<PAGE>
As filed with the Securities and Exchange Commission on July 1, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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First Union Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
North Carolina 56-0898180
<S> <C>
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
One First Union Center
Charlotte, North Carolina 28288-0013
(704) 374-6565
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
Marion A. Cowell, Jr., Esq.
Executive Vice President, Secretary and General Counsel
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
(704) 374-6828
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Robert B. Hiden, Jr., Esq.
Sullivan & Cromwell
250 Park Avenue
New York, New York 10177
(212) 558-3812
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Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this registration statement, as
determined in the light of market and other conditions.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to Amount to be Offering Price Aggregate Offer- Registration
be Registered Registered Per Unit (1) ing Price (1) Fee (1)
<S> <C> <C> <C> <C>
Debt Securities .... $4,822,000,000 (1) (1) $100
</TABLE>
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(1) This Registration Statement pertains to offers and sales of previously
registered debt securities of First Union Corporation related to
market-making transactions by and through Wheat First Securities, Inc., an
affiliate of the Registrant. Because registration fees with respect to
these debt securities were paid previously in connection with the
registration of the initial offerings of these debt securities to the
public, the amount of the registration fee payable with respect to this
Registration Statement is the minimum fee of $100.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
SUBJECT TO COMPLETION, DATED JULY 1, 1998
First Union Corporation
Debt Securities
----------------
First Union Corporation (the "Corporation" or "FUNC") has issued its
unsecured debt securities (the "Debt Securities") consisting of unsecured
senior debt securities (the "Senior Debt Securities") and unsecured
subordinated debt securities (the "Subordinated Debt Securities"). The
following Debt Securities have been issued and the indicated aggregate
principal amounts are outstanding as of the date hereof:
Senior Debt Securities
Fixed Rate Notes
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$250,000,000 of 6.60% Notes due June 15, 2000
Floating Rate Notes
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$100,000,000 of Floating Rate Extendible Notes due June 15, 2005
Subordinated Debt Securities
Fixed Rate Notes
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$250,000,000 of 9.45% Notes due June 15, 1999
$150,000,000 of 9.45% Notes due August 15, 2001
$250,000,000 of 8 1/8% Notes due June 24, 2002
$225,000,000 of 8% Notes due November 15, 2002
$150,000,000 of 7 1/4% Notes due February 15, 2003
$150,000,000 of 8.77% Notes due November 15, 2004
$250,000,000 of 6 5/8% Notes due July 15, 2005
$250,000,000 of 7.05% Notes due August 1, 2005
$250,000,000 of 6 7/8% Notes due September 15, 2005
$200,000,000 of 7% Notes due March 15, 2006
$300,000,000 of 7 1/2% Notes due July 15, 2006
$300,000,000 of 6.40% Notes due April 1, 2008
$200,000,000 of 6% Notes due October 30, 2008
$150,000,000 of 6 3/8% Notes due January 15, 2009
$150,000,000 of 8% Notes due August 15, 2009
$60,000,000 of 7.18% Notes due April 15, 2011
Fixed Rate Debentures
- ---------------------
$300,000,000 of 6.824%/7.574% Debentures due August 1, 2026
$200,000,000 of 6.30% Putable/Callable Notes Due April 15, 2028
$250,000,000 of 7 1/2% Debentures due April 15, 2035
$250,000,000 of 6.55% Debentures due October 15, 2035
Floating Rate Notes
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$150,000,000 of Floating Rate Notes due July 22, 2003
Medium-Term Notes
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$25,000,000 of 9.89% Notes due March 13, 2001 (Series B)
$3,000,000 of 9.93% Notes due March 27, 2001 (Series B)
$6,000,000 of 9.78% Notes due April 19, 2001 (Series B)
$2,000,000 of 9.58% Notes due June 4, 2001 (Series B)
$1,000,000 of 9.56% Notes due June 5, 2001 (Series B)
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------------
This Prospectus has been prepared in connection with the Debt Securities
and will be used by First Union Capital Markets, a division of Wheat First
Securities, Inc. ("First Union Capital Markets"), an affiliate of the
Corporation, in connection with offers and sales related to market-making and
other transactions in the Debt Securities. First Union Capital Markets may act
as principal or agent in such transactions. Such sales will be made at prices
related to prevailing market prices at the time of sale or otherwise.
The date of this Prospectus is , 1998.
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934 (as amended, the "Exchange Act") and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Corporation can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's Regional
Offices in New York (7 World Trade Center, 13th Floor, New York, New York
10048) and Chicago (Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60621), and copies of such materials can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Certain of such reports, proxy
statements and other information is also available from the Commission over the
Internet at http://www.sec.gov. The Corporation's Common Stock, $3.33 1/3 par
value per share ("First Union Common Stock"), is listed and traded on the New
York Stock Exchange, Inc. (the "NYSE"). Reports, proxy statements and other
information of the Corporation can also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005. This Prospectus does not
contain all of the information set forth in the Registration Statement on Form
S-3 of which this Prospectus is a part (together with all amendments and
exhibits thereto, the "Registration Statement"), which the Corporation has
filed with the Commission under the Securities Act, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission, and
to which reference is hereby made for further information.
The Commissioner of Insurance (the "Commissioner") of the State of North
Carolina has not approved or disapproved this offering nor has the Commissioner
passed upon the adequacy of this Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission (File
No. 1-10000) under Section 13(a) or 15(d) of the Exchange Act are hereby
incorporated by reference in this Prospectus:
(1) the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) the Corporation's Quarterly Report on Form 10-Q for the period ended
March 31, 1998; and
(3) the Corporation's Current Reports on Form 8-K dated January 22, 1998,
April 15, 1998, April 23, 1998, May 7, 1998, May 26, 1998 and June 8,
1998.
All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date hereof and prior to the termination of the
offering of the Debt Securities are hereby incorporated by reference into this
Prospectus and shall be deemed a part hereof from the date of filing of such
documents. Any statement contained herein, in any Prospectus Supplement or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained herein, in any
Prospectus Supplement or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of the Registration
Statement, this Prospectus or any Prospectus Supplement.
The Corporation will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents incorporated by reference herein,
except for certain exhibits to such documents. Written requests should be sent
to: Corporate Relations, First Union Corporation, One First Union Center,
Charlotte, North Carolina 28288-0206. Telephone requests may be directed to
(704) 374-6782.
2
<PAGE>
THE CORPORATION
The Corporation was incorporated under the laws of North Carolina in 1967
and is registered as a bank holding company under the Bank Holding Company Act
of 1956, as amended. Pursuant to a corporate reorganization in 1968, First
Union National Bank of North Carolina ("FUNB-NC") and First Union Mortgage
Corporation, a mortgage banking firm acquired by FUNB-NC in 1964, became
subsidiaries of the Corporation. FUNB-NC merged into First Union National Bank
("FUNB") in February 1998.
The Corporation provides a wide range of commercial and retail banking and
trust services through full-service banking offices in Connecticut, Delaware,
Florida, Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania,
South Carolina, Tennessee, Virginia and Washington, D.C. Such offices are
operated by FUNB, based in Charlotte, North Carolina, except the Delaware
offices, which are operated by First Union Bank of Delaware. The Corporation
also provides various other financial services, including mortgage banking,
credit card, home equity lending, leasing, investment banking, insurance and
securities brokerage services, through other subsidiaries.
The Corporation's principal executive offices are located at One First
Union Center, Charlotte, North Carolina 28288-0013 (telephone number (704)
374-6565).
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES*
<TABLE>
<CAPTION>
Three Months Years Ended December 31,
Ended ---------------------------------------------------------
March 31, 1998 1997 1996 1995 1994 1993
--------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Excluding interest on deposits ......... 2.63x 2.50 2.58 2.87 3.47 4.07
Including interest on deposits ......... 1.67x 1.57 1.56 1.58 1.72 1.74
</TABLE>
For purposes of computing these ratios, earnings represent income from
continuing operations before extraordinary items and cumulative effect of a
change in accounting principle plus income taxes and fixed charges (excluding
capitalized interest). Fixed charges, excluding interest on deposits, represent
interest (other than on deposits, but including capitalized interest),
one-third (the proportion deemed representative of the interest factor) of
rents and all amortization of debt issuance costs. Fixed charges, including
interest on deposits, represent all interest (including capitalized interest),
one-third (the proportion deemed representative of the interest factor) of
rents and all amortization of debt issuance costs.
* Restated to reflect the Corporation's pooling of interests acquisition
of CoreStates Financial Corp completed on April 28, 1998.
DESCRIPTION OF THE DEBT SECURITIES
General
The Debt Securities are direct, unsecured obligations of the Corporation.
The Debt Securities are not deposits or other obligations of a bank and are not
insured by the Federal Deposit Insurance Corporation or any other governmental
agency.
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities and should be read
together with the more detailed description of each individual Debt Security
set forth below.
Unless otherwise indicated with respect to an individual Senior Debt
Security, the Senior Debt Securities have been issued under an Indenture, dated
as of April 1, 1983, as amended by supplemental indentures dated as of May 17,
1986, July 1, 1988 and August 1, 1990 (the "Senior Indenture"), between the
Corporation and The Chase Manhattan Bank (formerly Chemical Bank), as Trustee
(the "Senior Trustee"). Unless otherwise indicated with respect to an
individual Subordinated Debt Security, the Subordinated Debt Securities have
been issued 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 (the "Subordinated Indenture" and together with the Senior
Indenture, the "Indentures"), between the Corporation and Harris Trust and
Savings Bank, as successor Trustee (the "Subordinated Trustee", and together
with the Senior Trustee, the "Trustees"). Copies of the Senior Indenture, the
Subordinated Indenture and any other indenture described herein are
incorporated by reference as
3
<PAGE>
exhibits to the Registration Statement of which this Prospectus is a part. The
following summaries of certain provisions of the Senior Debt Securities, the
Subordinated Debt Securities, the Senior Indenture, the Subordinated Indenture
and any other indenture discussed herein are brief summaries of certain
provisions thereof, do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
indenture applicable to a particular series of Debt Securities (the "Applicable
Indenture"), including the definitions therein of certain terms. Because some
of the Debt Securities, as discussed below, have been issued under an indenture
other than the Indentures or were issued under the Indentures as not so
supplemented or amended, the following summaries of certain provisions of the
Debt Securities are qualified by the more specific discussion of each
particular Debt Security set forth below. Whenever particular provisions or
defined terms in an Applicable Indenture or Indentures are referred to, such
provisions or defined terms are incorporated herein by reference. Section
references used herein are references to the Applicable Indenture or
Indentures. Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Applicable Indenture or Indentures.
The Indentures do not limit the aggregate principal amount of Debt
Securities or of any particular series of Debt Securities which may be issued
thereunder and provide that Debt Securities issued thereunder may be issued
from time to time in one or more series, in each case with the same or various
maturities, at par or at a discount. (Section 301). The Indentures provide that
there may be more than one trustee under the Indentures with respect to
different series of Debt Securities. As of March 31, 1998, $259 million
aggregate principal amount of Senior Debt Securities was issued and outstanding
as additional series of Debt Securities under the Senior Indenture. The Senior
Trustee is trustee for such additional series. As of March 31, 1998, $4.0
billion aggregate principal amount of Subordinated Debt Securities was issued
and outstanding as additional series of Debt Securities under the Subordinated
Indenture. The Subordinated Trustee is trustee for such additional series.
The Indentures do not limit the amount of other debt that may be issued by
the Corporation and do not contain financial or similar restrictive covenants.
As of March 31, 1998, the Corporation had an aggregate of $1.4 billion of
short-term Senior Indebtedness outstanding, which consisted primarily of
commercial paper. The Corporation expects from time to time to incur additional
indebtedness constituting Senior Indebtedness and Other Financial Obligations
(as defined herein). The Indentures do not prohibit or limit the incurrence of
additional Senior Indebtedness, Subordinated Debt Securities or Other Financial
Obligations.
Because the Corporation is a holding company and a legal entity separate
and distinct from its subsidiaries, the rights of the Corporation to
participate in any distribution of assets of any subsidiary upon its
liquidation of assets or reorganization or otherwise (and thus the ability of
Holders of Debt Securities to benefit indirectly from such distribution) would
be subject to the prior claims of creditors of that subsidiary, except to the
extent that the Corporation itself may be a creditor of that subsidiary with
recognized claims. Claims on the Corporation's subsidiary banks by creditors
other than the Corporation include long-term debt and substantial obligations
with respect to deposit liabilities and federal funds purchased, securities
sold under repurchase agreements, other short-term borrowings and various other
financial obligations. The Indentures do not contain any covenants designed to
afford holders of Securities, including Holders of the Debt Securities,
protection in the event of a highly leveraged transaction involving the
Corporation.
Unless otherwise indicated below with respect to any particular Debt
Security, principal, premium, if any, and interest, if any, on the Debt
Securities are payable, and the Debt Securities are transferable, at the
Corporate Trust Office of FUNB in Charlotte, North Carolina, except that
interest may be paid at the option of the Corporation by check mailed to the
address of the Holder entitled thereto as it appears on the Security Register.
(Sections 301, 305 and 1002).
Unless otherwise indicated below with respect to any particular Debt
Security, the Debt Securities have been issued only in fully registered form,
without coupons, in denominations of $1,000 and any integral multiple thereof.
(Section 302). The Indentures provide that Debt Securities of any series may be
issuable in permanent global form. (Section 301). Except as described below
with respect to any particular Debt Security, none of the Debt Securities
described herein have been issued in global form. No service charge will be
made for any registration of transfer or exchange of the Debt Securities, but
the Corporation may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. (Section 305).
4
<PAGE>
Unless otherwise indicated below with respect to any particular Debt
Security, the Debt Securities were not issued as Original Issue Discount
Securities at a substantial discount below their stated principal amount.
"Original Issue Discount Security" means any security which provides for an
amount less than the principal amount thereof to be due and payable upon the
declaration of acceleration of the maturity thereof in accordance with the
terms of the Applicable Indenture. (Section 101).
Subordination of the Subordinated Debt Securities
The obligations of the Corporation to make any payment on account of the
principal of and interest on any Subordinated Debt Securities are, to the
extent set forth in the Subordinated Indenture, subordinate and junior in right
of payment to all Senior Indebtedness of the Corporation. Unless otherwise
specified below with respect to any particular Subordinated Debt Security,
"Senior Indebtedness" of the Corporation is defined in the Subordinated
Indenture to mean the principal of, premium, if any, and interest on (i) all
indebtedness of the Corporation for money borrowed (including indebtedness of
others guaranteed by the Corporation) other than the Subordinated Debt
Securities, whether outstanding on the date of execution of the Subordinated
Indenture or thereafter created, assumed or incurred, except (a) any
obligations on account of Existing Subordinated Indebtedness (as defined
herein), and (b) such indebtedness as is by terms expressly stated to be not
superior in right of payment to the Subordinated Debt Securities or to rank
pari passu with the Subordinated Debt Securities, and (ii) any deferrals,
renewals or extensions of any such Senior Indebtedness. The term "indebtedness
of the Corporation for money borrowed" is defined in the Subordinated Indenture
to mean any obligation of, or any obligation guaranteed by, the Corporation for
the repayment of borrowed money, whether or not evidenced by bonds, debentures,
notes or other written instruments, and any deferred obligation for the payment
of the purchase price of property or assets. (Section 101 and Article Fourteen
of the Subordinated Indenture).
The payment of the principal of and interest on the Subordinated Debt
Securities is, to the extent set forth in the Subordinated Indenture,
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness. Unless otherwise specified below with respect to any particular
Subordinated Debt Security, in certain events of insolvency, the payment of the
principal of and interest on the Subordinated Debt Securities, other than
Subordinated Debt Securities that are also Existing Subordinated Indebtedness,
will, to the extent set forth in the Subordinated Indenture, also be
effectively subordinated in right of payment to the prior payment in full of
all Other Financial Obligations (as defined herein). Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up, reorganization, assignment for the benefit of creditors, marshalling of
assets or any bankruptcy, insolvency or similar proceedings of the Corporation,
the holders of all Senior Indebtedness will first be entitled to receive
payment in full of all amounts due or to become due thereon before the Holders
of the Subordinated Debt Securities will be entitled to receive any payment in
respect of the principal of or interest on the Subordinated Debt Securities. If
upon any such payment or distribution of assets to creditors, there remains,
after giving effect to such subordination provisions in favor of the holders of
Senior Indebtedness, any amount of cash, property or securities available for
payment or distribution in respect of Subordinated Debt Securities (defined in
the Subordinated Indenture as "Excess Proceeds") and if, at such time, any
Entitled Persons (as defined herein) in respect of Other Financial Obligations
have not received payment in full of all amounts due or to become due on or in
respect of such 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 the Subordinated Debt Securities which are not Existing Subordinated
Indebtedness. In the event of the acceleration of the maturity of any
Subordinated Debt Securities, the holders of all Senior Indebtedness will first
be entitled to receive payment in full of all amounts due thereon before the
Holders of the Subordinated Debt Securities will be entitled to receive any
payment upon the principal of or interest on the Subordinated Debt Securities.
By reason of such subordination in favor of the holders of Senior
Indebtedness, in the event of insolvency, creditors of the Corporation who are
not holders of Senior Indebtedness or Holders of the Subordinated Debt
Securities may recover less, ratably, than the holders of Senior Indebtedness
and may recover more, ratably, than the Holders of the Subordinated Debt
Securities. By reason of the obligation of the Holders of Subordinated Debt
Securities (other than Existing Subordinated Indebtedness) to pay over any
Excess Proceeds to Entitled Persons in respect of Other Financial Obligations,
in the event of insolvency, Holders of Existing Subordinated
5
<PAGE>
Indebtedness may recover less, ratably, than Entitled Persons in respect of
Other Financial Obligations and may recover more, ratably, than the Holders of
Subordinated Debt Securities (other than Existing Subordinated Indebtedness).
Unless otherwise specified below with respect to any particular
Subordinated Debt Security, "Existing Subordinated Indebtedness" means
Subordinated Debt Securities issued pursuant to the Subordinated Indenture
prior to November 15, 1992. (Section 101 of the Subordinated Indenture).
Unless otherwise specified below with respect to any particular
Subordinated Debt Security, "Other Financial Obligations" means all obligations
of the Corporation to make payment pursuant to the terms of financial
instruments, such as (i) securities contracts and foreign currency exchange
contracts, (ii) derivative instruments, such as swap agreements (including
interest rate and foreign exchange rate swap agreements), cap agreements, floor
agreements, collar agreements, interest rate agreements, foreign exchange rate
agreements, options, commodity futures contracts, commodity option contracts,
and (iii) in the case of both (i) and (ii) above, similar financial
instruments, other than (a) obligations on account of Senior Indebtedness, and
(b) obligations on account of indebtedness for money borrowed ranking pari
passu with or subordinate to the Subordinated Debt Securities. Unless otherwise
specified below with respect to any particular Subordinated Debt Security,
"Entitled Persons" means any Person who is entitled to payment pursuant to the
terms of Other Financial Obligations.
The Corporation's obligations under the Subordinated Debt Securities shall
rank pari passu in right of payment with each other and with the Existing
Subordinated Indebtedness, subject (unless otherwise specified below with
respect to any particular Subordinated Debt Security) to the obligations of the
Holders of Subordinated Debt Securities (other than Existing Subordinated
Indebtedness) to pay over any Excess Proceeds to Entitled Persons in respect of
Other Financial Obligations as provided in the Subordinated Indenture.
The particular provisions, if any, applicable to the subordination of the
Subordinated Debt Securities of a particular series are described below under
"Summary of Particular Subordinated Debt Securities".
Limitation on Disposition of Stock of FUNB
The Senior Indenture
The Senior Indenture contains a covenant by the Corporation that, so long
as any of the Senior Debt Securities issued thereunder before August 1, 1990
are outstanding, but subject to the rights of the Corporation in connection
with its consolidation with or merger into another corporation or a sale of the
Corporation's assets, it will not sell, assign, transfer, grant a security
interest in or otherwise dispose of any shares of, securities convertible into,
or options, warrants or rights to subscribe for or purchase shares of, Voting
Stock of FUNB, nor will it permit FUNB to issue (other than to the Corporation)
any shares (other than directors' qualifying shares) of, or securities
convertible into, or options, warrants or rights to subscribe for or purchase
shares of, Voting Stock of FUNB, unless (i) any such sale, assignment,
transfer, issuance, grant of a security interest or other disposition is made
for fair market value, as determined by the Board of Directors of the
Corporation, and (ii) the Corporation will own at least 80 percent of the
issued and outstanding Voting Stock of FUNB (or any successor to FUNB) free and
clear of any security interest after giving effect to such transaction.
(Section 1006).
The foregoing covenant is not a covenant for the benefit of any series of
Senior Debt Securities issued on or after August 1, 1990 under the Senior
Indenture.
The Subordinated Indenture
The Subordinated Indenture contains a covenant by the Corporation that, so
long as any of the Subordinated Debt Securities issued thereunder before August
1, 1990 are outstanding, but subject to the rights of the Corporation in
connection with its consolidation with or merger into another corporation or a
sale of the Corporation's assets, it will not sell, assign, transfer, grant a
security interest in or otherwise dispose of any shares of, securities
convertible into, or options, warrants or rights to subscribe for or purchase
shares of, Voting Stock of FUNB (other than to a Wholly-Owned Subsidiary), nor
will it permit FUNB to issue (other than to the Corporation or to a
Wholly-Owned Subsidiary) any shares (other than directors' qualifying shares)
of, or securities convertible into, or options, warrants or rights to subscribe
for or purchase shares of, Voting Stock of FUNB, unless (i) any such sale,
assignment, transfer, issuance, grant of a security interest or other
disposition is made for fair market value, as determined by the Board of
Directors of the Corporation, and (ii) the Corporation and/or
6
<PAGE>
its Wholly-Owned Subsidiaries will own at least 80 percent of the issued and
outstanding Voting Stock of FUNB (or any successor to FUNB) free and clear of
any security interest after giving effect to such transaction. (Section 1006).
The foregoing covenant is not a covenant for the benefit of any series of
Subordinated Debt Securities issued on or after August 1, 1990 under the
Subordinated Indenture.
Restriction on Sale or Issuance of Voting Stock of Major Subsidiary Banks
The Indentures each contain a covenant by the Corporation that it will
not, and will not permit any Subsidiary to, sell, assign, transfer, grant a
security interest or otherwise dispose of any shares of Voting Stock, or any
securities convertible into shares of Voting Stock, of any Major Subsidiary
Bank or any Subsidiary owning, directly or indirectly, any shares of Voting
Stock of any Major Subsidiary Bank and that it will not permit any Major
Subsidiary Bank or any Subsidiary owning, directly or indirectly, any shares of
Voting Stock of a Major Subsidiary Bank to issue any shares of its Voting Stock
or any securities convertible into shares of its Voting Stock, except for
sales, assignments, transfers or other dispositions which: (i) are for the
purpose of qualifying a Person to serve as a director; (ii) are for fair market
value (as determined by the Board of Directors of the Corporation) and, after
giving effect to such dispositions and to any potential dilution, the
Corporation will own not less than 80 percent of the shares of Voting Stock of
such Major Subsidiary Bank or any such Subsidiary owning any shares of Voting
Stock of such Major Subsidiary Bank; (iii) are made (x) in compliance with an
order of a court or regulatory authority of competent jurisdiction, or (y) in
compliance with a condition imposed by any such court or authority permitting
the acquisition by the Corporation, directly or indirectly, of any other bank
or entity the activities of which are legally permissible for a Person such as
the Corporation or a Subsidiary to engage in, or (z) in compliance with an
undertaking made to such authority in connection with such an acquisition
(provided that, in the case of clauses (y) and (z), the assets of the bank or
entity being acquired and its consolidated subsidiaries equal or exceed 75
percent of the assets of such Major Subsidiary Bank or such Subsidiary owning,
directly or indirectly, any shares of Voting Stock of a Major Subsidiary Bank
and its respective consolidated subsidiaries on the date of acquisition); or
(iv) are made to the Corporation or any Wholly-Owned Subsidiary.
Notwithstanding the foregoing, any Major Subsidiary Bank may be merged into or
consolidated with another banking institution organized under the laws of the
United States, any State thereof or Washington D.C., if after giving effect to
such merger or consolidation the Corporation or any Wholly-Owned Subsidiary
owns at least 80 percent of the Voting Stock of such other banking institution
then issued and outstanding free and clear of any security interest and if,
immediately after giving effect thereto, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing. (Section 1007). A Major Subsidiary Bank
is defined in each Indenture to mean any Subsidiary which is a bank and has
total assets equal to 25 percent or more of the consolidated assets of the
Corporation determined as of the date of the most recent audited financial
statements of such entities. At present, the only Major Subsidiary Bank is
FUNB.
The foregoing covenant is not a covenant for the benefit of any series of
Debt Securities issued before August 1, 1990, or, in the case of Subordinated
Debt Securities, issued after November 15, 1992.
Defaults
The Senior Indenture
An Event of Default is defined in the Senior Indenture as, with respect to
Senior Debt Securities of any series issued thereunder: default in payment of
principal of or premium, if any, on any Senior Debt Security of that series at
maturity; default for 30 days in payment of interest of any Senior Debt
Security of that series; failure to deposit any sinking fund payment when due
in respect of that series; failure by the Corporation for 60 days after due
notice in performance of any other of the covenants or warranties in the Senior
Indenture (other than a covenant or warranty included in the Senior Indenture
solely for the benefit of a series of Senior Debt Securities other than that
series); failure to pay when due any indebtedness of the Corporation or, in the
case of any series of Senior Debt Securities issued on or after August 1, 1990,
any Major Subsidiary Bank, or, in the case of any series of Senior Debt
Securities issued before August 1, 1990, FUNB, for borrowed money in excess of
$5,000,000, or acceleration of the maturity of any such indebtedness in excess
of such amount if acceleration results from a default under the instrument
giving rise to such indebtedness and is not annulled within 30 days after due
notice, unless in either case such default is contested in good faith by
appropriate proceedings; certain
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events of bankruptcy, insolvency or reorganization of the Corporation or, in
the case of any series of Senior Debt Securities issued on or after August 1,
1990, any Major Subsidiary Bank,or, in the case of any series of Senior Debt
Securities issued before August 1, 1990, FUNB; and any other Event of Default
provided with respect to Senior Debt Securities of that series. (Section 501).
The Senior Indenture provides that, if any Event of Default with respect
to Senior Debt Securities of any series at the time Outstanding thereunder
occurs and is continuing, either the Senior Trustee or the Holders of not less
than 25 percent in principal amount of the Outstanding Senior Debt Securities
of that series may declare the principal amount (or, if the Senior Debt
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
Senior Debt Securities of that series to be due and payable immediately
(provided that no such declaration is required upon certain events of
bankruptcy), but upon certain conditions such declaration may be annulled and
past defaults (except, unless theretofore cured, a default in payment of
principal of or premium, if any, or interest on the Senior Debt Securities of
that series and certain other specified defaults) may be waived by the Holders
of a majority in principal amount of the Outstanding Senior Debt Securities of
that series on behalf of the Holders of all Senior Debt Securities of that
series. (Sections 502 and 513). See the last paragraph under " -- General"
above. In the event of the bankruptcy, insolvency or reorganization of the
Corporation, the claims of Holders of the Senior Debt Securities would be
subject as to enforcement to the broad equity power of a federal bankruptcy
court, and to the determination by that court of the nature of the rights of
such Holders.
The Senior Indenture contains a provision entitling the Senior Trustee,
subject to the duty of the Senior Trustee upon the occurrence and continuation
of an Event of Default to act with the required standard of care, to be
indemnified by the Holders of any series of Outstanding Senior Debt Securities
thereunder before proceeding to exercise any right or power under the Senior
Indenture at the request of the Holders of such series of Senior Debt
Securities. (Section 603). The Senior Indenture provides that the Holders of a
majority in principal amount of Outstanding Senior Debt Securities thereunder
of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the Senior Trustee, or exercising any
trust or other power conferred on the Senior Trustee, with respect to the
Senior Debt Securities of such series, provided that the Senior Trustee may
decline to act if such direction is contrary to law or the Senior Indenture or
would involve the Senior Trustee in personal liability. (Section 512).
The Corporation has and will continue to file annually with the Senior
Trustee a certificate as to compliance with all conditions and covenants in the
Senior Indenture. (Section 1007).
The Subordinated Indenture
Payment of principal of the Subordinated Debt Securities may be
accelerated only upon an Event of Default under the Subordinated Indenture.
There is no right of acceleration in the case of a default in the payment of
interest or the payment of principal prior to the date of maturity or a default
in the performance of any other covenant of the Corporation in the Subordinated
Indenture, unless the terms of a particular series of Subordinated Debt
Securities specifically provide otherwise, in which case any such right of
acceleration will be described below with respect to such series of
Subordinated Debt Securities.
An Event of Default is defined in the Subordinated Indenture as, with
respect to Subordinated Debt Securities of any series issued thereunder,
certain events involving the bankruptcy, insolvency or reorganization of the
Corporation and any other Event of Default which may be provided for with
respect to the Subordinated Debt Securities of that series. (Section 501). A
Default, with respect to Subordinated Debt Securities of that series, is
defined in the Subordinated Indenture to include: (i) any Event of Default;
(ii) a default in the payment of principal or premium, if any, of any
Subordinated Debt Security of that series at its maturity; (iii) a default in
the payment of any interest when due, continued for 30 days; (iv) a default in
any required designation of funds as Available Funds; or (v) default in the
performance, or breach, of any other covenant of the Corporation in the
Subordinated Indenture or in the Subordinated Debt Securities of that series,
continued for 90 days after written notice to the Corporation by the
Subordinated Trustee or to the Corporation and the Subordinated Trustee by the
Holders of not less than 25 percent in aggregate principal amount of the
Outstanding Subordinated Debt Securities of such series. (Section 503). If an
Event of Default with respect to the Subordinated Debt Securities
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of any series occurs and is continuing, either the Subordinated Trustee or the
Holders of not less than 25 percent in aggregate principal amount of the
Outstanding Subordinated Debt Securities of that series may accelerate the
maturity of all Outstanding Subordinated Debt Securities of such series. The
Holders of a majority in aggregate principal amount of the Outstanding
Subordinated Debt Securities of that series may waive an Event of Default
resulting in acceleration of the Subordinated Debt Securities of such series,
but only if all Events of Default have been remedied and all payments due on
the Subordinated Debt Securities of that series (other than those due as a
result of acceleration) have been made and certain other conditions have been
met. (Section 502). Subject to the provisions of the Subordinated Indenture
relating to the duties of the Subordinated Trustee, in case a Default shall
occur and be continuing, the Subordinated Trustee will be under no obligation
to exercise any of its rights or powers under the Subordinated Indenture at the
request or direction of any of the Holders of the Outstanding Subordinated Debt
Securities of that series, unless such Holders shall have offered to the
Subordinated Trustee reasonable indemnity. (Section 603). Subject to such
provisions for the indemnification of the Subordinated Trustee, the Holders of
a majority in aggregate principal amount of the Outstanding Subordinated Debt
Securities of that series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Subordinated
Trustee or exercising any trust or power conferred on the Subordinated Trustee.
(Section 512). The Holders of a majority in aggregate principal amount of the
Outstanding Subordinated Debt Securities of that series may waive any past
default under the Subordinated Indenture with respect to such series, except a
default in the payment of principal or interest or a default in respect of a
covenant in the Subordinated Indenture which cannot be modified without the
consent of the Holder of each Outstanding Subordinated Debt Security of the
series affected. (Section 513). See the last paragraph under " -- General"
above. In the event of the bankruptcy, insolvency or reorganization of the
Corporation, the claims of the Holders of Subordinated Debt Securities would be
subject as to enforcement to the broad equity power of a federal bankruptcy
court, and to the determination by that court of the nature of the rights of
such Holders.
The Corporation has and will continue to file annually with the
Subordinated Trustee a certificate as to compliance with all conditions and
covenants in the Subordinated Indenture. (Section 1007).
Modification and Waiver
Certain modifications and amendments of each of the Senior Indenture or
the Subordinated Indenture may be made by the Corporation and the Trustee under
the Applicable Indenture only with the consent of the Holders of not less than
a majority in aggregate principal amount of the Outstanding Debt Securities of
each series issued under such Indenture and affected by the modification or
amendment, provided that no such modification or amendment may, without the
consent of the Holder of each Outstanding Debt Security issued under such
Indenture and affected thereby: (i) change the Stated Maturity of the principal
of, or any installment of principal of or interest on, any such Outstanding
Debt Security; (ii) reduce the principal amount of, or the premium, if any, or
the interest on, any such Outstanding Debt Security (including in the case of
an Original Issue Discount Security the amount payable upon acceleration of the
maturity thereof); (iii) change the place of payment where, or the coin or
currency or currency unit in which, any principal of, or premium, if any, or
interest on, any such Outstanding Debt Security is payable; (iv) impair the
right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date); (v) reduce the above-stated percentage of Outstanding Debt
Securities of any series the consent of the Holders of which is necessary to
modify or amend the Applicable Indenture; or (vi) modify the foregoing
requirements or reduce the percentage of aggregate principal amount of
Outstanding Debt Securities of any series required to be held by Holders
seeking to waive compliance with certain provisions of the Applicable Indenture
or seeking to waive certain defaults. (Section 902).
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Debt Securities of any series may on behalf of the Holders of
all Outstanding Debt Securities of that series waive, insofar as that series is
concerned, compliance by the Corporation with certain restrictive provisions of
the Applicable Indenture. (Section 1008). The Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
any series may on behalf of the Holders of all Outstanding Debt Securities of
that series waive any past default under the Applicable Indenture with respect
to that series, except a default in the payment of the principal of, or
premium, if any, or interest on any Outstanding Debt Security of that series or
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in respect of a covenant or provision which under the Applicable Indenture
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security issued thereunder of the series affected. (Section
513).
Certain modifications and amendments of each of the Senior Indenture and
the Subordinated Indenture may be made by the Corporation and the Trustee under
the Applicable Indenture without the consent of Holders of the Outstanding Debt
Securities issued under such Indenture. (Section 901).
Each Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities issued under such
Indenture have given any request, demand, authorization, direction, notice,
consent or waiver thereunder or are present at a meeting of Holders of
Outstanding Debt Securities for quorum purposes, (i) the principal amount of an
Original Issue Discount Security that shall be deemed to be Outstanding shall
be the amount of the principal thereof that would be due and payable as of the
date of such determination upon acceleration of the maturity thereof, and (ii)
the principal amount of Outstanding Debt Securities denominated in a foreign
currency or currency unit shall be the U.S. dollar equivalent, determined on
the date of original issuance of such Outstanding Debt Securities, of the
principal amount of such Outstanding Debt Securities or, in the case of an
Original Issue Discount Securities, the U.S. dollar equivalent, determined on
the date of original issuance of such Outstanding Debt Securities, of the
amount determined as provided in (i) above. (Section 101).
Consolidation, Merger and Sale of Assets
The Indentures each provide that the Corporation may not consolidate with
or merge into any other corporation or transfer its properties and assets
substantially as an entirety to any Person unless (i) the corporation formed by
such consolidation or into which the Corporation is merged or the Person to
which the properties and assets of the Corporation are so transferred shall be
a corporation organized and existing under the laws of the United States, any
State thereof or Washington, D.C. and shall expressly assume by supplemental
indenture the payment of the principal of and premium, if any, and interest on
the Senior Debt Securities or the Subordinated Debt Securities, as the case may
be, and the performance of the other covenants of the Corporation under the
Applicable Indenture; (ii) immediately after giving effect to such transaction,
no Event of Default or Default, as applicable, and no event which, after notice
or lapse of time or both, would become an Event of Default or Default, as
applicable, shall have occurred and be continuing; and (iii) certain other
conditions are met. (Section 801).
Trustees
Either or both of the Trustees may resign or be removed with respect to
one or more series of Debt Securities and a successor Trustee may be appointed
to act with respect to such series. (Section 610). In the event that two or
more persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a Trustee of a trust under the
Applicable Indenture separate and apart from the trust administered by any
other such Trustee (Section 611), and any action described herein to be taken
by the "Trustee" may then be taken by each such Trustee with respect to, and
only with respect to, the one or more series of Debt Securities for which it is
Trustee.
In the normal course of business, the Corporation and its subsidiaries
conduct banking transactions with the Trustees, and the Trustees conduct
banking transactions with the Corporation and its subsidiaries.
Book-Entry Debt Securities
As designated below, certain Debt Securities have been issued in permanent
global form (hereinafter, "Book-Entry Debt Securities") under the Indentures.
Upon issuance, all Book-Entry Debt Securities of like tenor and having the same
date of issuance will be represented by one or more permanent global Debt
Securities. Each permanent global Debt Security representing Book-Entry Debt
Securities has been deposited with, or on behalf of, The Depository Trust
Company ("DTC"), as Depositary, located in the Borough of Manhattan, the City
of New York, and has been registered in the name of the Depositary or a nominee
of the Depositary.
Ownership of Book-Entry Debt Securities is limited to institutions that
have accounts with such Depositary or its nominee ("participants") or Persons
that may hold interests through participants. In addition, ownership of
Book-Entry Debt Securities by participants is only evidenced by, and the
transfer of that ownership interest will
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be effected only through, records maintained by the Depositary or its nominee,
as the case may be. Ownership of Book-Entry Debt Securities by Persons that
hold through participants will only be evidenced by, and the transfer of that
ownership interest within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such laws may impair the ability to transfer Book-Entry
Debt Securities.
The Corporation has been advised by the Depositary that upon the issuance
of a permanent global Debt Security or Debt Securities, representing Book-Entry
Debt Securities, and the deposit of such permanent global Debt Security or Debt
Securities with the Depositary, the Depositary will immediately credit, on its
book-entry registration and transfer system, the respective principal amounts
of the Book-Entry Debt Securities represented by such permanent global Debt
Security or Debt Securities to the accounts of participants.
Payments of principal of and any premium and interest on Book-Entry Debt
Securities represented by any permanent global Debt Security or Debt Securities
registered in the name of or held by the Depositary or its nominee, will be
made to the Depositary or its nominee, as the case may be, as the registered
owner and the Holder of the permanent global Debt Security or Debt Securities
representing such Book-Entry Debt Securities. Such payments to the Depositary
or its nominee, as the case may be, will be made in immediately available funds
at the offices of the applicable Trustee, as Paying Agent, in the Borough of
Manhattan, the City of New York, provided that, in the case of payments of
principal and any premium, the permanent global Debt Security or Debt
Securities are presented to such Paying Agent in time for such Paying Agent to
make such payments in such funds in accordance with its normal procedures. None
of the Corporation, the Trustees and any agent of the Corporation or the
Trustees will have any responsibility or liability for any aspect of the
Depositary's records or any participant's records relating to or payments made
on account of Book-Entry Debt Securities or for maintaining, supervising or
reviewing any of the Depositary's records or any participant's records relating
to such Book-Entry Debt Securities.
The Corporation has been advised by the Depositary that upon receipt of
any payment of principal of or any premium or interest in respect of a
permanent global Debt Security, the Depositary will immediately credit, on its
book-entry registration and transfer system, accounts of participants with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such permanent global Debt Security or Debt Securities
as shown on the records of the Depositary. Payments by participants to owners
of Book-Entry Debt Securities held through such participants will be governed
by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name", and
will be the responsibility of such participants.
No permanent global Debt Security or Debt Securities described above may
be transferred except as a whole by the Depositary for such permanent global
Debt Security or Debt Securities to a nominee of the Depositary or by a nominee
of the Depositary.
Book-Entry Debt Securities represented by a permanent global Debt Security
are exchangeable for definitive Debt Securities in registered form, of like
tenor and of an equal aggregate principal amount, only if (i) the Depositary
notifies the Corporation that it is unwilling or unable to continue as
Depositary for such permanent global Debt Security or if at any time the
Depositary ceases to be a clearing agency registered under the Exchange Act,
(ii) the Corporation in its sole discretion determines that such Book-Entry
Debt Securities shall be exchangeable for definitive Debt Securities in
registered form, or (iii) any event shall have happened and be continuing
which, after notice or lapse of time, or both, would become an Event of Default
with respect to the Debt Securities. Unless otherwise indicated below with
respect to a particular Debt Security, any permanent global Debt Security
representing Book-Entry Debt Securities that is exchangeable pursuant to the
preceding sentence shall be exchangeable in whole for definitive Debt
Securities in registered form, of like tenor and of an equal aggregate
principal amount, in denominations of $1,000 and integral multiples of $1,000
in excess thereof. Such definitive Debt Securities shall be registered in the
name or names of such Person or Persons as the Depositary shall instruct the
Security Registrar. It is expected that such instructions may be based upon
directions received by the Depositary from its participants with respect to
ownership of Book-Entry Debt Securities.
Except as provided above, owners of Book-Entry Debt Securities will not be
entitled to receive physical delivery of Debt Securities in definitive form and
will not be considered the Holders thereof for any purpose under the
Indentures, and no permanent global Debt Security representing Book-Entry Debt
Securities will be
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exchangeable, except for another permanent global Debt Security of like
denomination and tenor to be registered in the name of the Depositary or its
nominee. Accordingly, each Person owning a Book-Entry Debt Security must rely
on the procedures of the Depositary and, if such Person is not a participant,
on the procedures of the participant through which such Person owns its
interest, to exercise any rights of a Holder under the Indentures. The
Indentures provide that the Depositary, as a Holder, may appoint agents and
otherwise authorize participants to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action which a
Holder is entitled to give or take under the Indentures. The Corporation
understands that under existing industry practices, in the event that the
Corporation requests any action of Holders or an owner of a Book-Entry Debt
Security desires to give or take any action a Holder is entitled to give or
take under the Indentures, the Depositary would authorize the participants
owning the relevant Book-Entry Debt Securities to give or take such action, and
such participants would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
The Depositary has advised the Corporation that the Depositary is a
limited purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to Section 17A of the Exchange Act. The Depositary was created to hold
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of such participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. Indirect
access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
SUMMARY OF PARTICULAR SENIOR DEBT SECURITIES
Non-Redeemable Senior Fixed Rate Notes
The 6.60% Notes due June 15, 2000 (the "Non-Redeemable Senior Notes") were
issued on June 10, 1997. The Non-Redeemable Senior Notes are not redeemable
prior to maturity and are issued and transferable in fully registered form in
denominations of $1,000 and integral multiples thereof. No sinking fund has
been provided for the Non-Redeemable Senior Notes. The Non-Redeemable Senior
Notes bear interest at the rate of 6.60%, payable semi-annually in arrears
through maturity to the Persons in whose names such Notes are registered at the
close of business on the Regular Record Date preceding each Interest Payment
Date for such Notes. The Regular Record Dates for the Non-Redeemable Senior
Notes are the June 1 and December 1 immediately preceding the Interest Payment
Dates of June 15 and December 15 of each year. Principal and interest are
payable as indicated above, except that interest may be paid at the option of
the Corporation by check mailed to the address of the Holder entitled thereto
as it appears on the Security Register. The Non-Redeemable Senior Notes are in
the Same Day Funds Settlement System at DTC and, to the extent that secondary
market trading in the Non-Redeemable Senior Notes is effected through the
facilities of DTC, such trades will be settled in immediately available funds.
Senior Floating Rate Notes
Floating Rate Extendible Notes due June 15, 2005 (the "SFRE Notes")
General. The SFRE Notes were issued on July 3, 1985 and will mature on
June 15, 2005 (the "SFRE Stated Maturity"). The SFRE Notes bear interest as
described below, from July 3, 1985 or from the most recent interest payment
date to which interest has been paid or duly provided for, payable quarterly in
arrears on March 15, June 15, September 15 and December 15 in each year,
commencing September 15, 1985, to the Persons in whose names the SFRE Notes (or
any predecessor SFRE Notes) are registered at the close of business on the
March 1, June 1, September 1 and December 1, as the case may be, next preceding
such Interest Payment Date. Each period beginning on a quarterly Interest
Payment Date and ending on and including the next succeeding quarterly Interest
Payment Date is herein called an "SFRE Interest Period". Interest accrues from
and including the first day of each SFRE Interest Period to but excluding the
last day of such SFRE Interest Period.
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The SFRE Notes, including SFRE Notes issuable upon partial redemption or
repayment, are issued and transferable in fully registered form in
denominations of $1,000 and integral multiples thereof.
Computation of Rate of Interest. For the purpose of calculating the rate
of interest per annum payable in respect of each SFRE Interest Period on the
SFRE Notes, the Corporation appointed as agent Bankers Trust Company (the
"Agent Bank"). The rate of interest per annum payable in respect of each SFRE
Interest Period (the "SFRE Rate of Interest") is calculated by the Agent Bank
in accordance with the following procedures:
(i) On the second SFRE Business Day prior to the commencement of each
SFRE Interest Period (the "SFRE Interest Determination Date"), the Agent
Bank requests the principal London office of each of the Reference Banks
(as defined below) to provide the Agent Bank with its offered quotation for
three-month United States dollar deposits to leading banks in the London
interbank market at approximately 11:00 A.M. (London time) on the SFRE
Interest Determination Date in question. The SFRE Rate of Interest for such
SFRE Interest Period is equal to the sum of (i) the Extendible Interest
Rate Spread (determined as summarized below) and (ii) the arithmetic mean
of such London interbank offered quotations (rounded upward as aforesaid),
as determined by the Agent Bank. The Corporation appointed The Chase
Manhattan Bank and Citibank, N.A. as Reference Banks.
(ii) If on any SFRE Interest Determination Date at least two but fewer
than all the Reference Banks provide the Agent Bank with such offered
quotations, the SFRE Rate of Interest for the relevant SFRE Interest Period
is determined in accordance with (i) above on the basis of the offered
quotations of those Reference Banks providing such quotations.
(iii) If on any SFRE Interest Determination Date only one or none of the
Reference Banks provides the Agent Bank with such an offered quotation, the
SFRE Rate of Interest for the relevant SFRE Interest Period is whichever is
the higher of:
(a) the SFRE Rate of Interest in effect for the last preceding SFRE
Interest Period to which (i) or (ii) above shall have applied; or
(b) the "Reserve Interest Rate". The "Reserve Interest Rate" is the
interest rate per annum equal to the sum of (i) the Extendible Interest
Rate Spread (determined as summarized below) and (ii) the arithmetic
mean of the offered rates in either (i) or (ii) above, as appropriate,
provided that if the Reference Banks selected as aforesaid by the Agent
Bank are not quoting as mentioned above, the SFRE Rate of Interest is
the SFRE Rate of Interest specified in (a).
Interest is calculated on the basis of the actual number of days for which
interest is payable in the applicable SFRE Interest Period divided by 360 and
rounding the resultant figure to the nearest cent (half a cent being rounded
upward). As used with respect to the SFRE Notes, "SFRE Business Day" means each
Monday, Tuesday, Wednesday, Thursday or Friday on which banks in New York City
and London are open for business; except that where used otherwise than in
reference to computation of the SFRE Rate of Interest, the term "SFRE Business
Day" means each Monday, Tuesday, Wednesday, Thursday or Friday on which banks
in New York City and Charlotte, North Carolina are open for business.
Publication of SFRE Rate of Interest. The Agent Bank has agreed to use its
best efforts to cause the SFRE Rate of Interest for each SFRE Interest Period,
together with the amount of interest payable in respect of each $1,000
principal amount of SFRE Notes for such SFRE Interest Period (the "SFRE
Interest Amount"), to be published in a newspaper in the English language
published daily in the City of New York as soon as possible after their
determination but in no event later than the fourth SFRE Business Day following
the applicable SFRE Interest Determination Date.
Reference Banks and Agent Bank. The Corporation has agreed that, until all
the SFRE Notes are paid or payment thereof is provided for, there shall at all
times be at least three Reference Banks (one of which may be the Agent Bank)
and an Agent Bank for the purpose of determining the SFRE Rate of Interest on
the SFRE Notes and that each such Reference Bank and Agent Bank shall be a
leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market. In the event that any such Reference Bank or
Agent Bank shall be unwilling or unable to act as such a Reference Bank or
Agent Bank or that such Agent Bank shall fail duly to determine the SFRE Rate
of Interest and the SFRE Interest Amount for any SFRE Interest Period,
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the Corporation will promptly appoint, and may at any time appoint, another
qualified successor in its place. The Agent Bank may not resign its duties
without a successor having been appointed as aforesaid.
Extendible Interest Rate Spread; Redeemable Period. On or before any May
15 immediately prior to any Election Date (as defined below), the Corporation
will establish and will forthwith notify the Senior Trustee and the Agent Bank
of (i) the interest rate spread ("Extendible Interest Rate Spread"), which will
be such number of basis points specified by the Corporation for the period from
such Election Date to the next following Election Date, if any, or the SFRE
Stated Maturity, as the case may be (an "Extendible Period"), (ii) the next
Extendible Period, (iii) the next following Election Date, if any, and (iv) the
period, if any, commencing and ending on the dates specified by the Corporation
within the Extendible Period commencing on the next June 15 during which the
SFRE Notes are redeemable at the option of the Corporation (a "Redeemable
Period") and the percentage or percentages (not less than 100 percent) of
principal amount of the SFRE Notes at which the SFRE Notes are redeemable
during such Redeemable Period. Not later than four SFRE Business Days after
notification to the Senior Trustee and the Agent Bank as aforesaid, the
Corporation will cause (i) the Extendible Interest Rate Spread, (ii) the next
Extendible Period, (iii) the next following Election Date, if any, and (iv) the
Redeemable Period, if any, and percentage or percentages of principal amount of
SFRE Notes at which the SFRE Notes are redeemable during such Redeemable
Period, to be published in a newspaper of general circulation in New York City.
If the Corporation fails to establish an Election Date as provided above,
the next following Election Date will be the date one year from the last
Election Date, and if the Corporation fails to establish an Extendible Interest
Rate Spread as provided above, the Extendible Interest Rate Spread for the
applicable Extendible Period will be 1/8 of one percent and the SFRE Rate of
Interest for such Extendible Period shall be equal to the sum of (i) such
Extendible Interest Rate Spread and (ii) the arithmetic mean of London
interbank offered quotations for three-month United States dollar deposits,
determined as set forth above under "Computation of SFRE Rate of Interest". If
the Corporation fails to establish a Redeemable Period as provided above, the
SFRE Notes will be redeemable at the option of the Corporation at the next
following Election Date, if any, at 100 percent of their principal amount
together with accrued interest to the date of redemption.
Promptly after the May 15 (and no later than the June 1) next preceding
each Election Date, the Corporation may, at its option, establish an Extendible
Interest Rate Spread for the Extendible Period commencing on the next
succeeding June 15 which is higher than the Extendible Interest Rate Spread
established pursuant to the above paragraphs by giving the Senior Trustee and
the Agent Bank and by causing to be published in a newspaper of general
circulation in New York City a notice (an "Increased Interest Rate Spread
Notice") setting forth, with respect to the Extendible Period commencing on the
next succeeding June 15, such higher Extendible Interest Rate Spread. The
Increased Interest Rate Spread Notice will be irrevocable and the spread set
forth therein will be the Extendible Interest Rate Spread for the Extendible
Period commencing on such next succeeding June 15.
Other. The interest rate on the SFRE Notes will in no event be higher than
the maximum rate permitted by applicable state law as the same may be modified
by United States law of general application. Under the Senior Indenture, the
SFRE Notes are governed by New York law, and under New York law the interest
rate on the SFRE Notes may be subject to an interest rate limitation of 25
percent per annum on a simple interest basis. Any such limitation may not apply
to SFRE Notes in which $2.5 million or more has been invested by any one
Holder.
Election Dates. On or prior to the May 15 immediately preceding the end of
any Extendible Period (other than an Extendible Period ending on June 15,
2005), the Corporation shall notify the Senior Trustee and the Agent Bank that
it has elected to designate as the next Extendible Period the period from the
end of the Extendible Period then ending to a June 15 one or more years
thereafter and not later than June 15, 2005. Any June 15 after June 15, 1995
and prior to June 15, 2005 on which an Extendible Period ends is herein
referred to as an "Election Date". The notifications provided for in this
paragraph, if made, shall be irrevocable. The Corporation will not notify the
Senior Trustee of more than one Election Date at any one time.
Redemption at Option of the Corporation. At the option of the Corporation,
the SFRE Notes will be redeemable as a whole or in part upon not less than 30
nor more than 60 days' notice by mail, at their principal amount plus accrued
interest to the date of redemption, at such percentage or percentages (not less
than 100 percent) of their principal amount as specified by the Corporation
plus accrued interest to the date of redemption on any
14
<PAGE>
date during a SFRE Redeemable Period. If less than all the SFRE Notes are to be
redeemed, the SFRE Notes will be selected by the Senior Trustee by such method
as it deems fair and appropriate, but not pro rata.
Repayment at Option of Holder. The SFRE Notes will be repayable in whole
or in part on each Election Date at the option of the Holder thereof, at 100
percent of the principal amount to be repaid, together with interest thereon
payable to the date of repayment. To be repaid, the SFRE Note must be received,
with the form entitled "Option to Elect Repayment" on the reverse side of the
SFRE Note duly completed, by the Senior Trustee, at the address therefor set
forth in the SFRE Notes (or at such other address of which the Corporation
shall from time to time notify the Holders of the SFRE Notes) not less than 15
nor more than 30 days prior to each Election Date.
Exercise of the repayment option by the Holder of an SFRE Note will be
irrevocable unless waived by the Corporation; provided, however, that if an
Increased Interest Rate Spread Notice has been published, such exercise of the
repayment option may be revoked by the Holder giving notice thereof to the
Senior Trustee, by telegram, telex, facsimile transmission or letter, which
notice must be received by the Senior Trustee at 55 Water Street, New York, New
York 10041. Attention: Corporate Trustee Administration Department, Suite 1820
(or such other address of which the Corporation shall from time to time notify
the Holders of the SFRE Notes), not later than 5:00 p.m., New York City time,
on the first SFRE Business Day following publication of the Increased Interest
Rate Spread Notice. Such notice of revocation shall be irrevocable.
The Corporation may elect, with respect to any SFRE Notes which the
Holders have surrendered for repayment, to designate a purchaser which will
purchase the SFRE Notes at a price equal to their principal amount on the
repayment date plus accrued interest, if any. The purchaser may resell or
otherwise dispose of the SFRE Notes. By surrendering the SFRE Notes, the Holder
consents to sell the SFRE Notes to any such purchaser. If such a purchaser
fails to purchase any SFRE Notes, the Corporation will repay the SFRE Notes on
the Election Date. If a purchaser is designated, the procedures for purchasing
and surrendering any SFRE Notes and for repayment will be determined by mutual
agreement among the Corporation, such purchaser and the Senior Trustee.
Modification of the Indenture. The description that follows amends the
description above under "Description of the Debt Securities -- Modification and
Waiver" for the SFRE Notes. The Senior Indenture as applicable to the SFRE
Notes (prior to amendment or supplement) contains provisions permitting the
Corporation and the Senior Trustee, with the consent of the Holders of not less
than a majority in principal amount of Outstanding Senior Debt Securities of
each series affected thereby, to execute supplemental indentures adding any
provisions to or changing or eliminating any of the provisions of the Senior
Indenture or modifying the rights of the Holders of Outstanding Senior Debt
Securities of such series thereunder, except that no such supplemental
indenture may, without the consent of the Holder of each Outstanding Senior
Debt Security affected thereby, (a) change the Stated Maturity, or reduce the
principal amount of, the premium, if any, thereon or the rate of payment of
interest thereon, of any Senior Debt Security of any series, (b) reduce the
aforesaid percentage of Outstanding Senior Debt Securities of any series, the
consent of the Holders of which is required for any supplemental indenture or
for waiver of compliance with certain provisions of the Senior Indenture or
certain defaults thereunder, or (c) effect certain other changes. (Section
902).
Consolidation, Merger and Sale of Assets. The description that follows
amends the description above under "Description of the Debt Securities --
Consolidation, Merger and Sale of Assets" for the SFRE Notes. The Senior
Indenture as applicable to the SFRE Notes (prior to amendment or supplement)
contains a provision permitting the Corporation, without the consent of the
Holders of any of the Outstanding Senior Debt Securities thereunder, to
consolidate with or merge into any other corporation or transfer or lease its
assets substantially as an entirety to any Person or to acquire or lease the
assets or any Person substantially as an entirety or to permit any corporation
to merge into the Corporation, provided that, (i) the successor is a
corporation organized under the laws of any domestic jurisdiction, (ii) the
successor corporation, if other than the Corporation, assumes the Corporation's
obligations under the Senior Indenture and on the Outstanding Senior Debt
Securities thereunder, (iii) after giving effect to the transaction no Event or
Default pursuant to the Senior Indenture, and no event which, after notice or
lapse of time, would become an Event of Default pursuant to the Senior
Indenture, shall have occurred and be continuing; and (iv) certain other
conditions are met. (Section 801).
15
<PAGE>
SUMMARY OF PARTICULAR SUBORDINATED DEBT SECURITIES
Non-Redeemable Subordinated Fixed Rate Notes
Each series of Non-Redeemable Subordinated Fixed Rate Notes bears interest
at a specified rate payable semiannually through maturity to the Persons in
whose names such Notes are registered at the close of business on the Regular
Record Date preceding each Interest Payment Date. Principal and interest are
payable as indicated above, except that interest may be paid at the option of
the Corporation by check mailed to the address of the Holder entitled thereto
as it appears on the Security Register. The Non-Redeemable Subordinated Fixed
Rate Notes are not redeemable prior to maturity and are issued and transferable
in fully registered form in denominations of $1,000 or any integral multiple
thereof. No sinking fund is provided for the Non-Redeemable Subordinated Fixed
Rate Notes. Except for the 9.45% Notes due June 15, 1999 and the 9.45% Notes
due August 15, 2001, the Non-Redeemable Subordinated Fixed Rate Notes are in
the Same Day Funds Settlement System at DTC and, to the extent that secondary
market trading in such Non-Redeemable Subordinated Fixed Rate Notes is effected
through the facilities of DTC, such trades are settled in immediately available
funds. The title of each series of Non-Redeemable Subordinated Fixed Rate Notes
designates the interest rate and Stated Maturity of such Notes.
The 9.45% Notes due June 15, 1999 were issued under the Subordinated
Indenture (prior to amendment or supplement) and the 9.45% Notes due August 15,
2001 and the 8 1/8% Notes due June 24, 2002 were issued under the Subordinated
Indenture as in place prior to the Supplemental Indenture, dated as of November
15, 1992, between the Corporation and the Subordinated Trustee (the "1992
Supplemental Indenture"). The provisions of the Subordinated Indenture
applicable to such Notes that differ from the descriptions set forth above
under "Description of the Debt Securities" are described following the table
below.
<TABLE>
<CAPTION>
Series Issue Dates Interest Payment Dates Regular Record Dates
- ------------------------------ -------------------- --------------------------- --------------------------
<S> <C> <C> <C>
9.45% Subordinated Notes
due June 15, 1999 .......... June 26, 1989 June 15 and December 15 June 1 and December 1
9.45% Subordinated Notes
due August 15, 2001 ........ August 23, 1991 February 15 and August 15 February 1 and August 1
8 1/8% Subordinated Notes
due June 24, 2002 .......... June 24, 1992 June 24 and December 24 June 9 and December 9
8% Subordinated Notes
due November 15, 2002 ...... November 24, 1992 May 15 and November 15 May 1 and November 1
7 1/4% Subordinated Notes
due February 15, 2003 ...... February 16, 1993 February 15 and August 15 February 1 and August 1
6 5/8% Subordinated Noes
due July 15, 2005 .......... July 16, 1993 January 15 and July 15 January 1 and July 1
7.05% Subordinated Notes
due August 1, 2005 ......... August 7, 1995 February 1 and August 1 January 15 and July 15
6 7/8% Subordinated Notes
due September 15, 2005 ..... September 22, 1995 March 15 and September 15 March 1 and September 1
7% Subordinated Notes
due March 15, 2006 ......... March 19, 1996 March 15 and September 15 March 1 and September 1
7 1/2% Subordinated Notes
due July 15, 2006 .......... July 19, 1996 January 15 and July 15 January 1 and July 1
6.40% Subordinated Notes
due April 1, 2008 .......... April 1, 1998 April 1 and October 1 March 15 and September 15
6% Subordinated Notes
due October 30, 2008 ....... October 22, 1993 April 30 and October 30 April 15 and October 15
6 3/8% Subordinated Notes
due January 15, 2009 ....... January 18, 1994 January 15 and July 15 January 1 and July 1
</TABLE>
Subordination
The description set forth above under "Description of the Debt Securities
- -- Subordination of the Subordinated Debt Securities" with respect to the 9.45%
Notes due June 15, 1999, the 9.45% Notes due August 15, 2001 and the 8 1/8%
Notes due June 24, 2002 (the "Applicable Subordinated Debt Securities") is
amended by the description that follows.
16
<PAGE>
The obligations of the Corporation to make any payment on account of the
principal of and interest on the Applicable Subordinated Debt Securities are,
to the extent set forth in the Subordinated Indenture, subordinate and junior
in right of payment to all Senior Indebtedness of the Corporation. "Senior
Indebtedness" of the Corporation is defined in the Subordinated Indenture
(prior to amendment or supplement) to mean the principal of, premium, if any,
and interest on (i) all indebtedness of the Corporation for money borrowed
(including indebtedness of other guaranteed by the Corporation), whether
outstanding on the date of execution of the Subordinated Indenture or
thereafter created, assumed or incurred, except (a) indebtedness of the
Corporation issued under the Subordinated Indenture, (b) such indebtedness as
is by its terms expressly stated to be not superior in right of payment to the
Applicable Subordinated Debt Securities, and (c) such indebtedness as is by its
terms expressly stated to rank pari passu in right of payment with the
Applicable Subordinated Debt Securities; and (ii) any deferrals, renewals or
extensions of any such Senior Indebtedness. The term "indebtedness of the
Corporation for money borrowed" is defined in the Subordinated Indenture to
mean any obligation of, or any obligation guaranteed by, the Corporation for
the repayment of borrowed money, whether or not evidenced by bonds, debentures,
notes or other written instruments, and any deferred obligation for the payment
of the purchase price of property or assets. (Section 101 and Article
Fourteen).
No payment of principal or interest on the Applicable Subordinated Debt
Securities may be made and no Holder of the Applicable Subordinated Debt
Securities will be entitled to demand or receive any such payment unless all
amounts of principal, premium, if any, sinking fund payments and interest then
due on all Senior Indebtedness of the Corporation shall have been paid in full
or duly provided for and, at the time of such payment or immediately after
giving effect thereto, there shall not exist with respect to any such Senior
Indebtedness any Event of Default permitting the Holders thereof (or a trustee
on their behalf) to accelerate the Maturity thereof or any event which, with
notice or lapse of time or both, would become such an event of default. Upon
any distribution of the assets of the Corporation upon dissolution, winding-up,
liquidation or reorganization, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership, conservatorship or other proceedings, the
holders of Senior Indebtedness of the Corporation will be entitled to receive
payment in full of principal, premium, if any, sinking fund payments and
interest before any payment is made on the Applicable Subordinated Debt
Securities. By reason of such subordination, in the event of the insolvency of
the Corporation, holders of Senior Indebtedness of the Corporation may receive
more, ratably, and Holders of the Applicable Subordinated Debt Securities may
receive less, ratably, than the other creditors of the Corporation. (Article
Fourteen).
Defaults
The description set forth above under "Description of the Debt Securities
- -- Defaults; The Subordinated Indenture" with respect to the 9.45% Notes due
June 15, 1999, is amended by the description that follows.
Payment of principal of the 9.45% Notes due June 15, 1999 may be
accelerated only upon an Event of Default (as defined below). There is no right
of acceleration in the case of a default in the payment of interest or the
payment of principal prior to the date of maturity or a default in the
performance of any other covenant of the Corporation in the Subordinated
Indenture, unless the terms of a particular series of Subordinated Debt
Securities specifically provide otherwise. The 9.45% Notes due June 15, 1999 do
not provide otherwise.
An Event of Default is defined in the Subordinated Indenture prior to the
1992 Supplemental Indenture as, with respect to Subordinated Debt Securities of
any series issued thereunder, certain events involving the bankruptcy,
insolvency or reorganization of the Corporation and any other Event of Default
which may be provided for with respect to the Subordinated Debt Securities of
that series. (Section 501). A Default, with respect to the Subordinated Debt
Securities of that series, is defined in the Subordinated Indenture prior to
the 1992 Supplemental Indenture to include: (i) any Event of Default; (ii) a
default in the payment of principal or premium, if any, of any Subordinated
Debt Security of that series at its maturity; (iii) default in the payment of
any interest when due, continued for 30 days; (iv) a default in any required
designation of funds as Available Funds; (v) default in the performance, or
breach, of any other covenant of the Corporation in the Subordinated Indenture
prior to the 1992 Supplemental Indenture or in the Subordinated Debt Securities
of that series, continued for 90 days after written notice to the Corporation
by the Subordinated Trustee or to the Corporation and the Subordinated Trustee
by the Holders of not less than 25 percent in aggregate principal amount of
Outstanding Subordinated Debt Securities of such series; or (vi) failure by the
Corporation or FUNB to repay a principal amount of money borrowed exceeding
$5,000,000 or the acceleration of such principal amount without such
17
<PAGE>
indebtedness having been discharged, or such acceleration having been rescinded
or annulled, within a period of 30 days after written notice to the Corporation
by the Subordinated Trustee or to the Corporation and the Subordinated Trustee
by the Holders of not less than 25 percent in aggregate principal amount of the
Outstanding Subordinated Debt Securities of that series. (Section 503). If an
Event of Default with respect to the Subordinated Debt Securities of any series
occurs and is continuing, either the Subordinated Trustee or the Holders of not
less than 25 percent in aggregate principal amount of the Outstanding
Subordinated Debt Securities of that series may accelerate the maturity of all
Outstanding Subordinated Debt Securities of such series. The Holders of a
majority in aggregate principal amount of the Outstanding Subordinated Debt
Securities of that series may waive an Event of Default resulting in
acceleration of the Subordinated Debt Securities of such series, but only if
all Events of Default have been remedied and all payments due on the
Subordinated Debt Securities of that series (other than those due as a result
of acceleration) have been made and certain other conditions have been met.
(Section 502). Subject to the provisions of the Subordinated Indenture relating
to the duties of the Subordinated Trustee, in case a Default shall occur and be
continuing, the Subordinated Trustee will be under no obligation to exercise
any of its rights or powers under the Subordinated Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to the
Subordinated Trustee reasonable indemnity. (Section 603). Subject to such
provisions for the indemnification of the Subordinated Trustee, the Holders of
a majority in aggregate principal amount of the Subordinated Debt Securities of
that series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Subordinated Trustee
or exercising any trust or power conferred on the Subordinated Trustee.
(Section 512). The Holders of a majority in aggregate principal amount of the
Subordinated Debt Securities of that series may waive any past default under
the Subordinated Indenture with respect to such series, except a default in the
payment of principal or interest or a default in respect of a covenant in the
Subordinated Indenture which cannot be modified without the consent of the
Holder of each outstanding Subordinated Debt Security of the series affected.
(Section 513). See the last paragraph under "Description of the Debt Securities
- -- General" above. In the event of the bankruptcy, insolvency or reorganization
of the Corporation, the claims of the Holders of Subordinated Debt Securities
would be subject as to enforcement to the broad equity power of a Federal
Bankruptcy Court, and to the determination by that court of the nature of the
rights of such Holders.
The Subordinated Indenture includes a covenant that the Corporation will
file annually with the Subordinated Trustee a certificate of no default or a
certificate specifying any default that exists, (Section 1007).
Redeemable Subordinated Fixed Rate Notes
Each series of Redeemable Subordinated Fixed Rate Notes bears interest at
a specified rate payable through maturity to the Persons in whose names such
Notes are registered at the close of business on the Regular Record Date
preceding each Interest Payment Date. Principal and interest are payable as
indicated above, except that interest may be paid at the option of the
Corporation by check mailed to the address of the Holder entitled thereto as it
appears on the Security Register. The Redeemable Subordinated Fixed Rate Notes
are redeemable at the option of the Corporation only on the Redemption Date
(and, in the case of (i) the 8.77% Subordinated Notes due November 15, 2004, on
each Interest Payment Date thereafter, and (ii) the 7.18% Subordinated Notes
due April 15, 2011, on each April 15 and October 15 after and including April
15, 2000), are not redeemable by the Holder prior to Maturity and are issued
and transferable in fully registered form in denominations of $1,000 any
integral multiple thereof. No sinking fund is provided for the Redeemable
Subordinated Fixed Rate Notes. The Redeemable Subordinated Fixed Rate Notes are
in the Same Day Funds Settlement System at DTC and, to the extent that
secondary market trading in such Redeemable Subordinated Fixed Rate Notes is
effected through the facilities of DTC, such trades are settled in immediately
available funds. The title of each series of Redeemable Subordinated Fixed Rate
Notes designates the interest rate and Stated Maturity of such Notes.
<TABLE>
<CAPTION>
Series Issue Dates Interest Payment Dates Regular Record Dates
- ------------------------------ ------------------ --------------------------- ------------------------
<S> <C> <C> <C>
8.77% Subordinated Notes due
November 15, 2004 ........... November 9, 1994 May 15 and November 15 May 1 and November 1
8% Subordinated Notes
due August 15, 2009 ......... August 9, 1994 February 15 and August 15 February 1 and August 1
7.18% Subordinated Notes
due April 15, 2011 .......... March 27, 1996 15th day of each month 1st day of each month
</TABLE>
18
<PAGE>
7 1/2% Subordinated Debentures due April 15, 2035
The 7 1/2% Subordinated Debentures due April 15, 2035 (the "7 1/2
Subordinated Debentures") were issued on April 26, 1995, and bear interest at
the rate of 7 1/2% payable semiannually (on April 15 and October 15) through
maturity to the Persons in whose names such Notes are registered at the close
of business on the April 1 or October 1 immediately preceding each such
Interest Payment Date and mature on April 15, 2035. Principal and interest are
payable as indicated above, except that interest may be paid at the option of
the Corporation by check mailed to the address of the Holder entitled thereto
as it appears on the Security Register. The 7 1/2% Subordinated Debentures are
redeemable at the option of the Holder only on April 15, 2005, are not
redeemable by the Corporation prior to maturity and are issued and transferable
in fully registered form in denominations of $1,000 and integral multiple
thereof. No sinking fund is provided for the 7 1/2% Subordinated Debentures.
The 7 1/2% Subordinated Debentures are in the Same Day Funds Settlement System
at DTC and, to the extent that secondary market trading in the 7 1/2%
Subordinated Debentures is effected through the facilities of DTC, such trades
are settled in immediately available funds.
6.55% Subordinated Debentures due October 15, 2035
The 6.55% Subordinated Debentures due October 15, 2035 (the "6.55%
Subordinated Debentures") were issued on October 18, 1995, and bear interest at
the rate of 6.55% payable semiannually (on April 15 and October 15) through
maturity to the Persons in whose names such Notes are registered at the close
of business on the April 1 or October 1 immediately preceding each such
Interest Payment Date and mature October 15, 2035. Principal and interest are
payable as indicated above, except that interest may be paid at the option of
the Corporation by check mailed to the address of the Holder entitled thereto
as it appears on the Security Register. The 6.55% Subordinated Debentures are
redeemable at the option of the Holder only on October 15, 2005 (such election,
which is irrevocable when made, must be made within the period beginning August
15, 2005 and ending September 15, 2005), are not redeemable by the Corporation
prior to maturity and are issued and transferable in fully registered form in
denominations of $1,000 and integral multiple thereof. No sinking fund is
provided for the 6.55% Subordinated Debentures. The 6.55% Subordinated
Debentures are in the Same Day Funds Settlement System at DTC and, to the
extent that secondary market trading in the 6.55% Subordinated Debentures is
effected through the facilities of DTC, such trades are settled in immediately
available funds.
6.824%/7.574% Subordinated Debentures due August 1, 2026
The 6.824%/7.574% Subordinated Debentures due August 1, 2026 (the
"6.824%/7.574% Subordinated Debentures") were issued on August 7, 1996, and
bear interest at the rate of 6.824% from August 1, 1996 to August 1, 2006, and,
to the extent not repaid on August 1, 2006 at the option of the Holder, at
7.574% from August 1, 2006 through maturity, payable semiannually (on February
1 and August 1) to the Persons in whose names such Notes are registered at the
close of business on the January 15 or July 15 immediately preceding each such
Interest Payment Date and mature August 1, 2026. Principal and interest are
payable as indicated above, except that interest may be paid at the option of
the Corporation by check mailed to the address of the Holder entitled thereto
as it appears on the Security Register. The 6.824%/7.574% Subordinated
Debentures are redeemable at the option of the Holder on August 1, 2006 or
August 1, 2016 (such election, which is irrevocable when made, must be made
within the period beginning June 1 immediately preceding the applicable
repayment date and ending the next succeeding July 1), are not redeemable by
the Corporation prior to maturity and are issued and transferable in fully
registered form in denominations of $1,000 and integral multiple thereof. No
sinking fund is provided for the 6.824%/7.574% Subordinated Debentures. The
6.824%/7.574% Subordinated Debentures are in the Same Day Funds Settlement
System at DTC and, to the extent that secondary market trading in the
6.824%/7.574% Subordinated Debentures is effected through the facilities of
DTC, such trades will be settled in immediately available funds.
6.30% Putable/Callable Subordinated Notes Due April 15, 2028
General
The 6.30% Putable/Callable Subordinated Notes Due April 15, 2028 (the
"Putable/Callable Notes") were issued April 23, 1998, and bear interest at the
rate of 6.30% from April 23, 1998 to April 15, 2008, payable semiannually (on
April 15 and October 15) to the Persons in whose names such Notes are
registered at the close of business on the April 1 and October 1 immediately
preceding each such Interest Payment Date.
19
<PAGE>
The Putable/Callable Notes are subject to mandatory redemption from the
Holders thereof on April 15, 2008 (the "Coupon Reset Date"), either (i) through
the exercise of an option to purchase such Notes in whole but not in part on
the Coupon Reset Date (the "Call Option") by the holder of the Call Option (the
"Callholder", which may be an affiliate of the Corporation), or (ii) in the
event the Callholder does not exercise the Call Option or, if exercised, does
not for any reason pay 100 percent of the principal amount thereof (the "Call
Price") when required, or the Corporation exercises its option to override the
exercise of the Call Option (the "Call Option Override"), through the automatic
exercise by the Subordinated Trustee of an option requiring the Corporation to
repurchase the Putable/Callable Notes from the Holders thereof on the Coupon
Reset Date (the "Put Option"). The Putable/Callable Notes will mature on April
15, 2028 (the "Final Maturity Date").
The Putable/Callable 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 elects to purchase the aggregate principal amount
of the Putable/Callable Notes pursuant to the Call Option and the Corporation
does not exercise the Call Option Override or the Floater Option (as defined
herein), the Calculation Agent (as defined herein) will reset the interest rate
on the Putable/Callable Notes effective on the Coupon Reset Date, pursuant to
the Call Option Coupon Reset Process described below. If the Corporation
exercises the Floater Option, the Calculation Agent will reset the interest
rate on the Putable/Callable Notes effective on the Coupon Reset Date, pursuant
to the Floater Option Coupon Reset Process described below. In either case (i)
the aggregate principal amount of Putable/Callable Notes will be purchased from
the Holders by the Callholder, in whole but not in part, at 100 percent of the
principal amount thereof on the Coupon Reset Date, on the terms and subject to
the conditions described herein (interest accrued to but excluding the Coupon
Reset Date will be paid by the Corporation on such date to the Holders of the
Putable/Callable Notes on the Record Date (as defined herein) for such payment
through the facilities of DTC), and (ii) on and after the Coupon Reset Date,
the Putable/Callable Notes will bear interest at the rate determined by the
Calculation Agent in accordance with the procedures set forth below.
The Putable/Callable Notes are represented by global securities deposited
with, or on behalf of, DTC and have not been issued as individual definitive
securities to their purchasers. Consequently, unless and until such individual
definitive securities are issued, such purchasers will not be recognized as
Holders of the Putable/ Callable Notes under the Subordinated Indenture and
DTC will be the sole Holder for all purposes under the Subordinated Indenture
and the Putable/Callable Notes. Hence, until such time, such purchasers will
only be able to exercise the rights of Holders of the Putable/Callable Notes
indirectly through DTC and its respective participating organizations and, as a
result, the ability of any such purchaser to pledge the Putable/Callable Notes
to persons or entities that do not participate in DTC's system, or to otherwise
act with respect to such Putable/ Callable Notes, may be limited. See
"Description of the Debt Securities -- Book-Entry Debt Securities".
The Corporation expects that DTC, for any Putable/Callable Notes
represented by a global security, upon request of any payment of principal,
premium or interest will credit immediately Participants' DTC accounts with
payments in amounts proportionate to their respective beneficial interests in
such global securities. The Corporation also expects that payments by
Participants to owners of beneficial interests in such global security or
securities held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name", and will be the
responsibility of such Participants. All payments of principal, premium or
interest will be made by the Corporation in immediately available funds so long
as the Putable/Callable Notes are maintained in book-entry form.
Call Option; Put Option; Call Option Override; Floater Option
Call Option. The Callholder is First Union Investors, Inc., an affiliate
of the Corporation, the Calculation Agent (as defined herein) and First Union
Capital Markets, or any successors or assigns. Pursuant to the terms of
Putable/Callable Notes, and subject to the Call Option Override, the Callholder
has the right to purchase the Putable/Callable Notes pursuant to the Call
Option, at the Call Price by giving notice to the Subordinated Trustee (the
"Call Notice"). Such Call Notice shall be given to the Subordinated Trustee, in
writing, no later than 15 calendar days prior to the Coupon Reset Date.
If the Callholder exercises the Call Option, the obligation of the
Callholder to pay the Call Price is subject to the conditions precedent that
(i) since the date of the Call Notice, no Event of Default, or any event which,
with the giving of notice or passage of time, or both, would constitute an
Event of Default, with respect to the Putable/Callable Notes shall have
occurred and be continuing; (ii) no Market Disruption Event (as defined
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herein) shall have occurred; (iii) two or more Dealers shall not have provided
timely Bids in the manner described herein under " -- Call Option Coupon Reset
Process"; and (iv) the Corporation shall not have exercised the Call Option
Override. The Callholder is not required to exercise the Call Option, and no
Holders of any Puta-ble/Callable Notes or any interest therein shall have any
right or claim against the Callholder as a result of the Callholder purchasing
or not purchasing the Putable/Callable Notes.
The Call Option provides for certain circumstances under which the Call
Option may be terminated, including termination by the Corporation if it
exercises the Call Option Override. If the Call Option terminates, or if the
Callholder after having exercised the Call Option does not for any reason pay
the Call Price to the Subordinated Trustee at or prior to the required time,
the Put Option will be automatically exercised by the Subordinated Trustee as
summarized below. In such circumstances, the Subordinated Trustee shall notify
the Holders of the Putable/Callable Notes that it is exercising the Put Option.
In the event that the Callholder exercises the Call Option and the
Corporation does not exercise the Call Option Override, the Corporation shall
have the right to exercise the Floater Option, as discussed below, the effect
of which will be to determine a floating interest rate for the Putable/Callable
Notes for the period from April 15, 2008 to (but excluding) the New Coupon
Reset Date (as defined herein), and to alter the method for determining the
coupon reset provided in the Call Option Coupon Reset Process until the end of
such period.
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 Subordinated
Trustee not later than 2:00 p.m. New York time on the Business Day prior to the
Coupon Reset Date, or if the Corporation exercises the Call Option Override,
the option to put the Putable/Callable Notes to the Corporation pursuant to the
Put Option will be automatically exercised by the Subordinated Trustee on
behalf of the Holders of the Putable/Callable Notes. Upon exercise of the Put
Option, the Corporation will be required to purchase the Putable/Callable Notes
on April 15, 2008, at a purchase price equal to 100 percent of the principal
amount thereof (the "Put Redemption Price"). In any such case, interest accrued
to but excluding April 15, 2008, will be paid by the Corporation on such date
to the Holders of the Putable/Callable Notes on the Regular Record Date for
such payment through the facilities of DTC. If the Put Option is exercised, the
Corporation will deliver the Put Redemption Price to the Subordinated 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 Puta-ble/Callable Notes will be required
to deliver, and will be deemed to have delivered, the Putable/Callable Notes to
the Corporation against payment therefor on such date, through the facilities
of DTC. The Putable/Callable Notes will thereupon be cancelled and no
Putable/Callable Notes will be issued in lieu of or in exchange therefor. No
Holder of any Putable/Callable Notes or any interest therein has the right to
consent or object to the Subordinated Trustee's duty to exercise the Put
Option.
Call Option Override. If the Call Option is exercised, the Corporation
shall have the right to exercise the Call Option Override by giving written
notice of such exercise to the Callholder, the Calculation Agent and the
Subordinated Trustee not later than 2:00 p.m. New York time no later than four
Business Days prior to April 15, 2008, in which case the Put Option will be
automatically exercised by the Subordinated Trustee for and on behalf of the
Holders of the Putable/Callable Notes on April 15, 2008. "Business Day" means
any day other than a Saturday, a Sunday or a day on which banking institutions
in the City of New York or the City of Chicago or the City of Charlotte are
authorized or obligated by law, executive order or governmental decree to be
closed.
Floater Option. If the Call Option is exercised and the Corporation does
not exercise the Call Option Override, the Corporation shall have the option
(the "Floater Option"), exercisable by giving written notice of exercise to the
Callholder, the Calculation Agent and the Subrodinated 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 Putable/Callable 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 Corporation by written notice to
the Callholder, the Subordinated 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 Putable/Callable Notes from the Holders, and the Holders of the
Putable/Callable Notes shall remain obligated to deliver, and will be deemed to
have delivered, the Putable/Callable Notes to the Callholder, at the Call Price
on the Coupon Reset Date. After the Coupon Rest Date, the Corporation may elect
(i) to exercise the Second Call Option (as defined herein) and have the coupon
reset to a fixed rate from the New Coupon Reset Date to the Final Maturity
Date, or (ii) to purchase and cancel the Putable/Callable Notes on the New
Coupon Reset Date, all as described below.
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Call Option Coupon Reset Process
Pursuant to a Calculation Agency Agreement with the Corporation, FUNB has
been appointed the calculation agent for the Putable/Callable Notes (in such
capacity, the "Calculation Agent"). If the Callholder exercises the Call Option
and the Corporation does not exercise the Call Option Override or the Floater
Option, each as set forth above under " -- Call Option; Put Option; Call Option
Override; Floater Option", the Corporation and the Calculation Agent shall
complete the following steps in order to determine the interest rate to be paid
on the Putable/Callable Notes from and including the Coupon Reset Date to the
Final Maturity Date. The Corporation 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 Corporation 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, one of which shall be First Union Capital Markets, from which it
desires the Calculation Agent to obtain the Bids (as defined below) for the
purchase of the Putable/Callable Notes on the Coupon Reset Date.
(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 the prospectus and the accompanying prospectus
supplement relating to the offering of the Putable/Callable Notes, (ii) a copy
of the form of the Putable/Callable 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 Putable/Callable Notes on the Coupon
Reset Date, and shall be quoted by such Dealer as a stated yield to maturity on
the Putable/Callable Notes ("Yield to Maturity"). Each Dealer shall be provided
with (i) the name of the Corporation, (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 Putable/Callable Notes, and (iv) the method by which
interest will be calculated on the Putable/Callable Notes.
(c) The purchase price to be paid by any Dealer for the Putable/Callable
Notes (the "Purchase Price") shall be equal to (i) the principal amount of the
Putable/Callable 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 Puta-ble/Callable Notes after the
Coupon Reset Date assuming the Putable/Callable 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 Putable/Callable Notes were to
remain outstanding until April 15, 2028, and (y) a stream of corresponding
interest payments which would have been due on the Putable/Callable Notes after
the Coupon Reset Date assuming the Putable/Callable 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 Putable/Callable 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 as 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 Putable/Callable Notes means the per annum rate equal to the sum
of the Base Rate (as defined herein) 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 Corporation 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 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
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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 Corporation, 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 Putable/Callable 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 Corporation 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 Coupon Reset Rate, the Calculation
Agent shall provide written notice to the Corporation and the Subordinated
Trustee setting forth such Coupon Reset Rate as the new interest rate on the
Putable/Callable Notes, effective from and including April 15, 2008, by
delivery to the Subordinated Trustee on or before the Coupon Reset Date of an
officers' certificate.
(f) The Callholder shall sell the Putable/Callable 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 Putable/Callable Notes shall have occurred and
be continuing, (ii) a Market Disruption Event (as defined herein) 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 Subordinated Trustee on behalf of the Holders of
the Putable/Callable Notes. "Market Disruption Event" shall mean any of the
following: (i) a suspension or material limitation in trading in securities
generally on the NYSE 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 Call Option Coupon Reset Process.
Floater Option Coupon Reset Process
If the Callholder has exercised the Call Option and the Corporation has
exercised the Floater Option, each as set forth above under " -- Call Option;
Put Option; Call Option Override; Floater Option", the Callholder shall remain
obligated to purchase the Putable/Callable Notes from the Holders, and the
Holders of the Puta-ble/Callable Notes shall remain obligated to deliver, and
will be deemed to have delivered, the Putable/Callable 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 Putable/Callable Notes from
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and including such Coupon Reset Date to (but excluding) the New Coupon Reset
Date and, in certain circumstances, as described below, the fixed rate of
interest to be paid on the Putable/Callable Notes from and after the New Coupon
Reset Date to the Final Maturity Date. The Corporation and the Calculation
Agent shall use reasonable efforts to cause the actions contemplated below to
be completed in as timely a manner as possible. Upon any reset of the interest
rate on the Putable/Callable Notes from a floating rate to a fixed rate
pursuant to the Floater Option Coupon Reset Process, as described below, (i)
the Corporation will deliver to the Subordinated Trustee through the facilities
of DTC, not later than 12:00 noon New York time on the New Coupon Reset Date,
the Call Price in immediately available funds for payment of such amount on the
New Coupon Reset Date, and (ii) the Holders of the Putable/Callable Notes shall
be required to deliver, and will be deemed to have delivered, the
Putable/Callable Notes to the Corporation against payment therefor on such New
Coupon Reset Date through the facilities of DTC.
-- Floating Rate
(a) Not later than four Business Days prior to the Coupon Reset Date, the
Calculation Agent shall provide to a dealer selected by the Corporation (the
"Bidding Dealer") (i) a copy of the prospectus and the accompanying prospectus
supplement relating to the offering of the Putable/Callable Notes, (ii) a copy
of the form of the Putable/Callable 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
Corporation, (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 Putable/Callable Notes, and (iv) the method by which interest
will be calculated on the Putable/Callable Notes. Unless the Corporation
determines otherwise at the time, First Union Capital Markets is expected to be
the Bidding Dealer.
(b) The Purchase Price shall be equal to the principal amount of the
Putable/Callable Notes. The Puta-ble/Callable 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-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 Corporation, 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).
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(d) Immediately after calculating the Floating Coupon Reset Rate, the
Calculation Agent shall provide written notice to the Corporation and the
Subordinated Trustee, setting forth such Floating Coupon Reset Rate as the new
interest rate on the Putable/Callable Notes, effective from and including April
15, 2008, to and excluding the New Coupon Reset Date, by delivery to the
Subordinated Trustee on or before the Coupon Reset Date of an officers'
certificate.
(e) The Callholder shall sell the Putable/Callable 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 Putable/Callable 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 Corporation, the Call Option and the Floater
Option will be automatically revoked, and the Put Option will be automatically
exercised by the Subordinated Trustee on behalf of the Holders of the Puta-
ble/Callable Notes.
If the Corporation, at any time after April 15, 2008 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 Putable/Callable Notes to
a fixed rate pursuant to the Floater Option Coupon Reset Process, it may
repurchase and cancel the Puta-ble/Callable Notes and shall give written notice
to the Subordinated 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 Corporation otherwise does not exercise or is deemed not to have exercised
the Second Call Option (as defined herein), the Corporation (i) will be
required to purchase the Putable/Callable 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 Subordinated 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 Putable/Callable 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 Putable/Callable Notes shall be
required to deliver, and will be deemed to have delivered, the Putable/Callable
Notes to the Corporation or the Subordinated Trustee against payment therefor
on such date through the facilities of DTC. The Putable/Callable Notes will
thereupon be cancelled and no Putable/Callable Notes will be issued in lieu of
or in exchange therefor.
-- Floating Rate to Fixed Rate
From the Coupon Reset Date until six Business Days prior to October 15,
2008, the Corporation shall have the right, exercisable by giving written
notice of exercise to the Subordinated Trustee and the Calculation Agent, not
later than 2:00 p.m. New York time on such Business Day (which shall be a date
not later than October 15, 2008), to purchase the Putable/Callable Notes in
whole but not in part on such New Coupon Reset Date at the Call Price, plus
accrued interest from the Coupon Reset Date to the New Coupon Reset Date (the
"Second Call Option"). If the Corporation has exercised the Second Call Option,
the Corporation and the Calculation Agent shall complete the following steps in
order to determine the interest rate to be paid on the Putable/Callable Notes
from and including the New Coupon Reset Date to the Final Maturity Date. The
Corporation 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 Corporation 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, one of which shall be First Union Capital Markets, from which it
desires the Calculation Agent to obtain the Bids for the purchase of such
Putable/Callable 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 the prospectus and the accompanying prospectus
supplement relating to the offering of the Putable/Callable Notes, (ii) a copy
of the form of the Putable/ Callable 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 Corporation, (ii) an
estimate of the Purchase Price (which shall be
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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 Putable/Callable Notes, (iv) the New Coupon Reset Date, and (v) the
method by which interest will be calculated on the Putable/Callable Notes.
(c) The Purchase Price shall be equal to (i) the principal amount of the
Putable/Callable 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 Corporation, 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 Putable/Callable
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
Putable/Callable 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 Corporation 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 Corporation and the
Subordinated Trustee, setting forth such New Coupon Reset Rate as the new
interest rate on the Putable/Callable Notes, effective from and including the
New Coupon Reset Date to the Final Maturity Date, by delivery to the
Subordinated Trustee on or before the New Coupon Reset Date of an officers'
certificate.
(f) The Corporation shall sell the Putable/Callable 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 Putable/Callable 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 timely manner
substantially as provided above, the Second Call Option will be automatically
revoked, and the Corporation will be deemed to have determined not to exercise
its right to reset the floating rate on the Putable/Callable Notes to a fixed
rate, as described under " -- Floating Rate" above.
Settlement on Exercise of the Put and Call Options
If the Callholder has exercised the Call Option and the Corporation has
not exercised the Call Option Override, then, on the Coupon Reset Date, all
beneficial interests in the Putable/Callable Notes will be transferred to a DTC
account designated by the Callholder. The transfers will be made automatically,
without any action on the part of any Holder or beneficial owner, by book entry
through DTC. The Callholder will be obligated to make payment of the Call Price
in immediately available funds for credit to the accounts of the DTC
Participants through which beneficial interests in the Putable/Callable Notes
are held, by 2:00 p.m. New York time on the Business Day prior to the Coupon
Reset Date. Each transfer will be made against the corresponding payment, and
each payment will be made against the corresponding transfer, in accordance
with applicable DTC procedures. If the Callholder fails to pay the Call Price
when due or if the Corporation exercises the Call Option Override, the Call
Option will be deemed not to have been exercised and the Put Option will be
deemed to have been automatically exercised. In these circumstances, the
Corporation will be obligated to pay the Put Redemption Price for the
Putable/Callable Notes on the Coupon Reset Date, with settlement occurring as
described in the next paragraph. In any event, the Corporation will remain
obligated to make payment of accrued and unpaid interest due on the
Putable/Callable Notes, with interest payable on the Coupon Reset Date being
payable to the Holders of the Putable/Callable Notes on the Regular Record Date
for such payment.
26
<PAGE>
If the Call Option is not exercised, the Callholder fails to pay the Call
Price when due, or the Corporation exercises the Call Option Override, and the
Put Option is therefore exercised, then, on the Coupon Reset Date, all
beneficial interests in the Putable/Callable Notes to be purchased will be
transferred to a DTC account designated by the Corporation. The transfers will
be made automatically, without any action on the part of any Holder or
beneficial owner, by book entry through DTC. The Corporation will be obligated
to make payment of the Put Redemption Price for credit to the accounts of the
DTC Participants through which beneficial interests in the Putable/Callable
Notes are held, by 12:00 noon New York Time on the Coupon Reset Date. Each
transfer will be made against the corresponding payment, and each payment will
be made against the corresponding transfer, in accordance with applicable DTC
procedures. If the Corporation fails to pay the Put Redemption Price when due,
accrued interest from the Coupon Reset Date to the date the payment is made
will be payable as part of the Put Redemption Price. With respect to all the
Putable/Callable Notes, whether or not purchased pursuant to the Put Option,
the Corporation will remain obligated to make payment of accrued and unpaid
interest due on the Putable/Callable Notes, with interest payable on the Coupon
Reset Date being payable to the Holders of the Putable/Callable Notes on the
Regular Record Date for such payment.
The transactions described above will be executed on the Coupon Reset Date
through DTC in accordance with the procedures of DTC, and the accounts of the
respective DTC Participants will be debited and credited and the
Putable/Callable Notes delivered by book entry as necessary to effect the
purchases and sales thereof. The transactions will settle in immediately
available funds through DTC's Same-Day Funds Settlement System.
Substantially similar procedures will also apply with respect to the
Second Call Option and the New Coupon Reset Date and the transactions described
above under " -- Floater Option Coupon Reset Process".
The settlement procedures described above, including those for payment for
and delivery of the Puta-ble/Callable Notes purchased by the Callholder or the
Corporation on the Coupon Reset Date or the New Coupon Reset Date, may be
modified, notwithstanding any contrary terms of the Subordinated Indenture, to
the extent required by DTC or, if the book-entry system is no longer available
for the Putable/Callable Notes at the relevant time, to the extent required to
facilitate these transactions in the Putable/Callable Notes in certificated
form. In addition, the Callholder and the Corporation may, notwithstanding any
contrary terms of the Subordinated Indenture, modify the settlement procedures
referred to above in order to facilitate the settlement process.
Under the terms of the Putable/Callable Notes, the Corporation has agreed
that, notwithstanding any provision to the contrary set forth in the Indenture,
(i) it will use its reasonable best efforts to maintain the Putable/Callable
Notes in book-entry form with DTC or any successor thereto and to appoint a
successor depositary to the extent necessary to maintain the Putable/Callable
Notes in book-entry form, and (ii) it will waive any discretionary right it
otherwise may have under the Indenture to cause the Putable/Callable Notes to
be issued in certificated form.
Calculation Agent
The Calculation Agency Agreement provides that the Calculation Agent may
resign at any time as Calculation Agent, such resignation to be effective ten
Business Days after the delivery to the Corporation and the Subordinated
Trustee of notice of such resignation. In such case, the Corporation may
appoint a successor Calculation Agent, which may be a subsidiary or an
affiliate of the Corporation.
The Calculation Agent, in its individual capacity, may buy, sell, hold and
deal in the Putable/Callable Notes and may exercise any vote or join in any
action which any Holder of the Putable/Callable Notes may be entitled to
exercise or take as if it were not the Calculation Agent. The Calculation
Agent, in its individual capacity, may also engage in any transaction with the
Corporation, the Callholder and First Union Capital Markets as if it were not
the Calculation Agent.
Floating Rate Subordinated Notes due July 22, 2003
The Floating Rate Subordinated Notes due July 22, 2003, were issued on
July 22, 1993 and mature on July 22, 2003. The terms of the Floating Rate
Subordinated Notes due July 22, 2003 are the same as those for the terms of the
Senior Floating Rate Notes described above under "Summary of Particular Senior
Debt Securities -- Senior Floating Rate Notes", except that the Floating Rate
Subordinated Notes due July 22, 2003 bear interest at a rate per annum equal to
the greater of (i) LIBOR plus 0.125%, or (ii) 4.125%. The Calculation Agent
with respect to the Floating Rate Subordinated Notes is The Bank of New York.
27
<PAGE>
Subordinated Medium-Term Notes
Each issue of Subordinated Medium-Term Notes bears interest at the rate
indicated by their title payable semiannually on February 15 and August 15
through maturity to the Persons in whose names such Notes are registered at the
close of business on the preceding February 1 or August 1, as the case may be.
Interest on such Notes is computed on the basis of a 360-day year of twelve
30-day months. Payments of principal and interest payable at maturity on such
Notes will be made in immediately available funds at the offices of the
Subordinated Trustee, as Paying Agent, in the Borough of Manhattan, the City of
New York, provided that such Note is presented to the Paying Agent in time for
the Paying Agent to make such payments in such funds in accordance with its
normal procedures. Such Notes are not redeemable prior to maturity and are
issued and transferable as Book-Entry Debt Securities. See "Description of the
Debt Securities -- Book-Entry Debt Securities". No sinking fund is provided for
such Notes.
The Subordinated Medium-Term Notes were issued under the Subordinated
Indenture as in effect prior to the 1992 Supplemental Indenture. The
description set forth above under "Description of the Debt Securities --
Defaults" with respect to the Subordinated Medium-Term Notes, is amended by the
description set forth under "Summary of Particular Subordinated Debt Securities
- -- Non-Redeemable Subordinated Fixed Rate Notes; Defaults".
28
<PAGE>
EXPERTS
The consolidated balance sheets of the Corporation as of December 31, 1997
and 1996, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997, included in the Corporation's 1997 Annual
Report to Stockholders which is incorporated by reference in the Corporation's
1997 Annual Report on Form 10-K and incorporated by reference herein, and the
supplemental consolidated balance sheets of the Corporation as of December 31,
1997 and 1996, and the related supplemental consolidated statements of income,
changes in stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997, included in the Corporation's 1997
Supplemental Annual Report to Stockholders which is included in First Union
Corporation's Form 8-K dated May 26, 1998 and incorporated by reference herein,
have been incorporated by reference herein in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
PLAN OF DISTRIBUTION
This Prospectus will be used by First Union Capital Markets in connection
with offers and sales related to market-making and other transactions in the
Debt Securities. First Union Capital Markets may act as principal or agent in
such transactions. Such sales will be made at prices relating to prevailing
market prices at the time of sale or otherwise.
VALIDITY OF SECURITIES
The validity of the Debt Securities has been passed upon for the
Corporation by Marion A. Cowell, Jr., Esq., Executive Vice President, Secretary
and General Counsel of the Corporation. Mr. Cowell has relied on the opinion of
New York counsel as to matters of New York law. Mr. Cowell owns shares of the
Corporation's Common Stock and holds options to purchase additional shares of
such Common Stock.
29
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
<TABLE>
<S> <C>
Registration fee ........................................ $ 100
Printing and engraving expenses ......................... 12,000
Accounting fees ......................................... 15,000
Legal fees and expenses ................................. 50,000
Blue sky and legal investment fees and expenses ......... 7,500
Miscellaneous ........................................... 10,400
-------
Total .......................................................... $95,000
=======
</TABLE>
All expenses are estimated except the registration fee.
Item 15. Indemnification of Directors and Officers.
Sections 55-8-50 through 55-8-58 of the revised North Carolina Business
Corporation Act (the "NCBCA"), which became effective on July 1, 1990, contain
specific provisions relating to indemnification of directors and officers of
North Carolina corporations. In general, the statute provides that (i) a
corporation must indemnify a director or officer against reasonable expenses
who is wholly successful in his defense of a proceeding to which he is a party
because of his status as such, unless limited by the articles of incorporation,
and (ii) a corporation may indemnify a director or officer if he is not wholly
successful in such defense, if it is determined as provided in the statute that
the director or officer meets a certain standard of conduct, provided when a
director or officer is liable to the corporation or liable on the basis of
receiving a personal benefit, the corporation may not indemnify him. The
statute also permits a director or officer of a corporation who is a party to a
proceeding to apply to the courts for indemnification, unless the articles of
incorporation provide otherwise, and the court may order indemnification under
certain circumstances set forth in the statute. The statute further provides
that a corporation may in its articles of incorporation or bylaws or by
contract or resolution provide indemnification in addition to that provided by
the statute, subject to certain conditions set forth in the statute.
The Corporation's Bylaws provide for the indemnification of the
Corporation's directors and executive officers by the Corporation against
liabilities arising out of his status as such, excluding any liability relating
to activities which were at the time taken known or believed by such person to
be clearly in conflict with the best interests of the Corporation.
The Corporation's Articles of Incorporation provides for the elimination
of the personal liability of each director of the Corporation to the fullest
extent permitted by the provisions of the NCBCA, as the same may from time to
time be in effect.
The Corporation maintains directors and officers liability insurance,
which provides coverage of up to $80,000,000, subject to certain deductible
amounts. In general, the policy insures (i) the Corporation's directors and
officers against loss by reason of any of their wrongful acts, and/or (ii) the
Corporation against loss arising from claims against the directors and officers
by reason of their wrongful acts, all subject to the terms and conditions
contained in the policy.
Under agreements which may be entered into by the Corporation, certain
controlling persons, directors and officers of the Corporation may be entitled
to indemnification by underwriters and agents who participate in the
distribution of Debt Securities covered by the Registration Statement against
certain liabilities, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise (other than
insurance), the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
insurance and the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in
II-1
<PAGE>
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------------------- --------------------------------------------------------------------------------------------
<S> <C> <C>
(4)(a)(i) -- Copy of Senior Indenture (including form of Senior Debt Security). (Incorporated by
reference to Exhibit (4) to the Corporation's Registration Statement No. 2-98213.)
(4)(a)(ii) -- Copy of supplemental indenture, dated as of May 17, 1986, between the Corporation and
Chemical Bank, as Trustee. (Incorporated by reference to Exhibit (4)(a)(ii) to Amendment
No. 1 to the Corporation's Registration Statement No. 33-30122.)
(4)(a)(iii) -- Copy of supplemental indenture, dated as of July 1, 1988, between the Corporation and
Chemical Bank, as Trustee. (Incorporated by reference to Exhibit (4)(a)(iii) to Amendment
No. 1 to the Corporation's Registration Statement No. 33-30122.)
(4)(a)(iv) -- Copy of supplemental indenture, dated as of August 1, 1990, between the Corporation and
Chemical Bank, as Trustee. (Incorporated by reference to Exhibit (4)(a)(iv) to the
Corporation's Registration Statement No. 33-40456.)
(4)(b)(i) -- Copy of Subordinated Indenture (including form of Subordinated Debt Security).
(Incorporated by reference to Exhibit (4)(a) to Amendment No. 1 to the Corporation's
Registration Statement No. 33-1852.)
(4)(b)(ii) -- Copy of supplemental indenture, dated as of August 1, 1990, between the Corporation and
The Bank of New York, as Trustee. (Incorporated by reference to Exhibit (4)(b)(ii) to the
Corporation's Registration Statement No. 33-40456.)
(4)(b)(iii) -- Copy of supplemental indenture, dated as of November 15, 1992, between the Corporation
and The Bank of New York, as Trustee. (Incorporated by reference to Exhibit (4) to the
Corporation's Current Report on Form 8-K dated November 17, 1992.)
(4)(b)(iv) -- Copy of supplemental indenture, dated as of February 7, 1996, between the Corporation and
Harris Trust and Savings Bank, as Trustee. (Incorporated by reference to Exhibit (4)(b) to
the Corporation's Current Report on Form 8-K dated February 7, 1996.)
(4)(b)(v) -- Form of Investment of Resignation, Appointment and Acceptance, dated as of February 7,
1996, among the Corporation, Harris Trust and Savings Bank and The Bank of New York
(formerly Irving Trust Company). (Incorporated by reference to Exhibit (4)(a) to the
Corporation's Current Report on Form 8-K dated February 7, 1996.)
(4)(c)(i) -- Form of proposed Senior Medium-Term Notes. (Incorporated by reference to Exhibit (4)(c)(i)
to the Corporation's Registration Statement No. 33-40456.)
(4)(c)(ii) -- Form of proposed Subordinated Medium-Term Notes. (Incorporated by reference to Exhibit
(4)(c)(ii) to the Corporation's Registration Statement No. 33-40456.)
(5) -- Opinion of Marion A. Cowell, Jr., Esq.
(12) -- Computations of Consolidated Ratios of Earnings to Fixed Charges. (Incorporated by
reference to Exhibit (12)(a) to the Corporation's Current Report on Form 8-K dated
May 26, 1998.)
(23)(a) -- Consent of KPMG Peat Marwick LLP.
(23)(b) -- Consent of Marion A. Cowell, Jr., Esq. (Included in Exhibit (5).)
(24) -- Power of Attorney.
(25)(a) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Chase
Manhattan Bank (formerly Chemical Bank). (Incorporated by reference to Exhibit 25(a) to
the Corporation's Registration Statement No. 333-34151.)
(25)(b) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Harris Trust and
Savings Bank. (Incorporated by reference to Exhibit 25(b) to the Corporation's
Registration Statement No. 333-34151.)
(27) -- The Corporation's Financial Data Schedules. (Incorporated by reference to Exhibits (27)(a),
(27)(b) and (27)(c) to the Corporation's Current Report on Form 8-K dated May 26, 1998.)
</TABLE>
II-2
<PAGE>
Item 17. Undertakings.
A. Undertakings to Update Annually.
(1) The undersigned registrant hereby undertakes:
(A) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of the 1933 (as amended, the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(A)(i) and (1)(A)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 (as amended, the
"Exchange Act") that are incorporated by reference in the registration
statement.
(B) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(C) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(2) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Charlotte, State of
North Carolina, on July 1, 1998.
FIRST UNION CORPORATION
By: MARION A. COWELL, JR.
---------------------------------------
Marion A. Cowell, Jr.
Executive Vice President, Secretary
and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Capacity
- ------------------------------------------ -------------------------------------
<S> <C>
EDWARD E. CRUTCHFIELD* Chairman and Chief Executive Officer
-------------------------------------
Edward E. Crutchfield and Director
ROBERT T. ATWOOD* Executive Vice President and Chief
-------------------------------------
Robert T. Atwood Financial Officer
JAMES H. HATCH* Senior Vice President and Corporate
-------------------------------------
James H. Hatch Controller (Principal Accounting
Officer)
EDWARD E. BARR* Director
-------------------------------------
Edward E. Barr
Director
-------------------------------------
G. Alex Bernhardt
W. WALDO BRADLEY* Director
-------------------------------------
W. Waldo Bradley
ROBERT J. BROWN* Director
-------------------------------------
Robert J. Brown
A. DANO DAVIS* Director
-------------------------------------
A. Dano Davis
Director
-------------------------------------
Norwood H. Davis
R. STUART DICKSON* Director
-------------------------------------
R. Stuart Dickson
B. F. DOLAN* Director
-------------------------------------
B. F. Dolan
RODDEY DOWD, SR.* Director
-------------------------------------
Roddey Dowd, Sr.
Director
-------------------------------------
John R. Georgius
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Capacity
- ------------------------------------------------- ---------
<S> <C>
ARTHUR M. GOLDBERG* Director
-------------------------------------
Arthur M. Goldberg
WILLIAM H. GOODWIN, JR.* Director
-------------------------------------
William H. Goodwin, Jr.
FRANK M. HENRY* Director
-------------------------------------
Frank M. Henry
ERNEST E. JONES* Director
-------------------------------------
Ernest E. Jones
TERRENCE A. LARSEN* Director
-------------------------------------
Terrence A. Larsen
HERBERT LOTMAN* Director
-------------------------------------
Herbert Lotman
RADFORD D. LOVETT* Director
-------------------------------------
Radford D. Lovett
MACKEY J. MCDONALD* Director
-------------------------------------
Mackey J. McDonald
MALCOLM S. MCDONALD* Director
-------------------------------------
Malcom S. McDonald
PATRICIA A. MCFATE* Director
-------------------------------------
Patricia A. McFate
JOSEPH NEUBAUER* Director
-------------------------------------
Joseph Neubauer
RANDOLPH N. REYNOLDS* Director
-------------------------------------
Randolph N. Reynolds
JAMES M. SEABROOK* Director
-------------------------------------
James M. Seabrook
Director
-------------------------------------
Ruth G. Shaw
CHARLES M. SHELTON, SR.* Director
-------------------------------------
Charles M. Shelton, Sr.
LANTY L. SMITH* Director
-------------------------------------
Lanty L. Smith
RAYMOND W. SMITH* Director
-------------------------------------
Raymond W. Smith
*By Marion A. Cowell, Jr., Attorney-in-Fact
MARION A. COWELL, JR.
-------------------------------------
Marion A. Cowell, Jr.
</TABLE>
Date: July 1, 1998
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------------------- ----------------------------------------------------------------------------------------------
<S> <C> <C>
(4)(a)(i) -- Copy of Senior Indenture (including form of Senior Debt Security). (Incorporated by reference
to Exhibit (4) to the Corporation's Registration Statement No. 2-98213.)
(4)(a)(ii) -- Copy of supplemental indenture, dated as of May 17, 1986, between the Corporation and
Chemical Bank, as Trustee. (Incorporated by reference to Exhibit (4)(a)(ii) to Amendment
No. 1 to the Corporation's Registration Statement No. 33-30122.)
(4)(a)(iii) -- Copy of supplemental indenture, dated as of July 1, 1988, between the Corporation and
Chemical Bank, as Trustee. (Incorporated by reference to Exhibit (4)(a)(iii) to Amendment
No. 1 to the Corporation's Registration Statement No. 33-30122.)
(4)(a)(iv) -- Copy of supplemental indenture, dated as of August 1, 1990, between the Corporation and
Chemical Bank, as Trustee. (Incorporated by reference to Exhibit (4)(a)(iv) to the
Corporation's Registration Statement No. 33-40456.)
(4)(b)(i) -- Copy of Subordinated Indenture (including form of Subordinated Debt Security). (Incorporated
by reference to Exhibit (4)(a) to Amendment No. 1 to the Corporation's Registration
Statement No. 33-1852.)
(4)(b)(ii) -- Copy of supplemental indenture, dated as of August 1, 1990, between the Corporation and The
Bank of New York, as Trustee. (Incorporated by reference to Exhibit (4)(b)(ii) to the
Corporation's Registration Statement No. 33-40456.)
(4)(b)(iii) -- Copy of supplemental indenture, dated as of November 15, 1992, between the Corporation and
The Bank of New York, as Trustee. (Incorporated by reference to Exhibit (4) to the
Corporation's Current Report on Form 8-K dated November 17, 1992.)
(4)(b)(iv) -- Copy of supplemental indenture, dated as of February 7, 1996, between the Corporation and
Harris Trust and Savings Bank, as Trustee. (Incorporated by reference to Exhibit (4)(b) to
the Corporation's Current Report on Form 8-K dated February 7, 1996.)
(4)(b)(v) -- Form of Investment of Resignation, Appointment and Acceptance, dated as of February 7,
1996, among the Corporation, Harris Trust and Savings Bank and The Bank of New York
(formerly Irving Trust Company). (Incorporated by reference to Exhibit (4)(a) to the
Corporation's Current Report on Form 8-K dated February 7, 1996.)
(4)(c)(i) -- Form of proposed Senior Medium-Term Notes. (Incorporated by reference to Exhibit (4)(c)(i)
to the Corporation's Registration Statement No. 33-40456.)
(4)(c)(ii) -- Form of proposed Subordinated Medium-Term Notes. (Incorporated by reference to Exhibit
(4)(c)(ii) to the Corporation's Registration Statement No. 33-40456.)
(5) -- Opinion of Marion A. Cowell, Jr., Esq.
(12) -- Computations of Consolidated Ratios of Earnings to Fixed Charges. (Incorporated by reference
to Exhibit (12)(a) to the Corporation's Current Report on Form 8-K dated May 26, 1998.)
(23)(a) -- Consent of KPMG Peat Marwick LLP.
(23)(b) -- Consent of Marion A. Cowell, Jr., Esq. (Included in Exhibit (5).)
(24) -- Power of Attorney.
(25)(a) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Chase
Manhattan Bank (formerly Chemical Bank). (Incorporated by reference to Exhibit 25(a) to
the Corporation's Registration Statement No. 333-34151.)
(25)(b) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Harris Trust and
Savings Bank. (Incorporated by reference to Exhibit 25(b) to the Corporation's Registration
Statement No. 333-34151.)
(27) -- The Corporation's Financial Data Schedules. (Incorporated by reference to Exhibits (27)(a),
(27)(b), and (27)(c) to the Corporation's Current Report on Form 8-K dated May 26, 1998.)
</TABLE>
Exhibit (5)
<TABLE>
<S> <C>
First Union Corporation One First Union Center (0013)
Legal Division Charlotte, North Carolina 28288
704 374-6828
FAX: 704 374-3425
</TABLE>
Marion A. Cowell, Jr.
Executive Vice President
General Counsel and
Secretary
July 1, 1998
Board of Directors
First Union Corporation
Charlotte, North Carolina 28288
Gentlemen:
I have acted as counsel for First Union Corporation (the "Corporation") in
connection with the registration on Form S-3 (the "Registration Statement") of
certain previously registered debt securities of the Corporation (as listed on
the cover page of the Prospectus included in the Registration Statement, the
"Debt Securities"), related to market-making transactions by and through Wheat
First Securities, Inc., an affiliate of the Corporation.
On the basis of such investigations as I deemed necessary, I am of the
opinion that:
(1) the Debt Securities have been duly authorized and are validly issued
and legally binding obligations of the Corporation, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors's rights and to
general equity principles.
I note that, as of the date of this opinion, a judgment for money in an
action based on a Debt Security denominated in a foreign currency or currency
unit in a federal or state court in the United States ordinarily would be
enforced in the United States only in United States dollars. The date used to
determine the rate of conversion of the foreign currency or currency unit in
which a particular Debt Security is denominated into United States dollars will
depend upon various factors, including which court renders the judgment.
I hereby consent to the use of my name under the heading "Validity of
Securities" in the Prospectus included in the Registration Statement and to the
filing of this opinion as an Exhibit to the Registration Statement. In giving
this consent, I do not hereby admit that I am within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
MARION A. COWELL, JR.
Exhibit (23)(a)
CONSENT OF KPMG PEAT MARWICK LLP
Board of Directors
First Union Corporation
We consent to the incorporation by reference in the Registration Statement
of First Union Corporation on Form S-3 of our report dated January 21, 1998,
relating to the consolidated balance sheets of First Union Corporation and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1997, which report
appears in the 1997 Annual Report to Stockholders which is incorporated by
reference in First Union Corporation's 1997 Form 10-K which is incorporated by
reference in the Registration Statement, and to the incorporation of our report
dated May 15, 1998, relating to the supplemental consolidated balance sheets of
First Union Corporation and subsidiaries as of December 31, 1997 and 1996, and
the related supplemental consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997, which report appears in the 1997 Supplemental
Annual Report to Stockholders which is included in First Union Corporation's
Form 8-K dated May 26, 1998 which is incorporated by reference in the
Registration Statement. We also consent to the reference to our Firm under the
caption "Experts."
KPMG PEAT MARWICK LLP
Charlotte, North Carolina
June 30, 1998
Exhibit (24)
FIRST UNION CORPORATION
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned directors and officers
of FIRST UNION CORPORATION (the "Corporation") hereby constitute and appoint
Marion A. Cowell, Jr. and Kent S. Hathaway, and each of them severally, the
true and lawful agents and attorneys-in-fact of the undersigned with full power
and authority in said agents and the attorneys-in-fact, and in any one of them,
to sign for the undersigned and in their respective names as directors and
officers of the Corporation, one or more registration statements ("Registration
Statements") to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, covering officers and sales of registered
debt securities of the Corporation and its affiliates ("Securities") in
connection with market-making activities by and through First Union Capital
Markets, a division of Wheat First Securities, Inc., with request to such
Securities, and to sign any and all amendments to such Registration Statements.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------------------------------------- ------------------------------------- -------
<S> <C> <C>
/s/ EDWARD E. CRUTCHFIELD Chairman and Chief Executive June 26, 1998
- ------------------------------------- Officer and Director
Edward E. Crutchfield
/s/ ROBERT T. ATWOOD Executive Vice President and Chief June 26, 1998
- ------------------------------------- Financial Officer
Robert T. Atwood
/s/ JAMES H. HATCH Senior Vice President and Corporate June 26, 1998
- ------------------------------------- Controller (Principal Accounting
James H. Hatch Officer)
/s/ EDWARD E. BARR Director June 26, 1998
- -------------------------------------
Edward E. Barr
Director
- -------------------------------------
G. Alex Bernhardt
/s/ W. WALDO BRADLEY Director June 26, 1998
- -------------------------------------
W. Waldo Bradley
/s/ ROBERT J. BROWN Director June 26, 1998
- -------------------------------------
Robert J. Brown
/s/ A. DANO DAVIS Director June 26, 1998
- -------------------------------------
A. Dano Davis
Director
- -------------------------------------
Norwood H. Davis
/s/ R. STUART DICKSON Director June 26, 1998
- -------------------------------------
R. Stuart Dickson
/s/ B. F. DOLAN Director June 29, 1998
- -------------------------------------
B. F. Dolan
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Capacity Date
- --------------------------------------- ------------------------------------- -------
<S> <C> <C>
/s/ RODDEY DOWD, SR. Director June 25, 1998
- -------------------------------------
Roddey Dowd, Sr.
Director
- -------------------------------------
John R. Georgius
/s/ ARTHUR M. GOLDBERG Director June 25, 1998
- -------------------------------------
Arthur M. Goldberg
/s/ WILLIAM H. GOODWIN, JR. Director June 25, 1998
- -------------------------------------
William H. Goodwin, Jr.
/s/ FRANK M. HENRY Director June 29, 1998
- -------------------------------------
Frank M. Henry
/s/ ERNEST E. JONES Director June 30, 1998
- -------------------------------------
Ernest E. Jones
/s/ TERRENCE A. LARSEN Director July 1, 1998
- -------------------------------------
Terrence A. Larsen
/s/ HERBERT LOTMAN Director June 29, 1998
- -------------------------------------
Herbert Lotman
/s/ RADFORD D. LOVETT Director June 29, 1998
- -------------------------------------
Radford D. Lovett
/s/ MACKEY J. MCDONALD Director June 26, 1998
- -------------------------------------
Mackey J. McDonald
/s/ MALCOM S. MCDONALD Director June 30, 1998
- -------------------------------------
Malcom S. McDonald
/s/ PATRICIA A. MCFATE Director June 26, 1998
- -------------------------------------
Patricia A. McFate
/s/ JOSEPH NEUBAUER Director June 26, 1998
- -------------------------------------
Joseph Neubauer
/s/ RANDOLPH N. REYNOLDS Director June 26, 1998
- -------------------------------------
Randolph N. Reynolds
/s/ JAMES M. SEABROOK Director June 26, 1998
- -------------------------------------
James M. Seabrook
Director
- -------------------------------------
Ruth G. Shaw
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Capacity Date
- --------------------------------------- ---------- -------
<S> <C> <C>
/s/ CHARLES M. SHELTON, SR. Director June 25, 1998
- -------------------------------------
Charles M. Shelton, Sr.
/s/ LANTY L. SMITH Director June 26, 1998
- -------------------------------------
Lanty L. Smith
/s/ RAYMOND W. SMITH Director June 26, 1998
- -------------------------------------
Raymond W. Smith
</TABLE>
