Filed pursuant to Rule 424(b)(3)
Registration No. 33-50103
FIRST UNION CORPORATION
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
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COMMON STOCK
(PAR VALUE $3.33 1/3 PER SHARE)
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This Prospectus relates to the shares of common stock, $3.33 1/3 par value
per share (the "Common Stock" or "FUNC Common Stock"), of First Union
Corporation (the "Corporation" or "FUNC") that may be purchased under the
Corporation's Dividend Reinvestment and Stock Purchase Plan (the "Plan"). The
primary purpose of the Plan is to make available to the holders of Common Stock
the opportunity to purchase additional shares of Common Stock through the
reinvestment of cash dividends and optional cash purchases. This Prospectus
relates to 5,567,638 shares of FUNC Common Stock, which are issuable under the
Plan as of April 30, 1998. See "Description of the Corporation's Capital Stock".
This Prospectus updates the Prospectus dated December 19, 1995, as
supplemented on February 14, 1997. Please retain this Prospectus for future
reference.
A stockholder who is not a participant in the Plan may become one by
completing an Enrollment Form and returning it to the Plan's administrator,
First Union National Bank ("FUNB"), a subsidiary of the Corporation, Corporate
Trust Department, 1525 West W.T. Harris Boulevard, 3C3, Charlotte, North
Carolina 28288-1153. Stockholders who are participants in the Plan may terminate
their participation at any time. Stockholders who are not participants in the
Plan and who do not want to become participants need do nothing and will
continue to receive their cash dividends, if and when declared, as usual.
Participants may call 1-800-347-1246 (590-0393 in Charlotte) if they have any
questions concerning their accounts under the Plan.
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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.
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THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
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The date of this Prospectus is May 26, 1998.
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), and in accordance therewith files reports 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 60661), 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 are also available from the
Commission over the Internet at http://www.sec.gov. The Common Stock is listed
and traded on the New York Stock Exchange (the "NYSE"). Reports, proxy
statements and other information 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, and exhibits thereto (together with all
amendments thereto, the "Registration Statement"), which the Corporation has
filed with the Commission under the Securities Act of 1933, 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 of the State of North Carolina has not
approved or disapproved this offering nor has the Commissioner passed upon the
accuracy or adequacy of this Prospectus.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission (File
No. 1-10000) under 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;
(3) the Corporation's Current Reports on Form 8-K dated January 22,
1998, April 15, 1998, April 23, 1998, May 7, 1998 and May 26, 1998; and
(4) 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.
Any statement contained herein 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 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 or this Prospectus.
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.
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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, the "BHCA"). Pursuant to a corporate reorganization in
1968, FUNB and First Union Mortgage Corporation, a mortgage banking firm
acquired by FUNB in 1964, became subsidiaries of the Corporation.
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, which is 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, investment banking, home equity lending, leasing,
insurance and securities brokerage services, through other subsidiaries.
Since the 1985 Supreme Court decision upholding regional interstate banking
legislation, the Corporation has concentrated its efforts on building a large,
financial services organization providing banking services in what it perceives
to be some of the better markets in the eastern region of the United States and
providing other financial services that complement such banking services in such
markets and elsewhere. Since November 1985, the Corporation has completed over
70 acquisitions relating to financial services, and currently has pending one
such acquisition, including the more significant acquisitions (I.E., involving
the acquisition of $3.0 billion or more of assets or deposits) set forth in the
following table.
<TABLE>
<CAPTION>
ASSETS/ CONSIDERATION/
NAME HEADQUARTERS DEPOSITS(1)(2) ACCOUNTING TREATMENT COMPLETION DATE
- ------------------------------ --------------- -------------- ------------------------- ---------------
<S> <C> <C> <C> <C>
Atlantic Bancorporation....... Florida $ 3.8 billion common stock/pooling November 1985
Northwestern Financial
Corporation................. North Carolina 3.0 billion common stock/pooling December 1985
First Railroad & Banking
Company of Georgia.......... Georgia 3.7 billion common stock/pooling November 1986
Florida National Banks of
Florida, Inc................ Florida 7.9 billion cash and preferred January 1990
stock/purchase
Southeast banks............... Florida 9.9 billion cash, notes and preferred September 1991
stock/purchase
Resolution Trust Company
("RTC") acquisitions........ Florida, 5.3 billion cash/purchase 1991-1994
Georgia,
Virginia
Dominion Bankshares
Corporation................. Virginia 8.9 billion common stock and March 1993
preferred stock/pooling
Georgia Federal Bank, FSB..... Georgia 4.0 billion cash/purchase June 1993
First American Metro Corp..... Virginia 4.6 billion cash/purchase June 1993
American Savings of Florida,
F.S.B....................... Florida 3.6 billion common stock/purchase July 1995
</TABLE>
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<TABLE>
<CAPTION>
ASSETS/ CONSIDERATION/
NAME HEADQUARTERS DEPOSITS(1)(2) ACCOUNTING TREATMENT COMPLETION DATE
- ------------------------------ --------------- -------------- ------------------------- ---------------
<S> <C> <C> <C> <C>
First Fidelity
Bancorporation.............. New Jersey, 35.3 billion common stock and January 1996
Pennsylvania preferred stock/pooling
Center Financial
Corporation................. Connecticut 4.0 billion common stock/purchase November 1996
Signet Banking
Corporation................. Virginia 11.3 billion common stock/pooling November 1997
CoreStates Financial Corp..... Pennsylvania 48.1 billion common stock/pooling April 1998
The Money Store Inc........... California, $ 3.0 billion common stock and pending
New Jersey preferred stock/purchase
</TABLE>
- ---------------
(1) The dollar amounts indicated represent the assets of the related
organization as of the last reporting period prior to acquisition or as of
the last reporting period prior to the date hereof as to pending
acquisitions, except for (i) the dollar amount relating to RTC acquisitions,
which represents savings and loan deposits acquired from the RTC, and (ii)
the dollar amount relating to Southeast banks, which represent assets of the
two banking subsidiaries of Southeast Banking Corporation acquired from the
FDIC.
(2) In addition, the Corporation acquired (i) Lieber & Company, a mutual fund
advisory company with approximately $3.4 billion in assets under management,
in June 1994, and (ii) Keystone Investments, Inc., a mutual fund advisory
company with approximately $11.6 billion in assets under management, in
December 1996. Since such assets are not owned by these mutual advisory
companies, they are not reflected on the Corporation's balance sheet.
The Corporation is continually evaluating acquisition opportunities and
frequently conducts due diligence activities in connection with possible
acquisitions. As a result, acquisition discussions and, in some cases,
negotiations frequently take place and future acquisitions involving cash, debt
or equity securities can be expected. Acquisitions typically involve the payment
of a premium over book and market values, and therefore, some dilution of the
Corporation's book value and net income per share may occur in connection with
any future transactions.
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SUMMARY
The following summary of certain provisions of the Plan is qualified in its
entirety by reference to the provisions of the Plan set forth below under
"Description of the Plan". Capitalized terms not previously defined are defined
under "Description of the Plan".
-- The number of shares of Common Stock available for issuance under the
Plan as of April 30, 1998, is 5,567,638.
-- The discount currently being offered to purchase shares of Common
Stock through the reinvestment of dividends under the Plan is one
percent. The discount may be adjusted by the Corporation from time to
time in its discretion. The primary factors the Corporation currently
expects to consider in making such adjustments are (i) the market
price of the Common Stock, (ii) the current and expected capital needs
of the Corporation, and (iii) the amount of optional cash purchases
expected to be made under the Plan. There is currently no discount for
optional cash purchases of Common Stock under the Plan.
-- The Corporation currently expects that the maximum amount of optional
cash purchases that may be made on each Investment Date will be
limited to $2,000 per month pursuant to the Threshold Price provisions
of the Plan described herein. Pursuant to such Threshold Price
provisions of the Plan, in no event shall optional cash purchases
exceed $10,000 on any Investment Date, unless waived by the
Corporation from time to time in its discretion. The primary factors
the Corporation currently expects to consider in granting such waivers
are (i) the amount of optional cash purchases expected to be made
under the Plan, (ii) the amount the Corporation is requested to waive,
(iii) the Investment Price of the Common Stock, and (iv) the current
and expected capital needs of the Corporation.
-- The foregoing discount, maximum and waiver provisions of the Plan
affect the amount of shares that may be distributed under the Plan and
the manner of distribution in various ways, including, under certain
circumstances, encouraging financial intermediaries to participate in
the Plan. Under such circumstances, such intermediaries may (i) engage
in positioning and other transactions which would allow them to
acquire shares prior to the record date for a particular Investment
Date, (ii) acquire shares at a discount under the Plan, and (iii)
resell the shares to capture the discount. If such financial
intermediaries engage in such transactions, under certain
circumstances such intermediaries may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933, as
amended (the "Securities Act"). The Corporation has not entered into
any arrangements (formal or informal) with any financial
intermediaries to engage in such transactions.
DESCRIPTION OF THE PLAN
The following, in question and answer form, are the provisions of the Plan.
Those holders of Common Stock who are not participants in the Plan will continue
to receive cash dividends, if and when declared, as usual.
GLOSSARY OF DEFINED TERMS
-- "Administrator" means First Union National Bank, a subsidiary of the
Corporation.
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-- "Agent" means a financial institution unaffiliated with the
Corporation acting on behalf of Participants in the Plan.
-- "Common Stock" means the Common Stock, $3.33 1/3 par value per share,
of the Corporation.
-- "Corporation" means First Union Corporation.
-- "Daily Investment Price" means the average high and low sale prices of
the Common Stock on the NYSE on a trading day during the Pricing
Period.
-- "Investment Date" means the Common Stock cash dividend payment dates
in months in which dividends are paid and the 15th day of the month in
each other month; provided if the NYSE is not open on such date the
Investment Date will be the next day that the NYSE is open.
-- "Investment Price" means the price at which original issue shares of
Common Stock are purchased under the Plan.
-- "NYSE" means the New York Stock Exchange.
-- "Participant" means a holder of record of at least ten shares of
Common Stock who is otherwise eligible to participate and is a
participant in the Plan.
-- "Plan" means the Corporation's Dividend Reinvestment and Stock
Purchase Plan.
-- "Pricing Period" means the ten business days preceding an Investment
Date.
-- "Threshold Price" means the minimum price for optional cash purchases
established by the Corporation prior to 5:00 p.m. on the last business
day preceding each Pricing Period.
PURPOSE
1. WHAT IS THE PURPOSE OF THE PLAN?
The primary purpose of the Plan is to provide holders of Common Stock the
opportunity of reinvesting cash dividends and making optional cash purchases in
additional shares of Common Stock. Shares purchased under the Plan will either
be original issue shares or shares purchased in the open market by the Agent. To
the extent shares are original issue shares, the Corporation will receive
additional funds for its general corporate purposes, including investments in,
or extensions of credit to, the Corporation's banking and nonbanking
subsidiaries. See "Use of Proceeds". To the extent shares are purchased in the
open market, the Corporation will not receive any additional funds.
ADVANTAGES
2. WHAT ARE THE ADVANTAGES OF THE PLAN?
Participants in the Plan may:
-- Automatically reinvest their Common Stock cash dividends, currently at
a one percent discount, including dividends on shares of Common Stock
held by them under the Plan, in additional shares of Common Stock.
-- Reinvest additional cash, under certain terms and conditions, in
additional shares of Common Stock by submitting payments by check or
through use of the Plan's direct debit program.
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<PAGE>
-- Reinvest the full amount of all dividends and any optional cash
purchases, since fractional share interests may be held under the
Plan.
-- Avoid safekeeping and record-keeping requirements and costs through
the free custodial service and reporting provisions of the Plan.
DISADVANTAGES
3. WHAT ARE SOME OF THE DISADVANTAGES OF THE PLAN?
-- Prior to being invested on a particular Investment Date, optional cash
purchases may not be returned to Participants, unless a request is
received prior to 5:00 p.m. on the last business day prior to the
applicable Investment Date.
-- NO INTEREST WILL BE PAID ON PAYMENTS FOR OPTIONAL CASH PURCHASES
PENDING INVESTMENT OR RETURN.
-- While a one percent discount is currently provided from the Investment
Price, or, if applicable, the open market purchase price for the
reinvestment of dividends, and may in the future apply to optional
cash purchases, the Investment Price, or, if applicable, the open
market purchase price and optional cash purchase price, as so
discounted, may exceed the price at which shares of the Common Stock
are trading on the Investment Date when the shares are issued or
thereafter.
IMPORTANT DATES
4. WHAT ARE SOME OF THE IMPORTANT DATES TO REMEMBER ABOUT THE PLAN?
-- PARTICIPATION. An Enrollment Form must be received by the record date
established for a particular dividend in order to have such dividend
reinvested under the Plan. In order to make optional cash purchases
under the Plan in months in which no dividend is paid, a Participant
must be a holder of record on the last business day of the month prior
to the Investment Date relating to such optional cash purchases. See
Question 6.
-- PRICING PERIOD. The ten business days preceding the applicable
Investment Date. See Question 14.
-- INVESTMENT DATES. In months in which dividends are paid the Investment
Date is the dividend payment date. In months in which dividends are
not paid the Investment Date is generally the 15th day of the month.
See Question 12.
-- OPTIONAL CASH PURCHASES. The deadline for receiving payments for
optional cash purchases is 5:00 p.m., Charlotte time, on the last
business day prior to the applicable Investment Date. See Question 15.
-- THRESHOLD PRICE. A Threshold Price for making optional cash purchases
in excess of $2,000 will be established prior to 5:00 p.m. on the last
business day preceding each Pricing Period. See Question 17.
PARTICIPATION
5. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
All holders of record of at least ten shares of Common Stock are eligible
to participate in the Plan, excluding depository clearing organizations;
provided, however, if any Participants have the same social security
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<PAGE>
number or federal tax identification number, the maximum amount of optional cash
purchases which all such Participants may make on each Investment Date is
limited to the maximum amount of optional cash purchases that one Participant
may make on such Investment Date, except as may otherwise be permitted under the
Plan.
6. HOW DOES AN ELIGIBLE STOCKHOLDER BECOME A PARTICIPANT?
An eligible stockholder may join the Plan by signing an Enrollment Form and
returning it to the Administrator. Enrollment Forms may be obtained at any time
by written request to First Union National Bank, Corporate Trust Department,
1525 West W.T. Harris Boulevard, 3C3, Charlotte, North Carolina 28288-1153.
Beneficial owners whose shares of Common Stock are registered in names
other than their own (for example, in the name of a broker, bank or other
nominee) must become owners of record by having the number of shares (not less
than ten) they wish to have participate in the Plan transferred into their name.
7. WHEN MAY AN ELIGIBLE STOCKHOLDER JOIN THE PLAN?
An eligible stockholder may join the Plan at any time. If an Enrollment
Form is received by the Administrator on or before the record date established
for payment of a particular dividend, reinvestment of dividends under the Plan
will commence with that dividend. If an Enrollment Form is received after the
record date established for a particular dividend, the reinvestment of dividends
under the Plan will begin with the next succeeding dividend. In the past,
quarterly dividend record and payment dates for Common Stock have ordinarily
occurred on or about the following dates:
<TABLE>
<S> <C>
RECORD DATE PAYMENT DATE
- ------------ -------------
February 28 March 15
May 31 June 15
August 31 September 15
November 30 December 15
</TABLE>
In order to make optional cash purchases in months in which no dividend is
paid, a Participant must be a holder of record on the last day of the month
prior to the Investment Date relating to such optional cash purchases.
ADMINISTRATION
8. WHO ADMINISTERS THE PLAN FOR PARTICIPANTS?
FUNB performs certain bookkeeping and similar administrative functions in
connection with the operation of the Plan, including keeping records and sending
statements of accounts to Participants. FUNB's mailing address is 1525 West W.T.
Harris Boulevard, 3C3, Charlotte, North Carolina 28288-1153, and its telephone
number is 1-800-347-1246 (590-0393 in Charlotte).
COSTS
9. ARE THERE ANY EXPENSES TO PARTICIPANTS IN CONNECTION WITH PURCHASES UNDER THE
PLAN?
To the extent shares are original issue shares, Participants will incur no
brokerage commissions or service charges for purchases made under the Plan. To
the extent shares are purchased in the open market by the Agent, brokerage
commissions or mark-ups and any other fees or expenses charged by the
broker-dealer or broker-dealers involved, will be paid out of the total amount
to be invested and therefore will be paid by the
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<PAGE>
Participants on a pro rata basis. The Corporation may elect, upon notice to the
Participants, to pay any such commissions, mark-ups, fees or expenses on behalf
of the Participants.
PURCHASES
10. HOW ARE SHARES OF COMMON STOCK ACQUIRED UNDER THE PLAN?
Purchases under the Plan are currently being made from the Corporation's
authorized and unissued shares. The Corporation will provide Participants with
prior written notice if purchases under the Plan are changed to open market
purchases by the Agent. If the Corporation were to give such notice, the
Corporation expects that such open market purchases would continue for not less
than the three-month period following such change.
Purchases by the Agent in the open market will be made at such times, in
such amounts, at such prices and by such methods as the Agent shall in its sole
discretion deems to be in the best interests of the Plan and the Participants,
subject to applicable rules and regulations of the Commission. The primary
factors the Corporation currently expects to consider in determining whether to
commence open market purchases under the Plan are (i) the market price of the
Common Stock, (ii) the current and expected capital needs of the Corporation,
(iii) the number of original issue shares expected to be issued under the Plan,
and (iv) the applicability of certain accounting restrictions that may apply to
open market purchases of the Common Stock.
11. HOW MANY SHARES OF COMMON STOCK WILL BE PURCHASED FOR PARTICIPANTS?
The number of shares purchased under the Plan for each Participant will
depend on the amount of each Participant's dividends and optional cash
purchases, the market price of the Common Stock, and if the shares purchased are
purchased in the open market by the Agent, the amount of brokerage commissions
or mark-ups and any other fees or expenses charged by the broker-dealer or
broker-dealers involved that are not paid by the Corporation. Each Participant's
account will be credited with the number of shares, including fractions computed
to three decimal places, equal to the total amount reinvested under the Plan by
the Participant, divided by the applicable purchase price per share of the
Common Stock (including, if applicable, brokerage commissions or mark-ups and
other brokerage fees and expenses in the case of open market purchases). The
Plan does not permit partial reinvestment of dividends.
Since there is currently no maximum on the number of shares that may be
issued to a Participant as reinvested dividends, financial intermediaries and
others may engage in positioning transactions in order to obtain shares at a
discount for resale.
12. WHAT ARE THE INVESTMENT DATES?
The investment dates ("Investment Dates") will be the cash dividend payment
dates in months in which dividends are paid and the 15th day of the month in
each other month; provided if the NYSE is not open on such date the Investment
Date shall be the next day that the NYSE is open.
13. WHEN WILL SHARES OF COMMON STOCK BE PURCHASED UNDER THE PLAN?
Purchases of original issue shares will be made as of each Investment Date
and will include the optional cash purchases and dividends to be reinvested as
of each Investment Date, as applicable. Open market purchases under the Plan
will be made by the Agent following each Investment Date and the delivery to the
Agent by the Administrator of the payments for optional cash purchases and the
dividends to be reinvested, as applicable. No interest will be paid on any funds
received under the Plan.
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<PAGE>
14. AT WHAT PRICE WILL SHARES OF COMMON STOCK BE PURCHASED UNDER THE PLAN?
If shares issued under the Plan are original issue shares, the price at
which such shares will be purchased (the "Investment Price") will be the average
of the high and low sale prices of the Common Stock on the NYSE on the ten
business days preceding the applicable Investment Date (the "Pricing Period"),
subject to the provisions set forth below with respect to optional cash
purchases in excess of $2,000 if the Threshold Price is greater than the
Investment Price; provided no purchases shall be made in the event that this
price is less than the par value of the Common Stock (presently $3.33 1/3 per
share), and provided, further, that the Corporation shall have the right from
time to time to allow such purchases to be made at a discount, upon giving
Participants not less than 30 days' prior written notice thereof. If instituted,
such discount may thereafter be changed or discontinued, upon giving
Participants similar notice of such change or discontinuance. Dividends are
currently being used to purchase shares of Common Stock at a one percent
discount. The Corporation currently expects to continue such discount for the
foreseeable future, but as indicated above, such discount may be changed or
discontinued at any time. There is currently no discount for optional cash
purchases of Common Stock under the Plan.
If shares issued under the Plan are purchased in the open market by the
Agent, the price at which such shares will be purchased will be the prices per
share payable to the broker-dealer or broker-dealers involved (including
brokerage commissions or mark-ups and any other brokerage fees and expenses
charged by the broker-dealer or broker-dealers involved that are not paid by the
Corporation).
OPTIONAL CASH PURCHASES
15. HOW MAY OPTIONAL CASH PURCHASES BE MADE?
An optional cash purchase may be made by a Participant enclosing a check or
money order payable to "First Union National Bank, Agent" together with an
optional cash purchase form attached to a statement of account referred to below
and mailing them to First Union National Bank, Corporate Trust Department, 1525
West W.T. Harris Boulevard, 3C3, Charlotte, North Carolina 28288-1153. The
deadline for receiving optional cash purchases to be made as of a particular
Investment Date, is 5:00 p.m., Charlotte time, on the last business day prior to
such Investment Date. Optional cash purchases received after such date and time
will be made as of the next Investment Date, subject to the provisions of the
Plan relating thereto. In addition, a Participant can also authorize the
Administrator to automatically debit the Participant's checking or savings
account for monthly optional cash purchases by completing the Direct Debit
Authorization Form that appears on the reverse side of the Enrollment Form.
Enrollment Forms can be obtained by request to the Administrator. Wire transfer
of funds may be made with the prior approval of the Administrator.
If a Participant desires the return of any payment for optional cash
purchases, the Administrator must be notified of such desire prior to 5:00 p.m.
on the last business day prior to the Investment Date. Requests received by the
Administrator after such time will not be honored.
16. WHAT ARE THE LIMITATIONS ON MAKING OPTIONAL CASH PURCHASES?
Any optional cash purchases must not be less than $25.00 nor, unless
approved by the Corporation as hereinafter provided and subject to the Threshold
Price provisions of the Plan with respect to optional cash purchases in excess
of $2,000, may such purchases to be made by any Participant currently aggregate
more than $10,000 on any Investment Date for such Participant subject to the
right of the Corporation from time to time to change such amounts or to
eliminate optional cash purchases upon giving Participants in the Plan not less
than 30 days' prior written notice of the effective date of such change. The
Corporation currently expects that optional cash purchases will be limited to
$2,000 per month pursuant to the Threshold Price provisions.
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<PAGE>
Optional cash purchases made by check, or, if approved, by wire transfer,
need not be in the same amount of money each time. However, if a Participant
elects to make optional cash purchases through the direct debit program, the
debit must be in the same amount each month and will continue until the
Participant notifies the Administrator in writing that the Participant wishes to
change the amount or terminate participation in the automatic debit program.
Participants who wish to make optional cash purchases in excess of the
maximum amount may do so if they have obtained the prior written approval of the
Corporation to make such purchases, which approval may be granted or withheld in
the Corporation's sole discretion. Requests for such approval should be directed
to the Corporation at (704) 374-2310.
The primary factors the Corporation currently expects to consider in
determining whether to grant waiver requests are (i) the market price of the
Common Stock, (ii) the current and expected capital needs of the Corporation,
(iii) the amount of optional cash purchases expected to be made, and (iv) the
amount the Corporation is being requested to waive. The Corporation currently
expects that waivers in any given month would either be granted to all
Participants who request the same or be denied to all such Participants, unless
the amount one or more Participants are requesting to be waived exceeds the
amount the Corporation desires to receive in such month. There is currently no
maximum dollar limit on the amount of shares of Common Stock that may be
purchased pursuant to a waiver.
17. WHAT ARE THE THRESHOLD PRICE PROVISIONS?
Prior to 5:00 p.m. on the last business day preceding each Pricing Period,
the Corporation will establish a minimum price for optional cash purchases (the
"Threshold Price") in excess of $2,000 on the Investment Date following such
Pricing Period, subject to the following provisions:
-- The Threshold Price will be established in the Corporation's sole
discretion after a review of current market conditions and other
factors.
-- A Participant may obtain the Threshold Price by telephoning the
Administrator at 1-800-347-1246.
-- If the average high and low sale prices of the Common Stock on the NYSE
on a trading day during the Pricing Period (a "Daily Investment Price")
is less than the Threshold Price, such Daily Investment Price will be
excluded from the Pricing Period for purposes of calculating the
Investment Price for optional cash purchases in excess of $2,000,
except as set forth below. An example of this is set forth in Example 3
below, where for purposes of calculating the Investment Price for
optional cash purchases in excess of $2,000 only those days during the
Investment Period where the Daily Investment Price exceeds the
Threshold Price are used in making such calculation.
-- If the Threshold Price is greater than the Daily Investment Price on
each business day during a Pricing Period for a particular Investment
Date, prior to 5:00 p.m. on the last business day prior to such
Investment Date, the Corporation shall have the right to determine, in
its sole discretion, whether or not optional cash purchases in excess
of $2,000 in the aggregate per Participant will be made at the
Investment Price on such Investment Date. If the Corporation determines
that such purchases are not to be so made, such payments for such
purchases will be returned to the Participants as promptly as
practicable following the Investment Date, without interest.
-- A Participant may call the Administrator at the number listed above to
ascertain the Investment Price and if optional cash purchases in excess
of $2,000 are to be invested on the Investment Date.
11
<PAGE>
-- The foregoing Threshold Price concept and return procedure apply only
to original issue shares and optional cash purchases in excess of
$2,000 in the aggregate per Participant.
Some examples of how the Threshold Price provisions apply are as follows:
-- EXAMPLE 1. The Corporation sets the Threshold Price at $55.00 prior to
the Pricing Period. Each day's average of the high and low sale prices
of Common Stock on the NYSE for the ten business days during the
Pricing Period is below $55.00 and the average of such prices is
$52.50. Under these circumstances, the Corporation has the option to
either (i) permit all optional cash purchases to be made at $52.50 per
share, or (ii) permit only optional cash purchases totalling $2,000 or
less to be so made.
-- EXAMPLE 2. The Corporation sets the Threshold Price at $55.00 prior to
the Pricing Period. Each day's average of the high and low sale prices
of Common Stock on the NYSE for the ten business days during the
Pricing Period is greater than $55.00 and the average of such prices is
$57.00. Under these circumstances, all optional cash purchases would be
made at $57.00 per share.
-- EXAMPLE 3. The Corporation sets the Threshold Price at $55.00 prior to
the Pricing Period. Several but not all of each day's average of the
high and low sale prices of Common Stock on the NYSE for the ten
business days during the Pricing Period are greater than $55.00. The
average of the days where such price exceeds $55.00 is $57.00. The
average of the ten days' high and low Common Stock price on the NYSE is
$52.50. Under these circumstances, (i) all optional cash purchases
equal to $2,000 or less would be made at $52.50 per share, and (ii) all
optional cash purchases in excess of $2,000 would be made at $57.00 per
share.
The primary purpose of the Threshold Price provisions is to assure the
price the Corporation will receive for optional cash purchases in excess of
$2,000 on each Investment Date. The Corporation currently expects that optional
cash purchases will be limited to $2,000 per month pursuant to the Threshold
Price provisions.
REPORTS TO PARTICIPANTS
18. WHAT REPORTS WILL BE SENT TO PARTICIPANTS?
As soon as practicable after each purchase made under the Plan on behalf of
a Participant, the Participant will receive a statement of his account, which
will include information regarding each such purchase and other information
regarding the status of the Participant's account as of the date of such
statement. These statements will provide a record of the cost basis of shares
purchased under the Plan and should be retained for tax purposes. Additional or
replacement copies of any such statements will be provided to Participants upon
request to the Administrator for a $15.00 fee.
DIVIDENDS
19. WILL PARTICIPANTS RECEIVE DIVIDENDS ON SHARES HELD IN THEIR ACCOUNTS UNDER
THE PLAN?
Yes. Dividends will be paid on all shares of Common Stock held in
Participants' accounts under the Plan on the basis of the full shares and
fractional share interests held in such accounts on the record dates for such
dividends. Such dividends will automatically be reinvested in additional shares
of Common Stock, which will be credited to the Participants' accounts under the
Plan.
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<PAGE>
WITHDRAWAL OF SHARES IN PLAN ACCOUNTS
20. HOW MAY A PARTICIPANT WITHDRAW SHARES PURCHASED UNDER THE PLAN?
A Participant may withdraw all or any portion of the full shares of Common
Stock held in the Participant's account under the Plan by notifying the
Administrator in writing to that effect. The notice should be sent to First
Union National Bank, Corporate Trust Department, 1525 West W.T. Harris
Boulevard, 3C3, Charlotte, North Carolina 28288-1153. A certificate for the full
shares so withdrawn will be issued in the name of and mailed to the Participant.
In no case will certificates for fractional share interests be issued. See
Questions 21 and 22.
TERMINATION OF PARTICIPATION
21. HOW MAY A PARTICIPANT'S PARTICIPATION IN THE PLAN BE TERMINATED?
A Participant may terminate participation in the Plan at any time by
notifying the Administrator in writing to that effect; provided that any notice
of termination received by the Administrator between a dividend record date and
payment date will not be effective insofar as that dividend is concerned (I.E.,
if a Participant's notice of termination is received between a dividend record
date and a dividend payment date, the cash dividend paid on such payment date
will be reinvested for such Participant's account under the Plan and then such
account will be terminated). Any such termination notice should be sent to First
Union National Bank, Corporate Trust Department, 1525 West W.T. Harris
Boulevard, 3C3, Charlotte, North Carolina 28288-1153.
THE CORPORATION MAY ALSO TERMINATE A PARTICIPANT'S PARTICIPATION IN THE
PLAN FOR ANY REASON, INCLUDING IF DURING A CALENDAR YEAR A PARTICIPANT REINVESTS
LESS THAN $100.00 IN DIVIDENDS, BY GIVING WRITTEN NOTICE TO THAT EFFECT TO A
PARTICIPANT AT ANY TIME; PROVIDED THAT IF SUCH NOTICE IS GIVEN BETWEEN A
DIVIDEND RECORD DATE AND PAYMENT DATE, SUCH TERMINATION SHALL NOT BE EFFECTIVE
INSOFAR AS THAT DIVIDEND IS CONCERNED.
22.WHAT HAPPENS TO THE FULL SHARES AND ANY FRACTIONAL SHARE INTEREST IN A
PARTICIPANT'S ACCOUNT WHEN A PARTICIPANT'S PARTICIPATION IN THE PLAN IS
TERMINATED?
Upon termination of a Participant's participation in the Plan, a
certificate for the number of full shares in the Participant's account will be
issued in the name of and mailed to the Participant. In lieu of issuing a
certificate for any fractional share interest remaining in a terminated
Participant's account, the fractional share interest will be liquidated and a
check for the net proceeds resulting from such liquidation (I.E., the proceeds
from such sale less brokerage commissions and other brokerage charges) will be
mailed to the Participant.
OTHER INFORMATION
23.WILL CERTIFICATES BE ISSUED FOR SHARES OF COMMON STOCK PURCHASED UNDER THE
PLAN?
Unless requested by a Participant, certificates for shares of Common Stock
purchased under the Plan on behalf of a Participant will not be issued in a
Participant's name. Certificates for any number of whole shares credited to a
Participant's account under the Plan will be issued in the Participant's name
without charge upon receipt by the Administrator of a written request therefor
from the Participant. Certificates representing fractional share interests will
not be issued under any circumstances.
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<PAGE>
24.WHAT HAPPENS TO A PARTICIPANT'S PLAN ACCOUNT IF ALL SHARES REGISTERED IN THE
PARTICIPANT'S NAME ARE TRANSFERRED OR SOLD?
If a Participant disposes of all shares of Common Stock registered in the
Participant's name on the stockholder records of the Corporation without
terminating participation in the Plan, the Administrator will continue to
reinvest dividends payable on the shares of Common Stock held in the
Participant's Plan account until such time as the Participant's participation in
the Plan is terminated. A Participant who sells all of the shares of Common
Stock held of record in the name of such Participant would still hold shares
under the Plan because those shares are held by the Administrator as nominee for
all Participants in the Plan. Dividends on the shares held in the Plan by such
Participant would continue to be reinvested under the Plan until the Participant
requests that such shares be issued to the Participant or sold by the
Administrator, as applicable.
Any Participant who does not have any shares of Common Stock registered in
his name on the stockholder records of the Corporation and who has less than 100
shares of Common Stock in his Plan account may instruct the Administrator, in
form satisfactory to the Administrator, to sell the shares of Common Stock in
his Plan account through the Agent. In addition, each quarter the Administrator
will send a form to each Participant who disposed of the shares of Common Stock
registered in his name during the prior quarter, according to the stockholder
records of the Corporation, and who has less than 100 shares of Common Stock in
his Plan account, for use by such Participant if he wants the Administrator to
sell the shares of Common Stock in his Plan account through the Agent. The
Corporation will pay all commissions or mark-ups and any other brokerage fees
and expenses charged by the broker-dealers involved in such sales. A check for
the proceeds from the sale of such shares of Common Stock will be mailed to the
Participant following settlement of the sale. Sales by the Agent will be made at
such times, in such amounts, at such prices and by such methods as the Agent in
its sole discretion deems to be in the best interests of the Plan and the
Participants, subject to applicable rules and regulations of the Commission. A
Participant will realize gain or loss in connection with such sale of the shares
of Common Stock in his Plan account equal to the difference between the amount
which the Participant receives for such shares and the tax basis therefor.
25.WHAT HAPPENS IF THE CORPORATION HAS A COMMON STOCK RIGHTS OFFERING, STOCK
DIVIDEND OR STOCK SPLIT?
Any Common Stock stock dividend or stock split issued by the Corporation
will be credited to the accounts of Participants based on the number of shares
(including fractional share interests) held in such accounts on the record date
for such dividend or split. In the event the Corporation makes available to
holders of Common Stock, rights or warrants to purchase additional shares of
Common Stock or other securities, such rights or warrants will be made available
to Participants based on the number of shares (including fractional share
interests to the extent practicable) held in their accounts on the record date
established for determining the holders of Common Stock entitled to such rights
or warrants. See "Description of the Corporation's Capital Stock -- Rights
Plan".
26. HOW WILL A PARTICIPANT'S PLAN SHARES BE VOTED AT A MEETING OF STOCKHOLDERS?
If on the record date for a meeting of stockholders there are any shares
credited to a Participant's account under the Plan, such shares will be added to
the shares registered in the Participant's name on the stockholder records of
the Corporation and the Participant will receive one proxy covering the total of
such shares, which proxy will be voted as the Participant directs; or, if a
Participant so elects, the Participant may vote all of such shares in person at
the stockholders' meeting.
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<PAGE>
27. MAY A PARTICIPANT SELL, PLEDGE OR OTHERWISE ASSIGN OR TRANSFER HIS ACCOUNT
UNDER THE PLAN?
A Participant may not sell, pledge or otherwise assign or transfer his
account under the Plan, or any interest therein, or any shares of Common Stock
credited to such account, except that such shares may be sold as provided above
and may be transferred in accordance with such requirements as may be imposed by
the Administrator in connection therewith. Except as provided in the preceding
sentence, a Participant who desires to sell, pledge or otherwise assign or
transfer shares of Common Stock in his account must request that certificates
for such shares be issued in the Participant's name.
28. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN?
REINVESTMENT OF DIVIDENDS
If the shares issued under the Plan are original issue shares, Participants
in the Plan will be considered to have received a dividend for federal income
tax purposes equal to the fair market value as of the Investment Date of the
shares purchased with the reinvested dividends, even though the actual price, by
virtue of a discount or market fluctuations during the Pricing Period, may be
more or less than that amount. If the shares issued under the Plan are acquired
by purchase in the open market, Participants will be treated as having received
a dividend equal to the cash dividend paid by the Corporation increased by the
amount of brokerage fees paid to the Agent by the Corporation. Such dividend
amount will become the Participant's basis in the shares purchased under the
Plan, and the Participant's holding period for such shares will begin on the day
following the date of purchase.
The following example may be helpful to illustrate the federal income tax
consequences of the reinvestment of dividends under the Plan:
<TABLE>
<S> <C>
Cash dividends reinvested...................................................... $100.00
Assumed current market price*.................................................. $ 55.00
Less 1.0% discount............................................................. $ .55
Net purchase price per share................................................... $ 54.45
Number of shares purchased ($100.00 $54.45).................................... 1.8365
Total taxable dividend resulting from the transactions
($55.00 X 1.8365)**.......................................................... $101.01
</TABLE>
- ---------------
*This price is assumed for illustrative purposes only, and will vary with the
market price of the Common Stock.
**Assumes market price is equal to fair market value as of the Investment Date.
OPTIONAL CASH PURCHASES
With respect to original issue shares, Participants in the Plan who elect
to reinvest in additional shares by making optional cash purchases will be
treated for federal income tax purposes as having received a dividend equal to
the excess (if any) of (i) the fair market value on the Investment Date of the
shares purchased, over (ii) the optional cash purchases made. (For the method
used in computing market price, see Question 14 above.) Participants will not be
deemed to have received a dividend with respect to shares acquired by purchases
in the open market, except to the extent of brokerage fees paid to the Agent by
the Corporation. The Participant's tax basis in the shares purchased under the
Plan will be equal to the cost paid by the Participant in acquiring such stock,
plus the amount (if any) treated as a dividend for federal income tax purposes,
and the Participant's holding period for such shares will begin on the day
following the date of purchase.
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<PAGE>
ADDITIONAL INFORMATION APPLICABLE TO REINVESTMENT OF DIVIDENDS AND OPTIONAL
CASH PURCHASES
The dividend income received by a corporate shareholder generally is
eligible for a 70 percent dividends-received deduction under current federal tax
laws.
A Participant will not realize any taxable income upon the receipt of
certificates for whole shares credited to the Participant's account under the
Plan, either upon the Participant's request for certificates for such shares or
upon withdrawal from or termination of the Plan. However, a Participant who
receives, upon withdrawal from or termination of the Plan, a cash payment for a
fractional share credit to the Participant's account will be treated as having
redeemed the fractional share of stock and accordingly will recognize gain or
loss for tax purposes equal to the difference between the cash payment and the
Participant's tax basis of such fractional share. Gain or loss will be realized
by the Participant upon the sale or exchange of shares after withdrawal from the
Plan. The amount of such gain or loss will be the difference between the amount
which the Participant receives for each whole share, and the Participant's tax
basis therefor.
A Participant (including a foreign stockholder) whose dividends are subject
to United States income tax withholding will have the amount of the tax to be
withheld deducted from such dividends before reinvestment in additional shares
for such Participant's Plan account. Statements confirming purchases made for
such Participants will indicate that tax has been withheld. Pursuant to Internal
Revenue Service regulations, the amount of tax to be withheld will be determined
by applying the applicable withholding rate to an amount equal to the amount of
cash dividends that the Participant would have received had the dividends been
paid to the Participant in cash.
The above is intended only as a general discussion for the current federal
income tax consequences of participation in the Plan. Participants should
consult their own tax advisers regarding the federal and state income tax
consequences (including the effects of any changes in law) of their individual
participation in the Plan.
29. WHO WILL ACT AS THE AGENT UNDER THE PLAN IN MAKING OPEN MARKET PURCHASES?
Currently, Merrill Lynch, Pierce, Fenner & Smith Incorporated, would act as
the Agent on behalf of Participants in making open market purchases of Common
Stock under the Plan. The Agent may make such purchases in negotiated
transactions or on any securities exchange where the Common Stock may be listed,
which purchases may be on such terms as to price, delivery and otherwise as the
Agent may determine; provided such purchases may not be made from the
Corporation or any of its affiliates. The fees payable to the Agent for its
services will be paid by the Corporation. The Agent is not affiliated with the
Corporation.
30. WHAT IS THE RESPONSIBILITY OF THE ADMINISTRATOR, THE CORPORATION AND THE
AGENT UNDER THE PLAN?
The Administrator, the Corporation and the Agent shall not be liable for
any act done in good faith or for any good faith omission to act, including,
without limitation, any claims of liability (i) arising out of failure to
terminate a Participant's account upon such Participant's death prior to receipt
by the Administrator of notice in writing of such death, (ii) with respect to
the price at, or terms upon which, shares of Common Stock may be purchased under
the Plan or the times such purchases may be made, or (iii) with respect to any
fluctuation in the market value of the Common Stock before, at or after any such
purchases may be made, nor shall they have any duties, responsibilities or
liabilities except such as are expressly set forth hereunder. The foregoing
limited liability provision does not affect a stockholder's right to bring a
cause of action based on alleged violations of federal securities laws. The
terms and conditions of the Plan shall be governed by the laws of the State of
North Carolina.
31. MAY THE PLAN BE CHANGED OR DISCONTINUED?
The Corporation reserves the right to modify, suspend or terminate the Plan
at any time. Participants will be notified of any such modification, suspension
or termination.
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<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of original issue shares of Common Stock
issued under the Plan will be used for general corporate purposes of the
Corporation, which may include the reduction of indebtedness, investments at the
holding company level, investments in, or extensions of credit to, the
Corporation's banking and nonbanking subsidiaries and other banks and companies
engaged in other financial service activities, the purchase of outstanding
equity securities of the Corporation, and possible acquisitions. Pending such
use, the net proceeds may be temporarily invested. The precise amounts and
timing of the application of net proceeds will depend upon the funding
requirements of the Corporation and its subsidiaries and the availability of
other funds. Based upon the past and anticipated growth of the Corporation, the
Corporation may engage in additional financings of a character and amount to be
determined as the need arises.
The Corporation will not receive any funds under the Plan from the purchase
of shares of Common Stock in the open market by the Agent.
PLAN OF DISTRIBUTION
Subject to the discussion below, original issue shares of Common Stock sold
under the Plan are distributed directly by the Corporation rather than through
an underwriter, broker or dealer. There are no brokerage commissions or other
fees charged to Participants in connection with their purchases of such original
issue shares under the Plan. To the extent shares are purchased in the open
market by the Agent, brokerage commissions or mark-ups, and any other fees or
expenses charged by the broker-dealer or broker-dealers involved, will be paid
out of the total amount to be invested and therefore will be paid by the
Participants on a pro rata basis. The Corporation may elect, upon notice to the
Participants, to pay any such commissions, mark-ups, fees or expenses on behalf
of the Participants.
Broker-dealers and other financial intermediaries may engage in positioning
transactions in order to benefit from the discount upon reinvestment of
dividends since there are currently no caps on the number of shares of Common
Stock that can be issued with respect thereto.
Under certain circumstances, certain Participants may be deemed to be
"underwriters" within the meaning of the Securities Act and subject to
obligations (including an obligation to deliver a prospectus) and liabilities
thereunder. Common Stock purchased by such a Participant may be sold in one or
more transactions (which may include block transactions) on a relevant stock
exchange or in the over-the-counter market, in negotiated transactions, through
the writing of options on the stock (whether such options are listed on an
options exchange or otherwise) or a combination of such methods of resale and at
market prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices and any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such Participant
and/or the purchasers of any such Common Stock. Any discount received from the
Corporation, and any profit made on any such resale and commissions or
concessions received, by any such Participants may be deemed to be underwriting
compensation under the Securities Act.
17
<PAGE>
DESCRIPTION OF THE CORPORATION'S CAPITAL STOCK
THE DESCRIPTIVE INFORMATION BELOW OUTLINES CERTAIN PROVISIONS OF THE
ARTICLES OF INCORPORATION, AS AMENDED (THE "ARTICLES"), AND BYLAWS OF THE
CORPORATION AND THE NORTH CAROLINA BUSINESS CORPORATION ACT ("NCBCA"). THE
INFORMATION DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ALL RESPECTS BY
REFERENCE TO THE PROVISIONS OF THE CORPORATION'S ARTICLES AND BYLAWS AND THE
NCBCA.
AUTHORIZED CAPITAL
The authorized capital stock of the Corporation consists of 2,000,000,000
shares of Common Stock, 10,000,000 shares of Preferred Stock, no-par value per
share ("Preferred Stock"), and 40,000,000 shares of Class A Preferred Stock,
no-par value per share ("Class A Preferred Stock"). As of April 30, 1998, there
were 960,490,805 shares of Common Stock, no shares of Class A Preferred Stock,
and no shares of Preferred Stock issued and outstanding. The Preferred Stock and
Class A Preferred Stock are each issuable in one or more series and, with
respect to any series, the Board of Directors of the Corporation, subject to
certain limitations, is authorized to fix the numbers of shares, dividend rates,
liquidation prices, liquidation rights of holders, redemption, conversion and
voting rights and other terms of the series. Shares of Class A Preferred Stock
and Preferred Stock that are redeemed, repurchased or otherwise acquired by the
Corporation have the status of authorized, unissued and undesignated shares of
Class A Preferred Stock and Preferred Stock, respectively, and may be reissued.
COMMON STOCK
Subject to the prior rights of the holders of any Preferred Stock and any
Class A Preferred Stock then outstanding, holders of Common Stock are entitled
to receive such dividends as may be declared by the Board of Directors out of
funds legally available therefor and, in the event of liquidation or
dissolution, to receive the net assets of the Corporation remaining after
payment of all liabilities and after payment to holders of all shares of
Preferred Stock and Class A Preferred Stock of the full preferential amounts to
which such holders are respectively entitled, in proportion to their respective
holdings.
Pursuant to an indenture dated as of November 27, 1996, between the
Corporation and Wilmington Trust Company, as trustee, under which certain of the
Corporation's outstanding junior subordinated debt securities have been issued,
the Corporation has covenanted that it generally will not declare or pay any
dividends or distributions on, or redeem, repurchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock,
including Common Stock, Preferred Stock and Class A Preferred Stock if, at such
time, certain defaults have occurred under such indenture or related guarantee
of the Corporation or the Corporation shall have exercised its rights under such
indenture to defer interest payments on the securities issued thereunder.
Subject to the rights of the holders of any Preferred Stock and any Class A
Preferred Stock then outstanding, all voting rights are vested in the holders of
the shares of Common Stock, each share being entitled to one vote on all matters
requiring stockholder action and in the election of directors. Holders of Common
Stock have no preemptive, subscription or conversion rights. All of the
outstanding shares of Common Stock, including the Shares, are fully paid and
nonassessable.
FUNB is the Transfer Agent, Registrar and Dividend Disbursement Agent for
the Common Stock.
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<PAGE>
PREFERRED STOCK
All shares of each series of Preferred Stock must be of equal rank and have
the same powers, preferences and rights and are subject to the same
qualifications, limitations and restrictions, except with respect to dividend
rates, redemption prices, liquidation amounts, terms of conversion or exchange
and voting rights.
CLASS A PREFERRED STOCK
Shares of Class A Preferred Stock rank prior or superior to Common Stock
and on a parity with or junior to (but not prior or superior to) Preferred Stock
or any series thereof, in respect of the right to receive dividends and/or the
right to receive payments out of the net assets of the Corporation upon any
involuntary or voluntary liquidation, dissolution or winding up of the
Corporation. Subject to the foregoing and the terms of any particular series of
Class A Preferred Stock, series of Class A Preferred Stock may vary as to
priority.
RIGHTS PLAN
Each outstanding share of Common Stock currently has attached to it one
right (a "Right") issued pursuant to an Amended and Restated Shareholder
Protection Rights Agreement (the "Rights Agreement"). Each Right entitles its
registered holder to purchase one one-hundredth of a share of a junior
participating series of Class A Preferred Stock designed to have economic and
voting terms similar to those of one share of Common Stock, for $105.00, subject
to adjustment (the "Rights Exercise Price"), but only after the earlier to occur
(the "Separation Time") of: (i) the tenth business day (subject to extension)
after any person (an "Acquiring Person") (x) commences a tender or exchange
offer, which, if consummated, would result in a person becoming the beneficial
owner of 15 percent or more of the outstanding shares of Common Stock, or (y) is
determined by the Federal Reserve Board to "control" the Corporation within the
meaning of the BHCA (see " -- Other Provisions" below), subject to certain
exceptions; and (ii) the tenth business day after the first date (the "Flip-in
Date") of a public announcement by the Corporation that a person has become an
Acquiring Person. The Rights will not trade separately from the shares of Common
Stock unless and until the Separation Time occurs.
The Rights Agreement provides that a person will not become an Acquiring
Person under the BHCA control test described above if either (i) the Federal
Reserve Board's control determination would not have been made but for such
person's failure to make certain customary passivity commitments, or such
person's violation of such commitments made, to the Federal Reserve Board, so
long as the Federal Reserve Board determines that such person no longer controls
the Corporation within 30 days (or 60 days in certain circumstances), or (ii)
the Federal Reserve Board's control determination was not based on such a
failure or violation and such person (x) obtains a noncontrol determination
within three years, and (y) is using its best efforts to allow the Corporation
to make any acquisition or engage in any legally permissible activity
notwithstanding such person's being deemed to control the Corporation for
purposes of the BHCA.
The Rights will not be exercisable until the business day following the
Separation Time. The Rights will expire on the earliest of: (i) the Exchange
Time (as defined below); (ii) the close of business on December 28, 2000; and
(iii) the date on which the Rights are redeemed or terminated as described below
(in any such case, the "Expiration Time"). The Rights Exercise Price and the
number of Rights outstanding, or in certain circumstances the securities
purchasable upon exercise of the Rights, are subject to adjustment upon the
occurrence of certain events.
In the event that prior to the Expiration Time a Flip-in Date occurs, the
Corporation will take such action as shall be necessary to ensure and provide
that each Right (other than Rights beneficially owned by an
19
<PAGE>
Acquiring Person or any affiliate, associate or transferee thereof, which Rights
shall become void) shall constitute the right to purchase, from the Corporation,
shares of Common Stock having an aggregate market price equal to twice the
Rights Exercise Price for an amount in cash equal to the then current Rights
Exercise Price. In addition, the Board of Directors of the Corporation may, at
its option, at any time after a Flip-in Date, elect to exchange all of the then
outstanding Rights for shares of Common Stock, at an exchange ratio of two
shares of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the Separation Time
(the "Rights Exchange Rate"). Immediately upon such action by the Board of
Directors (the "Exchange Time"), the right to exercise the Rights will terminate
and each Right will thereafter represent only the right to receive a number of
shares of Common Stock equal to the Rights Exchange Rate. If the Corporation
becomes obligated to issue shares of Common Stock upon exercise of or in
exchange for Rights, the Corporation, at its option, may substitute for each
such share of Common Stock one one-hundredth of a share of junior participating
Class A Preferred Stock.
The Rights may be canceled and terminated without any payment to holders
thereof at any time prior to the date that they become exercisable, and are
redeemable by the Corporation at $0.01 per Right, subject to adjustment upon the
occurrence of certain events, at any date between the date on which they become
exercisable and the Flip-in Date. The Rights have no voting rights, and they are
not entitled to dividends.
The Rights will not prevent a takeover of the Corporation. The Rights,
however, may cause substantial dilution to a person or group that acquires 15
percent or more of Common Stock (or that acquires "control" of the Corporation
within the meaning of the BHCA) unless the Rights are first redeemed or
terminated by the Board of Directors of the Corporation. Nevertheless, the
Rights should not interfere with a transaction that is in the best interests of
the Corporation and its stockholders because the Rights can be redeemed or
terminated, as hereinabove described, before the consummation of such
transaction.
The complete terms of the Rights are set forth in the Rights Agreement. The
foregoing description of the Rights and the Rights Agreement is qualified in its
entirety by reference to such document. The Rights Agreement is incorporated by
reference as an exhibit to the Registration Statement. A copy of the Rights
Agreement can be obtained upon written request to the Rights Agent, First Union
National Bank, 1525 West W. T. Harris Boulevard, 3C3, Charlotte, North Carolina
28288-1153.
OTHER PROVISIONS
The Articles and Bylaws of the Corporation contain a number of provisions
which may be deemed to have the effect of discouraging or delaying attempts to
gain control of the Corporation, including provisions in the Articles: (i)
classifying the Board of Directors into three classes with each class to serve
for three years, with one class being elected annually; (ii) authorizing the
Board of Directors to fix the size of the Board of Directors between nine and 30
directors; (iii) authorizing directors to fill vacancies on the Board of
Directors that occur between annual meetings, except that vacancies resulting
from a removal of a director by a stockholder vote may only be filled by a
stockholder vote; (iv) providing that directors may be removed only for cause
and only by affirmative vote of the majority of shares entitled to be voted in
the election of directors, voting as a single class; (v) authorizing only the
Board of Directors, the Chairman of the Board or the President to call a special
meeting of stockholders (except for special meetings called under specified
circumstances for holders of classes or series of stock ranking superior to the
Common Stock); and (vi) requiring an 80 percent vote of stockholders entitled to
vote in the election of directors, voting as a single class, to alter any of the
foregoing provisions.
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The Bylaws include provisions setting forth specific conditions under
which: (i) business may be transacted at an annual meeting of stockholders; and
(ii) persons may be nominated for election as directors of the Corporation at an
annual meeting of stockholders.
The Change in Bank Control Act prohibits a person or group of persons from
acquiring "control" of a bank holding company unless the Federal Reserve Board
has been given 60 days' prior written notice of such proposed acquisition and
within that time period the Federal Reserve Board has not issued a notice
disapproving the proposed acquisition or extending for up to another 30 days the
period during which such a disapproval may be issued, or unless the acquisition
is subject to Federal Reserve Board approval under the BHCA. An acquisition may
be made prior to the expiration of the disapproval period if the Federal Reserve
Board issues written notice of its intent not to disapprove the action. Under a
rebuttable presumption established by the Federal Reserve Board, the acquisition
of more than ten percent of a class of voting stock of a bank holding company
with a class of securities registered under Section 12 of the Exchange Act, such
as the Corporation, would, under the circumstances set forth in the presumption,
constitute the acquisition of control.
In addition, any "company" would be required to obtain the approval of the
Federal Reserve Board under the BHCA before acquiring 25 percent (five percent
in the case of an acquiror that is a bank holding company) or more of the
outstanding shares of the Corporation's Common Stock, or otherwise obtaining
"control" over the Corporation. Under the BHCA, "control" generally means (i)
the ownership or control of 25 percent or more of any class of voting securities
of the bank holding company, (ii) the ability to elect a majority of the bank
holding company's directors, or (iii) the ability otherwise to exercise a
controlling influence over the management and policies of the bank holding
company.
Two North Carolina "anti-takeover" statutes adopted in 1987, The North
Carolina Shareholder Protection Act and The North Carolina Control Share
Acquisition Act, allowed North Carolina corporations to elect to either be
covered or not be covered by such statutes. The Corporation elected not to be
covered by such statutes.
In addition to the foregoing, in certain instances the issuance of
authorized but unissued shares of Common Stock, Class A Preferred Stock or
Preferred Stock may have an anti-takeover effect.
The existence of the foregoing provisions could result in the (i)
Corporation being less attractive to a potential acquiror, and (ii)
Corporation's stockholders receiving less for their shares of Common Stock than
otherwise might be available in the event of a take-over attempt.
VALIDITY OF SHARES
The validity of the shares of Common Stock issuable under the Plan is being
passed upon for the Corporation by Marion A. Cowell, Jr., Esq., Executive Vice
President, Secretary and General Counsel of the Corporation. Mr. Cowell is also
a stockholder of the Corporation and holds options to purchase additional shares
of Common Stock.
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
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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, have been incorporated by reference herein in reliance upon the report
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.
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
Current Report on Form 8-K dated May 26, 1998, which is incorporated by
reference herein, have been incorporated by reference herein in reliance upon
the report 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.
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No person has been authorized by the Corporation to give any information or to
make any representation not contained in this Prospectus, in connection with the
offer made by this Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Corporation. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create an implication that there has been no
change in the affairs of the Corporation since the date hereof or that the
information contained in this Prospectus is correct as of any date subsequent to
the date of this Prospectus. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities other than the
securities to which it relates nor such an offer or solicitation by anyone in
any state in which such an offer or solicitation is not authorized or in which
the person making such an offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such an offer or solicitation.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents
by Reference................................. 2
The Corporation................................ 3
Summary........................................ 5
Description of the Plan........................ 5
Glossary of Defined Terms.................... 5
Purpose...................................... 6
Advantages................................... 6
Disadvantages................................ 7
Important Dates.............................. 7
Participation................................ 7
Administration............................... 8
Costs........................................ 8
Purchases.................................... 9
Optional Cash Purchases...................... 10
Reports to Participants...................... 12
Dividends.................................... 12
Withdrawal of Shares in Plan Accounts........ 13
Termination of Participation................. 13
Other Information............................ 13
Use of Proceeds................................ 17
Plan of Distribution........................... 17
Description of the Corporation's Capital
Stock........................................ 18
Validity of Shares............................. 21
Experts........................................ 21
</TABLE>
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FIRST UNION CORPORATION
DIVIDEND
REINVESTMENT
AND STOCK
PURCHASE
PLAN
COMMON STOCK
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PROSPECTUS
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DATED MAY 26, 1998
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