SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 23, 1998
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First Union Corporation
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(Exact name of Registrant as specified in its charter)
North Carolina 1-10000 56-0898180
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One First Union Center
Charlotte, North Carolina 28288-0013
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704)374-6565
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
This Current Report on Form 8-K is being filed by First Union
Corporation (the "Corporation") in order to file as exhibits hereto (i) the
Underwriting Agreement dated April 16, 1998 among the Corporation and the
several Underwriters named therein (the "Underwriting Agreement"), relating to
the Corporation's 6.30% Putable/Callable Subordinated Notes Due April 15, 2028
(the "Notes"); (ii) the form of Global Note containing the terms of the Notes;
(iii) the Calculation Agency Agreement between the Corporation and First Union
National Bank, as Calculation Agent, relating to the Notes (the "Calculation
Agency Agreement") and (iv) the Letter Agreement among the Corporation, First
Union Investors, Inc. and First Union Capital Markets, a division of First Wheat
Securities, Inc., relating to the Note Call Option (the "Letter Agreement").
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
(1) The Underwriting Agreement
(4)(a) The Form of Global Note
(4)(b) The Calculation Agency Agreement
(4)(c) The Letter Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST UNION CORPORATION
Date: April 23, 1998 By: /s/ Kent S. Hathaway
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Name: Kent S. Hathaway
Title: Senior Vice President
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Exhibit Index
Exhibit No. Description
<S> <C>
(1) The Underwriting Agreement
(4)(a) The Form of Global Note
(4)(b) The Calculation Agency Agreement
(4)(c) The Letter Agreement
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$200,000,000
6.30% Putable/Callable Subordinated Notes
Due April 15, 2028
Underwriting Agreement
April 16, 1998
To the Representative named in Schedule I hereto of the
Underwriters named in Schedule II hereto
Dear Sirs:
First Union Corporation ("First Union"), a North Carolina
corporation, proposes to sell to the underwriters named in Schedule II hereto
(the "Underwriters"), for whom you are acting as Representative (the
"Representative"), its designated debt securities named in Schedule I hereto
(the "Securities"), in the aggregate principal amount set forth in such Schedule
I. The Securities will be issued under the indenture referenced in Schedule I
hereto (the "Indenture"), between First Union and the trustee named in Schedule
I (the "Trustee").
1. Representations and Warranties. First Union represents and
warrants to, and agrees with, each Underwriter that:
(a) The registration statement (File No. 33- 61941) on Form
S-3, and the registration statement (File No. 333-34151) on Form S-3
(the "registration statements"), including a prospectus which, as
supplemented, shall be used in connection with the sale of the
Securities, have been filed with the Securities and Exchange Commission
(the "Commission"), in the forms heretofore delivered to the
Representative. Each registration statement, as it may have been
amended prior to the date of this Agreement, has become effective under
the Securities Act of 1933, as amended (the "Act"). (The registration
statements, as amended
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to the date of this Agreement, are hereinafter collectively referred to
as the "Registration Statement"; such prospectus (which shall be in
the form in which it has been most recently filed, or transmitted for
filing, with the Commission on or before the date of this Agreement, as
the same is proposed to be added to or changed), as supplemented by a
prospectus supplement relating to the Securities, filed or transmitted
for filing with the Commission pursuant to Rule 424 under the Act and
used in connection with the sale of the Securities, is hereinafter
referred to as the "Prospectus"; and such prospectus supplement is
hereinafter referred to as the "Prospectus Supplement". Any reference
herein to the Registration Statement, a preliminary prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), on or before the date of this Agreement, and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement or the Prospectus shall be deemed
to refer to and include the filing of any document under the Exchange
Act deemed to be incorporated therein by reference after the date of
this Agreement.)
(b) The Registration Statement, at the time it became
effective, and any amendments thereof filed prior to the date hereof,
as of their respective effective dates, conformed in all material
respects to the requirements of the Act, the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the respective rules
and regulations of the Commission thereunder; the Registration
Statement and the Prospectus, as of the date of the Prospectus
Supplement, and any amendments thereof and supplements thereto, as of
their respective effective or issue dates, will conform in all material
respects to the requirements of the Act, the Trust Indenture Act and
the respective rules and regulations of the Commission thereunder, and
no such document, as of such respective dates and, in the case of the
Prospectus and any amendments thereof or supplements thereto, as of the
Closing Date (as hereinafter defined), included or will include any
untrue statement of a material fact or omitted or will omit to state
any material fact required to be stated
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therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, provided that
First Union makes no representations or warranties as to (i) the
Statement of Eligibility (Form T-1) under the Trust Indenture Act of
the Trustee or (ii) the information contained in or omitted from the
Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to First
Union by or on behalf of any Underwriter specifically for use in
connection with the preparation of the Prospectus or any amendment
thereof or supplement thereto.
(c) First Union has been duly incorporated, is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has all power and authority
(corporate and other) necessary to own or hold its material properties
and to conduct its business substantially in the manner in which it
presently conducts such business.
(d) The Securities have been duly authorized, and, when
issued, delivered and paid for pursuant to this Agreement, will have
been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of First Union
entitled to the benefits provided by the Indenture; the Indenture has
been duly authorized and, at the Closing Date (as defined in Section 3
hereof), the Indenture will be duly qualified under the Trust Indenture
Act and will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles; the
letter agreement referenced in Schedule I hereto (the "Option
Agreement") and the calculation agency agreement referenced in Schedule
I hereto (the "Calculation Agency Agreement") have each been duly
authorized and, at the Closing Date, will each constitute a valid and
legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles;
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and the Securities, the Indenture, the Option Agreement, and the
Calculation Agency Agreement conform in all material respects to the
descriptions thereof in the Prospectus.
(e) First Union, First Union National Bank and First Union
Investors, Inc. each has all corporate power and authority necessary to
execute and deliver this Agreement, the Indenture, the Option
Agreement, and the Calculation Agency Agreement and the Securities, as
applicable, and to perform their respective obligations hereunder and
thereunder; the execution, delivery and performance of, as applicable
this Agreement, the Indenture, the Option Agreement, and the
Calculation Agency Agreement and the Securities by First Union, First
Union National Bank and First Union Investors, Inc. and compliance with
the provisions hereof and thereof by First Union, First Union National
Bank and First Union Investors, Inc., as applicable, will not
constitute a breach of or default under, the corporate charter or
by-laws of First Union, or any material agreement, indenture or other
instrument relating to indebtedness for money borrowed to which First
Union is a party, or, to the best of First Union's knowledge, any law,
order, rule, regulation or decree of any court, governmental agency or
authority located in the United States having jurisdiction over First
Union or any property of First Union, which breach or default would be
reasonably likely to have a material adverse effect on First Union and
its subsidiaries taken as a whole; and, no consent, authorization or
order of, or filing or registration with, any court or governmental
agency or authority is required for the execution, delivery and
performance of this Agreement, the Indenture, the Option Agreement, the
Calculation Agency Agreement and the Securities by First Union, First
Union National Bank and First Union Investors, Inc., as applicable,
except such as have been made or obtained or will be made or obtained
on or before the Closing Date (as defined in Section 3) and except such
as may be required under applicable state securities or "blue sky"
laws.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, First
Union agrees to sell to each Underwriter, and each Underwriter agrees, severally
and
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not jointly, to purchase from First Union, at the purchase price set forth in
Schedule I hereto, the principal amount of the Securities set forth opposite
such Underwriter's name in Schedule II hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at the office, on the date and at the time specified in
Schedule I hereto, which date and time may be postponed by agreement between the
Representative and First Union (such date and time of delivery of and payment
for the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to the Representative for the respective accounts of
the several Underwriters against payment by the several Underwriters through the
Representative of the purchase price thereof to or upon the order of First Union
in the manner and type of funds specified in Schedule I. Certificates for the
Securities shall be registered in such names and in such denominations as the
Representative may request not less than one full business day in advance of the
Closing Date.
First Union agrees to have the Securities avail able for
inspection, checking and packaging in New York, New York, on the business day
prior to the Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale as set forth in the
Prospectus.
5. Agreements. First Union agrees with the several
Underwriters that:
(a) First Union will cause the Prospectus to be filed, or
transmitted for filing, with the Commission pursuant to Rule 424 under
the Act and will promptly advise the Representative when the Prospectus
has been so filed or transmitted for filing, and, prior to the
termination of the offering of the Securities to which such Prospectus
relates, also will promptly advise the Representative (i) when any
amendment to the Registration Statement has become effective or any
further supplement to the Prospectus has been so filed or transmitted
for filing, (ii) of any request by the Commission for any amendment of
the Registration Statement or the Prospectus or for any additional
information, (iii) of the issuance by the Commission of
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any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that
purpose, and (iv) of the receipt by First Union of any notification
with respect to the suspension of the qualification of the Securities
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. First Union will use its reasonable best
efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as reasonably possible the withdrawal thereof. For so
long as a prospectus relating to the Securities is required to be
delivered under the Act, First Union will not file or transmit for
filing any amendment to the Registration Statement or supplement to the
Prospectus which relates to the Securities unless First Union has
furnished you or counsel for the Underwriters a copy for your review
prior to filing or transmission for filing.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or if
it shall be necessary to amend or supplement the Prospectus in
connection with the sale of the Securities to comply with the Act or
the rules and regulations of the Commission thereunder, promptly after
becoming aware thereof, First Union will notify the Representative or
counsel for the Underwriters and, upon either one's reasonable request,
prepare and file or transmit for filing with the Commission an
amendment or supplement which will correct such statement or omission
or effect such compliance.
(c) First Union will make generally available to its security
holders and to the Representative as soon as practicable, but not later
than 45 days after the end of the 12-month period beginning at the end
of the fiscal quarter of First Union during which the filing, or
transmission for filing, of the Prospectus pursuant to Rule 424 under
the Act occurs (except not later than 90 days after the end of such
period if such quarter is the last fiscal quarter), an earnings
statement (which
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need not be audited) of First Union and its subsidiaries, covering
such 12-month period, which will satisfy the provisions of Section
11(a) of the Act.
(d) First Union will use its best efforts to furnish in New
York City to each of the Underwriters prior to 10:00 a.m., New York
City time, on the New York business day next succeeding the date of
this Agreement and from time to time, as many copies of the Prospectus,
each related preliminary prospectus supplement and all amendments of
and supplements to such documents as may be reasonably requested.
(e) First Union will pay all expenses incident to the
performance of its obligations under this Agreement, and will pay the
expenses of printing and filing all documents relating to the offering
and mailing and delivering such to Underwriters and dealers, any filing
fee incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities,
all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws (including the fees and
disbursements of counsel to the Underwriters in connection with such
qualification and the preparation of the Blue Sky and legal investment
surveys), any taxes payable in connection with the sale and delivery of
the Securities by First Union to the Underwriters, and any fees charged
for rating the Securities.
(f) First Union will use its reasonable best efforts to
arrange for the qualification of the Securities for sale under the laws
of such jurisdictions as the Representative may designate and to
maintain such qualifications in effect so long as required for the
distribution of the Securities; provided that First Union shall not be
required to qualify to do business in any jurisdiction where it is not
now qualified or to take any action which would subject it to general
or unlimited service of process in any jurisdiction where it is not now
so subject.
(g) During the period beginning from the date of this
Agreement and continuing until the Closing Date or such longer period
as may be agreed to by First Union and set forth in Schedule I hereto
relating to the Securities, First Union will not offer, sell, contract
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to sell or otherwise dispose of any of its debt securities which mature
more than one year after the Closing Date and which are substantially
similar to the Securities without the prior written consent of the
Representative.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Securities shall be subject to
the accuracy in all material respects of the representations and warranties on
the part of First Union contained herein as of the date hereof and the Closing
Date, to the accuracy in all material respects of the statements of First Union
made in any certificates pursuant to the provisions hereof, to the performance
in all material respects by First Union of its obligations hereunder and to the
following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted and be pending or have been
threatened as of the Closing Date; and all requests for additional
information on the part of the Commission shall have been complied
with.
(b) First Union shall have furnished to the Representative a
certificate, dated the Closing Date, of First Union, signed by the
principal financial or accounting officer of First Union, to the effect
that, to the best of his knowledge after reasonable investigation:
(i) The representations and warranties of First Union
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and First Union has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date, in all material respects;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted and are pending or have been
threatened as of such date;
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(iii) Since the date of the most recent financial
statements included in the Prospectus, there has been no
material adverse change in the financial position, results of
operations, cash flows or prospects relating thereto of First
Union and its subsidiaries consolidated, except as set forth
in or contemplated by the Prospectus; and
(iv) Since the date of this Agreement, (A) no downgrading
has occurred in the rating accorded First Union's unsecured
debt securities or preferred stock as described in Section
6(h)(i) and (B) no announcement has been made with respect to
any rating accorded First Union's unsecured debt securities or
preferred stock as described in Section 6(h)(ii).
(c) First Union shall have furnished to the Underwriters the
opinion, dated the Closing Date, of Marion A. Cowell, Jr., Executive
Vice President, Secretary and General Counsel of First Union, to the
effect that:
(i) First Union has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of North Carolina, with corporate power and
authority under such laws to own its material properties and
to conduct its business substantially as described in the
Prospectus;
(ii) The Securities have been duly authorized, executed,
issued and delivered and, assuming authentication by the
Trustee in the manner contemplated in its certificate,
constitute valid and legally binding obligations of First
Union entitled to the benefits provided by the Indenture; and
the Securities, the Indenture, the Option Agreement, and the
Calculation Agency Agreement conform in all material respects
to the descriptions thereof in the Prospectus as amended or
supplemented;
(iii) The Indenture has been duly authorized, executed and
delivered by First Union, has been duly qualified under the
Trust Indenture Act and constitutes a valid and legally
binding obligation
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of First Union enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles; and the Option Agreement and the
Calculation Agency Agreement have each been duly authorized,
executed and delivered by the parties thereto and constitutes
a valid and legally binding obligation of such parties;
(iv) First Union, First Union National Bank and First
Union Investors, Inc. each has all corporate power and
authority necessary to execute and deliver this Agreement, the
Indenture, the Securities, the Option Agreement, and the
Calculation Agency Agreement, as applicable, and to perform
their respective obligations hereunder and thereunder; this
Agreement has been duly authorized, executed and delivered by
First Union; the execution, delivery and performance of, as
applicable, this Agreement, the Indenture, the Securities, the
Option Agreement, and the Calculation Agency Agreement by
First Union, First Union National Bank and First Union
Investors, Inc. and compliance with the provisions hereof and
thereof by First Union, First Union National Bank and First
Union Investors, Inc. as applicable, will not constitute a
breach of or default under, the corporate charter or by-laws
of First Union, or any material agreement, indenture or other
instrument relating to indebtedness for money borrowed known
to such counsel to which First Union is a party, or, to the
best of such counsel's knowledge, any law, order, rule,
regulation or decree of any court, governmental agency or
authority located in the United States having jurisdiction
over First Union or any property of First Union, which breach
or default would be reasonably likely to have a material
adverse effect on First Union and its subsidiaries taken as a
whole; and no consent, authorization or order of, or filing or
registration with, any court or governmental agency is
required for the execution, delivery and performance of this
Agreement, the Indenture, the Option Agreement,
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the Calculation Agency Agreement or the Securities by First
Union, First Union National Bank and First Union Investors,
Inc., as applicable, except such as may be required under
applicable state securities or "blue sky" laws or as have been
duly made or obtained;
(v) The Registration Statement has become effective
under the Act, and, to the best of the knowledge of such
counsel, 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 threatened
under the Act, and each part of the Registration Statement,
when such part became effective, any amendments thereof filed
prior to the date of this Agreement, as of their respective
effective dates, and the Registration Statement and the
Prospectus, as of the date of the Prospectus Supplement, and
each amendment thereof or supplement thereto, as of their
respective effective or issue dates, appeared on their face to
be appropriately responsive in all material respects to the
requirements of the Act, the Trust Indenture Act and the
respective rules and regulations of the Commission
thereunder; such counsel has no reason to believe that any
part of the Registration Statement, when such part became
effective, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus, as of the date of the
Prospectus Supplement, or any amendments thereof or
supplements thereto, as of their respective effective or issue
dates, contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, or that, as of the
Closing Date, either the Prospectus or any further amendment
or supplement thereto made by the Company prior to the Closing
Date contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not
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misleading; it being understood that such counsel need express
no opinion as to the Statement of Eligibility (Form T-1) under
the Trust Indenture Act of the Trustee, as to the financial
statements or other financial data contained in any part of
the Registration Statement or the Prospectus, as to any
statements or omissions made in reliance upon or in conformity
with information furnished in writing to First Union by or on
behalf of an Underwriter for use therein; and
(vi) First Union Investors, Inc. is not an
"investment company" within the meaning of the
Investment Company Act of 1940.
As to those matters which relate to the Trustee, such counsel
may rely upon the certificate or certificates of such Trustee, and as
to matters governed by New York law, upon the opinion of Sullivan &
Cromwell.
(d) The Representative shall have received from Sullivan &
Cromwell, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Representative
may reasonably require.
As to matters governed by North Carolina law,
Sullivan & Cromwell may rely upon the opinion of
Marion A. Cowell, Jr. delivered pursuant to
Section 6(c).
(e) KPMG Peat Marwick LLP, as independent accountants of First
Union, shall have furnished to the Representative a letter, dated as of
the Closing Date, to the effect set forth in Schedule III hereto. Ernst
& Young, LLP, as independent accountants of CoreStates Financial Corp,
shall have furnished to the Representative a letter, dated as of the
Closing Date, to the effect set forth in Schedule IV hereto.
(f) Subsequent to the date hereof, there shall not have
occurred any change, or any development involving a prospective change,
in or affecting the financial position, long-term debt, stockholders'
equity or results of operations of First Union and its consolidated
subsidiaries which the Representative concludes, after consultation
with First Union, in the
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judgment of the Representative is so material and adverse as to make it
impractical or inadvisable to proceed with the public offering or the
delivery of the Securities as contemplated by the Prospectus.
(g) First Union shall have furnished to the Representative
such further information, certificates and documents as it may
reasonably request prior to the Closing Date.
(h) Subsequent to the date of this Agreement, (i) no
downgrading shall have occurred in the rating accorded First Union's
unsecured debt securities or preferred stock by Standard & Poor's
Ratings Group or by Moody's Investors Service, Inc. and (ii) neither
such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating
of any of First Union's unsecured debt securities or preferred stock.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representative and its counsel, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representative. Notice of such
cancellation shall be given to First Union in writing or by telephone or
telegraph confirmed in writing.
7. Indemnification and Contribution. (a) First
Union agrees to indemnify and hold harmless each Underwriter
and each person who controls any Underwriter within the
meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a
material fact contained in the registration statement or in
any amendment thereof filed prior to the date hereof, or in
the Registration Statement or the Prospectus, or in any
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amendment thereof or supplement thereto, or in any related preliminary
prospectus or preliminary prospectus supplement, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) First Union will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to First Union by or on behalf of any Underwriter through the
Representative specifically for use in the Prospectus or any supplement thereto
or any related preliminary prospectus or preliminary prospectus supplement or of
the Statement of Eligibility (Form T-1) under the Trust Indenture Act of the
Trustee, and (ii) such indemnity with respect to any related preliminary
prospectus or preliminary prospectus supplement shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) from whom the
person asserting any such loss, claim, damage or liability purchased the
Securities which are the subject thereof if such person was not sent or given a
copy of the Prospectus (or the Prospectus as amended or supplemented), excluding
documents incorporated therein by reference, at or prior to the confirmation of
the sale of such Securities to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a material fact
contained in such related preliminary prospectus or preliminary prospectus
supplement was corrected in the Prospectus (or the Prospectus as amended or
supplemented). This indemnity agreement will be in addition to any liability
which First Union may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless First Union, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls First Union within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from First Union to each Underwriter, but only with
reference to written information furnished to First Union by or on behalf of
such Underwriter through the Representative specifically for use in the Pro-
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spectus or any supplement thereto or any related preliminary prospectus or
preliminary prospectus supplement. This indemnity agreement will be in addition
to any liability which any Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under
Section 7(a) or (b) of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any liability
which it may have to any indemnified party otherwise than under Section 7(a) or
(b). In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent that it may
elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided
that, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under Section 7(a) or (b) for any legal or other expenses
subsequently incurred by such indemnified party (other than reasonable costs of
investigation) in connection with the defense thereof unless (i) the indemnified
party shall have employed separate counsel in connection with the assertion of
legal defenses in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate national counsel, approved by the
Representative, representing the indemnified parties who are parties to such
action), (ii) the indemnifying party shall not have employed
15
<PAGE>
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by First Union on the one hand and the Underwriters
of the Securities on the other from the offering of the Securities to which such
loss, claim, damage or liability (or action in respect thereof) relates. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of First Union on the one hand and the Underwriters of the
Securities on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by First Union on the one hand and such Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by First Union bear to
the total underwriting discounts and commissions received by such Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by First Union on the one hand or such Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent
16
<PAGE>
such statement or omission. First Union and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the applicable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters of Securities in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations with respect to the Securities and not joint.
8. Termination. This Agreement shall be subject to termination
in the absolute discretion of the Representative, by notice given to First Union
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in securities generally on the New York Stock Exchange shall have been
suspended or materially limited, (ii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities, or (iii) there shall have occurred any material outbreak or
escalation of hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the reasonable
judgment of the Representative, impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities as contemplated by the
Prospectus.
17
<PAGE>
9. Substituted Underwriters. If, on the Closing Date, any one
or more of the Underwriters shall fail or refuse to purchase Securities that it
or they have agreed to purchase hereunder on such date, and the aggregate number
of Securities which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Securities to be purchased on the Closing Date, the other Underwriters
shall be obligated severally in the proportions that the number of Securities
set forth opposite their respective names in Schedule II bears to the aggregate
number of Securities set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as the Underwriters may agree, to
purchase the Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on the Closing Date; provided that in no event
shall the number of Securities that any Underwriter has agreed to purchase
pursuant to Section 2 above be increased pursuant to this Section 9 by an amount
in excess of one-ninth of such number of Securities without the written consent
of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters
shall fail or refuse to purchase Securities and the aggregate number of
Securities with respect to which such default occurs is more than one-tenth of
the aggregate number of Securities to be purchased on the Closing Date, and
arrangements satisfactory to the Underwriters and First Union for the purchase
of such Securities are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or First Union. In such case either the Underwriters or First Union
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. Any action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. Certain Liabilities Upon Termination. If this Agreement
shall be terminated pursuant to Section 9 hereof, the Company shall not then be
under any liability to any Underwriter except as provided in Sections 5(e) and 7
hereof; but, if for any other reason, any Securities are not delivered by or on
behalf of the Company as provided herein, the Company will reimburse the
Underwriters through you for all actual out-of-pocket expenses approved in
writing by
18
<PAGE>
you, including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Securities not so delivered, but the Company shall then be under no further
liability to any Underwriter in respect of the Securities not so delivered
except as provided in Sections 5(e) and 7 hereof.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
First Union or its officers and of the Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or First Union or any
of the officers, directors or controlling persons referred to in Section 7
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 5(e), 7, 9, 12, 13 and 14 hereof shall survive the
termination or cancellation of this Agreement.
12. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto (including any Underwriter or
Underwriters added pursuant to Section 9 hereof) and their respective
successors, heirs, executors, administrators and the officers and directors and
controlling persons referred to in Section 7 hereof, and no other person will
have any right or obligation hereunder.
13. Applicable Law. This Agreement will be
governed by and construed in accordance with the laws of the
State of New York.
14. Counterparts; Notices. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, which taken
together shall constitute one and the same instrument.
15. Remarketing. If a prospectus is required by the Act to be
delivered in connection with offers and sales of the Securities (including any
offers and sales of Securities by the Callholder (as defined in the Prospectus
Supplement, including any assignee or successor of the Callholder) or the
Underwriters or any of their affiliates) following any proposed exercise of the
Call Option, the Floater Option or any other right resulting in an interest rate
reset and remarketing of the Securities (the "Call Option" and "Floater Option"
being as described in the
19
<PAGE>
Prospectus Supplement), and it is necessary, in the reasonable opinion of
counsel for the Underwriters or for First Union, at any such time to amend any
registration statement or amend or supplement any prospectus or prospectus
supplement in order that such prospectus or prospectus supplement will not
include any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances under which made, or if it shall be necessary, in the
reasonable opinion of either such counsel, at any such time to amend any
registration statement or file a new registration statement or amend or
supplement any prospectus or issue a new prospectus or prospectus supplement in
order to comply with the requirements of the Act or the Commission's rules,
regulations or interpretations under the Act, First Union shall promptly prepare
and file with the Commission such amendment or supplement as may be necessary to
correct such statement or omission or to make any such registration statement or
any such prospectus or prospectus supplement comply with such requirements, or
promptly prepare and file any such new registration statement and prospectus as
either of such counsel may reasonably deem necessary for such purpose, and
furnish to the Callholder, the Underwriters, and any other persons participating
in the proposed distribution such number of copies of such amendment,
supplement, prospectus or other documents as they may reasonably request. In
addition, First Union shall, in connection with any such proposed offer or sale
of Securities by the Callholder, the Underwriters or any such other persons in
which a prospectus is required by the Act to be delivered, (i) execute and
deliver or cause to be executed and delivered legal documentation (including,
without limitation, a purchase agreement or underwriting agreement and
registration rights agreement with customary indemnities and contribution,
covenants, representations and warranties, expense provisions (but without
provision for express underwriting discounts or commissions), conditions,
comfort letters and legal opinions) in form and substance reasonably
satisfactory to First Union and counsel for the Underwriters, (ii) provide
promptly upon request updated consolidated financial statements to the date of
its latest report filed with the Commission, and (iii) to the extent First Union
and the Callholder, the Underwriters or any such other persons deem reasonably
necessary for successful completion of such offering and sale of the Securities,
make available senior management of First Union for road show and
20
<PAGE>
one-on-one presentations. This Section 15 shall not supercede or modify the
provisions of Section 5(d) of this Agreement.
All notices hereunder shall be in writing or by telegram if
promptly confirmed in writing, and if to the Underwriters shall be sufficient in
all respects if delivered or sent by registered mail to the address of the
Representative as set forth in Schedule I hereto; and if to First Union shall be
sufficient in all respects if delivered or sent by registered mail to the
address of First Union set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 7(c) hereof shall be delivered or sent by registered mail to such
Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to First
Union by the Representative upon request.
15. Action by Underwriters. Any action under this Agreement
taken by the Underwriters jointly or by the firm signing below on behalf of you
as the Representative will be binding upon all the Underwriters.
21
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between First Union and the Underwriters.
Very truly yours,
FIRST UNION CORPORATION
/s/ Kenneth R. Stancliff
---------------------------
Name: Kenneth R. Stancliff
Title: Senior Vice President
The foregoing Agreement is
hereby confirmed and
accepted as of the date
first above written.
By: FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
On behalf of the Underwriters
set forth in Schedule II
By: /s/ William B. Cameron
---------------------------
Name: William B. Cameron
Title: Vice President
22
<PAGE>
SCHEDULE I
Title of Designated Securities:
6.30% Putable/Callable Subordinated Notes Due April 15,
2028
Aggregate Principal Amount:
$200,000,000
Price to Public:
99.622% of the principal amount of the Designated
Securities
Purchase Price by Underwriters:
98.970% of the principal amount of the Designated
Securities
Specified Funds for Payment of Purchase Price:
Immediately available funds by wire
Indenture:
Indenture, dated as of March 15, 1986, as supplemented by the First
Supplemental Indenture, dated as of August 1, 1990, the Second
Supplemental Indenture, dated as of November 15, 1992, and the Third
Supplemental Indenture, dated as of February 7, 1996, between First
Union and Harris Trust and Savings Bank, as Successor Trustee to The
Bank of New York (formerly Irving Trust Company)
Maturity:
April 15, 2028
Interest Rate:
6.30% per annum until April 15, 2008; potentially reset thereafter as
described in the Prospectus Supplement
<PAGE>
Interest Payment Dates:
April 15 and October 15 of each year, commencing
October 15, 1998
Regular Record Dates:
April 1 and October 1 of each year
Mandatory Redemption:
See Prospectus Supplement
Call Option and Second Call Option:
See Prospectus Supplement
Put Option:
See Prospectus Supplement
Floater Option and Call Option Override:
See Prospectus Supplement
Coupon Reset Process and Floater Option Coupon Reset
Process:
See Prospectus Supplement
Option Agreement:
Letter Agreement dated April 23, 1998 among First Union
Corporation, First Union Investors, Inc. and First
Union Capital Markets, a division of First Wheat
Securities, Inc., as Agent
Calculation Agency Agreement:
Calculation Agency Agreement dated April 23, 1998
between First Union Corporation and First Union
National Bank
Sinking Fund Provisions:
None
I-2
<PAGE>
Conversion Provisions:
None
Exchange Provisions:
None
Other Terms:
See the Prospectus Supplement
Additional Comfort Letter Coverage:
Ernst & Young, LLP (for CoreStates Financial Corp)
Form of Designated Security:
Global securities, fully registered in denominations set forth in the
Prospectus Supplement, and maintained in book-entry form by or through
The Depository Trust Company
Closing Date and Place:
April 23, 1998 at 10:00 A.M. (E.S.T.)
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Restricted Period Under Section 5(g) of Underwriting
Agreement:
April 23, 1998 through Closing Date
Office for Payment for Designated Securities:
To be paid by wire in immediately available funds
Name of Representative:
First Union Capital Markets, a division of Wheat First
Securities, Inc.
I-3
<PAGE>
Address for Notices, etc.:
First Union Capital Markets Group
One First Union Center
Charlotte, North Carolina 28288
Attention: William Cameron
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Robert B. Hiden, Jr.
I-4
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
Principal
Amount of
Securities
to be
Underwriter Purchased
----------- ---------
<S> <C>
First Union Capital Markets, a division
of Wheat First Securities, Inc.......................................................$ 50,000,000
Credit Suisse First Boston Corporation............................................... 50,000,000
Lehman Brothers Inc. ............................................................... 50,000,000
Morgan Stanley & Co. Incorporated.................................................... 50,000,000
Total............................................................................... $200,000,000
</TABLE>
<PAGE>
SCHEDULE III
Pursuant to Section 6(e) of the Underwriting Agreement, the
independent accountants of First Union shall provide a comfort letter to the
effect that:
(i) They are independent certified public accountants with
respect to First Union and its subsidiaries within the meaning of the Act and
the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules examined by them and included
or incorporated by reference in the Prospectus as amended or supplemented comply
as to form in all material respects with the applicable accounting requirements
of the Act or the Exchange Act, as applicable, and the published rules and
regulations thereunder;
(iii) On the basis of limited procedures, not constituting an
audit, consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of First Union and its subsidiaries, inspection of the
minute books of First Union and its subsidiaries since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus as amended or supplemented, inquiries of officials of First Union and
its subsidiaries responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of changes in
financial position included or incorporated by reference in First
Union's most recent Quarterly Report on Form 10-Q incorporated by
reference in the Prospectus (if any) as amended or supplemented does
not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form 10-Q
and the related published rules and regulations thereunder or are not
in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of the audited consolidated
financial
<PAGE>
statements included or incorporated by reference in
First Union's most recent Annual Report on Form 10-K;
(B) any unaudited financial data included in the Prospectus as
amended or supplemented as at any time, or for any period ending, after
the end of the latest interim period covered by a Quarterly Report on
Form 10-Q of First Union or year ended for which First Union has filed
an Annual Report on Form 10-K (whichever is more recent) (and any data
for any comparable prior period included therein) do not agree with the
corresponding amounts in the unaudited consolidated financial
statements from which such data are derived, or any such unaudited
financial data were not deter mined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included or incorporated by
reference in First Union's most recent Annual Report on Form 10-K;
(C) the unaudited pro forma consolidated condensed financial
statements (if any) included or incorporated by reference in the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the published rules
and regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(D) as of a specified date not more than five days prior to
the date of delivery of such letter there have been any changes in the
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest audited financial
statements included or incorporated by reference in the Prospectus as
amended or supplemented) or long-term debt of First Union or any of its
subsidiaries, or any decreases in consolidated stockholders' equity,
consolidated assets, consolidated deposits, or allowance for loan
losses of First Union or other items specified by the Representative,
or any increases in any items specified by the Representative, in each
case as compared with amounts shown in the latest balance sheet
included or
III-2
<PAGE>
incorporated by reference in the Prospectus as amended or supplemented
except in each case for changes, increases or decreases which the
Prospectus as amended or supplemented discloses have occurred or may
occur or which are described in such letter; and
(E) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus as
amended or supplemented to the end of the latest period for which
financial statements are available there were any decreases in
consolidated net interest income, net interest income after provision
for loan losses, or the total or per share amounts of net income of
First Union or other items specified by the Representative, or any
increases in any items specified by the Representative, in each case as
compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Representative,
except in each case for increases or decreases which the Prospectus as
amended or supplemented discloses have occurred or may occur or which
are described in such letter;
(iv) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures referred
to in subparagraph (iii) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information specified by the Representative which are
derived from the general accounting records of First Union and its subsidiaries,
which appear in the Prospectus as amended or supplemented (excluding documents
incorporated by reference), in exhibits to the Registration Statement specified
by the Representative, or in documents incorporated by reference in the
Prospectus specified by the Representative, and have compared certain of such
amounts, percentages and financial information with the accounting records of
First Union and its subsidiaries and have found them to be in agreement.
III-3
<PAGE>
SCHEDULE IV
Pursuant to Section 6(e) of the Underwriting Agreement, the
independent accountants of CoreStates Financial Corp ("CoreStates") shall
provide a comfort letter to the effect that:
(i) They are independent certified public accountants with
respect to CoreStates and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules examined by them and included
or incorporated by reference in the Prospectus as amended or supplemented comply
as to form in all material respects with the applicable accounting requirements
of the Act or the Exchange Act, as applicable, and the published rules and
regulations thereunder;
(iii) On the basis of limited procedures, not constituting an
audit, consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of CoreStates and its subsidiaries, inspection of the
minute books of CoreStates and its subsidiaries since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus as amended or supplemented, inquiries of officials of CoreStates and
its subsidiaries responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) as of a specified date not more than five days prior to
the date of delivery of such letter there have been any changes in the
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest audited financial
statements included or incorporated by reference in the Prospectus as
amended or supplemented) or long-term debt of CoreStates or any of its
subsidiaries, or any decreases in consolidated stockholders' equity,
consolidated
<PAGE>
assets, consolidated deposits, or allowance for loan losses of
CoreStates or other items specified by the Representative, or any
increases in any items specified by the Representative, in each case as
compared with amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus as amended or supplemented
except in each case for changes, increases or decreases which the
Prospectus as amended or supplemented discloses have occurred or may
occur or which are described in such letter; and
(B) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus as
amended or supplemented to the end of the latest period for which
financial statements are available there were any decreases in
consolidated net interest income, net interest income after provision
for loan losses, or the total or per share amounts of net income of
CoreStates or other items specified by the Representative, or any
increases in any items specified by the Representative, in each case as
compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Representative,
except in each case for increases or decreases which the Prospectus as
amended or supplemented discloses have occurred or may occur or which
are described in such letter.
IV-2
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
REGISTERED REGISTERED
NO. 1 PRINCIPAL AMOUNT
CUSIP NO. 337 358 BL8 $200,000,000
FIRST UNION CORPORATION
6.30% Putable/Callable Subordinated Notes Due April 15, 2028
FIRST UNION CORPORATION, a corporation duly organized and existing
under the laws of North Carolina (herein called the "Company," which term
includes any successor under the Indenture hereinafter referred to), for value
received, hereby promises to pay to CEDE & CO. or its registered assigns, the
principal sum of TWO HUNDRED MILLION DOLLARS on April 15, 2028 (the "Final
Maturity"), and to pay interest thereon from April 23, 1998, or from the most
recent interest payment date to which interest has been paid or duly provided
for, semi-annually on April 15 and October 15 of each year, commencing on
October 15, 1998, at the rate described below, until the principal hereof is
paid or made available for payment. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the April 1 or October 1 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close
<PAGE>
of business on a Special Record Date for the payment of such Defaulted Interest
to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this Series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirement of any securities exchange on which the Securities of this
Series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture. Interest on this Security will be
computed on the basis of a 360-day year of twelve 30-day months.
From and including April 23, 1998 to but excluding April 15, 2008,
interest shall accrue on the principal sum of this Security at an annual rate
equal to 6.30%. On April 15, 2008 (the "Coupon Reset Date"), and again on the
New Coupon Reset Date (as defined on the reverse hereof), the interest rate on
this Security shall be reset as described on the reverse hereof, unless the
Company is obligated to repurchase and cancel this Security pursuant to the Put
Option or otherwise, as described on the reverse hereof.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the Corporate Trust Office of the Trustee in The City
of New York or in the city of Chicago, Illinois, or at the office or agency of
the Company maintained for that purpose in Charlotte, North Carolina, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
This Security has initially been issued in the form of a Global
Security, and the Company has initially designated The Depository Trust Company
as the Depository for this Security. For as long as this Security is issued in
such form, and notwithstanding the foregoing, all payments of interest,
principal and other amounts in respect of this Security (including payments
pursuant to the Call Option, Put Option and Second Call Option referred to on
the reverse hereof) shall be made to the Depository or its nominee in accordance
with Applicable Procedures (as defined on the reverse hereof), in the coin or
currency specified above and as further provided on the reverse hereof.
Reference is made to the further provisions of this Security set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as though fully set forth at this place.
- 2 -
<PAGE>
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof, or by an Authenticating Agent,
by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: April 23, 1998
[SEAL] FIRST UNION CORPORATION
By: __________________
Name:
Title:
ATTEST:
By: ______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK FIRST UNION NATIONAL BANK
as Trustee as Authenticating Agent
OR
By: ______________________________ By: ______________________
Authorized Officer Authorized Signature
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[REVERSE OF BOND]
FIRST UNION CORPORATION
6.30% Putable/Callable Subordinated Notes Due April 15, 2028
1. Indenture. This Security is one of a duly authorized issue of
securities of the Company (hereinafter sometimes called the "Notes" or this
"Security"), issued and to be issued in one or more series under an Indenture,
dated as of March 15, 1986, as amended by supplemental indentures dated as of
August 1, 1990, November 15, 1992 and February 7, 1996 (herein called the
"Indenture"), between the Company and Harris Trust and Savings Bank, as
successor Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Indebtedness, Entitled Persons in respect of
Other Financial Obligations and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered. If any
provision of this Security necessarily conflicts with any provision of the
Indenture, the provision of this Security shall be controlling to the fullest
extent permitted under the Indenture. This Security is one of the series
designated on the face hereof.
2. Interest Rate. The Notes will bear interest at the rate of 6.30% per
annum from the date of issuance to but excluding April 15, 2008 (the "Coupon
Reset Date"). If the Callholder (as defined below) elects to exercise the Call
Option (as defined below) and the Company does not exercise the Call Option
Override (as defined below) or the Floater Option (as defined below), the
Calculation Agent (as defined below) will reset the interest rate on the Notes
effective on the Coupon Reset Date, pursuant to Section 8 below. If the Company
exercises the Floater Option, the Calculation Agent will reset the interest rate
on the Notes effective on the Coupon Reset Date, pursuant to Section 9 below. If
the Company exercises the Second Call Option (as defined below), the Calculation
Agent will reset the interest rate on the Notes effective on the New Coupon
Reset Date (as defined below) pursuant to Section 10 below. If the Callholder
does not exercise the Call Option, or if exercised, does not for any reason pay
the Call Price (as defined below) when required, or if the Company exercises the
Call Option Override, the Trustee will be required to exercise the Put Option
(as defined below), the Company will be required to repurchase and cancel the
Notes and the interest rate on the Notes will
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not be reset on the Coupon Reset Date. If the Company exercises the Floater
Option but does not subsequently exercise the Second Call Option, the Company
will be required to purchase and cancel the Notes and the interest rate on the
Notes will not be reset on the New Coupon Reset Date.
3. Call Option. Subject to the Call Option Override, the Callholder
shall have the right to purchase the Notes in whole but not in part on the
Coupon Reset Date (the "Call Option"), at a price equal to 100 percent of the
principal amount thereof (the "Call Price"), by giving notice to the Trustee, in
writing, no later than fifteen calendar days prior to the Coupon Reset Date (the
"Call Notice"). The Trustee shall promptly give notice of exercise of the Call
Option to the Holders of the Notes.
In the event the Callholder exercises the Call Option and the Company
does not exercise the Call Option Override (whether or not the Floater Option is
exercised), then (i) not later than 2:00 p.m. New York time on the Business Day
prior to the Coupon Reset Date, the Callholder shall deliver the Call Price in
immediately available funds to the Trustee through the facilities of the DTC for
payment of the Call Price on the Coupon Reset Date, and (ii) the Holders of the
Notes shall be required to deliver, and will be deemed to have delivered, the
Notes to the Callholder against payment therefor on the Coupon Reset Date
through the facilities of DTC.
If the Callholder after having exercised the Call Option does not for
any reason pay the Call Price to the Trustee when required, or if the Company
exercises the Call Option Override, the Put Option will be automatically
exercised by the Trustee as described in Section 4 below. In such circumstances,
the Trustee shall notify the Holders of the Notes that it is exercising the Put
Option.
The Callholder may at any time assign its rights and obligations under
the Call Option; provided, however, that (i) such rights and obligations are
assigned in whole and not in part and (ii) it provides the Trustee and the
Company with notice of such assignment contemporaneously with such assignment.
Upon receipt of notice of assignment, the Trustee will treat the assignee as
Callholder for all purposes hereunder. The Callholder may assign its rights
under the Call Option without notice to, or consent of, the Holders of the Notes
(including, if applicable, the Holder hereof).
4. Put Option. If the Call Option is not exercised or, if exercised,
the Callholder does not for any reason deliver the Call Price to the Trustee not
later
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than 2:00 p.m. New York time on the Business Day prior to the Coupon Reset Date,
or if the Company exercises the Call Option Override, the Trustee shall
automatically exercise, on behalf of the Holders of the Notes, the right (the
"Put Option") to require the Company to purchase the Notes on April 15, 2008, at
a purchase price equal to 100 percent of the principal amount thereof (the "Put
Redemption Price"). By its purchase of any Note, each Holder irrevocably agrees
that the Trustee shall automatically exercise the Put Option for, or on behalf
of, the Holder as provided herein. No Holder of any Note or any interest therein
shall have the right to consent or object to the Trustee's duty to exercise the
Put Option.
If the Put Option is exercised, the Company will deliver the Put
Redemption Price to the Trustee through the facilities of DTC by no later than
12:00 noon, New York time, on April 15, 2008, and the Holders of the Notes will
be required to deliver, and will be deemed to have delivered, the Notes to the
Company against payment therefor on such date, through the facilities of DTC.
The Notes will thereupon be cancelled and no Notes will be issued in lieu of or
in exchange therefor.
5. Call Option Override. If the Call Option is exercised, the Company
shall have the option to override such exercise (the "Call Option Override") by
giving written notice of such exercise to the Callholder, the Calculation Agent
and the Trustee not later than 2:00 p.m. New York time no later than four
Business Days prior to April 15, 2008. If the Company exercises the Call Option
Override, the Put Option will be automatically exercised by the Trustee for and
on behalf of the Holders of the Notes on April 15, 2008.
6. Floater Option. If the Call Option is exercised and the Company does
not exercise the Call Option Override, the Company shall have the option (the
"Floater Option"), exercisable by giving written notice of exercise to the
Callholder, the Calculation Agent and the Trustee not later than 2:00 p.m. New
York time no less than four Business Days prior to April 15, 2008, to reset the
coupon on the Notes to a floating interest rate for the period from and
including the Coupon Reset Date to October 15, 2008, or such earlier date
established by the Company by written notice to the Trustee and the Calculation
Agent at least six Business Days prior to such date, as the new coupon reset
date (the "New Coupon Reset Date"). In such case, the Callholder shall remain
obligated to purchase the Notes from the Holders, and the Holders of the Notes
shall remain obligated to deliver, and will be deemed to have delivered, the
Notes to the Callholder, at the Call Price on the Coupon Reset Date. After the
Coupon Reset Date, the Company may elect (i) to exercise the Second Call Option
(as defined herein) and have the coupon reset to a
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fixed rate from the New Coupon Reset Date to the Final Maturity, as described in
Section 10 below, or (ii) to purchase and cancel the Notes on October 15, 2008
or such earlier date as it may determine, as described in Section 9 below.
7. Second Call Option. If the Floater Option is exercised, from the
Coupon Reset Date until six Business Days prior to October 15, 2008, the Company
shall have the right, exercisable by giving written notice of exercise to the
Trustee and the Calculation Agent not later than 2:00 p.m. at least six Business
Days prior to the date selected as the New Coupon Reset Date (which shall not be
later than October 15, 2008), to purchase the Notes in whole but not in part on
the New Coupon Reset Date at the Call Price plus accrued and unpaid interest (if
any) from the Coupon Reset Date to the New Coupon Reset Date (the "Second Call
Option"). The Trustee shall promptly give notice of exercise of the Second Call
Option to the Holders of the Notes.
Upon exercise of the Second Call Option, the interest rate on the Notes
will be reset from a floating rate to a fixed rate for the period from the New
Coupon Reset Date to Final Maturity pursuant to Section 10. The Company will
deliver to the Trustee through the facilities of the Depository, not later than
12:00 noon New York time on the New Coupon Reset Date, the Call Price plus
accrued and unpaid interest (if any), as aforesaid, in immediately available
funds for payment of such amount on the New Coupon Reset Date, and the Holders
of the Notes shall be required to deliver, and will be deemed to have delivered,
the Notes to the Company against payment therefor on such New Coupon Reset Date
through the facilities of the Depository.
8. Call Option Coupon Reset Process. If the Callholder exercises the
Call Option and the Company does not exercise the Call Option Override or the
Floater Option, the Company and a calculation agent selected by the Company
pursuant to a calculation agency agreement (the "Calculation Agent") shall
complete the following steps in order to determine the interest rate to be paid
on the Notes from and including the Coupon Reset Date to the Final Maturity
Date. The Company and the Calculation Agent shall use reasonable efforts to
cause the actions contemplated below to be completed in as timely a manner as
practicable.
(a) The Company shall provide the Calculation Agent with a list (the
"Dealer List"), no later than four Business Days prior to the Coupon Reset Date,
containing the names and addresses of at least three and not more than five
dealers, from which it desires the Calculation Agent to obtain the Bids (as
defined below) for the purchase of the Notes on the Coupon Reset Date.
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(b) Within one Business Day following receipt by the Calculation Agent
of the Dealer List, the Calculation Agent shall provide to each dealer
("Dealer") on the Dealer List (i) a copy of this Prospectus Supplement and the
accompanying Prospectus relating to the offering of the Notes, (ii) a copy of
the form of the Notes, and (iii) a written request that each such Dealer submit
a Bid to the Calculation Agent by 12:00 noon, New York City time (the "Bid
Deadline"), on the third Business Day prior to the Coupon Reset Date (the "Bid
Date"). "Bid" shall mean an irrevocable written offer given by a Dealer for the
purchase of the Notes on the Coupon Reset Date, and shall be quoted by such
Dealer as a stated yield to maturity on the Notes ("Yield to Maturity"). Each
Dealer shall be provided with (i) the name of the Company, (ii) an estimate of
the Purchase Price (which shall be stated as a U.S. dollar amount and be
calculated by the Calculation Agent in accordance with paragraph (c) below),
(iii) the principal amount and maturity of the Notes, and (iv) the method by
which interest will be calculated on the Notes.
(c) The purchase price to be paid by any Dealer for the Notes (the
"Purchase Price") shall be equal to (i) the principal amount of the Notes plus
(ii) a premium (the "Fixed Notes Premium") equal to the Settlement Amount.
"Settlement Amount" means the present value of an annuity equal to the positive
difference, if any, of (x) a stream of interest payments which would have been
due on the Notes after the Coupon Reset Date assuming the Notes were to bear
interest at 6.50% (computed on the basis of a 360-day year consisting of twelve
30-day months) and the aggregate face amount of the Notes were to remain
outstanding until April 15, 2028, and (y) a stream of corresponding interest
payments which would have been due on the Notes after the Coupon Reset Date
assuming the Notes were to bear interest at the Swap Rate (computed on the basis
of a 360-day year consisting of twelve 30-day months) and the aggregate face
amount of Notes were to remain outstanding until April 15, 2028, determined by
discounting such interest payments described in clauses (x) and (y) from the
respective dates on which such interest payments would have become due to the
Coupon Reset Date using a series of discount factors corresponding to those
dates determined by the Calculation Agent from the yield curve a swap dealer
would use on the Bid Date in valuing a series of swap payments similar to that
annuity. "Swap Rate" for the Notes means the per annum rate equal to the sum of
the Base Rate plus the bid side yield to maturity of then current 20-year swaps
spread which appears on Telerate Page 19901 ("Swap Spread") at 11:00 a.m., New
York time, on the applicable Bid Date (or such other date or time that may be
agreed upon by the Company and the Calculation Agent) (the "Rate Setting Time"),
or if such Swap Spread does not appear on Telerate Page 19901 as of the Rate
Setting Time then such Swap Spread shall be as determined by the Calculation
Agent by obtaining bid quotations for the then-current 20-year
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swap spread (quoted over the then-current on-the-run ten-year U.S. Treasury
Security) from four reference market-makers (selected in good faith by the
Calculation Agent) as of the Rate Setting Time and then computing the arithmetic
mean of the two middle bid quotations (after discarding the highest and lowest
of such quotations), which arithmetic mean shall be such Swap Spread. "Telerate
Page 19901" means the display designated as Page "19901" on the Dow Jones
Telerate Service (or any successor or substitute page as may replace such page
on such service). For purposes of the computation of Swap Rate, the "Base Rate"
means the per annum rate equal to the offered side yield to maturity of the
then-current on- the-run ten-year U.S. Treasury Security which appears on
Telerate Page 500 as of the Rate Setting Time or, if such rate does not appear
on Telerate Page 500 at such time, then the Base Rate shall be determined by the
Calculation Agent by obtaining offered quotations for the then-current
on-the-run ten-year U.S. Treasury Security from four government securities
dealers (selected in good faith by the Calculation Agent) as of the Rate Setting
Time and then computing the arithmetic mean of the yields of the two middle
offered quotations (after discarding the highest and lowest of such quotations),
which arithmetic mean shall be the "Base Rate"; provided, however, that if the
Swap Spread reported by Telerate on the applicable Bid Date is not based on an
underlying ten-year U.S. Treasury Security, then the Calculation Agent shall
determine the Base Rate by interpolation between a Base Rate computed on the
basis of a U.S. Treasury Security with a ten-year maturity and a Base Rate
computed on the basis of a U.S. Treasury Security with a 30-year maturity.
"Telerate Page 500" means the display designated as Page "500" on the Dow Jones
Telerate Service (or any successor or substitute page as may replace such page
on such service).
(d) Following receipt of the Bids, the Calculation Agent shall provide
written notice to the Company, setting forth (i) the names of each of the
Dealers from whom the Calculation Agent received Bids on the Bid Date, (ii) the
Bid submitted by each such Dealer, and (iii) the Purchase Price as determined
pursuant to paragraph (c) above. Except as provided below, the Calculation Agent
shall thereafter select from the Bids received the Bid with the lowest Yield to
Maturity (the "Selected Bid") and establish the Coupon Reset Rate (the "Coupon
Reset Rate") equal to the interest rate which would amortize the Fixed Notes
Premium fully over the term of the Notes at the Yield to Maturity indicated by
the Selected Bid; provided, however, that if the Calculation Agent has not
received a Bid from a Dealer by the Bid Deadline, the Selected Bid shall be the
lowest of all Bids received by such time, and provided, further, that if any two
or more of the lowest Bids submitted are equivalent, the Company shall in its
sole discretion select any of such equivalent Bids (and such selected Bid shall
be the Selected Bid).
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(e) Immediately after calculating the Coupon Reset Rate, the
Calculation Agent shall provide written notice to the Company and the Trustee
setting forth such Coupon Reset Rate as the new interest rate on the Notes,
effective from and including the Coupon Reset Date, by delivery to the Trustee
on or before the Coupon Reset Date of an officers' certificate.
(f) The Callholder shall sell the Notes to the Dealer that made the
Selected Bid at the Purchase Price, such sale to be settled on the Coupon Reset
Date in immediately available funds.
(g) Notwithstanding the foregoing, if the Calculation Agent determines
that (i) since the Call Notice, an Event of Default, or any event which, with
the giving of notice or the passage of time, or both, would constitute an Event
of Default with respect to the Notes, shall have occurred and be continuing,
(ii) a Market Disruption Event (as defined below) has occurred following the
exercise of the Call Option, or (iii) two or more of the Dealers have failed to
provide Bids in a timely manner substantially as provided above, the Call Option
will be automatically revoked, and the Put Option will be automatically
exercised by the Trustee on behalf of the Holders of the Notes. "Market
Disruption Event" shall mean any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange or
the establishment of minimum prices in such exchange; (ii) a general moratorium
on commercial banking activities declared by either federal or New York State
authorities; (iii) any material adverse change in the existing financial,
political or economic conditions in the United States of America; (iv) an
outbreak or escalation of major hostilities involving the United States of
America or the declaration of a national emergency or war by the United States
of America; or (v) any material disruption of the U.S. government securities
market, U.S. corporate bond market, or U.S. federal wire system; provided,
however, that in the case of a Market Disruption Event, in the judgment of the
Calculation Agent, the effect thereof makes it impracticable to conduct the
procedures set forth in this Section 8.
9. Floater Option Coupon Reset Process -- Floating Rate. If the
Callholder has exercised the Call Option and the Company has exercised the
Floater Option, the Callholder shall remain obligated to purchase the Notes from
the Holders, and the Holders of the Notes shall remain obligated to deliver, and
will be deemed to have delivered, the Notes to the Callholder, at the Call Price
on the Coupon Reset Date. The Calculation Agent shall complete the following
steps in order to determine the floating interest rate to be paid on such Notes
from and including the Coupon Reset Date to but excluding the New Coupon Reset
Date. The
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Company and the Calculation Agent shall use reasonable efforts to cause the
actions contemplated below to be completed in as timely a manner as possible.
(a) Not later than four Business Days prior to the Coupon Reset Date,
the Calculation Agent shall provide to a dealer selected by the Company (the
"Bidding Dealer") (i) a copy of this Prospectus Supplement and the accompanying
Prospectus relating to the offering of the Notes, (ii) a copy of the form of the
Notes, and (iii) a written request that the Bidding Dealer submit a Bid to the
Calculation Agent by the Bid Deadline on the Bid Date. The Bidding Dealer shall
be provided with (i) the name of the Company, (ii) the Purchase Price (which
shall be stated as a U.S. dollar amount in accordance with paragraph (b) below),
(iii) the principal amount and maturity of the Notes, and (iv) the method by
which interest will be calculated on the Notes.
(b) The Purchase Price shall be equal to the principal amount of the
Notes. The Notes shall bear interest at a per annum rate of interest, reset
daily, based on the three-month London Interbank Offered Rate ("LIBOR") plus or
minus a percentage spread to LIBOR to be determined by the Bidding Dealer (the
"Spread"). "LIBOR" means the offered rate (expressed as an interest rate per
annum) for three-month Eurodollar deposits for the semi-annual interest period
commencing on the Coupon Reset Date which appears on Telerate Screen Page 3750
(to five decimal places), as of 11:00 a.m., London time, on the Bid Date (or, if
such date is not a London Business Day, the next previous London Business Day,
where "London Business Day" means any Business Day on which dealings in deposits
in U.S. dollars are transacted in the London interbank market). "Telerate Page
3750" means the display designated as Page "3750" on the Dow Jones Telerate
Service (or such other page as may replace Page 3750 on that service or such
other service or services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates of
major banks for U.S. dollar deposits). If, on the Bid Date, LIBOR cannot be
determined as provided in the foregoing sentence, LIBOR will be determined on
the basis of the rates at which deposits in U.S. dollars having a maturity of
three months, commencing on the Coupon Reset Date in a principal amount of not
less than U.S. $1,000,000 that is representative for a single transaction in
such market at such time, are offered by four major banks in the London
interbank market selected by the Calculation Agent at approximately 11:00 a.m.,
London time, on the Bid Date to prime banks in the London interbank market. The
Calculation Agent will request the principal London office of each of such banks
to provide a quotation of its rate. If at least two such quotations are
provided, LIBOR in respect of the Bid Date will be the arithmetic mean (rounded
to the nearest one-thousandth of a percent, with five ten-
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thousandths of a percent rounded upwards) of such quotations. If fewer than two
quotations are provided, LIBOR in respect of the Bid Date will be the arithmetic
mean (rounded to the nearest one-thousandth of a percent, with five ten
thousandths of a percent rounded upwards) of the rates quoted by three major
banks in New York City selected by the Calculation Agent at approximately 11:00
a.m., New York City time, on the Bid Date for loans in U.S. dollars to leading
European banks having a maturity of three months commencing on the Coupon Reset
Date and in a principal amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at such time.
(c) Following receipt of the Bid, the Calculation Agent shall provide
written notice to the Company, setting forth the Purchase Price and shall
establish the floating coupon reset rate (the "Floating Coupon Reset Rate")
equal to LIBOR (as determined pursuant to paragraph (b) above) plus or minus the
Spread as determined pursuant to paragraph (b) above.
(d) Immediately after calculating the Floating Coupon Reset Rate, the
Calculation Agent shall provide written notice to the Company and the Trustee,
setting forth such Floating Coupon Reset Rate as the new interest rate on the
Notes, effective from and including the Coupon Reset Date, to and excluding the
New Coupon Reset Date, by delivery to the Trustee on or before the Coupon Reset
Date of an officers' certificate.
(e) The Callholder shall sell the Notes to the Bidding Dealer at the
Purchase Price, such sale to be settled on the Coupon Reset Date in immediately
available funds.
(f) Notwithstanding the foregoing, if (A) the Calculation Agent
determines that (i) since the Call Notice, an Event of Default, or any event
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default with respect to the Notes shall have occurred and
be continuing, (ii) a Market Disruption Event has occurred following the
exercise of the Call Option, or (iii) the Bidding Dealer shall not have provided
its Bid in a timely manner substantially as provided above, or (B) the Spread is
not acceptable to the Company, the Call Option and the Floater Option will be
automatically revoked, and the Put Option will be automatically exercised by the
Trustee on behalf of the Holders of the Notes.
If the Company, at any time after the Coupon Reset Date and at least
six Business Days prior to October 15, 2008, irrevocably determines not to
exercise its right to reset the floating interest rate on the Notes to a fixed
rate pursuant to
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Section 10 below, it may repurchase and cancel the Notes and shall give written
notice to the Trustee of such determination at least six Business Days prior to
the date on which it will make such repurchase. In such case, or if the Company
otherwise does not exercise or is deemed not to have exercised the Second Call
Option, the Company (i) will be required to purchase the Notes on October 15,
2008, or such earlier date as it may determine, at a purchase price equal to 100
percent of the principal amount thereof, plus accrued and unpaid interest to
October 15, 2008 or such earlier date, (ii) will deliver to the Trustee, not
later than 12:00 noon, New York time, on such date, an amount equal to 100
percent of the principal amount of the Notes plus any accrued and unpaid
interest in immediately available funds for payment of such amount on such date,
and (iii) the Holders of the Notes shall be required to deliver, and will be
deemed to have delivered, the Notes to the Company or the Trustee against
payment therefor on such date through the facilities of the Depository. The
Notes will thereupon be cancelled and no Notes will be issued in lieu of or in
exchange therefor.
10. Floater Option Coupon Reset Process -- Floating Rate to Fixed Rate.
If the Company has exercised the Second Call Option, the Company and the
Calculation Agent shall complete the following steps in order to determine the
interest rate to be paid on the Notes from and including the New Coupon Reset
Date to the Final Maturity Date. The Company and the Calculation Agent shall use
reasonable efforts to cause the actions contemplated below to be completed in as
timely a manner as possible.
(a) The Company shall provide the Calculation Agent with the Dealer
List, no later than four Business Days prior to the New Coupon Reset Date,
containing the names and addresses of at least three and no more than five
dealers from which it desires the Calculation Agent to obtain the Bids for the
purchase of such Notes.
(b) Within one Business Day following receipt by the Calculation Agent
of the Dealer List, the Calculation Agent shall provide to each Dealer on the
Dealer List (i) a copy of this Prospectus Supplement and the accompanying
Prospectus relating to the offering of the Notes, (ii) a copy of the form of the
Notes, and (iii) a written request that each such Dealer submit a Bid to the
Calculation Agent by the Bid Deadline on the third Business Day prior to the New
Coupon Reset Date (the "New Bid Date"). Each Dealer shall be provided with (i)
the name of the Company, (ii) an estimate of the Purchase Price (which shall be
stated as a U.S. dollar amount and be calculated by the Calculation Agent in
accordance with paragraph (c) below), (iii) the principal amount and maturity of
the Notes, (iv) the New Coupon Reset Date, and (v) the method by which interest
will be calculated on the Notes.
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(c) The Purchase Price shall be equal to (i) the principal amount of
the Notes plus (ii) a premium which shall be equal to the Settlement Amount plus
an amount equal to the interest payable on a note with a maturity of the New
Coupon Reset Date, accruing interest (payable at maturity) at a per annum rate,
reset daily, equal to three-month LIBOR accruing from the Coupon Reset Date, and
having a principal amount equal to the Settlement Amount (the "New Fixed Notes
Premium").
(d) Following receipt of the Bids, the Calculation Agent shall provide
written notice to the Company, setting forth (i) the names of each of the
Dealers from whom the Calculation Agent received Bids on the New Bid Date, (ii)
the Bid submitted by each such Dealer, and (iii) the Purchase Price as
determined pursuant to paragraph (c) above. Except as provided below, the
Calculation Agent shall thereafter select, from the three Bids received, the
Selected Bid and establish a new rate of interest for the Notes (the "New Coupon
Reset Rate") equal to the interest rate which would amortize the New Fixed Notes
Premium fully over the term of the Notes at the Yield to Maturity indicated by
the Selected Bid; provided, however, that if the Calculation Agent has not
received a Bid from a Dealer by the Bid Deadline on the New Bid Date, the
Selected Bid shall be the lowest of all Bids received by such time, and
provided, further, that if any two or more of the lowest Bids submitted are
equivalent, the Company shall in its sole discretion select any of such
equivalent Bids (and such selected Bid shall be the Selected Bid).
(e) Immediately after calculating the New Coupon Reset Rate, the
Calculation Agent shall provide written notice to the Company and the Trustee,
setting forth such New Coupon Reset Rate as the new interest rate on the Notes,
effective from and including the New Coupon Reset Date to the Final Maturity
Date, by delivery to the Trustee on or before the New Coupon Reset Date of an
officers' certificate.
(f) The Company shall sell the Notes to the Dealer that made the
Selected Bid at the Purchase Price, such sale to be settled on the New Coupon
Reset Date in immediately available funds.
(g) Notwithstanding the foregoing, if the Calculation Agent determines
that (i) since the exercise of the Second Call Option, an Event of Default, or
any event which, with the giving of notice or the passage of time or both, would
constitute an Event of Default with respect to the Notes shall have occurred and
be continuing, (ii) a Market Disruption Event has occurred following the
exercise of the Second Call Option, or (iii) two or more of the Dealers shall
have failed to provide Bids in a
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timely manner substantially as provided above, the Second Call Option will be
automatically revoked, and the Company will be deemed to have determined not to
exercise its right to reset the floating rate on the Notes to a fixed rate, as
described in Section 9 above.
11. Settlement on Exercise of Call Option or Put Option. If
the Callholder exercises the Call Option and the Company does not exercise the
Call Option Override, then, on the Coupon Reset Date, all beneficial interests
in the Notes shall be transferred to an account at the Depository designated by
the Callholder. The transfers shall be made automatically, without any action on
the part of any Holder or beneficial owner, by book entry through the
Depository. The Callholder shall be obligated to make payment of the Call Price
in immediately available funds for credit to the accounts of the participants of
the Depository through which beneficial interests in the Notes are held, by 2:00
p.m. New York time on the Business Day prior to the Coupon Reset Date. Each
transfer shall be made against the corresponding payment, and each payment shall
be made against the corresponding transfer, in accordance with the Depository's
applicable procedures ("Applicable Procedures"). If the Callholder fails to pay
the Call Price when due or if the Company exercises the Call Option Override,
the Call Option shall be deemed not to have been exercised and the Put Option
shall be deemed to have been automatically exercised. In these circumstances,
the Company shall be obligated to pay the Put Redemption Price for the Notes on
the Coupon Reset Date, with settlement occurring as described in the next
paragraph. In any event, the Company shall remain obligated to make payment of
accrued and unpaid interest due on the Notes, with interest payable on the
Coupon Reset Date being payable to the Holders of the Notes on the Record Date
for such payment.
If the Call Option is not exercised, the Callholder fails to pay the
Call Price when due, or the Company exercises the Call Option Override, and the
Put Option is therefore exercised, then, on the Coupon Reset Date, all
beneficial interests in the Notes to be purchased shall be transferred to an
account at the Depository designated by the Company. The transfers shall be made
automatically, without any action on the part of any Holder or beneficial owner,
by book entry through the Depository. The Company shall be obligated to make
payment of the Put Redemption Price for credit to the accounts of the
participants of the Depository through which beneficial interests in the Notes
are held, by 12:00 noon New York Time on the Coupon Reset Date. Each transfer
shall be made against the corresponding payment, and each payment shall be made
against the corresponding transfer, in accordance with Applicable Procedures. If
the Company fails to pay the Put Redemption Price when due, accrued interest
from the Coupon Reset Date to
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<PAGE>
the date the payment is made shall be payable as part of the Put Redemption
Price. Whether or not the Notes are purchased pursuant to the Put Option, the
Company shall remain obligated to make payment of accrued and unpaid interest
due on the Notes, with interest payable on the Coupon Reset Date being payable
to the Holders of the Notes on the Record Date for such payment.
The transactions described above shall be executed through the
Depository in accordance with Applicable Procedures, and the accounts of the
respective participants of the Depository shall be debited and credited and the
Notes delivered by book entry as necessary to effect the purchases and sales
thereof. The transactions shall settle in immediately available funds through
the Depository. Notwithstanding any provision hereof or in the Indenture, none
of the Company, the Callholder, or the Trustee, nor any agent of any such
person, shall have any responsibility with respect to Applicable Procedures or
for any payments, transfers or other transactions, or any notices or other
communications, among the Depository, any of its direct or indirect participants
and any beneficial owners of the Notes. For all purposes of this Security and
the Indenture, any payment or notice to be made or given with respect to this
Security by the Company, the Callholder or the Trustee shall be deemed made or
given when made or given to the Depository or its nominee, in accordance with
Applicable Procedures.
Substantially similar procedures shall also apply with respect to the
Second Call Option and the New Coupon Reset Date and the transactions described
in Sections 9 and 10 above.
The settlement procedures described above, including those for payment
for and delivery of the Notes purchased by the Callholder or the Company on the
Coupon Reset Date or the New Coupon Reset Date, may be modified, notwithstanding
any contrary terms of the Indenture, to the extent required by the Depository
or, if the book-entry system is no longer available for the Notes at the
relevant time, to the extent required to facilitate these transactions in the
Notes in certificated form. In addition, the Callholder and the Company may,
notwithstanding any contrary terms of the Indenture, modify the settlement
procedures referred to above in order to facilitate the settlement process.
Notwithstanding any provision to the contrary set forth in the
Indenture, the Company shall (i) use its reasonable best efforts to maintain the
Notes in book-entry form with the Depository and to appoint a successor
depository to the extent necessary to maintain the Notes in book-entry form, and
(ii) waive any discretionary right it otherwise may have under the Indenture to
cause the Notes to
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<PAGE>
be issued in certificated form.
12. Subordination. The indebtedness evidenced by the
Securities of this series is, to the extent provided in the Indenture,
subordinate and junior in right of payment to the Company's obligations to
holders of Senior Indebtedness of the Company. The Indenture also provides that
it, upon the occurrence of certain events of bankruptcy or insolvency relating
to the Company, there remains, after giving effect to such subordination
provisions, any amount of cash, property or securities available for payment or
distribution in respect of Securities of this series (defined in the Indenture
as "Excess Proceeds"), and if, at such time, any Entitled Person has not
received payment in full of all amounts due or to become due on or in respect of
Other Financial Obligations, then such Excess Proceeds shall first be applied to
pay or provide for the payment in full of such Other Financial Obligations
before any payment or distribution may be made in respect of Securities of this
series. This Security is issued subject to the provisions of the Indenture
regarding subordination to Senior Indebtedness and payments to Entitled Persons
in respect of Other Financial Obligations. Each Holder of this Security, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination and payment of Excess
Proceeds so provided and (c) appoints the Trustee his attorney-in-fact for any
and all such purposes.
13. Default, Waiver, Amendment and Enforcement. (a) If an
Event of Default (defined in the Indenture as certain events involving the
bankruptcy, insolvency or reorganization of the Company) shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture. The
principal of the Securities of this series may not be declared due and payable
upon a Default (as defined in the Indenture), other than a Default which also
constitutes an Event of Default, although the Trustee may in its discretion
protect the rights of Holders by appropriate judicial proceeding as provided in
the Indenture.
(b) The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of specified percentages in
principal amount of
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<PAGE>
the Securities of each series at the time Outstanding, on behalf of the Holders
of all Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Security.
(c) No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional to pay the principal of (and
premium, if any) and interest on this Security herein provided, and at the
times, place and rate, and in the coin or currency, herein prescribed.
14. Form and Denomination; Global Securities. (a) The
Securities of this series are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations set forth therein and herein,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
(b) As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office of the Company in any place where the principal of and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
(c) The Security evidenced by this certificate has been issued
in the form of a Global Security and, except as otherwise provided in this
Security, the
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<PAGE>
provisions of the Indenture governing Global Securities shall apply to this
Security for as long as this Security shall be issued in such form.
15. Holder. Prior to due presentment of this Security for
registration of a permitted transfer, the Company, the Trustee and any agent of
the Company or the trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security
be overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
16. Redemption. Except as otherwise specifically provided in
this Security, the Securities of this series will not be redeemable prior to
maturity.
17. Interpretation. All terms used in this Security which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture. Unless the context requires otherwise, terms defined herein include
the plural as well as the singular and vice-versa, and the words "herein" and
"hereof", and words of similar import, refer to this Security as a whole and not
to any particular paragraph or other subdivision.
18. Governing Law. As provided in the Indenture, this Security
shall for all purposes be governed by and construed in accordance with the laws
of the State of New York.
- 20 -
<PAGE>
CALCULATION AGENCY AGREEMENT
Between
FIRST UNION NATIONAL BANK
and
FIRST UNION CORPORATION
This Calculation Agency Agreement (the "Agreement"), dated as
of April 23, 1998, is made between FIRST UNION CORPORATION (the "Company") and
FIRST UNION NATIONAL BANK (the "Calculation Agent").
The Company proposes to issue and sell its 6.30%
Putable/Callable Subordinated Notes Due April 15, 2028 (the "Notes"), described
in a Prospectus Supplement dated April 16, 1998 (the "Prospectus Supplement"),
to the Prospectus dated September 5, 1997 (the "Prospectus"), and issued
pursuant to an Indenture, dated as of March 15, 1986, between the Company and
Harris Trust and Savings Bank, as successor Trustee (the "Trustee"), as amended
and supplemented by supplemental indentures, dated as of August 1, 1990,
November 15, 1992 and February 7, 1996 (as so amended and supplemented, the
"Indenture"), in an aggregate principal amount of $200,000,000. The Notes will
be issued and the terms thereof established in accordance with the Indenture,
the form of Global Note (the "Form of Note"), the Prospectus Supplement and the
Prospectus included in the registration statement on Form S-3 filed with the
Securities and Exchange Commission (the "Commission") (Registration No.
333-34151). The Company may from time to time file with the Commission one or
more post-effective amendments to such registration statement, or amended or
supplemented prospectuses, or additional registration statements and
prospectuses relating to the Notes. The interest rate on the Notes will be 6.30%
upon issuance and may be reset in accordance with the Form of Note attached
hereto as Appendix A. Capitalized terms used but not defined herein shall have
the same meanings as in the Form of Note.
SECTION 1. Appointment of Calculation Agent. The Company
hereby appoints First Union National Bank as the Calculation Agent for the
purpose of calculating the Coupon Reset Rate, the Floating Coupon Reset Rate and
the New Coupon Reset Rate (each as defined in the Form of Note) and of making
the other calculations and determinations, and of giving the notices and
conducting the other activities and obligations called for, by the Calculation
Agent, all as
<PAGE>
provided in and in accordance with the provisions of the
Form of Note and this Agreement.
SECTION 2. Status of Calculation Agent. Any acts taken by the
Calculation Agent under this Agreement or in connection with any Notes,
including, specifically, but without limitation, the calculation of any interest
rate for the Notes, shall be deemed to have been taken by the Calculation Agent
solely in its capacity as an agent acting on behalf of the Company and shall not
create or imply any obligation to, or any agency or trust relationship with, any
of the owners or holders of the Notes.
SECTION 3. Rights and Liabilities of the Calculation Agent.
The Calculation Agent shall incur no liability for, or in respect of, any action
taken, omitted to be taken or suffered by it in reliance upon any certificate,
affidavit, instruction, notice, request, direction, order, statement or other
paper, document or communication reasonably believed by it to be genuine. Any
order, certificate, affidavit, instruction, notice, request, direction,
statement or other communication from the Company made or given by it and sent,
delivered or directed to the Calculation Agent under, pursuant to, or as
permitted by, any provision of this Agreement shall be sufficient for purposes
of this Agreement if such communication is in writing and signed by any officer
or attorney-in-fact of the Company. The Calculation Agent may consult with
counsel satisfactory to it and the advice of such counsel shall constitute full
and complete authorization and protection of such Calculation Agent with respect
to any action taken, omitted to be taken or suffered by it hereunder in good
faith and in accordance with and in reliance upon the advice of such counsel.
SECTION 4. Right of Calculation Agent to Own Notes. The
Calculation Agent, in its individual capacity, and its officers, employees and
shareholders, may buy, sell, hold and deal in the Notes and may exercise any
vote or join in any action which any holder of the Notes may be entitled to
exercise or take as if it were not the Calculation Agent. The Calculation Agent,
in its individual capacity as such, may also engage in or have an interest in
any transaction with the Company or its affiliates as if it were not the
Calculation Agent.
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<PAGE>
SECTION 5. Duties of Calculation Agent. In acting under this
Agreement in connection with the Notes, the Calculation Agent shall be obligated
only to perform such duties as are specifically set forth herein or in the Form
of Note and no other duties or obligations on the part of such Calculation
Agent, in its capacity as such, shall be implied by this Agreement. In acting
under this Agreement, the Calculation Agent (in its capacity as such) assumes no
obligation towards, or any relationship of agency or trust for or with, the
holders of the Notes.
SECTION 6. Resignation of the Calculation Agent. (a) The
Calculation Agent may at any time resign as Calculation Agent by giving written
notice to the Company (with a copy to the Trustee) of such intention on its
part, specifying the date on which its desired resignation shall become
effective; provided, however, that such date shall not be earlier than 30 days
after the receipt of such notice by the Company, unless the Company agrees in
writing to accept less notice. The Company may remove the Calculation Agent at
any time by filing with the Calculation Agent (with a copy to the Trustee) any
instrument in writing signed on behalf of the Company and specifying such
removal, the reasons for such removal and the date when such removal is intended
to become effective. Such resignation or removal shall take effect upon the date
of the appointment by the Company, as hereinafter provided, of a successor
Calculation Agent. If at least 60 days after notice of resignation or removal
has been given a successor Calculation Agent has not been appointed, the
Calculation Agent may petition a court of competent jurisdiction to appoint a
successor Calculation Agent. A successor Calculation Agent shall be appointed by
the Company by an instrument in writing signed on behalf of the Company and the
successor Calculation Agent. Upon the appointment of a successor Calculation
Agent and acceptance by it of such appointment, the Calculation Agent so
superseded shall cease to be such Calculation Agent hereunder. Upon its
resignation or removal, the Calculation Agent shall be entitled to the
reimbursement of all reasonable out-of-pocket expenses incurred in connection
with the services rendered hereunder by it as Calculation Agent.
(b) Any successor Calculation Agent appointed hereunder shall
execute and deliver to its predecessor, the Company and the Trustee an
instrument accepting such appointment hereunder and agreeing to perform the
functions
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<PAGE>
and obligations of the Calculation Agent under the Notes and the obligations of
the Calculation Agent under this Agreement and to be bound by this Agreement
and, to the extent relating to it, the Form of Note, and thereupon such
successor Calculation Agent, without any further act, deed or conveyance, shall
become vested with all the authority, rights, powers, trusts, immunities, duties
and obligations of such predecessor with like effect as if originally named as
such Calculation Agent hereunder, and such predecessor Calculation Agent, upon
payment of its charges and disbursements then unpaid, shall thereupon become
obliged to transfer and deliver, and such successor Calculation Agent shall be
entitled to receive and the predecessor Calculation Agent shall provide, copies
of any relevant records maintained by such predecessor Calculation Agent.
(c) Any corporation, partnership, limited liability company or
other entity into which the Calculation Agent may be merged or converted or with
which the Calculation Agent may be consolidated, or any corporation,
partnership, limited liability company or other entity resulting from any
merger, conversion or consolidation to which the Calculation Agent shall be a
party, shall, to the extent permitted by applicable law, be the successor
Calculation Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto provided that
such successor Calculation Agent shall assume, or be deemed to have assumed, all
of the obligations and liabilities of its predecessor under this Agreement and,
to the extent relating to it, under the Form of Note. Notice of any such merger,
conversion, consolidation or sale shall forthwith be given to the Company and
the Trustee.
(d) The indemnity, reimbursement and other provisions of this
Agreement will survive any resignation or removal of the Calculation Agent. The
agreements of the parties set forth herein will be binding upon and inure to the
benefit of their respective successors.
SECTION 7. No Purchase of the Notes by the Company.
Notwithstanding any provision to the contrary set forth in the Indenture, the
Company will not purchase any Notes in the open market, by tender offer, in a
private transaction or otherwise, except pursuant to any purchase obligation it
may have under the Notes, with the prior
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<PAGE>
consent of the Callholder or pursuant to the terms of the
Notes.
SECTION 8. Book-entry Notes. Notwithstanding any provision to
the contrary set forth in the Notes or the Indenture, the Company (i) will use
its reasonable best efforts to maintain the Notes in book-entry form with The
Depository Trust Company ("DTC") or any successor thereto and to appoint a
successor depositary to the extent necessary to maintain the Notes in book-entry
form and (ii) will waive any discretionary right it otherwise has under the
Indenture to cause the Notes to be issued in certificated form. The Company will
perform its obligations, and pursue its rights against DTC, under the DTC Letter
of Representations dated April 23, 1998 among the Company, First Union National
Bank and DTC.
SECTION 9. No Amendment of Notes or Indenture. Notwithstanding
any provision to the contrary set forth in the Indenture, the Company will not
cause or permit the provisions of any Note (or the Indenture, as it relates to
any Note) to be modified in any way without the prior consent of the Callholder.
SECTION 10. Indemnification. The Company shall indemnify and
hold harmless First Union National Bank, or any successor Calculation Agent
thereof, and their respective officers and employees from and against all
actions, claims, damages, liabilities and losses, and costs and expenses related
thereto (including but not limited to reasonable legal fees and costs) relating
to or arising out of actions or omissions in any capacity hereunder, except
actions, claims, damages, liabilities, losses, costs and expenses caused by the
bad faith, gross negligence or wilful misconduct of First Union National Bank,
or any successor Calculation Agent, or their respective officers or employees.
This Section shall survive the termination of the Agreement and the payment in
full of all obligations under the Notes, whether by redemption, repayment or
otherwise.
SECTION 11. Notices. Any notice or other communication
required to be given hereunder shall be delivered in person, sent by letter,
telecopy or telex or communicated by telephone (subject, in the case of
communication by telephone, to written confirmation dispatched within
twenty-four (24) hours) to the addresses
-5-
<PAGE>
given below or such other address as each party hereto may subsequently
designate in writing.
To the Company:
First Union Corporation
One First Union Center
Charlotte, NC 28288
Attention: Kenneth R. Stancliff
Telephone No.: (704) 374-4269
Telecopy No.: (704) 374-2250
To the Trustee:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, IL 60606
Attention: Corporate Trust Division
Telephone No.: (312) 461-2908
Telecopy No.: (312) 461-3525
To the Calculation Agent:
First Union National Bank
One First Union Center
Charlotte, NC 28288
Attention: Ross Jeffries
Telephone No: (704) 374-3234
Telecopy No.: (704) 374-3105
Any notice hereunder given by telecopy or telex shall be deemed to have been
given when transmitted. Any notice hereunder given by letter shall be deemed to
have been given five business days after mailing such notice.
SECTION 12. Benefit of Agreement. Except as provided herein,
this Agreement is solely for the benefit of the parties hereto and their
successors and assigns, and no other person shall acquire or have any rights
under or by virtue hereof. The terms "successors" and "assigns" shall not
include any purchasers of any Notes merely because of such purchase.
-6-
<PAGE>
SECTION 13. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements entered into and performed in such State.
SECTION 14. Severability. If any provision of this Agreement
shall be held or deemed to be or shall, in fact, be invalid, inoperative or
unenforceable as applied in any particular case in any or all jurisdictions
because it conflicts with any provision of any constitution, statute, rule or
public policy or for any other reason, such circumstances shall not have the
effect of rendering the provision in question invalid, inoperative or
unenforceable in any other case, circumstances or jurisdiction, or of rendering
any other provision or provisions of this Agreement invalid, inoperative or
unenforceable to any extent whatsoever.
SECTION 15. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be regarded as an original and all of
which shall constitute one and the same instrument.
SECTION 16. Amendments. This Agreement may be amended by any
instrument in writing executed and delivered by each of the parties hereto.
-7-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been entered into as of
the 23rd day of April, 1998.
FIRST UNION CORPORATION
By: /s/ Kenneth R. Stancliff
---------------------------
Name: Kenneth R. Stancliff
Title: Senior Vice President
FIRST UNION NATIONAL BANK
By: /s/ Robert L. Andersen
---------------------------
Name: Robert L. Andersen
Title: Senior Vice President
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<PAGE>
Appendix A
(Form of Note)
-9-
<PAGE>
TRANSACTION
CONFIRMATION
[First Union Logo Appears Here]
Date: April 16, 1998
To: FIRST UNION CORPORATION ("Seller")
Attention: Jon Currier
From: FIRST UNION INVESTORS, INC. ("Buyer")
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the transaction entered into between Buyer and Seller on
the Trade Date specified below (the "Transaction").
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.) (the
"1991 Definitions") are hereby incorporated into this Confirmation. In the event
of any inconsistency between those definitions and provisions and this
Confirmation, this Confirmation will govern. Capitalized terms not otherwise
defined herein shall have the meanings set forth in the 1991 Definitions.
The terms of the Transaction to which this Confirmation relates are as follows:
1. General Terms:
Type of Transaction: Cash Settled Note Call Option
Trade Date: April 16, 1998.
Note Call Option: the "Call Option" as defined in the
Prospectus Supplement dated April 16, 1998 pursuant to
which the Notes have been issued ("Prospectus
Supplement").
Notes: US$200,000,000 6.30% Putable/Callable Subordinated
Notes of Seller due April 15, 2028.
Indenture: The Indenture dated as of March 15, 1986 between Seller
and Harris Trust and Savings Bank, as successor trustee
(the "Trustee"), as amended and supplemented by
supplemental indentures, dated as of August 1, 1990,
November 15, 1992 and February 7, 1996 (as so amended
an supplemented, the "Indenture"), pursuant to which
the Notes were issued.
Aggregate Face
Amount of Notes: US$200,000,000.
Premium Payable by Buyer
for Note Call Option: $10,220,000, which amount is consideration for the
grant to Buyer of the Note Call Option under the terms
of the Notes and the right to receive the Settlement
Amount under this Transaction.
Premium Due Date: April 23, 1998.
Settlement Amount
Payment Date: The earliest to occur of (i) the Coupon Reset Date if
the Floater Option (as defined in the Prospectus
Supplement) is not exercised, (ii) the New Coupon Reset
Date (as defined in the Prospectus Supplement) if both
the Floater Option and the Second Call Option (as
defined in the Prospectus Supplement) are exercised,
and (iii) October 15, 2008.
Coupon Reset Date: April 15, 2008.
1
<PAGE>
Settlement Amount
Payable by Seller
on the Settlement
Amount Payment Date: The present value of an annuity equal to the positive
difference, if any, of (i) a stream of interest
payments which would have been due on the Notes after
the Coupon Reset Date assuming the Notes were to bear
interest at 6.50% (with a Day Count Fraction of 30/360)
and the Aggregate Face Amount of Notes were to remain
outstanding until April 15, 2028 and (ii) a stream of
corresponding interest payments which would have been
due on the Notes after the Coupon Reset Date assuming
the Notes were to bear interest at the Swap Rate (with
a Day Count Fraction of (30/360) and the Aggregate Face
Amount of Notes were to remain outstanding until April
15, 2028, determined by discounting such interest
payments described in clauses (i) and (ii) from the
respective dates on which such interest payments would
have become due to the Coupon Reset Date using a series
of discount factors which correspond to those dates as
determined by the Calculation Agent from the yield
curve a swap dealer would use on the Swap Rate
Determination Date in valuing a series of swap payments
similar to that annuity.
Settlement Amount
Carrying Costs Payable
by Seller on the
Settlement Amount
Payment Date: The product of (i) the Settlement Amount, (ii)
USD-LIBOR-BBA with a Designated Maturity of three
months and a Day Count Fraction of Actual/360, as
determined and reset with respect to each day in the
period from and including the Coupon Reset Date to but
excluding the Settlement Amount Payment Date ("Carry
Period"), and (iii) the number of days in the Carrying
Period, if any.
Swap Rate: A rate per annum equal to the sum of the Swap
Spread plus the Base Rate.
Swap Spread: The twenty-year swap spread (bid side) determined by
the Calculation Agent as of the Rate Setting Time from
Telerate Page 19901, subject to the Swap Spread
Fallback.
Rate Setting Time: 11:00 a.m. (New York City time) on the
Swap Rate Determination Date.
Swap Rate
Determination Date: Third New York Business Day prior to the Coupon Reset
Date.
Swap Spread Fallback: If the Swap Spread is not reported by Telerate on the
Swap Rate Determination Date, then the Calculation
Agent shall determine the Swap Spread by obtaining bid
quotations for the 20-year interest rate swap spread
(quoted over the Reference Security with a ten-year
maturity) from four Reference Market-markers (selected
in good faith by the Calculation Agent) as of the Rate
Setting Time, and the Swap Spread shall be the
arithmetic mean of the two middle quotations after
discarding the highest and lowest of such quotations.
Base Rate: The yield to maturity (bid side) on the Swap Rate
Determination Date of the then current on-the-run U.S.
Treasury security ("Reference Security") with a
ten-year maturity determined by the Calculation Agent
as of the Rate Setting Time from Telerate Page 500 (or
a successor page), subject to the Base Rate Fallback.
Base Rate Fallback: If the Base Rate is not reported by Telerate on the
Swap Rate Determination Date, then the Calculation
Agent shall determine the Base Rate from bid quotations
for the Reference Security with a ten-year maturity
from four U.S. government securities dealers (selected
in good faith by the Calculation Agent) as of the Rate
Setting Time, and the Base Rate shall be based on the
arithmetic mean of the yields of the two
2
<PAGE>
middle quotations after discarding the highest and
lowest of such quotations.
If the Swap Spread reported by Telerate on the Swap
Rate Determination Dates is not based on an underlying
ten-year U.S. Treasury security and is instead based on
interpolation between a ten-year and a thirty-year U.S.
Treasury security , then the Calculation Agent shall
determine the Base Rate by interpolation between a Base
Rate computed on the basis of a Reference Security with
a ten-year maturity and a Base Rate computed on the
basis of a Reference Security with a thirty-year
maturity.
Business Day: As defined in the Prospectus Supplement.
Business Day Convention: Following
Calculation Agent: First Union National Bank
2. Settlement Terms:
(a) If Buyer exercises the Note Call Option in accordance with the terms of the
Notes and Seller does not exercise the Call Option Override (as defined in
the Prospectus Supplement) before 2:00 p.m. (New York City time) on the
Business Day prior to the Coupon Reset Date, then:
(i) Buyer shall be deemed to have assigned and transferred to Seller
all right, title and interest and obligations of Buyer in, to and
under, or resulting from the exercise of, the Note Call Option,
and Seller shall be deemed to have accepted that assignment and
transfer, and be deemed to have assumed those obligations,
automatically and without further action.
(ii) Seller shall pay the Settlement Amount and Settlement Amount
Carrying Costs, if any, to Buyer on the Settlement Amount Payment
Date.
(b) If Buyer exercises the Note Call Option in accordance with the terms of the
Notes and Seller exercises the Call Option Override before 2:00 p.m. (New
York City time) on the fourth Business Day prior to the Coupon Reset Date,
then:
(i) the Note Call Option shall be overridden as provided in the
Notes; and
(ii) notwithstanding such override, Seller shall pay the Settlement
Amount and Settlement Amount Carrying Costs, if any, to Buyer on
the Settlement Amount Payment Date.
(c) If Buyer does not exercise its Note Call Option in accordance with the terms
of the Note, then no Settlement Amount or Settlement Amount Carrying Costs
will be due hereunder.
3. Additional Terms
(a) Additional Termination Event. (i) For purposes of the ISDA Master referred
to below, the following shall be an Additional Termination Event with
respect to this Transaction: before the fifteenth calendar day prior to the
Coupon Reset Date, the Notes fail to be outstanding in an aggregate
principal amount of $200,000,000 or are accelerated pursuant to the terms of
the Indenture or any supplemental indenture thereto.
(ii) For purposes of this Additional Termination Event, this Transaction
shall be the Affected Transaction and Seller shall be the Affected Party.
(iii) Upon the designation of an Early Termination Date under the ISDA
Master for this Additional Termination Event, in addition to any amount
payable by Seller in respect of that Early Termination Date, Buyer shall be
deemed to have assigned and transferred to Seller all right, title and
interest and obligations of Buyer in, to and under, or that would result
from the exercise of, the Note Call Option, and Seller shall be deemed to
have accepted that assignment and transfer, and be deemed to have assumed
those obligations,
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automatically and without further action.
(b) Operational Agent. This Confirmation will be effected through First Union
Capital Markets, a division of First Wheat Securities, Inc. ("Capital
Markets") as agent for the parties, and Capital Markets will be responsible
solely for the operational aspects of this Confirmation, such as record
keeping and reporting. Capital Markets' sole role under this Confirmation is
as an agent of the parties on a disclosed basis, and Capital Markets shall
have no obligation, by guaranty, endorsement or otherwise, with respect to
the performance of either party's obligations under or in connection with
this Transaction.
(c) No Purchase of Notes. Without the prior approval of Buyer, Seller may not
purchase any of the Notes other than as provided in the Notes.
4. Documentation
This Confirmation incorporates by reference the 1992 ISDA Master Agreement
(Local Currency - Single Jurisdiction version) published by the
International Swaps and Derivatives Association, Inc. ("ISDA Master"), and
for that purpose "Loss" and the "Second Method" shall apply under the ISDA
Master as though this paragraph were deemed to be the "Schedule" to the ISDA
Master, and this Confirmation together with the ISDA Master shall form a
binding and complete contract between the parties governed by the law (and
not the law of conflicts) of the State of New York.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to us.
Very truly yours,
FIRST UNION INVESTORS, INC.
/s/ Kenneth R. Stancliff
By: _______________________________
Name: KENNETH R. STANCLIFF
Title: Senior Vice President
FIRST UNION CAPITAL MARKETS,
A DIVISION OF FIRST WHEAT
SECURITIES, INC., as Agent
/s/ William B. Cameron
By: ________________________________
Name: WILLIAM B. CAMERON
Title: Vice President
Accepted and confirmed as of the
date first above-written:
FIRST UNION CORPORATION
/s/ Thomas J. Wurtz
By: ________________________________
Name: THOMAS J. WURTZ
Title: Senior Vice President &
Assistant Treasurer
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