANC ONE ARIZONA CORPORATION ATTEST: By: JOHN W. WESTMAN RAND D. HADDOCK John W. Westman Rand D. Haddock President Secretary SECOND AGREEMENT AMENDING AGREEMENT and PLAN OF MERGER This Second Agreement Amending Agreement and Plan of Merger is dated as of December 5, 1993 between Capital Bancorp (hereinafter called "CAPITAL") and Banc One Arizona Corporation (hereinafter called "BANC ONE ARIZONA") and joined in by BANC ONE CORPORATION (hereinafter called "BANC ONE"). W I T N E S S E T H WHEREAS, the parties hereto have entered into an Agreement and Plan of Merger dated as of September 17, 1993 as amended by a First Agreement Amending Agreement and Plan of Merger dated as of November 23, 1993 (hereinafter called the "Merger Agreement") providing for the merger of CAPITAL into BANC ONE ARIZONA and the exchange of shares of BANC ONE Common Stock for the shares of CAPITAL Common Stock; WHEREAS, Section 10(n) of the Merger Agreement provides that BANC ONE will initiate a pre-acquisition investigation and review of the books, records and facilities of CAPITAL and CAPITAL's subsidiary, Capital City Bank ("CCB"), which investigation will be completed not later than the close of business on December 3, 1993; WHEREAS, Seaction 25(c) of the Merger Agreement provides BANC ONE a period of seven days following such investigation to terminate the Merger Agreement in the event such investigation discloses matters which BANC ONE in good faith believes to be either (i) inconsistent in any material respect with any of the representations and warranties of CAPITAL contained in the Merger Agreement or (ii), in the reasonable judgment of the Board of Directors of BANC ONE, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of CAPITAL and CCB on a consolidated basis or (y) to deviate materially and adversely from CAPITAL's audited financial statements for the year ended December 31, 1992; WHEREAS, the parties wish to extend the period during which BANC ONE may perform a pre-acquisition investigation. STATEMENT OF AMENDMENT NOW THEREFORE, the parties hereby agree that Section 10(n) of the Merger Agreement is amended to read in its entirety as follows: (n) BANC ONE will initiate a pre-acquisition investigation and review of the books, records and facilities of CAPITAL and CCB and will complete such pre-acquisition investigation not later than the close of business on December 10, 1993. BANC ONE shall advise CAPITAL at the conclusion of such pre-acquisition investigation of all matters then known to BANC ONE which BANC ONE shall in good faith determine to be either (i) inconsistent in any material and adverse respect with any of the representations and warranties of CAPITAL or CCB contained in this Merger Agreement or in the Bank Merger Agreement or (ii), in the reasonable judgment of the Board of Directors of BANC ONE, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of CAPITAL and CCB on a consolidated basis or (y) to deviate materially and adversely from CAPITAL's audited financial statements for the year ended December 31, 1992. BANC ONE shall have the right to terminate this Merger Agreement as set forth in Section 25(c). Except as amended by this Agreement, the Merger Agreement and the exhibits thereto remain in full force and effect without alteration or change. IN WITNESS WHEREOF, the parties hereto have set their hands on the date and in the year first above written. BANC ONE CORPORATION ATTEST: By: ROMAN J. GERBER CHARLES F. ANDREWS Roman J. Gerber Charles F. Andrews Executive Vice President Assistant Secretary CAPITAL BANCORP ATTEST: By: NORTON PARKER KENT R. JONES Norton Parker Kent R. Jones Chairman of the Board Assistant Secretary BANC ONE ARIZONA CORPORATION ATTEST: By: JOHN W. WESTMAN RAND D. HADDOCK John W. Westman Rand D. Haddock President Secretary THIRD AGREEMENT AMENDING AGREEMENT and PLAN OF MERGER This Third Agreement Amending Agreement and Plan of Merger is dated as of December 13, 1993 between Capital Bancorp (hereinafter called "CAPITAL") and Banc One Arizona Corporation (hereinafter called "BANC ONE ARIZONA") and joined in by BANC ONE CORPORATION (hereinafter called "BANC ONE"). W I T N E S S E T H WHEREAS, the parties hereto have entered into an Agreement and Plan of Merger dated as of September 17, 1993, as amended by a First Agreement Amending Agreement and Plan of Merger dated as of November 23, 1993, and as further amended by a Second Agreement Amending Agreement and Plan of Merger dated as of December 5, 1993 (hereinafter, the "Merger Agreement") providing for the merger of CAPITAL into BANC ONE ARIZONA and the exchange of shares of BANC ONE Common Stock for the shares of CAPITAL Common Stock; WHEREAS, the Merger Agreement provides the maximum and minimum number of shares of BANC ONE Common Stock to be exchanged for the shares of CAPITAL and CAPITAL's subsidiary, Capital City Bank ("CCB"), the maximum and minimum exchange ratios related thereto and the basis upon which the number of shares of BANC ONE Common Stock to be exchanged for each share of CAPITAL Common Stock and CCB Common Stock shall be calculated; and WHEREAS, the parties have agreed to modify the Merger Agreement to amend matters related to the maximum and minimum number of shares of BANC ONE Common Stock to be exchanged in the transaction, the minimum and maximum exchange ratios related thereto and the basis upon which the number of shares of BANC ONE Common Stock to be exchanged for each share of CAPITAL Common Stock and CCB Common Stock shall be calculated. STATEMENT OF AMENDMENT NOW THEREFORE, the parties hereby agree that the Merger Agreement shall be and is hereby amended to read as follows: A. The last sentence of the fifth paragraph of the Merger Agreement is amended to read in its entirety as follows: Except as may be required upon application of Sections 7(e) and/or 7(f) of this Merger Agreement, but after giving effect to the Stock Split, BANC ONE will issue not more than 433,850 shares of BANC ONE Common in connection with the transactions contemplated by this Merger Agreement, including not more than 353,461 shares of BANC ONE Common in connection with the Holding Company Merger and not more than 80,389 shares of BANC ONE Common in connection with the Bank Merger. B. Section 7 of the Merger Agreement is amended as follows: (i) each reference to $100.35 is amended to read $95.33; (ii) each reference to 2.475 is amended to read 2.351; and (iii) each reference to 2.048 is amended to read 1.946. C. Exhibit B, the Bank Merger Agreement, and Exhibit C, the Form of Plan of Merger, to the Merger Agreement are amended to read in their entirety, respectively, as attached hereto and incorporated herein by reference as Exhibit 1 and Exhibit 2. Except as amended by this Agreement, the Merger Agreement and the exhibits thereto remain in full force and effect without alteration or change. IN WITNESS WHEREOF, the parties hereto have set their hands on the date and in the year first above written. BANC ONE CORPORATION ATTEST: By: ROMAN J. GERBER CHARLES F. ANDREWS Roman J. Gerber Assistant Secretary Executive Vice President CAPITAL BANCORP ATTEST: By: NORTON PARKER KENT R. JONES Norton Parker Kent R. Jones Chairman of the Board Assistant Secretary BANC ONE ARIZONA CORPORATION ATTEST: By: JOHN W. WESTMAN RAND D. HADDOCK John W. Westman Rand D. Haddock President Secretary EXHIBIT 1 BANK MERGER AGREEMENT This Bank Merger Agreement made as of this 14th day of December, 1993 between Bank One, Utah, National Association, Salt Lake City, Utah ("BANK ONE UTAH") and Capital City Bank, South Salt Lake City, Utah ("CCB"). WITNESSETH WHEREAS, BANK ONE UTAH is a national banking association with its principal office located in Salt Lake City, Salt Lake County, Utah. BANK ONE UTAH is a wholly owned direct subsidiary of Banc One Arizona Corporation, Phoenix, Arizona ("BANC ONE ARIZONA") and a wholly owned indirect subsidiary of BANC ONE CORPORATION ("BANC ONE"). As of the date hereof, BANK ONE UTAH has 870,919 shares of authorized capital stock consisting solely of common stock with par value of $35.00 per share ("BANK ONE UTAH Common"), all of which are issued and outstanding. As of June 30, 1993, BANK ONE UTAH had capital of $28,277,165, surplus of $28,277,165 and undivided profits of $14,217,508; and WHEREAS, CCB is a corporation organized under the laws of the State of Utah with its principal office located in South Salt Lake City, Salt Lake County, Utah. At the present time, CCB is a subsidiary of Capital Bancorp ("CAPITAL"). At the effective time of the merger provided for herein, CAPITAL will merge with BANC ONE ARIZONA and CCB will be a wholly owned subsidiary of BANC ONE ARIZONA. As of June 30, 1993 and as of the date hereof, CCB has 200,000 shares of authorized capital stock consisting solely of common stock having a par value of $10.00 per share ("CCB Common") and 50,000 shares of non-voting, non-cumulative preferred stock with a par value of $50.00 per share ("CCB Preferred"). As of June 30, 1993 and as of the date hereof, there were 132,850 shares of CCB Common issued and outstanding and 24,000 of CCB Preferred issued and outstanding. As of June 30, 1993, CCB had common capital of $1,328,500, surplus of $2,522,500, undivided profits of $3,659,134 and preferred stock of $1,200,000. As of June 30, 1993 and as of the date hereof, CCB had outstanding options for 7,917 shares of CCB Common (the "CCB Options"). As of the date of this Agreement, 114,768 shares of CCB Common is owned by CAPITAL, a Utah corporation and registered bank holding company. WHEREAS, BANC ONE ARIZONA and CAPITAL have entered into a Merger Agreement dated September 17, 1993, joined in by BANC ONE, as amended by First Agreement Amending Agreement and Plan of Merger dated November 23, 1993, as further amended by Second Agreement Amending Agreement and Plan of Merger dated December 5, 1993, and as further amended by Third Agreement Amending Agreement and Plan of Merger dated December 14, 1993 (the "Holding Company Merger Agreement") providing for the merger of CAPITAL with and into BANC ONE ARIZONA (the "Holding Company Merger"); WHEREAS, it is desirable that following the Holding Company Merger, CCB, as an affiliate of BANC ONE ARIZONA and BANC ONE, be merged with and into BANK ONE UTAH; WHEREAS, BANK ONE UTAH and CCB have each adopted this Bank Merger Agreement by the concurrence of at least a majority of their respective Boards of Directors pursuant to the authority set forth in the National Banking Act, as amended (12 U.S.C. Section 215a); NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and for the purpose of prescribing the terms and conditions of the merger of CCB with and into BANK ONE UTAH (the "Bank Merger"), the manner of carrying the same into effect, the manner and basis of converting the CCB Common and BANK ONE UTAH Common and such other details and provisions as are deemed necessary or desirable, the parties hereby agree as follows: ARTICLE I GENERAL SECTION 1.1. THE BANK MERGER. Pursuant to the terms and conditions hereinafter set forth and the provisions of 12 U.S.C. Section 215a, CCB shall be merged with and into BANK ONE UTAH, with BANK ONE UTAH to survive the Bank Merger as the Continuing Bank under the Charter and Articles of Association of BANK ONE UTAH. SECTION 1.2. EFFECTIVE TIME. Subject to and upon satisfaction of all requirements of law and the terms and conditions specified in this Bank Merger Agreement, including, among other conditions, receipt of the approval of the Comptroller of the Currency and, if appropriate, approvals of other bank regulatory agencies, the Bank Merger shall become effective at the time specified in the Bank Merger approval to be issued by the Comptroller of the Currency. The time of such effectiveness is hereinafter referred to as the "Effective Time." Not later than the Effective Time, the participating banks shall file appropriate documents, if so required, with the Utah Department of Financial Institutions, the Utah Secretary of State or the Utah Department of Commerce as required to effect the Bank Merger pursuant to Utah law. SECTION 1.3. NAME, OFFICES, ARTICLES OF ASSOCIATION AND BY-LAWS OF THE CONTINUING BANK. (a) The name of BANK ONE UTAH (hereinafter sometimes called the "Continuing Bank" when reference is made to it as of the time of the Bank Merger or thereafter) shall not be changed as a result of the Bank Merger; (b) The principal office and place of business of BANK ONE UTAH, 80 West Broadway, Salt Lake City, Utah 84101, shall be the established and authorized principal office and place of business of the Continuing Bank. The main office of CCB shall be operated as a branch of Continuing Bank and the branch offices of BANK ONE UTAH and CCB shall be established and authorized branch offices of the Continuing Bank; (c) The Articles of Association of the Continuing Bank shall be as set forth in Schedule 1, annexed hereto. The Bylaws of the Continuing Bank shall be the Bylaws of BANK ONE UTAH in effect immediately prior to the Effective Time, until amended. SECTION 1.4. BOARD OF DIRECTORS. The Board of Directors of the Continuing Bank shall consist of those persons whose names and addresses are as set forth in Schedule 2, attached hereto, who are currently Directors of BANK ONE UTAH or CCB. Each Director shall hold office from and after the time of his qualification as Director of the Continuing Bank and until his successor is elected and has qualified. SECTION 1.5. OFFICERS. The officers of BANK ONE UTAH in office immediately prior to the Effective Time shall, at the Effective Time, continue as officers of the Continuing Bank, each to hold office in accordance with the Bylaws of the Continuing Bank as in effect at and after the Effective Time. Following the Bank Merger, officers of CCB immediately prior to the Effective Time shall become officers of Continuing Bank with titles and responsibilities to be determined. ARTICLE II MANNER AND BASIS OF CONVERTING COMMON STOCK AND CAPITALIZATION OF THE CONTINUING BANK SECTION 2.1. CONVERSION OF CAPITAL STOCK. Subject to the conditions and limitations set forth in this Bank Merger Agreement and the Holding Company Merger Agreement, by virtue of the Bank Merger and without any action on the part of any holder of shares of CCB Common: (a) At the Effective Time: (i) The aggregate dollar amount and number of shares of BANK ONE UTAH Common of the par value of Thirty-five Dollars ($35) per share issued and outstanding immediately prior to the Effective Time (specifically, $30,482,165 divided into 870,919 shares) shall be continue as 870,919 issued and outstanding shares of common stock of the par value of Thirty-five Dollars ($35) per share of BANK ONE UTAH as the Continuing Bank. (ii) Each of the not more than 114,768 shares of CCB Common which shall be owned by CAPITAL or BANC ONE ARIZONA immediately prior to the Effective Time shall be cancelled and shall not represent or continue as capital stock of the Continuing Bank and shall not be exchanged for shares of BANC ONE Common. All of the shares of CCB Common held by CCB as treasury shares immediately prior to the Effective Time shall be cancelled and shall not represent capital stock of the Continuing Bank and shall not be exchanged for shares of BANC ONE Common. (iii) Each of the not more than 25,999 shares of CCB Common that shall be issued and outstanding immediately prior to the Effective Time and which is held by a shareholder other than CAPITAL or BANC ONE ARIZONA (hereinafter, the "CCB Minority Shares" and which shall include not only the 18,082 shares of CCB Common owned by minority shareholders of CCB as of the date of this Bank Merger Agreement but also the not more than 7,917 shares of CCB Common which are acquired by a minority shareholder and received upon the exercise of the CCB Options prior to the Effective Time) shall be cancelled and shall not represent or continue as capital stock of the Continuing Bank, and at the Effective Time, and without further action, shall be converted into shares of BANC ONE Common at the Bank Exchange Rate which shall be calculated as set forth in this Section 2.1(a)(iii). CCB's shareholders of record at the Effective Time (other than CAPITAL or BANC ONE ARIZONA and which shareholders other than CAPITAL or BANC ONE ARIZONA are hereinafter sometimes referred to as the "Minority Shareholders) for the CCB Minority Shares then held by them, respectively, shall be allocated and entitled to receive (upon surrender of certificates representing said shares for cancellation) shares of BANC ONE Common, which total number of shares of BANC ONE Common shall have a market value as of the Valuation Period (as hereinafter defined) equal to the product of (x) the number of CCB Minority Shares that shall be issued and outstanding immediately prior to the Effective Time, times (y) $125.40 (hereinafter the amount so-calculated pursuant to this Section 2.1(a)(iii) is referred to as the "Market Value"), subject, however, to (A) the provisions of this Section 2.1(a)(iii) with respect to the minimum and maximum number of shares to be exchanged, (B) the anti-dilution provisions of Sections 7(e) and 7(f) of this Merger Agreement, and (C) provisions set forth in Section 2.1(c) herein relative to fractional shares. The term "Valuation Period" shall mean the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") ending on the sixth NYSE trading day immediately prior to the proposed Effective Time, as designated by BANC ONE pursuant to Section 10(c) of the Holding Company Merger Agreement. For purposes of establishing the "Bank Exchange Rate," (the number of shares of BANC ONE Common into which each CCB Minority Share shall be converted at the Effective Time), each share of BANC ONE Common shall be valued at the average of the daily closing trade prices of BANC ONE Common on the NYSE during the Valuation Period as reported in The Wall Street Journal for NYSE Composite Transactions (the "BANC ONE Average Price"); provided, however, that for purposes of Section 2.1 of this Merger Agreement and the calculations herein required, said BANC ONE Average Price will be deemed not to be greater than $49.00 nor less than $40.54 per share. Such BANC ONE Average Price shall then be divided into the Market Value (as calculated pursuant to this Section 2.1(a)(iii), above) to establish (to the nearest whole share) the aggregate number of shares of BANC ONE Common into which all of the then issued and outstanding CCB Minority Shares shall be converted at the Effective Time. Such number of shares of BANC ONE Common shall then be divided by the number of CCB Minority Shares issued and outstanding immediately prior to the Effective Time with the quotient therefrom, carried to three decimal places, being the number of shares of BANC ONE Common into which each such CCB Minority Share shall be converted at the Effective Time. In the event the BANC ONE Average Price is below $40.54, the total number of shares of BANC ONE Common into which the CCB Minority Shares shall be converted will be the number of BANC ONE Common shares calculated by multiplying (x) 3.092 times (y) the number of CCB Minority Shares issued and outstanding immediately prior to the Effective Time. In the event the BANC ONE Average Price is above the $49.00, the total number of shares of BANC ONE Common into which such CCB Minority Shares shall be converted will be the number of BANC ONE Common shares calculated by multiplying (x) 2.558 times (y) the number of CCB Minority Shares that shall be issued and outstanding immediately prior to the Effective Time (not including treasury shares). The maximum and minimum total number of shares of BANC ONE Common for which all of the CCB Minority Shares shall be exchanged shall be subject to adjustment in accordance with the anti-dilution provisions of Section 2.1(e) of this Merger Agreement. The Bank Exchange Rate shall be subject to adjustment in accordance with the anti-dilution provisions of Section 2.1(f) of this Merger Agreement. In no event, however, will more than 80,389 shares of BANC ONE Common be exchanged for all the shares of CCB Common held by Minority Shareholders. (b) At the Effective Time, stock issued by reason of the Bank Merger shall be allocated to the Minority Shareholders as of the Effective Time with such shares of BANC ONE Common to be equal to the number of CCB Minority Shares outstanding immediately prior to the Effective Time multiplied by the Bank Exchange Rate as calculated pursuant to Section 2.1(a). Such allocation of BANC ONE Common for each CCB Minority Share held of record at the Effective Time made on the basis of the Bank Exchange Rate is subject to limitations relative to fractional shares as set forth in Section 2.1(c) herein and to adjustments pursuant to the anti-dilution provisions of Sections 2.1(e) and 2.1(f). (c) No certificate for fractional shares of BANC ONE Common will be issued by BANC ONE in connection with the exchange contemplated by the Bank Merger, but in lieu thereof, any holder of CCB Minority Shares shall, upon surrender of the certificate or certificates representing such CCB Minority Shares, be paid cash, without interest, by BANC ONE for such fractional shares on the basis of the BANC ONE Average Price. (d) At the Effective Time, holders of certificates formerly representing CCB Minority Shares will tender such certificates to BANC ONE and subject to the provisions set forth above relating to fractional shares, BANC ONE, or Bank One, Indianapolis, N.A., as Exchange Agent for BANC ONE, will distribute to the holders of certificates formerly representing CCB Minority Shares in exchange for and upon surrender for cancellation by such holders of a certificate or certificates formerly representing CCB Minority Shares the certificate(s) for shares of BANC ONE Common in accordance with the Bank Exchange Rate. Each certificate formerly representing CCB Minority Shares (other than certificates representing CCB Minority Shares subject to the rights of dissenting shareholders) shall be deemed for all purposes to evidence the ownership of the number of shares of BANC ONE Common and cash for fractional shares into which such shares have been converted, except, however, and notwithstanding the foregoing, that, until such surrender of the certificate or certificates formerly representing CCB Minority Shares, the holder thereof shall not be entitled to receive any dividend or other payment or distribution payable to holders of BANC ONE Common. Upon such surrender (or in lieu of surrender other provisions reasonably satisfactory to BANC ONE as are made as set forth in the next following paragraph), there shall be paid to the person entitled thereto the aggregate amount of dividends or other payments or distributions (in each case without interest) which became payable after the Effective Time on the whole shares of BANC ONE Common represented by the certificates issued upon such surrender and exchange or in accordance with such other provisions, as the case may be. After the Effective Time, the holders of certificates formerly representing CCB Minority Shares shall cease to have rights with respect to such shares (except such rights, if any, as they may have as dissenting shareholders), and except as aforesaid, their sole rights shall be to exchange said certificates for shares of BANC ONE Common and cash for fractional shares in accordance with this Bank Merger Agreement. Certificates representing CCB Minority Shares surrendered for cancellation by each shareholder entitled to exchange shares of CCB Minority Shares for shares of BANC ONE Common by reason of the Bank Merger shall be appropriately endorsed or accompanied by such appropriate instruments of transfer as BANC ONE may reasonably require; provided, however, that if there be delivered to BANC ONE by any person who is unable to produce any such certificate formerly representing CCB Minority Shares for transfer (i) evidence to the reasonable satisfaction of BANC ONE that any such certificate has been lost, wrongfully taken or destroyed, (ii) such security or indemnity as reasonably may be requested by BANC ONE to save it harmless, and (iii) evidence to the reasonable satisfaction of BANC ONE that such person is the owner of the shares theretofore represented by each certificate claimed by him or her to be lost, wrongfully taken or destroyed and that he or she is the person who would be entitled to present each such certificate and to receive shares of BANC ONE Common pursuant to this Bank Merger Agreement, then BANC ONE, in the absence of actual notice to it that any shares theretofore represented by any such certificate have been acquired by a bona fide purchaser, shall deliver to such person the certificate(s) representing shares of BANC ONE Common which such person would have been entitled to receive upon surrender of each such lost, wrongfully taken or destroyed certificate for CCB Minority Shares. (e) Except for BANC ONE's Stock Split, which has been taken into account in this Bank Merger Agreement, if prior to the Effective Time BANC ONE shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its shares of common stock or declare a dividend or make a distribution on its common stock in any security convertible into its common stock, appropriate ratable adjustment or adjustments will be made in the Bank Exchange Rate. (f) Except for BANC ONE's Stock Split, which has been taken into account in this Bank Merger Agreement, if prior to the Effective Time BANC ONE shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its shares of common stock in any security convertible into its common stock, and the "Ex-Dividend Date" (as herein defined) established for the shares being so divided or otherwise diluted (if an "Ex-Dividend Date" is not established by the NYSE) or the "Record Date" (as herein deferred) established for the shares being so divided or otherwise diluted (if an "Ex-Dividend Date" is not established by the NYSE, whichever is applicable, is subsequent to the Valuation Period (as defined in Section 2.1(a) of this Bank Merger Agreement), appropriate ratable adjustment or adjustments will be made in the Bank Exchange Rate. The "Ex-Dividend Date" is that date established by the NYSE for such distribution. The Record Date is that date established by resolution of the Board of Directors of the distributing party as the time as of which record ownership of the distributing securities will entitle the record owner(s) to such distribution. SECTION 2.2. CAPITALIZATION OF THE CONTINUING BANK. The Continuing Bank shall have capital stock of $30,482,165 divided into 870,919 shares of common stock, each of $35 par value. Following the Bank Merger, all of the capital and surplus of CCB will be added to the surplus of BANK ONE UTAH as the surplus of the Continuing Bank. At the Effective Time, the Continuing Bank shall have undivided profits, including capital reserves, which when combined with the capital and surplus will be equal to the combined capital structures of BANK ONE UTAH and CCB as set forth in the preamble of this Agreement, adjusted, however, for normal earnings and expenses between the date of this Agreement and the Effective Time. Pursuant to the Articles of Association of the Continuing Bank as set forth in Schedule 1, annexed hereto, BANK ONE UTAH will have authorized capital stock of 870,919 shares of common stock. ARTICLE III EFFECT OF THE BANK MERGER UPON CCB AND BANK ONE UTAH SECTION 3.1. GENERAL. Except as specifically set forth herein, at the Effective Time, the identity, existence, purposes, powers, objects, franchises, privileges, rights and immunities of BANK ONE UTAH shall continue unaffected and unimpaired by the Bank Merger and the corporate franchises, existence and rights of CCB shall be merged with and into the Continuing Bank. The separate existence and corporate organization of CCB, except insofar as it may be continued by statute, shall cease at the Effective Time. The Continuing Bank shall at and after the Effective Time possess all of the rights, privileges, immunities, powers and franchises, including appointments, designations and nominations, and all other rights and interests as trustee, executor, administrator, registrar or transfer agent of stocks and bonds, guardian, conservator, assignee, receiver, and in every other fiduciary capacity, in the same manner and to the same extent as was held or enjoyed by CCB or BANK ONE UTAH at the Effective Time. SECTION 3.2. PROPERTIES OF THE CONTINUING BANK. At the Effective Time, all property, real, personal and mixed, and all debts due on whatever account and all other chooses in action and all and every other interest, of or belonging to, or due to, CCB shall be taken and deemed to be transferred to and vested in the Continuing Bank without further act or deed, and the title to all real estate, or any interest therein, under the laws of Utah or of any other state or of the United States, vested in CCB shall vest in the Continuing Bank and shall not revert or be in any way impaired by reason of the Bank Merger. CCB shall execute all such instruments of transfer, if any, as shall be necessary under the laws of the State of Utah or of any other state or of the United States to vest all the right, title and interest of CCB in and to its assets in the Continuing Bank. SECTION 3.3. LIABILITIES OF CONTINUING BANK. The Continuing Bank at and after the Effective Time shall be responsible and liable for and assume all of the liabilities, deposits, contracts and obligations of CCB in the same manner and to the same extent as if the Continuing Bank had itself incurred the same or contracted therefor, and any claim existing or action or proceeding pending by or against CCB may be prosecuted to judgment as if the Bank Merger had not taken place, or the Continuing Bank may be substituted in place of CCB. Neither the rights of creditors nor any liens upon the property of CCB or BANK ONE UTAH shall be impaired by reason of the Bank Merger, but such liens shall be limited to the property upon which they were liens immediately prior to the Effective Time. The filing of this Bank Merger Agreement with the Secretary of State of the State of Utah, accompanied by such other documents as are required by Utah law shall operate as a consent by the Continuing Bank that it may be sued and served with process in the State of Utah in any suit, action or proceeding for the enforcement of any obligation or liability of CCB including any amount payable to any dissenting shareholder; as an irrevocable consent by the Continuing Bank to service upon and by the Utah Secretary of State as agent of the Continuing Bank to accept service of process in any such suit, action or proceeding for the enforcement of any such obligation or liability; as an appointment by the Continuing Bank of Brad Baldwin, Bank One, Utah, N.A., whose address is 80 West Broadway, Salt Lake City, Utah 84101, as agent of the Continuing Bank for service of process in any action, suit or proceeding to enforce any such obligation or liability of CCB, to whom the Utah Secretary of State or Department of Commerce may mail a copy of any such process served upon the Utah Secretary of State or Department of Commerce; and as an agreement by the Continuing Bank that it will promptly pay to dissenting shareholders of CCB the amounts, if any, to which they shall be entitled under applicable law. ARTICLE IV CONDITIONS This Bank Merger Agreement is subject to, and consummation of the Bank Merger herein provided for is conditioned upon the fulfillment prior to the Effective Time of each of the following conditions: (a) approval of this Bank Merger Agreement by the affirmative vote of not less than two-thirds of the outstanding shares of CCB Common and by the affirmative vote of all of the outstanding shares of BANK ONE UTAH Common; and (b) procurement of all other actions, consents, approvals or rulings, governmental or otherwise, and satisfaction of all other requirements of law (including without limitation the approval of the Office of the Comptroller of the Currency) which are, or in the opinion of counsel for CCB or BANK ONE UTAH may be, necessary to permit or enable the Continuing Bank, upon and after the Bank Merger, to conduct all or any part of the business and activities of CCB in the manner in which such business and activities were conducted by it prior to the Bank Merger. ARTICLE V TERMINATION Notwithstanding anything herein to the contrary, this Bank Merger Agreement may be terminated by (a) agreement of the parties, (b) by any party in the event the Holding Company Merger Agreement shall have been terminated and (c) by BANC ONE in accordance with Section 10(t) of the Holding Company Merger Agreement. ARTICLE VI MISCELLANEOUS SECTION 6.1. EXPENSES. The parties to this Bank Merger Agreement shall pay expenses incurred by each of them, respectively, in connection with the transactions contemplated herein. SECTION 6.2. COUNTERPARTS; CAPTIONS. This Bank Merger Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. The title of this Bank Merger Agreement and the headings herein set out are for convenience of reference only and shall not be deemed a part of this Bank Merger Agreement. SECTION 6.3. ENTIRE AGREEMENT; AMENDMENT. This Bank Merger Agreement supersedes any other agreement, whether written or oral, including that Bank Merger Agreement dated September 17, 1993 between CCB and BANK ONE UTAH. At any time before or after approval and adoption hereof by the respective shareholders of CCB and BANK ONE UTAH, this Bank Merger Agreement may be amended by agreement among CCB and BANK ONE UTAH. SECTION 6.4. GOVERNING LAW. This Bank Merger Agreement and the legal relations among the parties hereto shall be governed by and construed in accordance with the laws of the United States and of the State of Utah, except as otherwise required. SECTION 6.5. DIVIDENDS. CCB shall continue to pay dividends in accordance with its regular practices during the period between the date this Bank Merger Agreement is executed and the date of the consummation of the Bank Merger contemplated herein. IN WITNESS WHEREOF, CCB and BANK ONE UTAH have caused this Bank Merger Agreement to be executed in counterparts by their duly authorized officers and their corporate seals to be hereunto affixed as of the date first above written. BANK ONE, UTAH, NATIONAL ASSOCIATION [SEAL] By: JEFFREY P. GAIA Chairman ATTEST: BRAD BALDWIN Brad Baldwin CAPITAL CITY BANK [SEAL] By: NORTON PARKER President ATTEST: KENT R. JONES Schedule 1 Articles of Association of Bank One, Utah, National Association Schedule 2 DIRECTORS OF THE CONTINUING BANK EXHIBIT 2 FORM OF PLAN OF MERGER This Plan of Merger dated as of , 199 sets forth certain of the terms relating to the merger (the "Merger") of BANC ONE ARIZONA Corporation, an Arizona corporation ("BANC ONE ARIZONA") and Capital Bancorp, a Utah corporation ("Capital"); 1. Merger and the Surviving Corporation. (a) Subject to the terms and conditions of the Agreement and Plan of Merger dated as of September 17, 1993, as amended by First Agreement Amending Agreement and Plan of Merger dated November 23, 1993, as further amended by Second Agreement Amending Agreement and Plan of Merger dated December , 1993, and as further amended by Third Agreement Amending Agreement and Plan of Merger dated December , 1993 (the "Merger Agreement") among CAPITAL, BANC ONE ARIZONA and BANC ONE CORPORATION, an Ohio corporation ("BANC ONE") and the sole shareholder of BANC ONE ARIZONA, CAPITAL shall be merged with and into BANC ONE ARIZONA (which shall be the surviving corporation in the Merger) in accordance with the Arizona Business Corporation Act (the "Arizona BCA"). The Merger shall become effective upon the issuance by the Secretary of State of the State of Arizona of articles of merger with respect thereto. For purposes hereof, the term "Effective Time" shall mean the time when such articles of merger is issued by the Secretary of State of the State of Arizona, and the term "Surviving Corporation" shall mean BANC ONE ARIZONA as the corporation surviving the Merger. (b) At the Effective Time, by virtue of the Merger, the Surviving Corporation shall have all the rights, privileges, immunities and powers, and shall be subject to all the duties and liabilities, of a corporation organized under the Arizona BCA, and the Surviving Corporation shall thereupon and thereafter possess all the rights, privileges, immunities, and franchises, of a public as well as of a private nature, of each of BANC ONE ARIZONA and CAPITAL; and all property, real, personal, and mixed, and all debts due on whatever account, and all other chooses in action, and all and every other interest, of or belonging to or due to each of BANC ONE ARIZONA and CAPITAL, shall be taken and deemed to be transferred to and vested in the Surviving Corporation without further act or deed; and the title to any real estate, or any interest therein, vested in either BANC ONE ARIZONA or CAPITAL shall not revert or be in any way impaired by reason of the Merger, and the Surviving Corporation shall be responsible and liable for all the liabilities and obligations of each of BANC ONE ARIZONA and CAPITAL, all with the full effect provided for in the Arizona BCA. (c) The Surviving Corporation shall be governed by the laws of the State of Arizona. The Articles of Incorporation of BANC ONE ARIZONA in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation at and after the Effective Time. (d) The By-laws of BANC ONE ARIZONA in effect immediately prior to the Effective Time shall be the By-laws of the Surviving Corporation at and after the Effective Time, until altered, amended or repealed as provided therein and in the Articles of Incorporation of the Surviving Corporation. (e) The directors of BANC ONE ARIZONA in office immediately prior to the Effective Time shall be the directors of the Surviving Corporation at and after the Effective Time, until the next annual meeting of shareholders at which their respective successors are elected and qualified in accordance with the By-laws of the Surviving Corporation. (f) The officers of BANC ONE ARIZONA in office immediately prior to the Effective Time shall be the officers of the Surviving Corporation at and after the Effective Time, holding the offices in the Surviving Corporation which they held in BANC ONE ARIZONA immediately prior thereto, until their successors are elected or appointed in accordance with the By-laws of the Surviving Corporation and shall have duly qualified. 2. Conversion of Stock. (a) At the Effective Time: (i) Each of the not more than 150,345 shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time (excluding any shares held by CAPITAL as treasury shares) shall thereupon and without further action be converted into shares of BANC ONE Common at the Exchange Rate which shall be calculated as set forth in this Section 2(a)(i). CAPITAL's shareholders of record at the Effective Time for the shares of CAPITAL Common then held by them, respectively, shall be allocated and entitled to receive (upon surrender of certificates representing said shares for cancellation) shares of BANC ONE Common, which total number of shares of BANC ONE Common shall have a market value as of the Valuation Period (as hereinafter defined) equal to the product of (x) the number of shares of CAPITAL Common that shall be issued and outstanding (not including treasury shares) immediately prior to the Effective Time, times (y) $95.33 (hereinafter the amount so-calculated pursuant to this Section 2(a)(i) is referred to as the "Market Value"), subject, however, to (A) the provisions of this Section 2(a)(i) with respect to the minimum and maximum number of shares to be exchanged, (B) the anti-dilution provisions of Sections 2(e) and 2(f) of this Plan of Merger, and (C) provisions set forth in Section 2(c) herein relative to fractional shares. The term "Valuation Period" shall mean the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") ending on the sixth NYSE trading day immediately prior to the proposed Effective Time, as designated by BANC ONE pursuant to Section 10(c) of the Merger Agreement. For purposes of establishing the "Exchange Rate," (the number of shares of BANC ONE Common into which each share of CAPITAL Common shall be converted at the Effective Time), each share of BANC ONE Common shall be valued at the average of the daily closing trade prices of BANC ONE Common on the NYSE during the Valuation Period as reported in The Wall Street Journal for NYSE Composite Transactions (the "BANC ONE Average Price"); provided, however, that for purposes of Section 2 hereof and the calculations herein required, said BANC ONE Average Price will be deemed not to be greater than $49.00 nor less than $40.54 per share. Such BANC ONE Average Price shall then be divided into the Market Value (as calculated pursuant to this Section 2(a)(i), above) to establish (to the nearest whole share) the aggregate number of shares of BANC ONE Common into which all of the then issued and outstanding shares of CAPITAL Common shall be converted at the Effective Time. Such number of shares of BANC ONE Common shall then be divided by the number of shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time with the quotient therefrom, carried to three decimal places, being the number of shares of BANC ONE Common into which each share of CAPITAL Common shall be converted at the Effective Time. In the event the BANC ONE Average Price is below $40.54, the total number of shares of BANC ONE Common into which the shares of CAPITAL Common shall be converted will be the number of BANC ONE Common shares calculated by multiplying (x) 2.351 times (y) the number of shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time (not including treasury shares). In the event the BANC ONE Average Price is above the $49.00, the total number of shares of BANC ONE Common into which the shares of CAPITAL Common shall be converted will be the number of BANC ONE Common shares calculated by multiplying (x) 1.946 times (y) the number of shares of CAPITAL Common that shall be issued and outstanding immediately prior to the Effective Time (not including treasury shares). The maximum and minimum total number of shares of BANC ONE Common for which the shares of CAPITAL Common shall be exchanged shall be subject to adjustment in accordance with the anti-dilution provisions of Section 2(e) of this Plan of Merger. The Exchange Rate shall be subject to adjustment in accordance with the anti-dilution provisions of Section 2(f) of this Plan of Merger. (ii) The 500 shares of BANC ONE ARIZONA Common issued and outstanding immediately prior to the Effective Time shall continue to be issued and outstanding shares of common stock without par value of the Surviving Corporation. (iii) All of the shares of CAPITAL Common held by CAPITAL as treasury shares immediately prior to the Effective Time shall be cancelled and shall not represent CAPITAL stock of the Surviving Corporation and shall not be exchanged for shares of BANC ONE Common. (b) CAPITAL's shareholders of record at the Effective Time, for the shares of CAPITAL Common then held by them, respectively, shall be allocated and be entitled to receive (upon surrender of certificates formerly representing shares of CAPITAL Common for cancellation) certificates for shares of BANC ONE Common as shall be equal to the number of shares of CAPITAL Common outstanding immediately prior to the Effective Time multiplied by the Exchange Rate. (c) No certificate for fractional shares of BANC ONE Common will be issued by BANC ONE in connection with the exchange contemplated by the Merger, but in lieu thereof, any holder of CAPITAL Common shall, upon surrender of the certificate or certificates representing such CAPITAL Common, be paid cash, without interest, by BANC ONE for such fractional shares on the basis of the BANC ONE Average Price. (d) Except for the 5 shares for 4 shares stock split declared on BANC ONE Common by the Board of Directors of BANC ONE on July 20, 1993 and payable August 31, 1993 to shareholders of record on August 3, 1993, which stock split has been taken into account in this Plan of Merger, if prior to the Effective Time BANC ONE or CAPITAL shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its shares of common stock or declare a dividend or make a distribution on its common stock in any security convertible into its common stock, appropriate ratable adjustment or adjustments will be made in the Exchange Rate. (e) Except for the 5 shares for 4 shares stock split declared on BANC ONE Common by the Board of Directors of BANC ONE on July 20, 1993 and payable August 31, 1993 to shareholders of record on August 3, 1993, which stock split has been taken into account in this Plan of Merger, if prior to the consummation of this Merger BANC ONE or CAPITAL shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its shares of common stock in any security convertible into its common stock, and the "Ex-Dividend Date" (as herein defined) established for the shares being so divided or otherwise diluted (if an "Ex-Dividend Date" is established by the NYSE) or the "Record Date" (as herein defined established for the shares being so divided or otherwise diluted (if an "Ex-Dividend Date" is not established by the NYSE), whichever is applicable, is subsequent to the Valuation Period (as defined in Section 2.1(a) of this Merger Agreement), appropriate ratable adjustment or adjustments will be made in the Exchange Rate. The "Ex-Dividend Date" is that date established by the NYSE for such distribution. The Record Date is that date established by resolution of the Board of Directors of the distributing party as the time as of which record ownership of the distributing securities will entitle the record owner(s) to such distribution. 3. Dissenting Shares. Shareholders of CAPITAL Common who do not vote their shares of CAPITAL Common in favor of the Merger and otherwise perfect applicable dissenters' rights and shareholders of CAPITAL Preferred who perfect applicable dissenters' rights will be entitled to dissenters or appraisal rights, if any, pursuant to applicable provisions of the Utah BCA. 4. Surrender of Certificates. (a) Prior to the Effective Time, BANC ONE shall appoint Bank One, Indianapolis, N.A. to act as exchange agent in respect of the Merger (said bank, in its capacity as such exchange agent, being hereinafter called the "Exchange Agent"). (b) Promptly following the Effective Time, BANC ONE shall provide to Exchange Agent shares of BANC ONE Common and funds necessary to pay for the shares of CAPITAL Common pursuant to Section 2. (c) As soon as practicable after the Effective Time, and subject to the provisions of Section 2 relating to fractional shares, BANC ONE, or Bank One, Indianapolis, N.A., as Exchange Agent for BANC ONE, will distribute to the former holders of CAPITAL Common, in exchange for and upon surrender for cancellation by such holders of a certificate or certificates formerly representing shares of CAPITAL Common, the certificate(s) for shares of BANC ONE Common in accordance with the Common Exchange Rate. Each certificate formerly representing CAPITAL Common (other than certificates representing shares of CAPITAL Common subject to the rights of dissenting shareholders) shall be deemed for all purposes to evidence the ownership of the number of shares of BANC ONE Common and cash for fractional shares into which such shares have been converted, except, however, and notwithstanding the foregoing, that, until such surrender of the certificate or certificates formerly representing shares of CAPITAL Common, the holder thereof shall not be entitled to receive any dividend or other payment or distribution payable to holders of BANC ONE Common. Upon such surrender (or in lieu of surrender other provisions reasonably satisfactory to BANC ONE as are made as set forth in the next following paragraph), there shall be paid to the person entitled thereto the aggregate amount of dividends or other payments or distributions (in each case without interest) which became payable after the Effective Time on the whole shares of BANC ONE Common represented by the certificates issued upon such surrender and exchange or in accordance with such other provisions, as the case may be. After the Effective Time, the holders of certificates formerly representing shares of CAPITAL Common shall cease to have rights with respect to such shares (except such rights, if any, as they may have as dissenting shareholders), and except as aforesaid, their sole rights shall be to exchange said certificates for shares of BANC ONE Common and cash for fractional shares in accordance with this Merger Agreement. Certificates representing shares of CAPITAL Common surrendered for cancellation by each shareholder entitled to exchange shares of CAPITAL Common for shares of BANC ONE Common by reason of the Merger shall be appropriately endorsed or accompanied by such appropriate instruments of transfer as BANC ONE may reasonably require; provided, however, that if there be delivered to BANC ONE by any person who is unable to produce any such certificate formerly representing shares of CAPITAL Common for transfer (i) evidence to the reasonable satisfaction of BANC ONE that any such certificate has been lost, wrongfully taken or destroyed, (ii) such security or indemnity as reasonably may be requested by BANC ONE to save it harmless, and (iii) evidence to the reasonable satisfaction of BANC ONE that such person is the owner of the shares theretofore represented by each certificate claimed by him or her to be lost, wrongfully taken or destroyed and that he or she is the person who would be entitled to present each such certificate and to receive shares of BANC ONE Common pursuant to this Merger Agreement, then BANC ONE, in the absence of actual notice to it that any shares theretofore represented by any such certificate have been acquired by a bona fide purchaser, shall deliver to such person the certificate(s) representing shares of BANC ONE Common which such person would have been entitled to receive upon surrender of each such lost, wrongfully taken or destroyed certificate of CAPITAL Common. EX-2 3 EXH 2.3 PROXIES--CAPITAL BANCORP (BHC AND BANK) THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS P R O X Y FOR SPECIAL MEETING OF SHAREHOLDERS OF CAPITAL BANCORP KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned shareholder of Capital Bancorp ("CAPITAL") do hereby nominate, constitute and appoint , , , or any one of them (with full power to act alone) my proxy and true and lawful attorney(s) in fact with full power of substitution, for me and in my name, place and stead to vote all Common Stock of CAPITAL standing in my name, on its books at the close of business on February 28, 1994 at the special meeting of its shareholders to be held at , Salt Lake City, Utah on , 1994 at p.m., local time, or at any adjournment thereof, with all the powers the undersigned would possess if personally present, as follows: 1. Proposal to approve and adopt an Agreement and Plan of Merger dated September 17, 1993 by and between CAPITAL and Banc One Arizona Corporation ("Banc One Arizona") and joined in by BANC ONE CORPORATION ("BANC ONE") and providing for the merger of CAPITAL with and into Banc One Arizona, as subsidiary of BANC ONE, pursuant to which each share of CAPITAL Common Stock (other than shares of CAPITAL Common Stock owned by a CAPITAL shareholder who properly demands and preserves dissenters' rights) will be converted into shares of BANC ONE Common Stock as follows: If the average price of BANC ONE Common is not less than $36.85 nor greater than $44.55 during the Valuation Period (as defined below), each share of CAPITAL Common will be converted into an amount of BANC ONE Common having a market value of $95.33 during the Valuation Period. If the average price of BANC ONE Common is below $36.85 during the Valuation Period, each share of CAPITAL Common will be converted into 2.587 shares of BANC ONE Common, and if the average price of BANC ONE Common is above $44.55 during the Valuation Period, each share of CAPITAL Common will be converted into 2.140 shares of BANC ONE Common. The Valuation Period will be the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") as reported in The Wall Street Journal for NYSE composite transactions ending on the sixth NYSE trading day immediately prior to the Merger. FOR AGAINST ABSTAIN 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors knows of no other business to be brought before the meeting. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND ACCORDING TO THE BEST JUDGMENT OF THE PROXIES WITH REGARD TO PROPOSAL 2. THIS PROXY MAY BE REVOKED BY A SUBSEQUENTLY DATED PROXY OR WRITTEN NOTICE TO THE BOARD OF DIRECTORS OR PERSONAL BALLOT AT THE MEETING. Please sign exactly as name appears on CAPITAL's records. When shares are held by joint tenants, both must sign. When signing as attorney-in-fact, executor, administrator, trustee, committee, personal representative or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Dated: Dated: Signature Signature if held jointly (Please print name) (Please print name) PLEASE MARK, SIGN, DATE AND RETURN THE PROXY USING THE ENCLOSED ENVELOPE THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS P R O X Y FOR SPECIAL MEETING OF SHAREHOLDERS OF CAPITAL CITY BANK KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned shareholder of Capital City Bank ("CCB") do hereby nominate, constitute and appoint , , , or any one of them (with full power to act alone) my proxy and true and lawful attorney(s) in fact with full power of substitution, for me and in my name, place and stead to vote all Common Stock of CCB standing in my name, on its books at the close of business on February 28, 1994 at the special meeting of its shareholders to be held at , Salt Lake City, Utah, on at p.m., local time, or at any adjournment thereof, with all the powers the undersigned would possess if personally present, as follows: 1. Proposal to approve and adopt a Bank Merger Agreement dated December 14, 1993 by and between CCB and Bank One, Utah, N.A. ("Bank One, Utah") and providing for the merger of CCB with and into Bank One, Utah, as subsidiary of BANC ONE CORPORATION, pursuant to which each share of CCB Common Stock (other than shares of CCB Common Stock owned by a CCB shareholder who properly demands and preserves dissenters' rights and shares owned by Capital Bancorp) will be converted into shares of BANC ONE Common Stock as follows: If the average price of BANC ONE Common is not less than $36.85 nor greater that $44.55 during the Valuation Period (as defined below), each share of CCB Common will be converted into an amount of BANC ONE Common having a market value of $125.40 during the Valuation Period. If the average price of BANC ONE Common is below $36.85 during the Valuation Period, each share of CCB Common will be converted into 3.403 shares of BANC ONE Common, and if the average price of BANC ONE Common is above $44.55 during the Valuation Period, each share of CCB Common will be converted into 2.815 shares of BANC ONE Common. The Valuation Period will be the ten consecutive days on which shares of BANC ONE Common are traded on the New York Stock Exchange ("NYSE") as reported in The Wall Street Journal for NYSE composite transactions ending on the sixth NYSE trading day immediately prior to the Merger. FOR AGAINST ABSTAIN 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors knows of no other business to be brought before the meeting. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND ACCORDING TO THE BEST JUDGMENT OF THE PROXIES WITH REGARD TO PROPOSAL 2. THIS PROXY MAY BE REVOKED BY A SUBSEQUENTLY DATED PROXY OR WRITTEN NOTICE TO THE BOARD OF DIRECTORS OR PERSONAL BALLOT AT THE MEETING. Please sign exactly as name appears on CCB's records. When shares are held by joint tenants, both must sign. When signing as attorney-in-fact, executor, administrator, trustee, committee, personal representative or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Dated: Dated: Signature Signature if held jointly (Please print name) (Please print name) PLEASE MARK, SIGN, DATE AND RETURN THE PROXY USING THE ENCLOSED ENVELOPE EX-5 4 EXH 5 ROMAN J. GERBER OPINION February 22, 1994 BANC ONE CORPORATION 100 East Broad Street Columbus, Ohio 43215 Re: BANC ONE CORPORATION Registration Statement on Form S-4 (Capital Bancorp) Gentlemen: I have acted as counsel to BANC ONE CORPORATION ("BANC ONE") in connection with the Registration Statement on Form S-4 to be filed by BANC ONE with the Securities and Exchange Commission under the Securities Act of 1933, as amended. The Registration Statement relates to the issuance of up to 433,850 shares of common stock, no par value, of BANC ONE (the "Shares") to (a) the shareholders of Capital Bancorp ("CAPITAL") in connection with the merger (the "Merger") of CAPITAL with and into Banc One Arizona Corporation ("Banc One Arizona"), a wholly owned subsidiary of BANC ONE, pursuant to the terms of an Agreement and Plan of Merger dated September 17, 1993, by and among CAPITAL, BANC ONE and Banc One Arizona (the "Merger Agreement") and (b) the shareholders (other than Capital) of Capital City Bank ("CCB") in connection with the merger (the "Bank Merger") of CCB with and into Bank One, Utah, N.A. ("Bank One Utah"), a wholly owned subsidiary of Banc One Arizona, pursuant to the terms of a Bank Merger Agreement dated December 14, 1993 between CCB and Bank One Utah (the "Bank Merger Agreement"). In this connection, I have examined such corporate records and other documents and certificates of public officials as I have deemed necessary in order to render the opinion set forth below. Based upon the foregoing, it is my opinion that upon the satisfaction of certain conditions provided for in the Merger Agreement and Bank Merger Agreement, the Shares, when issued and delivered pursuant to the provisions of the Merger Agreement and Bank Merger Agreement and upon consummation of the Merger and Bank Merger, will be validly issued, fully paid and non-assessable. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, ROMAN J. GERBER Roman J. Gerber General Counsel EX-8 5 EXH 8 GERRISH & MCCREARY OPINION (INCLDG CONSENT) GERRISH & MCCREARY, P.C. Attorneys Washington Square 222 Second Avenue North, Suite 424 Nashville, Tennessee 37201 February 11, 1994 Shareholders of Capital Bancorp Capital Bancorp 2200 South State Street Salt Lake, Utah 84115 Banc One Corporation 100 East Broad Street Columbus, Ohio 43271-0152 Ladies and Gentlemen: You have requested our opinion as to certain federal income tax consequences resulting from the merger of Capital Bancorp ("Capital") with and into Banc One Arizona Corporation ("Banc One Arizona") as set forth and more fully described in the Agreement and Plan of Merger between Capital and Banc One Arizona and joined in by Banc One CORPORATION ("Banc One"), dated September 17, 1993, as amended (the "Agreement") including exhibits attached thereto. We have acted as special counsel to Capital with respect to the merger of Capital into Banc One Arizona (the "Holding Company Merger"). In this capacity, we have examined the Agreement and the Registration Statement (Form S-4) pursuant to which Banc One is issuing additional shares of its common stock, without par value, to the stockholders of Capital pursuant to the merger of Capital with and into Banc One Arizona. All capitalized terms used herein shall, except where the context indicates otherwise, be deemed to have the meanings assigned to such terms in the Registration Statement and the Agreement. In reaching our opinion, we have relied on certain representations made by the management of Banc One, Banc One Arizona, and Capital Bancorp, including the representations and warranties and undertakings in the Agreement, and have examined such documents, records and other instruments as we have deemed necessary or appropriate, including, without limitations, the Registration Statement and the Agreement. We have assumed that Banc One has previously been and will be in the future maintained and operated in conformance with the laws of the State of Ohio and the terms of the aforementioned documents. We have also assumed that Banc One Arizona has previously been and will be in the future maintained and operated in conformance with the laws of the State of Arizona and the terms of the aforementioned documents. Banc One is a registered bank holding company organized and existing under the laws of the State of Ohio. Banc One has authorized capital stock consisting of 635,000,000 shares consisting of 600,000,000 shares of common stock without par value ("Banc One Common Stock") of which 341,965,620 shares were issued and outstanding at September 17, 1993 and 35,000,000 shares of preferred stock of which 5,000,000 were issued and outstanding as of such date. Up to 4,405,854 shares of Banc One Common Stock are subject to options. It is anticipated that not more than approximately 353,461 shares of Banc One Common Stock will be issued pursuant to the Holding Company Merger. In addition, it is anticipated that not more than approximately 80,389 shares of Banc One Common Stock will be issued in connection with the Merger of Capital City Bank with and into Bank One, Utah, N.A. (the "Bank Merger"). Capital is a bank holding company duly organized and existing under the laws of the State of Utah and has authorized capital stock consisting of 200,000 shares of common stock, par value $10.00 per share ("Capital Common Stock"), of which 150,345 shares are issued and outstanding and 2,805 of which are shares of treasury stock owned by Capital. Banc One Arizona is an Arizona corporation duly organized and existing under the laws of the State of Arizona. Banc One owns 100% of the outstanding shares of stock of Banc One Arizona. Other than noted above, there are no outstanding securities or obligations which are convertible into shares of stock or options, warrants, rights, calls or any other commitments of any nature relating to the unissued shares of Banc One, Capital, or Banc One Arizona. Pursuant to the Agreement at the Effective Date of the Merger, the following transactions will be consummated: 1. Capital shall merge with and into Banc One Arizona whereby each share of $10.00 par value Capital Common Stock issued and outstanding, other than shares whose holders have perfected their rights to dissent from the Merger, shall be converted into and exchanged for up to 353,461 shares of newly issued Banc One Common Stock without par value. Banc One Arizona shall survive the Merger and the former stockholders of Capital shall become stockholders of Banc One. No fractional shares of Banc One Common Stock shall be issued. The former Capital stockholders entitled to fractional shares of Banc One Common Stock shall be paid cash by Banc One for such fractional shares, the value of which shall be computed by multiplying the fraction thereof by the "Average Price" of Banc One Common Stock. The "Banc One Average Price" is the average of the daily market price of Banc One Common Stock during a ten (10) day period preceding the Effective Time of the Merger as set forth in Section 7(a) of the Agreement. 2. The Merger is subject to various conditions including, among others, approval by a majority of the stockholders of Capital at the Capital Special Meeting and approval by all applicable regulatory authorities. This opinion is conditioned on the following assumptions and representations being made by the management of Banc One, Banc One Arizona and Capital in connection with the Merger transaction at or before closing: 1. The Merger shall be consummated pursuant to and in accordance with the Agreement. 2. The fair market value of newly issued Banc One Common Stock without par value to be received by Capital stockholders will be, in each instance, approximately equal to the fair market value of the Capital Common Stock to be surrendered in exchange therefor. 3. After consummation of the Merger transaction, Banc One Arizona will continue its historical business in a substantially unchanged manner. 4. The management of Capital knows of no plan or intention by the stockholders of Capital who own 5% or more of the Capital Common Stock or on the part of the remaining stockholders of Capital to sell or otherwise dispose of a number of shares of Banc One Common Stock to be received in the Merger transaction that would reduce the Capital stockholders' ownership of Banc One Common Stock to a number of shares having a value as of the date of the Merger, of less than fifty (50) percent of the value of the formerly outstanding Capital Common Stock as of the same date. For purposes of this representation, shares of Capital Common Stock exchanged for cash or other property, surrendered by dissenters or exchanged for cash in lieu of fractional shares of Banc One Common Stock will be treated as outstanding Capital Common Stock on the date of the transaction. Moreover, shares of Capital Common Stock and shares of Banc One Common Stock held by Capital stockholders and otherwise sold, redeemed, or disposed of prior or subsequent to the merger transaction will be considered in making this representation. 5. Banc One Arizona will acquire at least 90% of the fair market value of the net assets and at least 70% of the fair market value of the gross assets held by Capital immediately prior to the Effective Date of the Merger. For purposes of this representation, amounts paid by Capital to dissenters, amounts paid by Capital to stockholders who receive cash or other property, Capital assets used to pay its reorganization expenses, and all redemptions and other distributions (except for regular, normal dividends) made by Capital immediately preceding the transfer, will be included as assets of Capital held immediately prior to the transaction. 6. Prior to the transaction, Banc One will be in control of Banc One Arizona within the meaning of Section 268(c) of the Internal Revenue Code. 7. Following the transaction, Banc One Arizona will not issue additional shares of its stock that would result in Banc One losing control of Banc One Arizona within the meaning of Section 368(c) of the Code. 8. Banc One has no plan or intention to reacquire any of its stock issued in this transaction. 9. Banc One has no plan or intention to liquidate Banc One Arizona, to merge Banc One Arizona with and into another corporation, to sell or otherwise dispose of the stock of Banc One Arizona or to cause Banc One Arizona to sell or otherwise dispose of any of the assets of Capital acquired in the transaction, except for dispositions made in the ordinary course of business or transfers described in Section 368(a)(2)(c) of the Code. 10. The liabilities of Capital assumed by Banc One Arizona and the liabilities to which the transferred assets of Capital are subject were incurred by Capital in the ordinary course of its business. 11. Following the transaction, Banc One Arizona will continue the historic business of Capital or use a significant portion of Capital's historical business assets in its business. 12. Each Party to the Agreement will pay its own expenses incurred in connection with the Merger including the cost of soliciting proxies for the Capital Special Meeting. Printing costs and expenses incurred in connection with the Proxy Statement/Prospectus and the associated Banc One Registration Statement to be filed with the Securities and Exchange Commission of which the Proxy Statement/Prospectus forms a part will be paid by Banc One and/or Banc One Arizona. If the Merger is not consummated for any reason, except if one Party breaches the agreement, Banc One and Capital each agree to pay the expenses arising from the negotiation and preparation of, and filings and solicitations with respect to the Agreement and the transactions contemplated by such Agreement as follows: Each party will pay its own expenses, except that Banc One will pay the costs of printing the proxy material. 13. There is no intercorporate indebtedness existing between Banc One and Capital or between Banc One Arizona and Capital that was issued, acquired, or will be settled at a discount. 14. No two parties to the transaction are investment companies as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code. 15. Capital, Banc One or Banc One Arizona is not under the jurisdiction of a court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code. 16. The fair market value of the assets of Capital transferred to Banc One Arizona will equal or exceed the sum of the liabilities assumed by Banc One Arizona, plus the amount of liabilities, if any, to which the transferred assets are subject. 17. No stock of Banc One Arizona will be issued in the transaction. 18. None of the compensation received by any stockholder-employee of Capital will be separate consideration for, or allocable to, any of their shares of Capital stock; none of the shares of Banc One stock received by any stockholder-employee will be separate consideration for, or allocable to, any employment agreement; and the compensation paid to any stockholder- employee will be for services actually rendered and will be commensurate with amounts paid to third parties bargaining at arm's-length for similar services. Based solely on the information submitted and on the representations set forth above our opinion is as follows: 1. Provided the proposed merger of Capital with and into Banc One Arizona qualifies under Utah and Arizona law, the acquisition by Banc One Arizona of substantially all of the assets of Capital solely in exchange for Banc One Common Stock and the assumption by Banc One Arizona of the liabilities, will qualify as a reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code. For purposes of this opinion, "substantially all" means at least 90% of the fair market value of the net assets and at least 70% of the fair market value of the gross assets of Capital held immediately prior to the proposed transaction. Capital, Banc One and Banc One Arizona will each be "a party to a reorganization" within the meaning of Section 368(b). 2. No gain or loss will be recognized by Capital upon the transfer of substantially all of its assets to Banc One Arizona in exchange for Banc One Common Stock and the assumption of Capital's liabilities by Banc One Arizona (Sections 361 and 357(a)). 3. No gain or loss will be recognized by either Banc One or Banc One Arizona upon the acquisition by Banc One Arizona of substantially all of the assets of Capital in exchange for Banc One's Common Stock and the assumption of Capital's liabilities (Rev. Rul. 57-278, 1957-1 C.B. 124). 4. The federal income tax basis of the assets of Capital acquired by Banc One Arizona will be the same in the hands of Banc One Arizona as the basis of such assets in the hands of Capital immediately prior to the exchange (Section 362(b)). 5. The basis of the Banc One Arizona Common Stock in the hands of Banc One will be increased by an amount equal to the basis of the Capital assets in the hands of Banc One Arizona and decreased by the sum of the amount of the liabilities of Capital assumed by Banc One Arizona and the amount of liabilities to which the assets of Capital are subject. 6. The holding period of the assets of Capital received by Capital will, in each instance, include the period for which such assets were held by Capital (Section 1223(2)). 7. No gain or loss will be recognized to the stockholders of Capital upon the exchange of Capital stock solely for Banc One Common Stock (Section 354(a)(1). 8. The basis of the Banc One Common Stock received by the stockholders of Capital will be the same as the basis of the Capital stock surrendered in exchange therefor (Section 358(a)(1)). 9. The holding period of the Banc One Common Stock received by the stockholders of Capital will include the period during which Capital stock surrendered therefor was held, provided the stock of Capital is a capital asset in the hands of the stockholders of Capital on the date of the exchange (Section 1223(1)). 10. As provided by Section 381(c)(2) of the Code and Section 1.381(c)(2)-1 of the Income Tax Regulations, Banc One Arizona will succeed to and take into account the earnings and profits, or deficit in earnings and profits, of Capital as of the date of transfer. Any deficit in the earnings and profits of Capital or Banc One Arizona will be used only to offset the earnings and profits accumulated after the date of transfer. 11. Where a dissenting Capital stockholder receives cash in exchange for his or her stock, such cash will be treated as having been received by the stockholder as a distribution in redemption of his or her stock subject to the provisions and limitations of Section 302 of the Code. Rev. Rul. 74-515, 1974-2 C.B. 118. No opinion in expressed about the tax treatment of the Merger transaction under other provisions of the Code and regulations or about the federal income tax or state income tax treatment of any conditions existing at the time of, or other tax consequences resulting from the Merger transaction that are not specifically covered above. No opinion is expressed herein with regard to the tax treatment of the merger of Capital City Bank into Bank One, Utah, N.A. This opinion is addressed only to you and concerns only the transaction described above. This opinion may be relied upon only by Capital, Banc One, Banc One Arizona and the stockholders of Capital. We consent to the inclusion of this opinion in the Registration Statement (Form S-4) of Banc One relating to the Merger and to the reference to our firm under the caption "Legal Matters" in the Prospectus/Proxy Statement which is part of the Registration Statement. Very truly yours, GERRISH & McCREARY, P.C. GERRISH & MCCREARY, P.C. EX-23 6 EXH 23 COOPERS & LYBRAND AND KPMG CONSENTS CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement of BANC ONE CORPORATION on Form S-4 of our reports: - dated February 26, 1993 on our audits of the consolidated financial statements of BANC ONE CORPORATION as of December 31, 1992 and 1991 and for the years ended December 31, 1992, 1991, and 1990; - dated February 22, 1991 on our audit of the consolidated financial statements of Bank One, Texas, NA as of December 31, 1990 and for the year ended December 31, 1990; included in BANC ONE CORPORATION's Annual Report on Form 10-K for the year ended December 31, 1992. Additionally, we consent to the incorporation by reference in the Registration Statement of BANC ONE CORPORATION on Form S-4 of our report dated August 18, 1993 on our audits of the supplemental consolidated financial statements of BANC ONE CORPORATION as of December 31, 1992 and 1991 and for the years ended December 31, 1992, 1991, and 1990, included in BANC ONE CORPORATION's Current Report filed on Form 8-K. We also consent to the reference to our Firm under the caption "Experts" in said Registration Statement. COOPERS & LYBRAND COOPERS & LYBRAND Columbus, Ohio February 23, 1994 Consent of Independent Public Accountants The Board of Directors Capital Bancorp and Capital City Bank: We consent to the use of our reports dated January 12, 1993 with respect to the consolidated financial statements of Capital Bancorp and subsidiary, and the financial statements of Capital City Bank as of December 31, 1992 and 1991, and for each of the years in the three-year period ended December 31, 1992 included herein, and to the reference to our firm under the heading "Experts" in the prospectus. KPMG Peat Marwick Salt Lake City, Utah February 21, 1994 -----END PRIVACY-ENHANCED MESSAGE-----