Filed Pursuant to Rule 424(b)(5)
File Number 333-41046
Prospectus Supplement
October 30, 2001
(To prospectus -- July 21, 2000)
[LOGO] FIRST UNION/WACHOVIA
$1,750,000,000
Wachovia Corporation
(Formerly named First Union Corporation)
4.95% Global Notes Due November 1, 2006
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The Company: The Notes and the Offering:
Wachovia Corporation . Maturity: November 1, 2006
One First Union Center
301 South College Street . Interest Rate: 4.95%
Charlotte, North Carolina 28288
(704) 374-6565 . Interest payments: semi-annually on
May 1 and November 1,
commencing on May 1, 2002
. Closing: November 2, 2001
-------------------------------------------------------
Per Note Total
-------------------------------------------------------
Public Offering Price (1): 99.807% $1,746,622,500
Underwriting fees: 0.35 6,125,000
Net proceeds to Wachovia (1): 99.457 1,740,497,500
-------------------------------------------------------
(1) Plus accrued interest from November 2, 2001, if any.
--------------------------------------------------------------------------------
These securities have not been approved or disapproved by the SEC, any state
securities commission or the Commissioner of Insurance of the state of North
Carolina nor have these organizations determined if this prospectus supplement
or the attached prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
Wachovia intends to apply to list the Notes on the Luxembourg Stock Exchange.
We expect that the Notes will be ready for delivery in New York, New York, on
or about November 2, 2001.
--------------------------------------------------------------------------------
Wachovia Securities
Barclays Capital
Credit Suisse First Boston
JPMorgan Chase & Co.
Merrill Lynch & Co.
Salomon Smith Barney
Guzman & Company
Keefe, Bruyette & Woods, Inc.
Utendahl Capital Partners, L.P.
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Description of Notes....................................................... S-3
Recent Developments........................................................ S-4
Use of Proceeds............................................................ S-4
Clearstream and Euroclear Clearance and Settlement......................... S-4
Underwriting............................................................... S-7
Tax Considerations......................................................... S-9
General Information........................................................ S-13
Validity of Securities..................................................... S-14
Experts.................................................................... S-14
Prospectus
About This Prospectus...................................................... 1
Where You Can Find More Information........................................ 2
Forward-Looking Statements................................................. 3
First Union Corporation.................................................... 3
Use of Proceeds............................................................ 4
Consolidated Earnings Ratios............................................... 4
Regulatory Considerations.................................................. 5
Description of Common Stock................................................ 6
Description of Preferred Stock and Class A Preferred Stock................. 10
Description of Depositary Shares........................................... 14
Description of Debt Securities............................................. 17
Description of Warrants.................................................... 26
Global Securities.......................................................... 29
Plan of Distribution....................................................... 31
Validity of Securities..................................................... 32
Experts.................................................................... 32
S-2
DESCRIPTION OF NOTES
This section outlines the specific financial and legal terms of the Notes
that are more generally described under "Description of Debt Securities"
beginning on page 17 of the prospectus that is attached to this prospectus
supplement. If anything described in this section is inconsistent with the
terms described under "Description of Debt Securities" in the attached
prospectus, the terms described here shall prevail.
. Title: 4.95% Global Notes due November 1, 2006
. Total principal amount being issued: $1,750,000,000
. Due date for principal: November 1, 2006
. Interest rate: 4.95% per annum
. Date interest starts accruing: November 1, 2001
. Interest due dates: Every May 1 and November 1
. First interest due date: May 1, 2002
. Regular record dates for interest: Every April 15 and October 15
. Form of Notes: The Notes will be issued as one or more global securities.
See "Global Securities" on page 29 of the attached prospectus.
. Name of Depository: The Depository Trust Company ("DTC"). See "Global
Securities" on page 29 of the attached prospectus for more information
about DTC's procedures.
. Trading through DTC, Clearstream and Euroclear: Initial settlement for
the Notes will be made in immediately available funds. Secondary market
trading between DTC participants will occur in the ordinary way in
accordance with DTC's rules and will be settled in immediately available
funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Clearstream customers and/or Euroclear participants will
occur in the ordinary way in accordance with the applicable rules and
operating procedures of Clearstream and Euroclear and will be settled
using the procedures applicable to conventional Eurobonds in immediately
available funds. See below under "Clearstream and Euroclear Clearance and
Settlement" on page S-4 for more information about global securities held
by DTC through Clearstream or Euroclear.
. Payment of principal and interest: Principal of and interest on the Notes
are to be payable, and the transfer of the Notes will be registrable, at
the Corporate Trust Office of the trustee in the City of New York or at
the Corporate Trust Office of First Union National Bank, a subsidiary of
Wachovia, in Charlotte, North Carolina, except that interest may be paid
at Wachovia's option by check mailed to the address of the holder
entitled to it as it appears on the note register.
. Sinking Fund: There is no sinking fund.
. Trustee: Wachovia will issue the Notes under the senior indenture with
The Chase Manhattan Bank, as trustee, which is referred to on page 17 of
the attached prospectus.
S-3
RECENT DEVELOPMENTS
On September 1, 2001, Wachovia Corporation ("Former Wachovia") merged with
First Union Corporation (the "Merger"). Immediately following the Merger on
September 1, 2001, First Union Corporation changed its name to "Wachovia
Corporation" ("Wachovia"). As consideration for the Merger, shareholders of
Former Wachovia are entitled to receive 2 shares of Wachovia common stock for
each share of Former Wachovia they owned as of September 1, 2001. In addition,
Former Wachovia shareholders are entitled to receive either a $0.48 cash
payment or 2 shares of Wachovia Dividend Equalization Preferred Shares
("DEPs") for each share of Former Wachovia common stock they owned as of
September 1, 2001. Approximately 407 million shares of Wachovia common stock
were issued in the Merger. The Merger has been accounted for as a purchase. On
September 6, 2001, Wachovia filed a Current Report on Form 8-K with the SEC
which contains certain pro forma and historical financial information about
Former Wachovia and the Merger. You are encouraged to review this filing and
all of Wachovia's filings with the SEC that are incorporated by reference into
this document.
For information regarding Wachovia's third quarter results, see Wachovia's
Current Report on Form 8-K filed with the SEC on October 23, 2001.
USE OF PROCEEDS
Wachovia currently intends to use the net proceeds from the sale of the
Notes for general corporate purposes, which may include:
. reducing debt
. investments at the holding company level
. investing in, or extending credit to, our operating subsidiaries
. possible acquisitions and
. stock repurchases
Pending such use, we may temporarily invest the net proceeds. The precise
amounts and timing of the application of proceeds will depend upon our funding
requirements and the availability of other funds.
Based upon our historical and anticipated future growth and our financial
needs, we may engage in additional financings of a character and amount that
we determine as the need arises.
CLEARSTREAM AND EUROCLEAR CLEARANCE AND SETTLEMENT
The Notes will be issued in the form of one or more fully registered global
securities which will be deposited with, or on behalf of, DTC and registered
in the name of Cede & Co., DTC's nominee. Beneficial interests in the
registered global securities will be represented through book-entry accounts
of financial institutions acting on behalf of beneficial owners as direct and
indirect participants in DTC. Investors may elect to hold interests in the
registered global securities held by DTC through Clearstream Banking AG,
societe anonyme, or any successor thereto ("Clearstream") or Euroclear Bank
S.A./N.V., as operator of the Euroclear system (the "Euroclear operator"), if
they are participants in such systems, or indirectly through organizations
which are participants in such systems. Clearstream and the Euroclear operator
will hold interests on behalf of their participants through customers'
securities accounts in Clearstream's and the Euroclear operator's names on the
books of their respective depositaries, which in turn will hold such interests
in customers' securities accounts in the depositaries' names on the books of
DTC. Citibank, N.A. will act as depositary for Clearstream and The Chase
Manhattan Bank will act as depositary for the Euroclear operator (in such
capacities, the "U.S. depositaries").
Clearstream and the Euroclear operator have informed Wachovia that
Clearstream and the Euroclear operator each hold securities for their
customers and facilitate the clearance and settlement of securities
transactions by electronic book-entry transfer between their respective
account holders. Clearstream and the Euroclear operator provide various
services including safekeeping, administration, clearance and settlement of
S-4
internationally traded securities and securities lending and borrowing.
Clearstream and the Euroclear operator also deal with domestic securities
markets in several countries through established depositary and custodial
relationships. Clearstream and the Euroclear operator have established an
electronic bridge between their two systems across which their respective
participants may settle trades with each other.
Clearstream and the Euroclear operator customers are world-wide financial
institutions including underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to Clearstream and
the Euroclear operator is available to other institutions which clear through
or maintain a custodial relationship with an account holder of either system.
Distributions with respect to the Notes held through Clearstream will be
credited to cash accounts of Clearstream customers in accordance with its
rules and procedures, to the extent received by the U.S. depositary for
Clearstream.
Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively, the "terms and conditions"). The terms and conditions
govern transfers of securities and cash within the Euroclear system,
withdrawals of securities and cash from the Euroclear system, and receipts of
payments with respect to securities in the Euroclear system. All securities in
the Euroclear system are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
operator acts under the terms and conditions only on behalf of Euroclear
participants and has no record of or relationship with persons holding through
Euroclear participants.
Distributions with respect to the Notes held beneficially through the
Euroclear system will be credited to the cash accounts of Euroclear
participants in accordance with the terms and conditions, to the extent
received by the U.S. depositary for Euroclear.
The Euroclear operator further advises that investors that acquire, hold
and transfer interests in the Notes by book-entry through accounts with the
Euroclear operator or any other securities intermediary are subject to the
laws and contractual provisions governing their relationship with their
intermediary, as well as the laws and contractual provisions governing the
relationship between such an intermediary and each other intermediary, if any,
standing between themselves and the registered global securities.
The Euroclear operator advises as follows: under Belgian law, investors
that are credited with securities on the records of the Euroclear operator
have a co-property right in the fungible pool of interests in securities on
deposit with the Euroclear operator in an amount equal to the amount of
interests in securities credited to their accounts. In the event of the
insolvency of the Euroclear operator, Euroclear participants would have a
right under Belgian law to the return of the amount and type of interests in
securities credited to their accounts with the Euroclear operator. If the
Euroclear operator does not have a sufficient amount of interests in
securities on deposit of a particular type to cover the claims of all
participants credited with such interests in securities on the Euroclear
operator's records, all participants having an amount of interests in
securities of such type credited to their accounts with the Euroclear operator
will have the right under Belgian law to the return of their pro-rata share of
the amount of interests in securities actually on deposit.
Under Belgian law, the Euroclear operator is required to pass on the
benefits of ownership in any interests in securities on deposit with it (such
as dividends, voting rights and other entitlements) to any person credited
with such interests in securities on its records.
Individual certificates in respect of the Notes may be issued in exchange
for the registered global securities.
Title to book-entry interests in the Notes will pass by book-entry
registration of the transfer within the records of Clearstream, Euroclear or
DTC, as the case may be, in accordance with their respective procedures. Book-
entry interests in the Notes may be transferred within Clearstream and within
Euroclear and between Clearstream and Euroclear in accordance with procedures
established for these purposes by Clearstream and Euroclear. Book-entry
interests in the Notes may be transferred within DTC in accordance with
procedures established for this purpose by DTC. Transfers of book-entry
interests in the Notes among Clearstream and Euroclear and DTC may be effected
in accordance with procedures established for this purpose by Clearstream,
Euroclear and DTC.
S-5
A further description of DTC's procedures with respect to the registered
global securities is set forth in the prospectus under "Global Securities."
DTC has confirmed to Wachovia, First Union Securities, Inc. and the trustee
that it intends to follow such procedures.
Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC's rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Clearstream customers and/or Euroclear participants will occur
in the ordinary way in accordance with the applicable rules and operating
procedures of Clearstream and Euroclear and will be settled using the
procedures applicable to conventional Eurobonds in immediately available
funds.
Cross-market transfers between persons holding directly or indirectly
through DTC on the one hand, and directly or indirectly through Clearstream
customers or Euroclear participants, on the other, will be effected through
DTC in accordance with DTC's rules on behalf of the relevant European
international clearing system by its U.S. depositary; however, such cross-
market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
U.S. depositary to take action to effect final settlement on its behalf by
delivering interests in the securities to or receiving interests in the Notes
from DTC, and making or receiving payment in accordance with normal procedures
for same-day funds settlement applicable to DTC. Clearstream customers and
Euroclear participants may not deliver instructions directly to their
respective U.S. depositaries.
Because of time-zone differences, credits of interests in the Notes
received in Clearstream or Euroclear as a result of a transaction with a DTC
participant will be made during subsequent securities settlement processing
and dated the business day following the DTC settlement date. Such credits or
any transactions involving interests in such Notes settled during such
processing will be reported to the relevant Clearstream customers or Euroclear
participants on such business day. Cash received in Clearstream or Euroclear
as a result of sales of interests in the Notes by or through a Clearstream
customer or a Euroclear participant to a DTC participant will be received with
value on the DTC settlement date but will be available in the relevant
Clearstream or Euroclear cash account only as of the business day following
settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of interests in the Notes among
participants of DTC, Clearstream and Euroclear, they are under no obligation
to perform or continue to perform such procedures and such procedures may be
changed or discontinued at any time.
S-6
UNDERWRITING
The underwriters named below have severally agreed, subject to the terms
and conditions of the underwriting agreement with Wachovia, to purchase the
principal amount of Notes set forth below opposite their respective names. The
underwriters are committed to purchase all of such Notes if any are purchased.
Under certain circumstances, the commitments of non-defaulting underwriters
may be increased.
Principal
Amount of
Underwriters Notes
------------ --------------
First Union Securities, Inc............................... $1,435,000,000
Barclays Capital Inc. .................................... 52,500,000
Credit Suisse First Boston Corporation.................... 52,500,000
J.P. Morgan Securities Inc................................ 52,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................... 52,500,000
Salomon Smith Barney Inc.................................. 52,500,000
Guzman & Company.......................................... 17,500,000
Keefe, Bruyette & Woods, Inc.............................. 17,500,000
Utendahl Capital Partners, L.P............................ 17,500,000
--------------
Total................................................... $1,750,000,000
==============
The underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
prospectus supplement and in part to certain securities dealers at such price
less a concession of 0.21% of the principal amount of the Notes. The
underwriters may allow, and such dealers may reallow, a concession not to
exceed 0.15% of the principal amount of the Notes to certain brokers and
dealers. After the Notes are released for sale in the public, the offering
price and other selling terms may from time to time be varied by the
underwriters.
The Notes are a new issue of securities with no established trading market.
Wachovia intends to apply to list the Notes on the Luxembourg Stock Exchange,
although no assurance can be given that the Notes will be listed on the
Luxembourg Stock Exchange, and if so listed, this listing does not assure that
a trading market for the Notes will develop. Wachovia has been advised by each
underwriter that each such underwriter intends to make a market in the Notes
but is not obligated to do so and may discontinue market making at any time
without notice. No assurance can be given as to the liquidity of the trading
market for the Notes.
Settlement for the Notes will be made in immediately available funds. The
Notes will be in the Same Day Funds Settlement System at DTC and, to the
extent the secondary market trading in the Notes is effected through the
facilities of such depositary, such trades will be settled in immediately
available funds.
Wachovia has agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
First Union Securities, Inc. is an indirect, wholly-owned subsidiary of
Wachovia. Wachovia conducts its investment banking, institutional and capital
markets businesses through its various bank, broker-dealer and nonbank
subsidiaries (including First Union Securities, Inc.) under the trade name
"Wachovia Securities". Unless otherwise mentioned or unless the context
requires otherwise, any reference in this prospectus supplement to "Wachovia
Securities" means First Union Securities, Inc., and does not mean Wachovia
Securities, Inc., a broker-dealer subsidiary of Wachovia which is not
participating in this offering.
This prospectus supplement and the attached prospectus may be used by First
Union Securities, Inc., an affiliate of Wachovia, in connection with offers
and sales related to market-making transactions in the Notes. First Union
Securities, Inc. 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 participation of First Union Securities, Inc. in the offer and sale of
the Notes will comply with the requirements of Rule 2720 of the National
Association of Securities Dealers, Inc. (the "NASD") regarding underwriting
securities of an "affiliate". No NASD member participating in offers and sales
will execute a transaction in the Notes in a discretionary account without the
prior specific written approval of such member's customer.
S-7
From time to time the underwriters engage in transactions with Wachovia in
the ordinary course of business. The underwriters have performed investment
banking services for Wachovia in the last two years and have received fees for
these services.
First Union Securities, Inc., on behalf of the underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934. Over-allotment involves syndicate sales in excess of the offering
size, which creates a syndicate short position. Stabilizing transactions
permit bids to purchase the underlying security so long as the stabilizing
bids do not exceed a specified maximum. Syndicate covering transactions
involve purchases of the Notes in the open market after the distribution has
been completed in order to cover syndicate short positions. Penalty bids
permit reclaiming a selling concession from a syndicate member when the Notes
originally sold by such syndicate member are purchased in a syndicate covering
transaction to cover syndicate short positions. Such stabilizing transactions,
syndicate covering transactions and penalty bids may cause the price of the
Notes to be higher than it would otherwise be in the absence of such
transactions.
Each of the underwriters has severally represented and agreed that (i) it
has not offered or sold and prior to the date six months after the date of
issue of the Notes will not offer or sell any Notes to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995 (as
amended); (ii) it has complied and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of the
Notes to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 (as
amended) or is a person to whom such document may otherwise lawfully be issued
or passed on.
Each of the underwriters has agreed not to offer or sell the Notes in the
Federal Republic of Germany other than in compliance with the Securities Sales
Prospectus Act (Wertpapier-Verkaufsprospektgesetz), or any other laws
applicable in the Federal Republic of Germany governing the issue, offering
and sale of securities. This prospectus supplement and the accompanying
prospectus does not constitute a sales prospectus for purposes of the
Securities Sales Prospectus Act and no sales prospectus has been or will be
published in the Federal Republic of Germany.
The Notes have not been and will not be registered under the Securities and
Exchange Law of Japan (Law No. 25 of 1948) (as amended) (the "Securities and
Exchange Law") and are subject to the Special Taxation Measures Law of Japan
(Law No. 26 of 1957) (as amended) (the "Special Taxation Measures Law"). Each
of the underwriters has severally represented and agreed that (i) it has not,
directly or indirectly, offered or sold and will not, directly or indirectly,
offer or sell, the Notes in Japan or to any person resident in Japan for
Japanese securities law purposes (including any corporation or other entity
organized under the laws of Japan), except pursuant to an exemption from the
registration requirements of, and otherwise in compliance with, the Securities
and Exchange Law; and (ii) it has not, directly or indirectly, offered or sold
and will not, (a) as part of its distribution at any time and (b) otherwise
until forty days after the closing date, directly or indirectly offer or sell
the Notes to any person other than a Gross Recipient. A "Gross Recipient" for
this purpose is (i) a beneficial owner that is not an individual resident of
Japan or a Japanese corporation for Japanese tax purposes, (ii) a Japanese
financial institution, designated in Article 3-2 paragraph (19) of the Cabinet
Order of December 17, 1997 (the "Cabinet Order") relating to the Special
Taxation Measures Law that will hold the Notes for its own proprietary account
or (iii) an individual resident of Japan or a Japanese corporation whose
receipt of interest on the Notes will be made through a payment handling agent
in Japan as defined in Article 2-2 paragraph (2) of the Cabinet Order.
S-8
TAX CONSIDERATIONS
This section describes the material United States federal income tax
consequences of owning the Notes Wachovia is offering. It applies to you only
if you hold your Notes as capital assets for tax purposes. This section does
not apply to you if you are a member of a class of holders subject to special
rules, such as:
. a dealer in securities or currencies,
. a trader in securities that elects to use a mark-to-market method of
accounting for your securities holdings,
. a bank,
. a life insurance company,
. a tax-exempt organization,
. a person that owns Notes as part of a straddle or conversion transaction
for tax purposes,
. a person that owns Notes that are a hedge of or that are hedged against
interest rate risks, or
. a person whose functional currency for tax purposes is not the U.S.
dollar.
This section is based on the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations under the Internal
Revenue Code, published rulings and court decisions, all as currently in
effect. These laws are subject to change, possibly on a retroactive basis.
Please consult your own tax advisor concerning the consequences of
owning these Notes in your particular circumstances under the Internal
Revenue Code and the laws of any other taxing jurisdiction.
United States Holders
This subsection describes the tax consequences to a United States holder.
You are a United States holder if you are a beneficial owner of a Note and you
are:
. a citizen or resident of the United States,
. a domestic corporation,
. an estate whose income is subject to United States federal income tax
regardless of its source, or
. a trust if a United States court can exercise primary supervision over
the trust's administration and one or more United States persons are
authorized to control all substantial decisions of the trust.
If you are not a United States holder, this section does not apply to you and
you should refer to "--United States Alien Holders" below.
Payments of Interest
You will be taxed on any interest on your Note as ordinary income at the
time you receive the interest or when it accrues, depending on your method of
accounting for tax purposes. In addition, if you acquire your Note at a price
other than the initial offering price the rules related to market discount or
amortizable base premium may also apply to your Note.
Market Discount
You will be treated as if you purchased your Note at a market discount, and
your Note will be a market discount Note if:
. the difference between the Note's principal amount and the price you paid
for your Note is equal to or greater than 1/4 of 1 percent of your Note's
principal amount multiplied by the number of complete years to the Note's
maturity.
If your Note's principal amount does not exceed the price you paid for the
Note by 1/4 of 1 percent multiplied by the number of complete years to the
Note's maturity, the excess constitutes de minimis market discount, and the
rules discussed below are not applicable to you.
You must treat any gain you recognize on the maturity or disposition of
your market discount Note as ordinary income to the extent of the accrued
market discount on your Note. Alternatively, you may elect to include market
discount in income currently over the life of your Note. If you make this
election, it will apply to all debt instruments with market discount that you
acquire on or after the first day of the first taxable year to which the
election applies. You may not revoke this election without the consent of the
Internal Revenue
S-9
Service. If you own a market discount Note and do not make this election, you
will generally be required to defer deductions for interest on borrowings
allocable to your Note in an amount not exceeding the accrued market discount
on your Note until the maturity or disposition of your Note.
You will accrue market discount on your market discount Note on a straight-
line basis unless you elect to accrue market discount using a constant-yield
method. If you make this election, it will apply only to the Note with respect
to which it is made and you may not revoke it.
Notes Purchased at a Premium
If you purchase your Note for an amount in excess of its principal amount,
you may elect to treat the excess as amortizable bond premium. If you make
this election, you will reduce the amount required to be included in your
income each year with respect to interest on your Note by the amount of
amortizable bond premium allocable to that year, based on your Note's yield to
maturity. If you make an election to amortize bond premium, it will apply to
all debt instruments, other than debt instruments the interest on which is
excludible from gross income, that you hold at the beginning of the first
taxable year to which the election applies or that you thereafter acquire, and
you may not revoke it without the consent of the Internal Revenue Service.
Sale or Retirement of Notes
You will generally recognize capital gain or loss on the sale or retirement
of your Note equal to the difference between the amount you realize on the
sale or retirement, excluding any amounts attributable to accrued but unpaid
interest or accrued market discount, and your tax basis in your Note. Your tax
basis in your Note will generally be its cost, increased by the amount of any
market discount previously included in income with respect to your Note, and
decreased by the amount of any amortizable bond premium applied to reduce
interest on your Note. Capital gain of a noncorporate United States holder is
generally taxed at a maximum rate of 20% where the property is held more than
one year.
United States Alien Holders
This subsection describes the tax consequences to a United States alien
holder. You are a United States alien holder if you are the beneficial owner
of a Note and are, for United States federal income tax purposes:
. a nonresident alien individual,
. a foreign corporation,
. a foreign partnership, or
. an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from a Note.
If you are a United States holder, this section does not apply to you.
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below, if you are a United States
alien holder of a Note:
. we and other payors will not be required to deduct United States
withholding tax from payments of principal, premium, if any, and interest
to you if, in the case of payments of interest:
1. you do not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Wachovia entitled to
vote,
2. you are not a controlled foreign corporation that is related to
Wachovia through stock ownership, and
3. the U.S. payor does not have actual knowledge or reason to know that
you are a United States person and:
a. you have furnished to the U.S. payor an Internal Revenue Service
Form W-8BEN or an acceptable substitute form upon which you
certify, under penalties of perjury, that you are a non-United
States person,
S-10
b. in the case of payments made outside the United States to you at
an offshore account (generally, an account maintained by you at a
bank or other financial institution at any location outside the
United States), you have furnished to the U.S. payor documentation
that establishes your identity and your status as a non-United
States person,
c. the U.S. payor has received a withholding certificate (furnished
on an appropriate Internal Revenue Service Form W-8 or an
acceptable substitute form) from a person claiming to be:
i. a withholding foreign partnership (generally a foreign
partnership that has entered into an agreement with the
Internal Revenue Service to assume primary withholding
responsibility with respect to distributions and guaranteed
payments it makes to its partners),
ii. a qualified intermediary (generally a non-United States
financial institution or clearing organization or a non-United
States branch or office of a United States financial
institution or clearing organization that is a party to a
withholding agreement with the Internal Revenue Service), or
iii. a U.S. branch of a non-United States bank or of a non-United
States insurance company, and the withholding foreign
partnership, qualified intermediary or U.S. branch has
received documentation upon which it may rely to treat the
payment as made to a non-United States person in accordance
with U.S. Treasury regulations (or, in the case of a
qualified intermediary, in accordance with its agreement with
the Internal Revenue Service),
d. the U.S. payor receives a statement from a securities clearing
organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or
business,
i. certifying to the U.S. payor under penalties of perjury that an
Internal Revenue Service Form W-8BEN or an acceptable
substitute form has been received from you by it or by a
similar financial institution between it and you, and
ii. to which is attached a copy of the Internal Revenue Service
Form W-8BEN or acceptable substitute form, or
e. the U.S. payor otherwise possesses documentation upon which it may
rely to treat the payment as made to a non-United States person in
accordance with U.S. Treasury regulations; and
. no deduction for any United States federal withholding tax will be made
from any gain that you realize on the sale or exchange of your Note.
Further, a Note held by an individual who at death is not a citizen or
resident of the United States will not be includible in the individual's gross
estate for United States federal estate tax purposes if:
. the decedent did not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of Wachovia entitled
to vote at the time of death and
. the income on the Note would not have been effectively connected with a
United States trade or business of the decedent at the same time.
Backup Withholding and Information Reporting
United States Holders
In general, if you are a noncorporate United States holder, Wachovia and
other payors are required to report to the Internal Revenue Service all
payments of principal, any premium and interest on your Note. In addition, the
proceeds of the sale of your Note before maturity within the United States will
be reported to the Internal Revenue Service. Additionally, backup withholding
will apply to any payments if you fail to provide an accurate taxpayer
identification number, or you are notified by the Internal Revenue Service that
you have failed to report all interest and dividends required to be shown on
your federal income tax returns.
United States Alien Holders
In general, payments of principal, premium or interest, made by us and other
payors to you will not be subject to backup withholding and information
reporting, provided that the certification requirements described above under
"--United States Alien Holders" are satisfied or you otherwise establish an
exemption. However, we and other payors are required to report payments of
interest on your Notes on Internal Revenue Service Form 1042-S even if the
payments are
S-11
not otherwise subject to information reporting requirements. In addition,
payment of the proceeds from the sale of Notes effected at a United States
office of a broker will not be subject to backup withholding and information
reporting provided that:
. the broker does not have actual knowledge or reason to know that you are
a United States person and you have furnished to the broker:
. an appropriate Internal Revenue Service Form W-8 or an acceptable
substitute form upon which you certify, under penalties of perjury,
that you are not a United States person, or
. other documentation upon which it may rely to treat the payment as made
to a non-United States person in accordance with U.S. Treasury
regulations, or
. you otherwise establish an exemption.
If you fail to establish an exemption and the broker does not possess
adequate documentation of your status as a non-United States person, the
payments may be subject to information reporting and backup withholding.
However, backup withholding will not apply with respect to payments made to an
offshore account maintained by you unless the broker has actual knowledge that
you are a United States person.
In general, payment of the proceeds from the sale of Notes effected at a
foreign office of a broker will not be subject to information reporting or
backup withholding. However, a sale effected at a foreign office of a broker
will be subject to information reporting and backup withholding if:
. the proceeds are transferred to an account maintained by you in the
United States,
. the payment of proceeds or the confirmation of the sale is mailed to you
at a United States address, or
. the sale has some other specified connection with the United States as
provided in U.S. Treasury regulations, unless the broker does not have
actual knowledge or reason to know that you are a United States person
and the documentation requirements described above (relating to a sale of
Notes effected at a United States office of a broker) are met or you
otherwise establish an exemption.
In addition, payment of the proceeds from the sale of Notes effected at a
foreign office of a broker will be subject to information reporting if the
broker is:
. a United States person,
. a controlled foreign corporation for United States tax purposes,
. a foreign person 50% or more of whose gross income is effectively
connected with the conduct of a United States trade or business for a
specified three-year period, or
. a foreign partnership, if at any time during its tax year:
. one or more of its partners are "U.S. persons", as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership, or
. such foreign partnership is engaged in the conduct of a United States
trade or business, unless the broker does not have actual knowledge or
reason to know that you are a United States person and the
documentation requirements described above (relating to a sale of Notes
effected at a United States office of a broker) are met or you
otherwise establish an exemption. Backup withholding will apply if the
sale is subject to information reporting and the broker has actual
knowledge that you are a United States person.
S-12
GENERAL INFORMATION
Listing and Documents Available
We intend to apply to list the Notes on the Luxembourg Stock Exchange. The
Restated Articles of Incorporation and the By-Laws of Wachovia and a legal
notice relating to the issuance of the Notes well be deposited prior to
listing with the Registrar of the District Court in Luxembourg (Greffier en
Chef du Tribunal d'Arrondissement de et a Luxembourg), where such documents
may be examined and copies obtained upon request. Copies of the above
documents together with this prospectus supplement and prospectus, the
Underwriting Agreement, the indentures and Wachovia's Annual Report on Form
10-K for the year ended December 31, 2000 as well as all other documents
incorporated by reference herein including future Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q, so long as the Notes are listed on the
Luxembourg Stock Exchange, will be made available for inspection, and may be
obtained free of charge, at the main office of Banque Internationale a
Luxembourg. Banque Internationale a Luxembourg will act as a contact between
the Luxembourg Stock Exchange and Wachovia or the holders of the Notes.
Paying Agent
For as long as the Notes are listed on the Luxembourg Stock Exchange,
Wachovia will maintain a paying agent in Luxembourg. Wachovia expects to
initially appoint Banque Internationale a Luxembourg, acting out of its
corporate office in Luxembourg, or its successor, as the paying agent.
Wachovia will notify you of any change in the Luxembourg paying agent by
publication in Luxembourg.
Notices
As long as the Notes are issued in global form, notices to be given to
holders of the Notes will be given to the depositary, in accordance with its
applicable procedures from time to time. See "Global Securities" in the
prospectus.
As long as the Notes are listed on the Luxembourg Stock Exchange and its
rules require, Wachovia will also give notices to holders by publication in a
daily newspaper of general circulation in Luxembourg. We expect that newspaper
to be, but it need not be, the Luxemburger Wort. If publication in Luxembourg
is not practical, we will make the publication elsewhere in Western Europe. By
"daily newspaper" we mean a newspaper that is published on each day, other
than a Saturday, Sunday or holiday, in Luxembourg or, when applicable,
elsewhere in Western Europe. You will be presumed to have received these
notices on the date we first publish them. If we are unable to give notice as
described in this paragraph because the publication of any newspaper is
suspended or it is otherwise impracticable for us to publish the notice, then
we or the trustee, acting on our instructions, will give holders notice in
another form. That alternate form of notice will be sufficient notice to you.
Neither the failure to give any notice to a particular holder, nor any
defect in a notice given to a particular holder, will affect the sufficiency
of any notice given to another holder.
Authorization
The Notes have been issued pursuant to authority granted by the Board of
Directors of Wachovia on April 18, 2000.
Material Change
As of the date of this prospectus supplement, other than as disclosed or
contemplated herein or in the documents incorporated by reference, to the best
of Wachovia's knowledge and belief, there has been no material adverse change
in the financial position of Wachovia on a consolidated basis since December
31, 2000. See "Where You Can Find More Information" in the prospectus.
Litigation
As of the date of this prospectus supplement, other than as disclosed or
contemplated herein or in the documents incorporated by reference, to the best
of Wachovia's knowledge and belief, Wachovia is not a party to any legal or
arbitration proceedings (including any that are pending or threatened) which
may have, or have had, since December 31, 2000, a significant effect on
Wachovia's consolidated financial position or that are material in the context
of the issuance of the Notes which could jeopardize Wachovia's ability to
discharge its obligation under the Notes.
Clearance Systems
The Notes have been accepted for clearance through the DTC, Euroclear and
Clearstream systems.
S-13
VALIDITY OF SECURITIES
The validity of the Notes will be passed upon for Wachovia by Ross E.
Jeffries, Jr., Esq., Senior Vice President and Assistant General Counsel of
Wachovia, and for the underwriters by Sullivan & Cromwell, 125 Broad Street,
New York, New York. Sullivan & Cromwell will rely upon the opinion of Mr.
Jeffries as to matters of North Carolina law, and Mr. Jeffries will rely upon
the opinion of Sullivan & Cromwell as to matters of New York law. Mr. Jeffries
owns shares of Wachovia's common stock and holds options to purchase additional
shares of Wachovia's common stock. Sullivan & Cromwell regularly performs legal
services for Wachovia. Certain members of Sullivan & Cromwell performing these
legal services own shares of Wachovia's common stock.
EXPERTS
The consolidated balance sheets of Wachovia Corporation (formerly named
First Union Corporation) as of December 31, 2000 and 1999, 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, 2000,
included in Wachovia's 2000 Annual Report to Stockholders which is incorporated
by reference in Wachovia's Annual Report on Form 10-K for the year ended
December 31, 2000, and incorporated by reference in this prospectus supplement,
have been incorporated by reference in this prospectus supplement in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The restated audited financial statements of Wachovia Corporation at
December 31, 2000 and 1999, and for each of the three years in the period ended
December 31, 2000, included in Wachovia Corporation's (formerly named First
Union Corporation) Current Report on Form 8-K dated August 30, 2001 and
incorporated by reference herein, have been incorporated by reference herein in
reliance upon the report of Ernst & Young LLP, independent auditors. The
restated audited financial statements referred to above are included in
reliance upon such report given on the authority of said firm as experts in
accounting and auditing.
S-14
[LOGO] FIRST UNION
One First Union Center
301 South College Street
Charlotte, North Carolina 28288
(704) 374-6565
FIRST UNION CORPORATION
$4,315,000,000
COMMON STOCK
PREFERRED STOCK
CLASS A PREFERRED STOCK
DEPOSITARY SHARES
DEBT SECURITIES
WARRANTS
----------------
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any prospectus supplement
carefully before you invest.
These securities have not been approved or disapproved by the SEC, any state
securities commission or the Commissioner of Insurance of the state of North
Carolina nor have these organizations determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal offense.
These securities will be our equity securities or our unsecured obligations
and will not be savings accounts, deposits or other obligations of any bank or
non-bank subsidiary of ours and are not insured by the Federal Deposit
Insurance Corporation, the Bank Insurance Fund or any other governmental
agency.
----------------
This prospectus is dated July 21, 2000
TABLE OF CONTENTS
Page
----
About This Prospectus...................................................... 1
Where You Can Find More Information........................................ 2
Forward-Looking Statements................................................. 3
First Union Corporation.................................................... 3
Use of Proceeds............................................................ 4
Consolidated Earnings Ratios............................................... 4
Regulatory Considerations.................................................. 5
Description of Common Stock................................................ 6
Description of Preferred Stock and Class A Preferred Stock................. 10
Description of Depositary Shares........................................... 14
Description of Debt Securities............................................. 17
Description of Warrants.................................................... 26
Global Securities.......................................................... 29
Plan of Distribution....................................................... 31
Validity of Securities..................................................... 32
Experts.................................................................... 32
ABOUT THIS PROSPECTUS
This document is called a prospectus and is part of a registration statement
that we filed with the SEC using a "shelf" registration or continuous offering
process. Under this shelf process, we may from time to time sell any
combination of the securities described in this prospectus in one or more
offerings up to a total dollar amount of $4,315,000,000.
This prospectus provides you with a general description of the securities we
may offer. Each time we sell securities we will provide a prospectus supplement
containing specific information about the terms of the securities being
offered. That prospectus supplement may include a discussion of any risk
factors or other special considerations that apply to those securities. The
prospectus supplement may also add, update or change the information in this
prospectus. If there is any inconsistency between the information in this
prospectus and any prospectus supplement, you should rely on the information in
that prospectus supplement. You should read both this prospectus and any
prospectus supplement together with additional information described under the
heading "Where You Can Find More Information".
The registration statement containing this prospectus, including exhibits to
the registration statement, provides additional information about us and the
securities offered under this prospectus. The registration statement can be
read at the SEC web site or at the SEC offices mentioned under the heading
"Where You Can Find More Information".
When acquiring any securities discussed in this prospectus, you should rely
only on the information provided in this prospectus and in any prospectus
supplement, including the information incorporated by reference. Neither we nor
any underwriters or agents have authorized anyone to provide you with different
information. We are not offering the securities in any state where the offer is
prohibited. You should not assume that the information in this prospectus, any
prospectus supplement or any document incorporated by reference is truthful or
complete at any date other than the date mentioned on the cover page of these
documents.
We may sell securities to underwriters who will sell the securities to the
public on terms fixed at the time of sale. In addition, the securities may be
sold by us directly or through dealers or agents designated from time to time,
which agents may be affiliates of First Union. If we, directly or through
agents, solicit offers to purchase the securities, we reserve the sole right to
accept and, together with our agents, to reject, in whole or in part, any of
those offers.
The prospectus supplement will contain the names of the underwriters,
dealers or agents, if any, together with the terms of offering, the
compensation of those underwriters and the net proceeds to us. Any
underwriters, dealers or agents participating in the offering may be deemed
"underwriters" within the meaning of the Securities Act of 1933.
One or more of our subsidiaries, including First Union Securities, Inc., may
buy and sell any of the securities after the securities are issued as part of
their business as a broker-dealer. Those subsidiaries may use this prospectus
and the related prospectus supplement in those transactions. Any sale by a
subsidiary will be made at the prevailing market price at the time of sale.
Unless otherwise mentioned or unless the context requires otherwise, all
references in this prospectus to "we", "us", "our", or similar references mean
First Union Corporation and its subsidiaries.
1
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. In addition, our SEC filings are
available to the public at the SEC's web site at http://www.sec.gov. You can
also inspect reports, proxy statements and other information about us at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York.
The SEC allows us to "incorporate by reference" into this prospectus the
information in documents we file with it. This means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus and should be read with the same care. When we update the
information contained in documents that have been incorporated by reference by
making future filings with the SEC the information incorporated by reference in
this prospectus is considered to be automatically updated and superseded. In
other words, in the case of a conflict or inconsistency between information
contained in this prospectus and information incorporated by reference into
this prospectus, you should rely on the information contained in the document
that was filed later. We incorporate by reference the documents listed below
and any documents we file with the SEC in the future under Section 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until our offering
is completed:
. Annual Report on Form 10-K for the year ended December 31, 1999
. Quarterly Report on Form 10-Q for the period ended March 31, 2000 and
. Current Reports on Form 8-K dated March 10, 2000, June 26, 2000 and July
7, 2000.
You may request a copy of these filings, other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing,
at no cost, by writing to or telephoning us at the following address:
Corporate Relations
First Union Corporation
One First Union Center
301 South College Street
Charlotte, North Carolina 28288-0206
(704) 374-6782
2
FORWARD-LOOKING STATEMENTS
This prospectus and accompanying prospectus supplements contain or
incorporate statements that are "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. These
statements can be identified by the use of forward-looking language such as
"will likely result", "may", "are expected to", "is anticipated", "estimate",
"projected", "intends to", or other similar words. Our actual results,
performance or achievements could be significantly different from the results
expressed in or implied by these forward-looking statements. These statements
are subject to certain risks and uncertainties, including but not limited to
certain risks described in the prospectus supplement or the documents
incorporated by reference. When considering these forward-looking statements,
you should keep in mind these risks, uncertainties and other cautionary
statements made in this prospectus and the prospectus supplements. You should
not place undue reliance on any forward-looking statement, which speaks only as
of the date made. You should refer to our periodic and current reports filed
with the SEC for specific risks which could cause actual results to be
significantly different from those expressed or implied by these forward-
looking statements.
FIRST UNION CORPORATION
First Union was incorporated under the laws of North Carolina in 1967. We
are registered as a financial holding company and a bank holding company under
the Bank Holding Company Act of 1956, as amended, and are supervised and
regulated by the Board of Governors of the Federal Reserve System. Our banking
and securities subsidiaries are supervised and regulated by various federal and
state banking and securities regulatory authorities.
In addition to North Carolina, First Union's full-service banking
subsidiaries operate in Connecticut, Delaware, Florida, Georgia, Maryland, New
Jersey, New York, Pennsylvania, South Carolina, Tennessee, Virginia and
Washington, D.C. These full-service banking subsidiaries provide a wide range
of commercial and retail banking and trust services. First Union also provides
various other financial services, including mortgage banking, home equity
lending, leasing, investment banking, insurance and securities brokerage
services through other subsidiaries.
In 1985, the Supreme Court upheld regional interstate banking legislation.
Since then, First Union has concentrated its efforts on building a large
regional banking organization in what it perceives to be some of the better
banking markets in the eastern United States. Since November 1985, First Union
has completed over 80 banking-related acquisitions.
First Union continually evaluates its business operations and organizational
structures. Therefore, we routinely explore acquisition opportunities and
frequently conduct 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. When consistent with our overall
business strategy, we also consider the potential disposition of certain of our
assets, branches, subsidiaries or lines of business.
First Union is a separate and distinct legal entity from our banking and
other subsidiaries. Dividends received from our subsidiaries are our principal
source of funds to pay dividends on our common and preferred stock and debt
service on our debt. Various federal and state statutes and regulations limit
the amount of dividends that our banking and other subsidiaries may pay to us
without regulatory approval.
3
USE OF PROCEEDS
First Union currently intends to use the net proceeds from the sale of any
securities for general corporate purposes, which may include
. reducing debt
. investments at the holding company level
. investing in, or extending credit to, our operating subsidiaries
. possible acquisitions
. stock repurchases and
. other purposes as mentioned in any prospectus supplement.
Pending such use, we may temporarily invest the net proceeds. The precise
amounts and timing of the application of proceeds will depend upon our funding
requirements and the availability of other funds. Except as mentioned in any
prospectus supplement, specific allocations of the proceeds to such purposes
will not have been made at the date of that prospectus supplement.
Based upon our historical and anticipated future growth and our financial
needs, we may engage in additional financings of a character and amount that we
determine as the need arises.
CONSOLIDATED EARNINGS RATIOS
The following table provides First Union's consolidated ratios of earnings
to fixed charges:
Three Years Ended December 31,
-------------- ------------------------
Months Ended
March 31, 2000 1999 1998 1997 1996 1995
-------------- ---- ---- ---- ---- ----
Consolidated Ratios of Earnings to
Fixed Charges
Excluding interest on deposits........ 2.04x 2.29 2.13 2.50 2.58 2.87
Including interest on deposits........ 1.52x 1.62 1.51 1.57 1.56 1.58
For purposes of computing these ratios
. earnings represent income from continuing operations before
extraordinary items and cumulative effect of a change in accounting
principles, plus income taxes and fixed charges (excluding capitalized
interest)
. fixed charges, excluding interest on deposits, represent interest
(including capitalized interest), one-third of rents and all
amortization of debt issuance costs and
. fixed charges, including interest on deposits, represent all interest
(including capitalized interest), one-third of rents and all
amortization of debt issuance costs.
One-third of rents is used because it is the proportion deemed
representative of the interest factor.
4
REGULATORY CONSIDERATIONS
As a financial holding company and a bank holding company under the Bank
Holding Company Act, the Federal Reserve Board regulates, supervises and
examines First Union. For a discussion of the material elements of the
regulatory framework applicable to financial holding companies, bank holding
companies and their subsidiaries and specific information relevant to First
Union, please refer to First Union's annual report on Form 10-K for the fiscal
year ended December 31, 1999, quarterly report on Form 10-Q for the period
ended March 31, 2000, and any subsequent reports we file with the SEC, which
are incorporated by reference in this prospectus. This regulatory framework is
intended primarily for the protection of depositors and the federal deposit
insurance funds and not for the protection of security holders. As a result of
this regulatory framework, First Union's earnings are affected by actions of
the Federal Reserve Board, the Office of Comptroller of the Currency, that
regulates our banking subsidiaries, the Federal Deposit Insurance Corporation,
that insures the deposits of our banking subsidiaries within certain limits,
and the SEC, that regulates the activities of certain subsidiaries engaged in
the securities business.
First Union's earnings are also affected by general economic conditions, our
management policies and legislative action.
In addition, there are numerous governmental requirements and regulations
that affect our business activities. A change in applicable statutes,
regulations or regulatory policy may have a material effect on First Union's
business.
Depository institutions, like First Union's bank subsidiaries, are also
affected by various federal laws, including those relating to consumer
protection and similar matters. First Union also has other financial services
subsidiaries regulated, supervised and examined by the Federal Reserve Board,
as well as other relevant state and federal regulatory agencies and self-
regulatory organizations. First Union's non-bank subsidiaries may be subject to
other laws and regulations of the federal government or the various states in
which they are authorized to do business.
5
DESCRIPTION OF COMMON STOCK
The following information outlines some of the provisions in First Union's
articles of incorporation, bylaws and the North Carolina Business Corporation
Act (the "NCBC Act"). This information is qualified in all respects by
reference to the provisions of First Union's articles, bylaws and the NCBC Act.
Authorized Common Stock
First Union's authorized common stock consists of 2,000,000,000 shares of
common stock, par value $3.33 1/3 per share. On May 31, 2000, 980,709,010
shares of common stock were issued and outstanding. First Union's common stock
is listed on the New York Stock Exchange under the symbol "FTU".
General
Subject to the prior rights of any First Union preferred stockholder, Class
A preferred stockholder and depositary shareholder then outstanding, common
stockholders are entitled to receive such dividends as First Union's board of
directors may declare. In the event of liquidation or dissolution, common
stockholders are entitled to receive First Union's net assets remaining after
paying all liabilities and after paying all preferred stockholders, Class A
preferred stockholders and depositary shareholders the full preferential
amounts to which those holders are entitled.
Under an indenture between First Union and Wilmington Trust Company, as
trustee, First Union agreed not to pay any dividends on, or acquire or make a
liquidation payment relating to, any of First Union's common stock, preferred
stock and Class A preferred stock, if, at that time, there is a default under
the indenture or a related First Union guarantee or First Union has deferred
interest payments on the securities issued under the indenture.
Subject to the prior rights of any preferred stockholders, Class A preferred
stockholders and depositary shareholders, common stockholders have all voting
rights, each share being entitled to one vote on all matters requiring
stockholder action and in electing directors. Common stockholders have no
preemptive, subscription or conversion rights. All of the outstanding shares of
common stock are, and any common stock issued and sold hereunder will be, fully
paid and nonassessable.
First Union National Bank is the transfer agent, registrar and dividend
disbursement agent for the common stock.
Rights Plan
Under an Amended and Restated Shareholder Protection Rights Agreement, each
outstanding common stock share has a right attached to it. This right remains
attached unless a separation time occurs. At separation time, common
stockholders will receive separate certificates for these rights. Each right
entitles its owner to purchase at separation time one one-hundredth of a share
of a junior participating series of Class A preferred stock for $105. This
series of Class A preferred stock would have economic and voting terms similar
to those of one common stock share. Separation time would generally occur at
the earlier of the following two dates:
. the tenth business day after any person
. commences a tender or exchange offer that entitles that person to
15% or more of First Union's outstanding common stock or
. is determined by the Federal Reserve Board to "control" First Union
or
6
. the tenth business day after First Union publicly announces that a
person
. has commenced a tender or exchange offer that entitles that person
to 15% or more of First Union's outstanding common stock or
. is determined by the Federal Reserve Board to "control" First Union.
These rights will not trade separately from the shares of common stock until
separation time occurs, and may be exercised on the business day immediately
after the separation time. The rights will expire at the earliest of:
. the date on which First Union's board of directors elects to exchange
the rights for First Union common stock shares as described below
. the close of business on December 28, 2000 or
. the date on which the rights are terminated or redeemed as described
below.
In addition, separation time will not occur even though a person is
determined by the Federal Reserve Board to "control" First Union if either
. the determination is based on that person's failure to make commitments
to the Federal Reserve Board that he owns shares "passively", or he
makes such commitments and then violates them, and the Federal Reserve
Board in each case determines within up to 60 days that this person no
longer "controls" First Union or
. the Federal Reserve Board's determination is not based on that person's
commitment, or violation of a commitment, and that person
. obtains a "non-control" determination from the Federal Reserve Board
within three years and
. is using its best efforts to allow First Union to make acquisitions
or engage in any lawful activity even though that person is believed
to "control" First Union.
Once First Union publicly announces that a person has acquired 15% of First
Union's outstanding common stock or the Federal Reserve Board has determined
that a person has gained "control" of First Union, First Union can allow for
rights holders to buy our common stock for half of its market value. For
example, First Union would sell to each rights holder common stock shares worth
$200 for $100 in cash. At the same time, any rights held by the 15% owner or
"control" person or any of his affiliates, associates or transferees will be
void.
In the alternative, First Union's board of directors may elect to exchange
all of the then outstanding rights for shares of common stock at an exchange
ratio of two common stock shares for one right. Upon election of this exchange,
a right will no longer be exercisable and will only represent a right to
receive two common stock shares.
If First Union is required to issue common stock shares upon the exercise of
rights, or in exchange for rights, it may substitute shares of junior
participating Class A preferred stock. The substitution will be at a rate of
two one-hundredths of a share of junior participating Class A preferred stock
for each right exchanged.
The rights may be terminated without any payment to holders before their
exercise date and First Union may redeem them at $0.01 per right. The rights
have no voting rights and are not entitled to dividends.
The rights will not prevent a takeover of First Union. The rights, however,
may cause substantial dilution to a person or group that acquires 15% or more
of common stock (or that acquires "control" of First Union as described above)
unless First Union's board first redeems or terminates the rights.
Nevertheless, the rights should not interfere with a transaction that is in
First Union's and its stockholders' best interests because the rights can be
redeemed or terminated by the board before that transaction is completed.
7
The complete terms of the rights are contained in the Amended and Restated
Shareholder Protection Rights Agreement. This agreement is incorporated by
reference as an exhibit to the registration statement of which this prospectus
is a part, and the description above is qualified entirely by that document. A
copy of this agreement can be obtained upon written request to First Union
National Bank, 1525 West W.T. Harris Blvd., Charlotte, North Carolina 28288-
1153.
Other Provisions
First Union's articles and bylaws contain various provisions which may
discourage or delay attempts to gain control of First Union. First Union's
articles include provisions
. classifying the board of directors into three classes, each class to
serve for three years, with one class elected annually
. authorizing the board of directors to fix the size of the board between
nine and 30 directors
. authorizing directors to fill vacancies on the board occurring between
annual stockholder meetings, except that vacancies resulting from a
director's removal by a stockholder vote may only be filled by a
stockholder vote
. providing that directors may be removed only for a valid reason and only
by majority vote of shares entitled to vote in electing directors,
voting as a single class
. authorizing only the board of directors, First Union's Chairman or
President to call a special meeting of stockholders, except for special
meetings called under special circumstances for classes or series of
stock ranking superior to common stock and
. requiring an 80% stockholder vote by holders entitled to vote in
electing directors, voting as a single class, to alter any of the above
provisions.
First Union's bylaws include specific conditions under which business may be
transacted at annual stockholders' meetings, and persons may be nominated for
election as First Union directors at annual stockholders' meetings.
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 the 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 otherwise requires Federal Reserve Board approval. An
acquisition may be made before expiration of the disapproval period if the
Federal Reserve Board issues written notice that it intends not to disapprove
the action. It is generally assumed that the acquisition of more than 10% of a
class of voting stock of a bank holding company with publicly held securities,
such as First Union, would constitute the acquisition of control.
8
In addition, any "company" would be required to obtain Federal Reserve Board
approval before acquiring 25% or more of the outstanding common stock of First
Union. If the acquiror is a bank holding company, this approval is required
before acquiring 5% of the outstanding stock. Obtaining "control" over First
Union would also require Federal Reserve Board prior approval. "Control"
generally means
. the ownership or control of 25% or more of a bank holding company voting
securities class,
. the ability to elect a majority of the bank holding company's directors,
or
. the ability otherwise to exercise a controlling influence over the bank
holding company's management and policies.
Two North Carolina shareholder protection 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 these statutes. First Union elected not to be
covered by these statutes.
In addition, in certain instances the ability of First Union's board to
issue authorized but unissued shares of common stock, preferred stock or Class
A preferred stock may have an anti-takeover effect.
Existence of the above provisions could result in First Union being less
attractive to a potential acquiror, or result in First Union stockholders
receiving less for their shares of common stock than otherwise might be
available if there is a takeover attempt.
9
DESCRIPTION OF PREFERRED STOCK AND CLASS A PREFERRED STOCK
The following information outlines some of the provisions of the preferred
stock and the Class A preferred stock. This information may not be complete in
all respects and is qualified entirely by reference to First Union's articles,
as amended with respect to each series of preferred stock or Class A preferred
stock. Our articles are, and any amendments to the articles will be,
incorporated by reference in the registration statement of which this
prospectus is a part for the issuance of any series of preferred stock or Class
A preferred stock. This information relates to terms and conditions that apply
to the preferred stock as a class and the Class A preferred stock as a class.
The specific terms of any series of preferred stock or Class A preferred stock
will be described in the relevant prospectus supplement. If so described in a
prospectus supplement, the terms of that series may differ from the general
description of the terms described below.
Authorized Preferred Stock
First Union's authorized preferred stock consists of 10,000,000 shares of
preferred stock, no-par value, and 40,000,000 shares of Class A preferred
stock, no-par value. On May 31, 2000, no shares of preferred stock and no
shares of Class A preferred stock were issued and outstanding.
General
Under First Union's articles, the preferred stock and the Class A preferred
stock may be issued from time to time in one or more series, upon board
authorization and without stockholder approval. Within certain legal limits,
the board is authorized to determine the
. voting powers
. designation
. preferences and relative, participating, optional or other rights
. qualifications, limitations or restrictions, including any
. dividend rights
. conversion rights
. exchange rights
. redemption rights
. liquidation preferences
. voting rights and
. the designation and number of shares and the terms and conditions of
their issuance
of any series of preferred stock or Class A preferred stock. Thus, the board,
without stockholder approval, could authorize preferred stock or Class A
preferred stock to be issued with voting, conversion and other rights that
could adversely affect the voting power and other rights of common stockholders
or other outstanding series of preferred stock or Class A preferred stock.
Each series of preferred stock or Class A preferred stock will have the
dividend, liquidation, redemption and voting rights described below unless
otherwise described in a prospectus supplement pertaining to a specific series
of preferred stock or Class A preferred stock. The relevant prospectus
supplement will describe the following terms of the series of preferred stock
or Class A preferred stock in respect of which this prospectus is being
delivered
. the designation of that series and the number of shares offered
. the amount of the liquidation preference per share or the method of
calculating that amount
10
. the initial public offering price at which shares of that series will be
issued
. the dividend rate or the method of calculating that rate, the dates on
which dividends will be paid and the dates from which dividends will
begin to cumulate
. any redemption or sinking fund provisions
. any conversion or exchange rights
. any additional voting and other rights, preferences, privileges,
qualifications, limitations and restrictions
. any securities exchange listing
. the relative ranking and preferences of that series as to dividend
rights and rights upon any liquidation, dissolution or winding up of
First Union and
. any other terms of that series.
Under the indenture between First Union and Wilmington Trust Company, as
trustee, First Union agreed not to pay any dividends on, or acquire or make a
liquidation payment relating to, any of First Union's common stock, preferred
stock and Class A preferred stock, if, at that time, there is a default under
the indenture or a related First Union guarantee or First Union has delayed
interest payments on the securities issued under the indenture.
Shares of preferred stock and Class A preferred stock, when issued against
full payment of their purchase price, will be fully paid and nonassessable. The
liquidation preference of any series of preferred stock or Class A preferred
stock does not necessarily indicate the price at which shares of that series of
preferred stock or Class A preferred stock will actually trade on or after the
issue date.
Rank
Each series of preferred stock and Class A preferred stock will, with
respect to dividend rights and rights upon First Union's liquidation,
dissolution or winding up, rank prior or superior to common stock. All shares
of each series of preferred stock will be of equal rank with each other. Shares
of Class A preferred stock will rank equal or junior to, but not prior or
superior to, any series of preferred stock. Subject to the foregoing and the
terms of any particular Class A preferred stock series, Class A preferred stock
series may vary as to priority within that class.
Dividends
Holders of each series of preferred stock and Class A preferred stock will
be entitled to receive, when, as and if First Union's board declares, cash
dividends, payable at the dates and at the rates per share as described in the
relevant prospectus supplement. Those rates may be fixed, variable or both.
Dividends may be cumulative or noncumulative, as described in the relevant
prospectus supplement. If dividends on a series of preferred stock or Class A
preferred stock are noncumulative and if First Union's board fails to declare a
dividend for a dividend period for that series, then holders of that preferred
stock or Class A preferred stock will have no right to receive a dividend for
that dividend period, and First Union will have no obligation to pay the
dividend for that period, whether or not dividends are declared for any future
dividend payment dates. If dividends on a series of preferred stock or Class A
preferred stock are cumulative, the dividends on those shares will accrue from
and after the date mentioned in the relevant prospectus supplement.
11
No full dividends may be paid on any series of preferred stock or Class A
preferred stock ranking as to dividends equal or junior to the series of
preferred stock or Class A preferred stock offered by the relevant prospectus
supplement for any period unless full dividends for the immediately preceding
dividend period on that offered stock, including any accumulation of unpaid
dividends, if dividends on such offered stock are cumulative, are paid. When
dividends are not paid in full upon such offered stock and any other parity
stock, dividends upon that stock will be declared on a proportional basis so
that the amount of dividends declared per share will bear to each other the
same ratio that accrued dividends for the current dividend period per share on
the offered stock, including any accumulated unpaid dividends, if dividends on
such offered stock are cumulative, and accrued dividends, including any
accumulations on such parity stock, bear to each other. No interest will be
payable in respect of any dividend payment on such offered stock that may be in
arrears. Unless full dividends on the offered stock have been paid for the
immediately preceding dividend period, including any accumulated dividends, if
dividends on such offered stock are cumulative
. no cash dividend or distribution (other than in junior stock) may be
paid on junior stock (including common stock)
. First Union may not acquire any junior stock except by conversion into
or exchange for junior stock and
. First Union may not acquire any parity stock otherwise than pursuant to
pro rata offers to purchase all, or a pro rata portion, of the offered
stock and such parity stock, except by conversion into or exchange for
junior stock.
Any dividend payment made on a preferred stock or Class A preferred stock
series will first be credited against the earliest accrued but unpaid dividend
due with respect to shares of that series that remains payable.
Redemption
The terms on which any series of preferred stock or Class A preferred stock
may be redeemed will be in the relevant prospectus supplement. All shares of
preferred stock or Class A preferred stock First Union redeems, purchases or
acquires, including shares surrendered for conversion or exchange, shall be
cancelled and restored to the status of authorized but unissued shares of
preferred stock or Class A preferred stock, as the case may be, undesignated as
to series.
Liquidation
In the event of First Union's voluntary or involuntary liquidation,
dissolution or winding up, preferred stockholders or Class A preferred
stockholders will be entitled, subject to creditors' rights, but before any
distribution to common stockholders or any other junior stock, to receive a
liquidating distribution in the amount of the liquidation preference per share
as mentioned in the relevant prospectus supplement, plus accrued and unpaid
dividends for the current dividend period. This would include any accumulation
of unpaid dividends for prior dividend periods, if dividends on that series of
preferred stock or Class A preferred stock are cumulative. If the amounts
available for distribution upon First Union's liquidation, dissolution or
winding up are not sufficient to satisfy the full liquidation rights of all the
outstanding preferred stock or Class A preferred stock and all stock ranking
equal to that preferred stock or Class A preferred stock, then the holders of
each series of that stock will share ratably in any distribution of assets in
proportion to the full respective preferential amount, which may include
accumulated dividends, to which they are entitled. After the full amount of the
liquidation preference is paid, the holders of preferred stock or Class A
preferred stock will not be entitled to any further participation in any
distribution of First Union's assets.
Voting
The voting rights of preferred stock or Class A preferred stock of any
series will be described in the relevant prospectus supplement. The shares of
any series of preferred stock having voting rights may not have
12
more than one vote per share. The shares of any series of Class A preferred
stock having voting rights shall have the number of votes per share, which may
be more or less than one, as are specified in the amendment to First Union's
articles with respect to that series and in the relevant prospectus supplement.
The NCBC Act provides that, regardless of whether a class or series of
shares is granted voting rights by the terms of First Union's articles, the
shareholders of that class or series are entitled to vote as a separate voting
group, or together with other similarly affected series, on certain amendments
to First Union's articles and certain other fundamental changes to First Union
that directly affect that class or series.
Under Federal Reserve Board regulations, if the holders of any series of
preferred stock or Class A preferred stock become entitled to vote for the
election of directors because dividends on that series are in arrears, that
series may then be deemed a "class of voting securities," and a holder of 25%
or more of that series (or a holder of 5% or more if it otherwise exercises a
"controlling influence" over First Union) may then be subject to regulation as
a bank holding company. In addition, in that event
. any bank holding company may be required to obtain Federal Reserve Board
approval, and any foreign bank, and any company that controls a foreign
bank, that has certain types of U.S. banking operations may be required
to obtain Federal Reserve Board approval under the International Banking
Act of 1978, to acquire 5% or more of any series of preferred stock or
Class A preferred stock and
. any person other than a bank holding company may be required to obtain
Federal Reserve Board approval under the Change in Bank Control Act to
acquire 10% or more of that series of preferred stock or Class A
preferred stock.
Conversion or Exchange
The terms on which preferred stock or Class A preferred stock of any series
may be converted into or exchanged for another class or series of securities
will be described in the relevant prospectus supplement.
Other Rights
The shares of a series of preferred stock or Class A preferred stock may
have the preferences, voting powers or relative, participating, optional or
other special rights as may be described in the relevant prospectus supplement,
First Union's articles, or as otherwise required by law. The holders of
preferred stock and Class A preferred stock will not have any preemptive rights
to subscribe to any First Union securities.
Title
First Union, the transfer agent and registrar for a series of preferred
stock or Class A preferred stock, and any of their agents may treat the
registered owner of that preferred stock or Class A preferred stock as the
absolute owner of that stock, whether or not any payment for that preferred
stock or Class A preferred stock shall be overdue and despite any notice to the
contrary, for any purpose. See also "Global Securities".
Transfer Agent and Registrar
The transfer agent, registrar and dividend disbursement agent for each
series of preferred stock or Class A preferred stock will be named in the
relevant prospectus supplement.
13
DESCRIPTION OF DEPOSITARY SHARES
The following information outlines some of the provisions of the deposit
agreement, the depositary shares and the depositary receipts. This information
may not be complete in all respects and is qualified entirely by reference to
the relevant deposit agreement and depositary receipts with respect to the
depositary shares relating to any particular series of preferred stock or Class
A preferred stock. The specific terms of any series of depositary shares will
be described in the relevant prospectus supplement. If so described in the
prospectus supplement, the terms of that series of depositary shares may differ
from the general description of terms presented below.
General
First Union may elect to offer fractional interests in shares of preferred
stock or Class A preferred stock, instead of whole shares of preferred stock or
Class A preferred stock. If so, First Union will allow a depositary to issue to
the public depositary shares, each of which will represent a fractional
interest as described in the relevant prospectus supplement, of a share of
preferred stock or Class A preferred stock.
The shares of the preferred stock or the Class A preferred stock series
underlying any depositary shares will be deposited under a separate deposit
agreement between First Union and a bank or trust company acting as depositary
with respect to that series. The depositary will have its principal office in
the United States and have a combined capital and surplus of at least
$50,000,000. The relevant prospectus supplement relating to a series of
depositary shares will mention the name and address of the depositary. Under
the relevant deposit agreement, each owner of a depositary share will be
entitled, in proportion to its fractional interest in a share of the preferred
stock or the Class A preferred stock underlying that depositary share, to all
the rights and preferences of that preferred stock or Class A preferred stock,
including dividend, voting, redemption, conversion, exchange and liquidation
rights.
Depositary shares will be evidenced by one or more depositary receipts
issued under the relevant deposit agreement.
Pending the preparation of definitive engraved depositary receipts, a
depositary may, upon First Union's order, issue temporary depositary receipts
substantially identical to and entitling their holders to all the rights
pertaining to the definitive depositary receipts but not in definitive form.
Definitive depositary receipts will be prepared without unreasonable delay, and
the temporary depositary receipts will be exchangeable for definitive
depositary receipts at First Union's expense.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash
distributions in respect of the preferred stock or the Class A preferred stock
to the record depositary shareholders based on the number of the depositary
shares owned by that holder on the relevant record date. The depositary will
distribute only that amount which can be distributed without attributing to any
depositary shareholders a fraction of one cent, and any balance not so
distributed will be added to and treated as part of the next sum received by
the depositary for distribution to record depositary shareholders.
If there is a distribution other than in cash, the depositary will
distribute property to the entitled record depositary shareholders, unless the
depositary determines that it is not feasible to make that distribution. In
that case the depositary may, with First Union's approval, adopt the method it
deems equitable and practicable for making that distribution, including any
sale of property and the distribution of the net proceeds from this sale to the
concerned holders.
14
Each deposit agreement will also contain provisions relating to the manner
in which any subscription or similar rights First Union offers to preferred
stockholders or the Class A preferred stockholders of the relevant series will
be made available to depositary shareholders.
Withdrawal of Stock
Upon surrender of depositary receipts at the depositary's office, the holder
of the relevant depositary shares will be entitled to the number of whole
shares of the related preferred stock series or Class A preferred stock series
and any money or other property those depositary shares represent. Depositary
shareholders will be entitled to receive whole shares of the related preferred
stock series or Class A preferred stock series on the basis described in the
relevant prospectus supplement, but holders of those whole preferred stock
shares or Class A preferred stock shares will not afterwards be entitled to
receive depositary shares in exchange for their shares. If the depositary
receipts the holder delivers evidence a depositary share number exceeding the
whole share number of the related preferred stock series or Class A preferred
stock series to be withdrawn, the depositary will deliver to that holder a new
depositary receipt evidencing the excess depositary share number.
Redemption; Liquidation
The terms on which the depositary shares relating to the preferred stock or
the Class A preferred stock of any series may be redeemed, and any amounts
distributable upon First Union's liquidation, dissolution or winding up, will
be described in the relevant prospectus supplement.
Voting
Upon receiving notice of any meeting at which preferred stockholders or
Class A preferred stockholders of any series are entitled to vote, the
depositary will mail the information contained in that notice to the record
depositary shareholders relating to those series of preferred stock or Class A
preferred stock. Each depositary shareholder on the record date will be
entitled to instruct the depositary on how to vote the shares of preferred
stock or Class A preferred stock underlying that holder's depositary shares.
The depositary will vote the preferred stock shares or Class A preferred stock
shares underlying those depositary shares according to those instructions, and
First Union will take reasonably necessary actions to enable the depositary to
do so. If the depositary does not receive specific instructions from the
depositary shareholders relating to such preferred stock or Class A preferred
stock, it will abstain from voting those preferred stock shares or Class A
preferred stock shares, unless otherwise mentioned in the relevant prospectus
supplement.
Amendment and Termination of Depositary Agreement
The depositary receipt form evidencing the depositary shares and the
relevant deposit agreement may be amended by First Union and the depositary.
However, any amendment that significantly affects the rights of the depositary
shareholders will not be effective unless a majority of the outstanding
depositary shareholders approve that amendment. First Union or the depositary
may terminate a deposit agreement only if
. First Union has redeemed or reacquired all outstanding depositary shares
relating to the deposit agreement
. all preferred stock or Class A preferred stock of the relevant series
has been withdrawn or
. there has been a final distribution in respect of the preferred stock or
the Class A preferred stock of the relevant series in connection with
First Union's liquidation, dissolution or winding up and such
distribution has been made to the related depositary shareholders.
Charges of Depositary
First Union will pay all charges of each depositary in connection with the
initial deposit and any redemption of the preferred stock or the Class A
preferred stock. Depositary shareholders will be required to pay any other
transfer and other taxes and governmental charges and any other charges
expressly provided in the deposit agreement to be for their accounts.
15
Miscellaneous
Each depositary will forward to the relevant depositary shareholders all
First Union reports and communications that First Union is required to furnish
to preferred stockholders or Class A preferred stockholders of the relevant
series.
Neither any depositary nor First Union will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under any deposit agreement. The obligations of First Union and
each depositary under any deposit agreement will be limited to performance in
good faith of their duties under that agreement, and they will not be obligated
to prosecute or defend any legal proceeding in respect of any depositary
shares, preferred stock or Class A preferred stock unless they are provided
with satisfactory indemnity. They may rely upon written advice of counsel or
accountants, or information provided by persons presenting preferred stock or
Class A preferred stock for deposit, depositary shareholders or other persons
believed to be competent and on documents believed to be genuine.
Title
First Union, each depositary and any of their agents may treat the
registered owner of any depositary share as the absolute owner of that share,
whether or not any payment for that depositary share is overdue and despite any
notice to the contrary, for any purpose. See "Global Securities".
Resignation and Removal of Depositary
A depositary may resign at any time by delivering to First Union notice of
its election, and First Union may remove a depositary, and resignation or
removal will take effect upon the appointment of a successor depositary and its
acceptance of appointment. That successor depositary must
. be appointed within 60 days after delivery of the notice of resignation
or removal
. be a bank or trust company having its principal office in the United
States and
. have combined capital and surplus of at least $50,000,000.
16
DESCRIPTION OF DEBT SECURITIES
General
The following information outlines some of the provisions of the indentures
and the debt securities. This information may not be complete in all respects,
and is qualified entirely by reference to the indenture under which the debt
securities are issued. These indentures are incorporated by reference as
exhibits to the registration statement of which this prospectus is a part. This
information relates to certain terms and conditions that generally apply to the
debt securities. The specific terms of any series of debt securities will be
described in the relevant prospectus supplement. If so described in a
prospectus supplement, the terms of that series may differ from the general
description of the terms presented below.
Senior debt securities will be issued under an indenture between First Union
and The Chase Manhattan Bank, as trustee. Subordinated debt securities will be
issued under an indenture between First Union and Bank One Trust Company, N.A.,
as trustee. Whenever we refer to specific provisions or defined terms in one or
both of the indentures, those provisions or defined terms are incorporated in
this prospectus by reference. Section references used in this discussion are
references to the relevant indenture. Capitalized terms which are not otherwise
defined shall have the meaning given to them in the relevant indenture.
The debt securities will be limited to an aggregate initial offering price
of $4,315,000,000, or at First Union's option if so specified in the relevant
prospectus supplement, the equivalent of this amount in any other currency or
currency unit, and will be First Union's direct, unsecured obligations. The
debt securities will not be deposits or other bank obligations and will not be
FDIC insured.
The indentures do not limit the aggregate principal amount of debt
securities or of any particular series of debt securities which may be issued
under the indentures and provide that these debt securities may be issued at
various times 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, 2000, $3.1 billion
aggregate principal amount of senior debt securities was outstanding under the
senior indenture. The senior trustee is trustee for such series. As of March
31, 2000, $4.0 billion aggregate principal amount of subordinated debt
securities was outstanding under the subordinated indenture. The subordinated
trustee is trustee for such series.
The indentures do not limit the amount of other debt that First Union may
issue and do not contain financial or similar restrictive covenants. As of
March 31, 2000, First Union had an aggregate of $4.7 billion of short-term
senior indebtedness outstanding which consisted primarily of commercial paper.
First Union expects from time to time to incur additional senior indebtedness
and Other Financial Obligations (as defined below). The indentures do not
prohibit or limit additional senior indebtedness or Other Financial
Obligations.
Because First Union is a holding company and a legal entity separate and
distinct from its subsidiaries, First Union's rights to participate in any
distribution of assets of any subsidiary upon its liquidation, reorganization
or otherwise, and the holders of debt securities' ability to benefit indirectly
from such distribution, would be subject to prior creditor's claims, except to
the extent that First Union itself may be a creditor of that subsidiary with
recognized claims. Claims on First Union's subsidiary banks by creditors other
than First Union 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 debt securities protection in the event of a highly leveraged
transaction involving First Union.
17
The following information relating to the debt securities will be described
in the relevant prospectus supplement
. the title of the debt securities
. whether the debt securities are senior debt securities or subordinated
debt securities
. any limit upon the aggregate principal amount of the debt securities and
the percentage of such principal amount at which they may be issued
. the date on which the principal of the debt securities must be paid
. the interest rates per annum of the debt securities, the method of
determining these rates, the dates from which the interest will accrue,
the interest payment dates, the regular record date for the interest
payable on any interest payment date, the person to whom any payment
must be made, if other than the person in whose name that debt security
is registered on the regular record date for such interest, and the
payment method of any interest payable on a global debt security on an
interest payment date
. if other than the location specified in this prospectus, the place where
any principal, premium or interest on the debt securities must be paid
. any redemption and any mandatory or optional sinking fund provisions
. any repayment provision
. if other than denominations of $1,000 and any integral multiple of
$1,000, the denominations in which the debt securities shall be issued
. if other than the principal amount, the portion of the debt securities'
principal amount which shall be payable upon an acceleration of their
maturity
. the currency or currency unit of payment of principal, premium, if any,
and interest on the debt securities, and any index used to determine the
amount of payment of principal, premium, if any, and interest on these
debt securities
. whether the debt securities will be issued in permanent global form and,
in such case, the initial depository and the circumstances under which
such permanent global debt security may be exchanged
. whether the subordination provisions summarized below or other
subordination provisions, including a different definition of "senior
indebtedness", "Entitled Persons", "Existing Subordinated Indebtedness"
or "Other Financial Obligations" shall apply to the debt securities
. the terms and conditions of any obligation or right of First Union or a
holder to convert or exchange subordinated debt securities into other
securities and
. any other key aspects of the debt securities not specified in this
prospectus. (Section 301)
Where appropriate, the applicable prospectus supplement will describe the U. S.
federal income tax considerations relevant to the debt securities.
Unless otherwise described in the relevant prospectus supplement, principal,
premium, and interest, if any, on the debt securities will be payable, and the
debt securities will be transferable, at the Corporate Trust Office of First
Union National Bank in Charlotte, North Carolina, except that interest may be
paid at First Union's option by check mailed to the address of the holder
entitled to it as it appears on the security register. (Sections 301, 305 and
1002)
18
Unless otherwise described in the relevant prospectus supplement, the debt
securities will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiples of $1,000. (Section 302) The
indentures provide that debt securities of any series may be issued in
permanent global form (Section 301) and, unless otherwise described in the
relevant prospectus supplement, debt securities will be issued in permanent
global form. See "Global Securities". No service charge will be made for any
registration of transfer or exchange of the debt securities, but First Union
may require payment to cover any tax or other governmental charge payable in
connection with a transfer or exchange. (Section 305)
Both senior debt securities and subordinated debt securities may be issued
as original issue discount securities to be offered and sold at a substantial
discount below their stated principal amount. Federal income tax consequences
and other special considerations that apply to any original issue discount
securities will be described in the relevant prospectus supplement. The term
"original issue discount security" means any security which provides for an
amount less than its principal amount to be due and payable upon the
acceleration of its maturity in accordance with the related indenture. (Section
101)
We refer to the relevant prospectus supplement relating to any series of
debt securities that are original issue discount securities for the particular
provisions relating to acceleration of the maturity of a portion of the
principal amount of such original issue discount securities upon a continuing
event of default.
Subordination of the Subordinated Debt Securities
First Union's obligations to make any payment of the principal and interest
on any subordinated debt securities will, to the extent the subordinated
indenture specifies, be subordinate and junior in right of payment to all of
First Union's senior indebtedness. Unless otherwise specified in the prospectus
supplement relating to a specific series of subordinated debt securities, First
Union's "senior indebtedness" is defined in the subordinated indenture to mean
the principal of, premium and interest, if any, on
. all First Union indebtedness for money borrowed, including indebtedness
First Union guarantees, other than the subordinated debt securities,
whether outstanding on the date of execution of the indenture or
incurred afterward, except
. any obligations on account of Existing Subordinated Indebtedness and
. indebtedness as is by its terms expressly stated to be not superior
in payment right to the subordinated debt securities or to rank
equal to the subordinated debt securities and
. any deferrals, renewals or extensions of any such senior indebtedness.
(Section 101 of the subordinated indenture)
The payment of the principal and interest on the subordinated debt
securities will, to the extent described in the subordinated indenture, be
subordinated in payment right to the prior payment of all senior indebtedness.
Unless otherwise described in the prospectus supplement relating to the
specific series of subordinated debt securities, in certain events of
insolvency, the payment of the principal and interest on the subordinated debt
securities, other than subordinated debt securities that are also Existing
Subordinated Indebtedness, will, to the extent described in the subordinated
indenture, also be effectively subordinated in payment right to the prior
payment of all Other Financial Obligations. Upon any payment or distribution of
assets to creditors under First Union's liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors, or any bankruptcy,
insolvency or similar proceedings, all senior indebtedness holders will be
entitled to receive payment in full of all amounts due before the subordinated
debt securities holders will be entitled to receive any payment in respect of
the principal or interest on their securities. If upon any such payment or
asset distribution to creditors, there remains, after giving effect to those
subordination provisions in favor of senior
19
indebtedness holders, 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 that time, any
Entitled Persons (as defined below) in respect of Other Financial Obligations
have not received payment of all amounts due on such Other Financial
Obligations, then such Excess Proceeds shall first be applied to pay these
Other Financial Obligations before any payment may be applied to the
subordinated debt securities which are not Existing Subordinated Indebtedness.
In the event of the acceleration of the maturity of any subordinated debt
securities, all senior indebtedness holders will be entitled to receive payment
of all amounts due before the subordinated debt securities holders will be
entitled to receive any payment upon the principal of or interest on their
subordinated debt securities. (Sections 1403, 1404 and 1413 of the subordinated
indenture)
By reason of such subordination in favor of senior indebtedness holders, in
the event of insolvency, First Union's creditors who are not senior
indebtedness holders or subordinated debt securities holders may recover less,
ratably, than senior indebtedness holders and may recover more, ratably, than
subordinated debt securities holders. By reason of subordinated debt
securities' holders (other than Existing Subordinated Indebtedness) to pay over
any Excess Proceeds to Entitled Persons in respect to Other Financial
Obligations, in the event of insolvency, Existing Subordinated Indebtedness
holders may recover less, ratably, than Entitled Persons in respect of Other
Financial Obligations and may recover more, ratably, than the subordinated debt
securities holders (other than Existing Subordinated Indebtedness).
Unless otherwise specified in the prospectus supplement relating to the
particular subordinated debt securities series offered by it, "Existing
Subordinated Indebtedness" means subordinated debt securities issued under the
subordinated indenture prior to November 15, 1992. (Section 101 of the
subordinated indenture)
Unless otherwise specified in the prospectus supplement relating to the
particular subordinated debt securities series offered by it, "Other Financial
Obligations" means all obligations of First Union to make payment under the
terms of financial instruments, such as
. securities contracts and foreign currency exchange contracts
. 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
. similar financial instruments other than
. obligations on account of senior indebtedness and
. obligations on account of indebtedness for money borrowed ranking
equal or subordinate to the subordinated debt securities. (Section
101 of the subordinated indenture)
Unless otherwise described in the prospectus supplement relating to a specific
series of subordinated debt securities, "Entitled Persons" means any person who
is entitled to payment under the terms of Other Financial Obligations. (Section
101 of the subordinated indenture)
20
First Union's obligations under the subordinated debt securities shall rank
equal in right of payment with each other and with the Existing Subordinated
Indebtedness, subject, unless otherwise described in the prospectus supplement
relating to a specific series of subordinated debt securities, to the
obligations of subordinated debt securities holders (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. (Section 1413 of the subordinated indenture)
The relevant prospectus supplement may further describe the provisions, if
any, applicable to the subordination of the subordinated debt securities of a
particular series.
Conversion or Exchange
If and to the extent mentioned in the relevant prospectus supplement, any
subordinated debt securities series may be convertible or exchangeable into
other debt securities or common stock, preferred stock, Class A preferred stock
or depositary shares. The specific terms on which any subordinated debt
securities series may be so converted or exchanged will be described in the
relevant prospectus supplement. These terms may include provisions for
conversion or exchange, either mandatory, at the holder's option or at First
Union's option, in which case the amount or number of securities the
subordinated debt securities holders would receive would be calculated at the
time and manner described in the relevant prospectus supplement.
Defaults
The Senior Indenture
The senior indenture defines an "event of default" as
. default in any principal or premium payment on any senior debt security
of that series at maturity
. default for 30 days in interest payment of any senior debt security of
that series
. failure to deposit any sinking fund payment when due in respect of that
series
. First Union's failure for 60 days after notice in performing any other
covenants or warranties in the senior indenture (other than a covenant
or warranty solely for the benefit of other senior debt securities
series)
. failure to pay when due any First Union indebtedness or First Union
National Bank indebtedness in excess of $5,000,000, or maturity
acceleration of any indebtedness exceeding that amount if acceleration
results from a default under the instrument giving rise to that
indebtedness and is not annulled within 30 days after due notice
. First Union's or First Union National Bank's bankruptcy, insolvency or
reorganization and
. any other event of default provided for senior debt securities of that
series. (Section 501)
The senior indenture provides that, if any event of default for senior debt
securities of any series outstanding occurs and is continuing, either the
senior trustee or the holders of not less than 25% in principal amount of the
outstanding senior debt securities of that series may declare the principal
amount (or, if the securities of that series are original issue discount
securities, such principal amount portion as the terms of that series specify)
of all senior debt securities of that series to be due and payable immediately.
However, no such declaration is required upon certain bankruptcy events. In
addition, upon fulfillment of certain conditions, this declaration may be
annulled and past defaults waived by the holders of a majority in principal
amount of the outstanding senior debt securities of that series on behalf of
all senior debt securities holders of that series. (Sections 502 and 513) In
the event of First Union's bankruptcy, insolvency or reorganization, senior
debt securities holders' claims would fall under the broad equity power of a
federal bankruptcy court, and to that court's determination of the nature of
those holders' rights.
21
The senior indenture contains a provision entitling the senior trustee,
acting under the required standard of care, to be indemnified by the holders of
any outstanding senior debt securities series before proceeding to exercise any
right or power under the senior indenture at the holders' request. (Section
603) The holders of a majority in principal amount of outstanding senior debt
securities 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. The senior trustee, however, may decline
to act if that direction is contrary to law or the senior indenture or would
involve the senior trustee in personal liability. (Section 512)
First Union will file annually with the senior trustee a compliance
certificate as to all conditions and covenants in the senior indenture.
(Section 1007)
The Subordinated Indenture
Subordinated debt securities principal payment may be accelerated only upon
an event of default. There is no acceleration right in the case of a default in
the payment of interest or principal prior to the maturity date or a default in
First Union performing any covenants in the subordinated indenture, unless a
specific series of subordinated debt securities provide otherwise, which will
be described in the relevant prospectus supplement.
The subordinated indenture defines an "event of default" as certain events
involving First Union's bankruptcy, insolvency or reorganization and any other
event of default provided for the subordinated debt securities of that series.
(Section 501) The subordinated indenture defines a "default" to include
. any event of default
. a default in any principal or premium payment of any subordinated debt
security of that series at maturity
. default in any interest payment when due and continued for 30 days
. a default in any required designation of funds as "available funds" or
. default in the performance, or breach, of First Union's covenants in the
subordinated indenture or in the subordinated debt securities of that
series and continued for 90 days after written notice to
. First Union by the subordinated trustee or
. First Union and the subordinated trustee by the holders of not less
than 25% in aggregate principal amount of the outstanding
subordinated debt securities of that series. (Section 503)
If an event of default for subordinated debt securities of any series occurs
and is continuing, either the subordinated trustee or the holders of not less
than 25% 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
subordinated indenture provisions relating to the subordinated trustee's
duties, 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 holders' request or direction, unless
such holders shall have offered to the subordinated trustee reasonable
indemnity. (Section 603) Subject to such indemnification provisions, 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
22
any past default under the subordinated indenture with respect to such series,
except a default in principal or interest payment or a default of a
subordinated indenture covenant which cannot be modified without the consent of
each outstanding subordinated debt security holder of the series affected.
(Section 513) In the event of First Union's bankruptcy, insolvency or
reorganization, subordinated debt securities holders' claims would fall under
the broad equity power of a federal bankruptcy court, and to that court's
determination of the nature of those holders' rights.
First Union will file annually with the subordinated trustee a compliance
certificate as to all conditions and covenants in the subordinated indenture.
(Section 1007)
Modification and Waiver
Each indenture may be modified and amended by First Union and the relevant
trustee. Certain modifications and amendments require the consent of the
holders of at least a majority in aggregate principal amount of the outstanding
debt securities of each series issued under that indenture and affected by the
modification or amendment. No such modification or amendment may, without the
consent of the holder of each outstanding debt security issued under such
indenture and affected by it
. change the stated maturity of the principal, or any installment of
principal or interest, on any outstanding debt security
. reduce any principal amount, premium or interest, on any outstanding
debt security, including in the case of an original issue discount
security the amount payable upon acceleration of the maturity of that
security
. change the place of payment where, or the coin or currency or currency
unit in which, any principal, premium or interest, on any outstanding
debt security is payable
. impair the right to institute suit for the enforcement of any payment on
or after the stated maturity, or in the case of redemption, on or after
the redemption date
. reduce the above-stated percentage of outstanding debt securities
necessary to modify or amend the applicable indenture or
. modify the above 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 relevant indenture or seeking to waive certain
defaults. (Section 902)
The holders of at least a majority in aggregate principal amount of the
outstanding debt securities of any series may on behalf of all outstanding debt
securities holders of that series waive, insofar as that series is concerned,
First Union's compliance with certain restrictive provisions of the relevant
indenture. (Section 1008) The holders of at least a majority in aggregate
principal amount of the outstanding debt securities of any series may on behalf
of all outstanding debt securities holders of that series waive any past
default under the relevant indenture with respect to that series, except a
default in the payment of the principal, or premium, if any, or interest on any
outstanding debt security of that series or in respect of an indenture covenant
which cannot be modified or amended without each outstanding debt security
holder consenting. (Section 513)
Certain modifications and amendments of each indenture may be made by First
Union and the relevant trustee without the outstanding debt securities holders
consenting. (Section 901)
Each indenture provides that in determining whether the holders of the
requisite principal amount of the outstanding debt securities have given any
request, demand, authorization, direction, notice, consent or waiver under that
indenture or are present at a meeting of holders of outstanding debt securities
for quorum purposes
. the principal amount of an original issue discount security that shall
be deemed to be outstanding shall be the amount of the principal that
would be due and payable as of the date of such determination upon
acceleration of its maturity and
23
. 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 that outstanding debt
security, of the principal amount of that outstanding debt security or,
in the case of an original issue discount security, the U.S. dollar
equivalent, determined on the date of original issuance of such
outstanding debt security, of the amount determined as provided in the
above bullet-point. (Section 101)
Consolidation, Merger and Sale of Assets
The indentures each provide that First Union may not consolidate with or
merge into any other corporation or transfer its properties and assets
substantially as an entirety to any person unless
. the corporation formed by the consolidation or into which First Union is
merged, or the person to which First Union's properties and assets are
so transferred, shall be a corporation organized and existing under the
laws of the U.S., any state or Washington, D.C. and shall expressly
assume by supplemental indenture the payment of any principal, premium
or interest on the debt securities, and the performance of First Union's
other covenants under the relevant indenture
. immediately after giving effect to this 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
. certain other conditions are met. (Section 801)
Limitation on Disposition of First Union National Bank Stock
The indentures each contain First Union's covenant that, so long as any of
the debt securities issued under that indenture before August 1, 1990 are
outstanding, but subject to First Union's rights in connection with its
consolidation with or merger into another corporation or a sale of First
Union'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, First Union
National Bank voting stock, nor will it permit First Union National Bank to
issue any shares of, or securities convertible into, or options, warrants or
rights to subscribe for or purchase shares of, First Union National Bank voting
stock, unless
. any such sale, assignment, transfer, issuance, grant of a security
interest or other disposition is made for fair market value, as
determined by First Union's board and
. First Union will own at least 80% of the issued and outstanding First
Union National Bank voting stock free and clear of any security interest
after giving effect to such transaction. (Section 1006)
The above covenant is not a covenant for the benefit of any series of debt
securities issued on or after August 1, 1990.
Restriction on Sale or Issuance of Voting Stock of Major Subsidiary Banks
The indentures each contain First Union's covenant that it will not, and
will not permit any subsidiary to, sell, assign, transfer, grant a security
interest in, or otherwise dispose of, any shares of voting stock, or any
securities convertible into shares of voting stock, of any "Major Subsidiary
Bank" (as defined below) 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
. are for the purpose of qualifying a person to serve as a director
. are for fair market value, as determined by First Union's board, and,
after giving effect to such dispositions and to any potential dilution,
First Union will own not less than 80% of the shares of
24
voting stock of such Major Subsidiary Bank or any such subsidiary owning
any shares of voting stock of such Major Subsidiary Bank
. are made
. in compliance with court or regulatory authority order or
. in compliance with a condition imposed by any such court or
authority permitting First Union's acquisition of any other bank or
entity or
. in compliance with an undertaking made to such authority in
connection with such an acquisition; provided, in the case of the
two preceding bullet-points, the assets of the bank or entity being
acquired and its consolidated subsidiaries equal or exceed 75% 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
. to First Union or any wholly-owned subsidiary.
Despite the above requirements, any Major Subsidiary Bank may be merged into
or consolidated with another banking institution organized under U.S. or state
law, if after giving effect to that merger or consolidation First Union or any
wholly-owned subsidiary owns at least 80% of the voting stock of the other
banking institution free and clear of any security interest and if, immediately
after the merger or consolidation, 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% or more of First Union's consolidated assets determined on
the date of the most recent audited financial statements of these entities. At
present, the only Major Subsidiary Bank is First Union National Bank.
The above 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.
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 that 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 relevant
indenture separate and apart from the trust administered by any other such
trustee (Section 611), and any action 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, First Union and its subsidiaries conduct
banking transactions with the trustees, and the trustees conduct banking
transactions with First Union and its subsidiaries.
Title
First Union, the trustees and any of their agents may treat the registered
owner of any debt security as the absolute owner of that security, whether or
not that debt security is overdue and despite any notice to the contrary, for
any purpose. See "Global Securities".
25
DESCRIPTION OF WARRANTS
The following information outlines some of the provisions of each warrant
agreement, the warrants and the warrant certificates. This information may not
be complete in all respects and is qualified entirely by reference to the
relevant warrant agreement with respect to the warrants of any particular
series. The specific terms of any series of warrants will be described in the
relevant prospectus supplement. If so described in a prospectus supplement, the
terms of that series of warrants may differ from the general description of
terms presented below.
General
First Union may issue warrants for the purchase of its debt securities,
preferred stock, Class A preferred stock, depositary shares or common stock.
Warrants may be issued independently or together with debt securities,
preferred stock, Class A preferred stock, depositary shares or common stock,
and may be attached to or separate from those securities.
Each series of warrants will be evidenced by certificates issued under a
separate warrant agreement to be entered into between First Union and a bank,
as warrant agent, selected by First Union with respect to such series, having
its principal office in the U.S. and having combined capital and surplus of at
least $50,000,000.
The relevant prospectus supplement relating to a series of warrants will
mention the name and address of the warrant agent. The relevant prospectus
supplement will describe the terms of the series of warrants in respect of
which this prospectus is being delivered, including
. the offering price
. the currency for which such warrants may be purchased
. the designation and terms of the securities with which the warrants are
issued and the number of warrants issued with each such security or each
principal amount of such security
. the date which the warrants and the related securities will be
separately transferable
. in the case of warrants to purchase debt securities, the principal
amount of debt securities that can be purchased upon exercise of one
warrant, and the price and currency for purchasing those debt securities
upon exercise and, in the case of warrants to purchase preferred stock,
Class A preferred stock, depositary shares or common stock, the number
of depositary shares or shares of preferred stock, Class A preferred
stock or common stock, as the case may be, that can be purchased upon
the exercise of one warrant, and the price for purchasing such shares
upon this exercise
. the dates on which the right to exercise the warrants will commence and
expire
. certain federal income tax consequences of holding or exercising those
warrants
. the terms of the securities issuable upon exercise of those warrants and
. any other terms of the warrants.
Warrant certificates may be exchanged for new warrant certificates of
different denominations, may be presented for transfer registration, and may be
exercised at the warrant agent's corporate trust office or any other office
indicated in the relevant prospectus supplement. If the warrants are not
separately transferable from the securities with which they were issued, this
exchange may take place only if the certificates representing such related
securities are also exchanged. Prior to warrant exercise, warrantholders will
not have any rights as holders of the securities purchasable upon such
exercise, including, in the case of warrants to purchase debt securities, the
right to receive principal, premium, if any, or interest payments, on the debt
securities purchasable upon such exercise or to enforce covenants in the
applicable indenture or, in the case of warrants to purchase preferred stock,
Class A preferred stock, depositary shares or common stock, the right to
receive any
26
dividends, or payments upon First Union's liquidation, dissolution or winding
up or to exercise any voting rights.
Exercise of Warrants
Each warrant will entitle the holder to purchase the securities specified in
the relevant prospectus supplement at the exercise price mentioned in, or
calculated as described in, the relevant prospectus supplement. Unless
otherwise specified in the relevant prospectus supplement, warrants may be
exercised at any time up to 5:00 p.m., New York time, on the expiration date
mentioned in that prospectus supplement. After the close of business on the
expiration date, unexercised warrants will become void.
Warrants may be exercised by delivery of the warrant certificate
representing the warrants to be exercised, or in the case of global securities,
as described below under "Global Securities", by delivery of an exercise notice
for those warrants, together with certain information, and payment to the
warrant agent in immediately available funds, as provided in the relevant
prospectus supplement, of the required purchase amount. The information
required to be delivered will be on the reverse side of the warrant certificate
and in the relevant prospectus supplement. Upon receipt of such payment and the
warrant certificate or exercise notice properly executed at the warrant agent's
corporate trust office or any other office indicated in the relevant prospectus
supplement, First Union will, in the time period the relevant warrant agreement
provides, issue and deliver the securities purchasable upon such exercise. If
fewer than all of the warrants represented by such warrant certificate are
exercised, a new warrant certificate will be issued for the remaining amount of
warrants.
If mentioned in the relevant prospectus supplement, securities may be
surrendered as all or part of the exercise price for warrants.
Antidilution Provisions
In the case of warrants to purchase common stock, the exercise price payable
and the number of common stock shares to be purchased upon warrant exercise may
be adjusted in certain events, including
. the issuance of a stock dividend to common stockholders or a
combination, subdivision or reclassification of common stock
. the issuance of rights, warrants or options to all common stockholders
entitling them to purchase common stock for an aggregate consideration
per share less than the current market price per common stock share
. any First Union distribution to its common stockholders of evidences of
First Union's indebtedness or of assets, excluding cash dividends or
distributions referred to above and
. any other events mentioned in the relevant prospectus supplement.
No adjustment in the number of shares purchasable upon warrant exercise will
be required until cumulative adjustments require an adjustment of at least 1%
of such number. No fractional shares will be issued upon warrant exercise, but
First Union will pay the cash value of any fractional shares otherwise
issuable.
Modification
First Union and the relevant warrant agent may amend any warrant agreement
and the terms of the related warrants by executing a supplemental warrant
agreement, without any such warrantholders consent, for the purpose of
. curing any ambiguity, any defective or inconsistent provision contained
in the warrant agreement, or making any other corrections to the warrant
agreement that are not inconsistent with the provisions of the warrant
certificates
27
. evidencing the succession of another corporation to First Union and
their assumption of First Union's covenants contained in the warrant
agreement and the warrants
. appointing a successor depository, if the warrants are issued in the
form of global securities
. evidencing a successor warrant agent's acceptance of appointment with
respect to the warrants
. adding to First Union's covenants for the warrantholders' benefit or
surrendering any right or power conferred upon First Union under the
warrant agreement
. issuing warrants in definitive form, if such warrants are initially
issued in the form of global securities or
. amending the warrant agreement and the warrants as First Union deems
necessary or desirable and that will not adversely affect the
warrantholders' interests in any material respect.
First Union and the warrant agent may also amend any warrant agreement and
the related warrants by a supplemental agreement with the consent of the
holders of a majority of the unexercised warrants such amendment affects, for
the purpose of adding, modifying or eliminating any of the warrant agreement's
provisions or of modifying the holders' rights. However, no such amendment that
. changes the number or amount of securities purchasable upon warrant
exercise so as to reduce the number of securities receivable upon this
exercise
. shortens the time period during which the warrants may be exercised
. otherwise adversely affects the exercise rights of such warrantholders
in any material respect or
. reduces the number of unexercised warrants the consent of holders of
which is required for amending the warrant agreement or the related
warrants,
may be made without the consent of each holder affected by that amendment.
Consolidation, Merger and Sale of Assets
Each warrant agreement will provide that First Union may consolidate or
merge with or into any other corporation or sell, lease, transfer or convey all
or substantially all of its assets to any other corporation, provided that
. either First Union must be the continuing corporation, or the
corporation other than First Union formed by or resulting from any
consolidation or merger or that receives the assets must be organized
and existing under U.S. or state law and must assume First Union's
obligations for the unexercised warrants and the performance of all
covenants and conditions of the relevant warrant agreement and
. First Union or that successor corporation must not immediately be in
default under that warrant agreement.
Enforceability of Rights by Holders of Warrants
Each warrant agent will act solely as First Union's agent under the relevant
warrant agreement and will not assume any obligation or relationship of agency
or trust for any warrantholder. A single bank or trust company may act as
warrant agent for more than one issue of warrants. A warrant agent will have no
duty or responsibility in case First Union defaults in performing its
obligations under the relevant warrant agreement or warrant, including any duty
or responsibility to initiate any legal proceedings or to make any demand upon
First Union. Any warrantholder may, without the warrant agent's consent or of
any other warrantholder, enforce by appropriate legal action its right to
exercise, and receive the securities purchasable upon exercise of, that
warrant.
28
Replacement of Warrant Certificates
First Union will replace any destroyed, lost, stolen or mutilated warrant
certificate upon delivery to First Union and the relevant warrant agent of
evidence satisfactory to them of the ownership of that warrant certificate and
of the destruction, loss, theft or mutilation of that warrant certificate, and
(in the case of mutilation) surrender of that warrant certificate to the
relevant warrant agent, unless First Union or the warrant agent has received
notice that the warrant certificate has been acquired by a bona fide purchaser.
That warrantholder will also be required to provide indemnity satisfactory to
the relevant warrant agent and First Union before a replacement warrant
certificate will be issued.
Title
First Union, the warrant agents and any of their agents may treat the
registered holder of any warrant certificate as the absolute owner of the
warrants evidenced by that certificate for any purpose and as the person
entitled to exercise the rights attaching to the warrants so requested, despite
any notice to the contrary. See "Global Securities".
GLOBAL SECURITIES
Unless otherwise mentioned in the relevant prospectus supplement, securities
other than common stock will be issued in the form of one or more global
certificates, or "global securities", registered in the name of a depositary or
its nominee. Unless otherwise mentioned in the relevant prospectus supplement,
the depositary will be The Depository Trust Company, commonly referred to as
DTC. DTC has informed First Union that its nominee will be Cede & Co.
Accordingly, we expect Cede & Co. to be the initial registered holder of all
securities that are issued in global form. No person that acquires a beneficial
interest in those securities will be entitled to receive a certificate
representing that person's interest in the securities except as mentioned
herein or in the relevant prospectus supplement. Unless and until definitive
securities are issued under the limited circumstances described below, all
references to actions by holders of securities issued in global form shall
refer to actions taken by DTC upon instructions from its participants, and all
references to payments and notices to holders shall refer to payments and
notices to DTC or Cede & Co., as the registered holder of these securities.
DTC has informed First Union that it 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 under Section 17A of the Exchange Act,
and that it was created to hold securities for its participating organizations
and to facilitate clearance and settlement of securities transactions among its
participants through electronic book-entry. This eliminates the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations, and may include
other organizations. Indirect access to the DTC system also is 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.
Persons that are not participants or indirect participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in,
securities may do so only through participants and indirect participants. Under
a book-entry format, holders may experience some delay in their receipt of
payments, as such payments will be forwarded by First Union's designated agent
to Cede & Co., as nominee for DTC. DTC will forward such payments to its
participants, who will then forward them to indirect participants or holders.
Holders will not be recognized by the relevant registrar, transfer agent,
trustee, depositary or warrant agent as registered holders of the securities
entitled to the benefits of First Union's articles or the applicable indenture,
deposit agreement or warrant agreement. Beneficial owners that are not
participants will be permitted to exercise their rights only indirectly through
and according to the procedures of participants and, if applicable, indirect
participants.
29
Under the rules, regulations and procedures creating and affecting DTC and
its operations as currently in effect, DTC will be required to make book-entry
transfers of securities among participants and to receive and transmit payments
to participants. DTC rules require participants and indirect participants with
which beneficial securities owners have accounts to make book-entry transfers
and receive and transmit payments on behalf of their respective account
holders.
Because DTC can act only on behalf of
. participants, who in turn act only on behalf of participants or indirect
participants and
. certain banks, trust companies and other persons approved by it,
the ability of a beneficial owner of securities issued in global form to pledge
such securities to persons or entities that do not participate in the DTC
system may be limited due to the unavailability of physical certificates for
these securities.
DTC has advised First Union that DTC will take any action permitted to be
taken by a registered holder of any securities under First Union's articles or
the relevant indenture, deposit agreement or warrant agreement only at the
direction of one or more participants to whose accounts with DTC such
securities are credited.
Unless otherwise mentioned in the relevant prospectus supplement, a global
security will be exchangeable for the relevant definitive securities registered
in the names of persons other than DTC or its nominee only if
. DTC notifies First Union that it is unwilling or unable to continue as
depositary for that global security or if DTC ceases to be a clearing
agency registered under the Exchange Act when DTC is required to be so
registered
. First Union executes and delivers to the relevant registrar, transfer
agent, trustee, depositary and/or warrant agent an order complying with
the requirements of First Union's articles or the relevant indenture,
deposit agreement and/or warrant agreement that this global security
shall be so exchangeable or
. there has occurred and is continuing a default in the payment of any
amount due in respect of the securities or, in the case of debt
securities, an event of default or an event that, with the giving of
notice or lapse of time, or both, would constitute an event of default
with respect to these debt securities.
Any global security that is exchangeable under the preceding sentence will be
exchangeable for securities registered in such names as DTC directs.
Upon the occurrence of any event described in the above paragraph, DTC is
generally required to notify all participants of the availability of definitive
securities. Upon DTC surrendering the global security representing the
securities and delivery of instructions for re-registration, the registrar,
transfer agent, trustee, depositary or warrant agent, as the case may be, will
reissue the securities as definitive securities, and then such persons will
recognize the holders of such definitive securities as registered holders of
securities entitled to the benefits of First Union's articles or the relevant
indenture, deposit agreement and/or warrant agreement.
Except as described above, the global security may not be transferred except
as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or to a successor depositary First Union appoints. Except as
described above, DTC may not sell, assign, transfer or otherwise convey any
beneficial interest in a global security evidencing all or part of any
securities unless the beneficial interest is in an amount equal to an
authorized denomination for these securities.
None of First Union, the trustees, any registrar and transfer agent, any
warrant agent or any depositary, or any agent of any of them, will have any
responsibility or liability for any aspect of DTC's or any participant's
records relating to, or for payments made on account of, beneficial interests
in a global security, or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a global security, in some cases, may trade in the DTC's same-day funds
settlement system, in which secondary market trading activity in those
beneficial interests
30
would be required by DTC to settle in immediately available funds. There is no
assurance as to the effect, if any, that settlement in immediately available
funds would have on trading activity in such beneficial interests. Also,
settlement for purchases of beneficial interests in a global security upon the
original issuance of this security may be required to be made in immediately
available funds.
PLAN OF DISTRIBUTION
First Union may sell securities to or through underwriters, including First
Union Securities, Inc., an affiliate of First Union, to be designated at
various times, and also may sell securities directly to other purchasers or
through agents. The distribution of securities may be effected at various times
in one or more transactions at a fixed price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
The debt securities, preferred stock, Class A preferred stock, depositary
shares and warrants will be new issues of securities with no established
trading market. It has not presently been established whether the underwriters,
if any, of these securities will make a market in these securities. If a market
in these securities is made by those underwriters, this market making may be
discontinued at any time without notice. No assurance can be given as to the
liquidity of the trading market for these securities.
This prospectus and the related prospectus supplements may be used by First
Union Securities, Inc., an affiliate of First Union, for offers and sales
related to market-making transactions in the securities. First Union
Securities, Inc. may act as principal or agent in these transactions. These
sales will be made at prices related to prevailing market prices at the time of
sale or otherwise.
In facilitating the sale of securities, underwriters may receive
compensation from First Union or from purchasers of securities for whom they
may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell securities to or through dealers, and these dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agents. Underwriters, dealers and agents that participate in the
distribution of securities may be considered underwriters, and any discounts or
commissions received by them from First Union and any profit on the resale of
securities by them may be considered underwriting discounts and commissions
under the Securities Act. Any such underwriter or agent will be identified, and
any such compensation received from First Union will be described, in the
prospectus supplement relating to those securities.
Unless otherwise mentioned in the relevant prospectus supplement, the
obligations of any underwriters to purchase the securities will be subject to
certain conditions precedent, and each of the underwriters with respect to a
sale of securities will be obligated to purchase all of its securities if any
are purchased. Unless otherwise mentioned in the relevant prospectus
supplement, any such agent involved in the offer and sale of the securities in
respect of which this prospectus is being delivered will be acting on a best
efforts basis for the period of its appointment.
In connection with an offering of securities, underwriters may purchase and
sell these securities in the open market. These transactions may include over-
allotment and stabilizing transactions and purchases to cover short positions
created by underwriters with respect to the offering. Stabilizing transactions
consist of certain bids or purchases for preventing or retarding a decline in
the market price of the securities; and short positions created by underwriters
involve the sale by underwriters of a greater number of securities than they
are required to purchase from First Union in the offering. Underwriters also
may impose a penalty bid, by which selling concessions allowed to broker-
dealers in respect of the securities sold in the offering may be reclaimed by
underwriters if such securities are repurchased by underwriters in stabilizing
or covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the securities, which may be higher than the price
that might otherwise prevail in the open market; and these activities, if
commenced, may be discontinued at any time. These transactions may be effected
on the New York Stock Exchange, in the over-the-counter market or otherwise.
31
Under agreements which First Union may enter into, underwriters, agents and
their controlling persons who participate in the distribution of securities may
be entitled to indemnification by First Union against certain liabilities,
including liabilities under the Securities Act.
If so noted in the prospectus supplement relating to any securities, First
Union will authorize dealers or other persons acting as First Union's agents to
solicit offers by certain institutions to purchase any securities from First
Union under contracts providing for payment and delivery on a future date.
Institutions with which these contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others. First Union must approve
such institutions in all cases. The obligations of any purchaser under any of
these contracts will be subject to the condition that the purchase of any
securities shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
The participation of First Union Securities, Inc. in the offer and sale of
the securities must comply with the requirements of Rule 2720 of the National
Association of Securities Dealers, Inc. regarding underwriting securities of an
"affiliate". No NASD member participating in offers and sales will execute a
transaction in the securities in a discretionary account without the prior
specific written approval of such member's customer.
If First Union offers and sells securities directly to a purchaser or
purchasers in respect of which this prospectus is delivered, purchasers
involved in the reoffer or resale of such securities, if these purchasers may
be considered underwriters as that term is defined in the Securities Act, will
be named and the terms of their reoffers or resales will be mentioned in the
relevant prospectus supplement. These purchasers may then reoffer and resell
such securities to the public or otherwise at varying prices to be determined
by such purchasers at the time of resale or as otherwise described in the
relevant prospectus supplement. Purchasers of securities directly from First
Union may be entitled under agreements that they may enter into with First
Union to indemnification by First Union against certain liabilities, including
liabilities under the Securities Act, and may engage in transactions with or
perform services for First Union in the ordinary course of their business or
otherwise.
Underwriters or agents and their associates may be customers of (including
borrowers from), engage in transactions with, and/or perform services for,
First Union, the senior trustee and the subordinated trustee, in the ordinary
course of business.
VALIDITY OF SECURITIES
The validity of any securities will be passed upon for First Union by Kent
S. Hathaway, Esq., Senior Vice President and Deputy General Counsel of First
Union, and for any underwriters or agents by Sullivan & Cromwell, 125 Broad
Street, New York, New York. Sullivan & Cromwell will rely upon the opinion of
Mr. Hathaway as to matters of North Carolina law, and Mr. Hathaway will rely
upon the opinion of Sullivan & Cromwell as to matters of New York law. Mr.
Hathaway owns shares of First Union's common stock and holds options to
purchase additional shares of First Union's common stock. Sullivan & Cromwell
regularly performs legal services for First Union. Certain members of Sullivan
& Cromwell performing these legal services own shares of First Union's common
stock.
EXPERTS
The consolidated balance sheets of First Union as of December 31, 1999 and
1998, 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, 1999, included in First Union's 1999 Annual Report to
Stockholders which is incorporated by reference in First Union's 1999 Annual
Report on Form 10-K and incorporated by reference herein, have been
incorporated by reference herein in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
32
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No person has been authorized to give any information or to make any represen-
tations other than those contained in this prospectus supplement or the pro-
spectus and, if given or made, such information or representations must not be
relied upon as having been authorized. This prospectus supplement and the pro-
spectus do not constitute an offer to sell or a solicitation of an offer to buy
any securities other than the securities described in this prospectus supple-
ment or an offer to sell or solicitation of an offer to buy such securities in
any circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this prospectus supplement or the prospectus nor any sale made
hereunder or thereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of First Union since the date
hereof or that the information contained herein or therein is correct as of any
time subsequent to the date of such information.
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TABLE OF CONTENTS
Page
----
Prospectus Supplement
Description of Notes....................................................... S-3
Recent Developments........................................................ S-4
Use of Proceeds............................................................ S-4
Clearstream and Euroclear Clearance and
Settlement................................................................ S-4
Underwriting............................................................... S-7
Tax Considerations......................................................... S-9
General Information........................................................ S-13
Validity of Securities..................................................... S-14
Experts.................................................................... S-14
Prospectus
About This Prospectus...................................................... 1
Where You Can Find More Information........................................ 2
Forward-Looking Statements................................................. 3
First Union Corporation.................................................... 3
Use of Proceeds............................................................ 4
Consolidated Earnings Ratios............................................... 4
Regulatory Considerations.................................................. 5
Description of Common Stock................................................ 6
Description of Preferred Stock and Class A Preferred Stock................. 10
Description of Depositary Shares........................................... 14
Description of Debt Securities............................................. 17
Description of Warrants.................................................... 26
Global Securities.......................................................... 29
Plan of Distribution....................................................... 31
Validity of Securities..................................................... 32
Experts.................................................................... 32
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$1,750,000,000
Wachovia Corporation
(Formerly named First Union Corporation)
4.95% Global Notes
Due November 1, 2006
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[LOGO] FIRST UNION/WACHOVIA
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Wachovia Securities
Barclays Capital
Credit Suisse First Boston
JPMorgan Chase & Co.
Merrill Lynch & Co.
Salomon Smith Barney
Guzman & Company
Keefe, Bruyette & Woods, Inc.
Utendahl Capital Partners, L.P.
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