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As filed with the Securities and Exchange Commission on September 10, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WACHOVIA CORPORATION NORTH CAROLINA 56-1473727
WACHOVIA CAPITAL TRUST VI DELAWARE 56-6518499
WACHOVIA CAPITAL TRUST VII DELAWARE 56-6518679
WACHOVIA CAPITAL TRUST VIII DELAWARE 56-6518678
(EXACT NAME OF EACH REGISTRANT AS (STATE OR OTHER
SPECIFIED IN ITS CHARTER) JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR IDENTIFICATION NO.)
ORGANIZATION)
100 NORTH MAIN STREET AND 191 PEACHTREE STREET, N.E.
WINSTON-SALEM, NORTH CAROLINA 27101 ATLANTA, GEORGIA 30303
(336) 732-5141 (404) 332-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
KENNETH W. MCALLISTER
WACHOVIA CORPORATION
100 NORTH MAIN STREET
WINSTON-SALEM, NORTH CAROLINA 27101
(336) 732-5141
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
DANIEL M. ROSSNER
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 839-5300
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 ("Securities Act"), other than Securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT(1) PRICE(1) FEE(2)
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Junior Subordinated Deferrable Interest
Debentures of Wachovia Corporation(3) ........... $1,000,000 $1,000 $1,000,000 N/A
Preferred Securities of Wachovia Capital Trusts
VI, VII and VIII, severally ("Preferred 1,000 $1,000 $1,000,000 $295
Securities")(3)..................................
Guarantees (the "Guarantees") of Preferred
Securities of Wachovia Capital Trusts VI, VII
and VIII by Wachovia Corporation(4)(5)........... N/A N/A N/A N/A
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(1) Estimated solely for purposes of calculating the registration fee,
exclusive of accrued interest and dividends, if any.
(2) Calculated pursuant to Rule 457.
(3) The Junior Subordinated Deferrable Interest Debentures of Wachovia
Corporation will be purchased by Wachovia Capital Trust VI, Wachovia
Capital Trust VII and Wachovia Capital Trust VIII with the proceeds of the
sale of the Preferred Securities.
(4) No separate consideration will be received for any Guarantee or any other
obligations.
(5) This Registration Statement is deemed to cover the Junior Subordinated
Deferrable Interest Debentures of Wachovia Corporation, the rights of
holders of the Junior Subordinated Deferrable Interest Debentures of
Wachovia Corporation under the Indenture, the rights of the holder of the
Preferred Securities of Wachovia Capital Trust VI, Wachovia Capital Trust
VII and Wachovia Capital Trust VIII under each Declaration, the rights of
holders of Preferred Securities under the Guarantees, which taken together,
fully irrevocably and unconditionally guarantee all of the respective
obligations of Wachovia Capital Trust VI, Wachovia Capital Trust VII and
Wachovia Capital Trust VIII under the Preferred Securities.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY
BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 1998
PROSPECTUS SUPPLEMENT
(To Prospectus Dated __________, 1998)
$[ ]
WACHOVIA CAPITAL TRUST VI
[ ]% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
WACHOVIA CORPORATION
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The _____% Capital Securities (the "Capital Securities"), offered hereby
represent preferred beneficial interests in Wachovia Capital Trust VI, a
statutory business trust formed under the laws of the State of Delaware (the
"Trust"). Wachovia Corporation, a North Carolina corporation ("Wachovia" or the
"Corporation"), will be the owner of all the beneficial interests represented by
common securities of the Trust (the "Common Securities" and, together with the
Capital Securities, the "Trust Securities"). (Continued on next page)
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SEE "RISK FACTORS" BEGINNING ON PAGE S-9 HEREOF FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE CAPITAL SECURITIES.
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THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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UNDERWRITING PROCEEDS TO
PRICE TO COMMISSIONS THE TRUST
PUBLIC(1) AND DISCOUNTS(2) (3)(4)
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Per Capital Security............................. $1,000 (3) $1,000
Total ........................................... $ (3) $
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(1) Plus accrued distributions from ____________, 1998.
(2) The Trust and the Corporation have each agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Capital Securities
will be invested in the Junior Subordinated Debentures, the Corporation has
agreed to pay to the Underwriters as compensation for their arranging the
investment therein of such proceeds $ per Capital Security (or $________ in
the aggregate). See "Underwriting."
(4) Expenses of the offering which are payable by the Corporation are estimated
to be $ .
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The Capital Securities are offered, subject to prior sale, when, as and if
accepted by the Underwriters named herein and subject to their right to reject
orders in whole or in part. It is expected that delivery of the Capital
Securities will be made on or about _____________, 1998 through the book entry
facilities of The Depository Trust Company in New York, New York, against
payment therefor in immediately available funds.
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_________, 1998.
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IN CONNECTION WITH CERTAIN OFFERINGS OF CAPITAL SECURITIES MADE HEREBY,
CERTAIN PERSONS MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE
AFFECT THE PRICE OF THE CAPITAL SECURITIES, INCLUDING OVER-ALLOTMENT,
STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH CAPITAL SECURITIES, AND THE
IMPOSITION OF PENALTY BIDS IN CONNECTION WITH SUCH OFFERINGS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING" IN THIS PROSPECTUS SUPPLEMENT AND "PLAN
OF DISTRIBUTION" IN THE ACCOMPANYING PROSPECTUS.
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(cover page continued)
The Trust exists for the sole purpose of issuing the Trust Securities and
investing the proceeds thereof in ____% Junior Subordinated Deferrable Interest
Debentures (the "Junior Subordinated Debentures"), to be issued by the
Corporation. The Junior Subordinated Debentures will mature on ____________
(such date, the "Stated Maturity Date"). The Capital Securities will have a
preference over the Common Securities under certain circumstances with respect
to cash distributions and amounts payable on liquidation, redemption or
otherwise. See "Description of Preferred Securities--Subordination of Common
Securities" in the accompanying Prospectus.
Holders of the Trust Securities will be entitled to receive cumulative
cash distributions, accumulating from the date of original issuance and payable
semi-annually in arrears on and ______________ of each year, commencing
______________, at the annual rate of _______% of the Liquidation Amount of
$1,000 per Capital Security ("Distributions"). So long as no Debenture Event of
Default (as defined herein) has occurred and is continuing, the Corporation will
have the right to defer payments of interest on the Junior Subordinated
Debentures at any time or from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each deferral period (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity Date of the Junior Subordinated Debentures. Upon the termination
of any such Extension Period and the payment of all amounts then due, the
Corporation may elect to begin a new Extension Period subject to the
requirements set forth herein. If and for so long as interest payments on the
Junior Subordinated Debentures are so deferred, Distributions on the Trust
Securities will also be deferred and the Corporation will not be permitted,
subject to certain exceptions described herein, to declare or pay any cash
distributions with respect to the Corporation's capital stock (which includes
common and preferred stock) or to make any payment with respect to debt
securities of the Corporation that rank pari passu with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of Distributions
to which holders of the Trust Securities are entitled will continue to
accumulate) at the rate of ____% per annum, compounded semi-annually, and
holders of Trust Securities will be required to accrue interest income for
United States federal income tax purposes. See "Description of Junior
Subordinated Debentures--Option to Extend Interest Payment Date" and "Certain
Federal Income Tax Considerations--Interest Income and Original Issue Discount."
The Corporation will, through the Guarantee, the Common Guarantee, the
Declaration, the Junior Subordinated Debentures and the Indenture (each as
defined herein), taken together, fully, irrevocably and unconditionally
guarantee all of the Trust's obligations under the Trust
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Securities. See "Relationship Among the Preferred Securities, the Corresponding
Junior Subordinated Debentures and the Guarantees--Full and Unconditional
Guarantee" in the accompanying Prospectus. The Guarantee and the Common
Guarantee will guarantee the payments of Distributions and payments on
liquidation or redemption of the Trust Securities, but in each case only to the
extent that the Trust holds funds on hand legally available therefor and has
failed to make such payments, as described herein. See "Description of
Guarantees" in the accompanying Prospectus. If the Corporation fails to make a
required payment on the Junior Subordinated Debentures, the Trust will not have
sufficient funds to make the related payments, including Distributions on the
Trust Securities. The Guarantee and the Common Guarantee will not cover any such
payment when the Trust does not have sufficient funds legally available
therefor. In such event, a holder of Capital Securities may institute a legal
proceeding directly against the Corporation to enforce payment to such holder of
accrued but unpaid interest on Junior Subordinated Debentures with a principal
amount equal to the Liquidation Amount of the Capital Securities held by such
holder. See "Description of Junior Subordinated Debentures--Enforcement of
Certain Rights By Holders of Preferred Securities" in the accompanying
Prospectus. The obligations of the Corporation under the Guarantee and the
Junior Subordinated Debentures will be unsecured and subordinate and rank junior
in right of payment to the extent and in the manner set forth in the Indenture
to all Senior Indebtedness of the Corporation (as defined in "Description of
Junior Subordinated Debentures--Subordination" in the accompanying Prospectus),
which totalled approximately $1.67 billion at June 30, 1998. This amount does
not reflect $.35 billion of 6.25% Subordinated Notes due August 4, 2008 issued
by the Corporation on August 4, 1998 which constitute Senior Indebtedness (as
defined herein).
The Trust Securities will be subject to mandatory redemption in a Like
Amount (as defined herein), (i) in whole but not in part, on the Stated Maturity
Date upon repayment of the Junior Subordinated Debentures at a redemption price
equal to the principal amount of, plus accrued interest on, the Junior
Subordinated Debentures (the "Maturity Redemption Price"), (ii) in whole but not
in part, at any time before _____________, contemporaneously with the optional
prepayment of the Junior Subordinated Debentures, upon the occurrence and
continuation of a Special Event (as defined herein) at a redemption price equal
to the Special Event Prepayment Price (as defined herein) (the "Special Event
Redemption Price"), and (iii) in whole or in part, on or after ________________,
contemporaneously with the optional prepayment by the Corporation of the Junior
Subordinated Debentures, at a redemption price equal to the Optional Prepayment
Price (as defined herein) (the "Optional Redemption Price"). Any of the Maturity
Redemption Price, the Special Event Redemption Price and the Optional Redemption
Price may be referred to herein as the "Redemption Price." See "Description of
Capital Securities--Redemption" and "Description of the Junior Subordinated
Debentures--Optional Prepayment" and "--Special Event Prepayment."
Subject to the Corporation having received prior approval of the Board
of Governors of the Federal Reserve System (the "Federal Reserve"), if then
required under applicable capital guidelines or policies of the Federal Reserve,
the Junior Subordinated Debentures will be prepayable prior to the Stated
Maturity Date at the option of the Corporation (i) on or after _______________,
in whole or in part, at a prepayment price (the "Optional Prepayment Price")
equal to _____% of the principal amount thereof on _____________ (the "Initial
Optional Prepayment Date"), declining ratably on each ____________ thereafter to
100% on or after ____________, plus accrued interest thereon to the date of
prepayment, or (ii) at any time before
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_______________, in whole but not in part, upon the occurrence and continuation
of a Special Event, at a prepayment price (the "Special Event Prepayment Price")
equal to the greater of (a) 100% of the principal amount thereof or (b) the sum,
as determined by a Quotation Agent (as defined herein), of the present values of
the principal amount and premium payable as part of the Optional Prepayment
Price with respect to an optional redemption of such Junior Subordinated
Debentures on _________________, together with scheduled payments of interest
from the prepayment date to the Initial Optional Prepayment Date, in each case
discounted to the prepayment date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as
defined herein) plus, in either case, accrued and unpaid interest thereon to the
date of prepayment. Either of the Optional Prepayment Price or the Special Event
Prepayment Price may be referred to herein as the "Prepayment Price." See
"Description of Junior Subordinated Debentures--Optional Prepayment" and
"--Special Event Prepayment."
The Corporation, as the direct or indirect holder of the outstanding
Common Securities, will have the right at any time to terminate the Trust and
cause a Like Amount of the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust, subject to (i)
the Corporation having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of the Capital Securities
and (ii) the prior approval of the Federal Reserve, if then required under
applicable capital guidelines or policies of the Federal Reserve. Unless the
Junior Subordinated Debentures are distributed to the holders of the Trust
Securities, in the event of a liquidation of the Trust as described herein,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, the holders of the Capital Securities generally will be entitled
to receive a Liquidation Amount of $1,000 per Capital Security plus accumulated
and unpaid Distributions thereon to the date of payment. See "Description of
Preferred Securities--Liquidation Distribution upon Termination" in the
accompanying Prospectus and "Certain Federal Income Tax Considerations--Receipt
of Junior Subordinated Debentures or Cash Upon Liquidation of the Trust."
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE TRUST OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
----------------------
The information in this Prospectus Supplement supplements, and should
be read in conjunction with, the information contained in the accompanying
Prospectus. As used herein, (i) the "Indenture" means the Indenture, dated as of
January 31, 1997 (the "Original Indenture"), as amended and supplemented from
time to time, between the Corporation and The First National Bank of Chicago, as
trustee (the "Debenture Trustee"), as supplemented by the supplemental
indenture, to be dated __________, 1998 (the "Second Supplemental Indenture" and
together with the Original Indenture, the "Indenture") relating to the Junior
Subordinated Debentures, (ii) the "Declaration" means the Amended and Restated
Declaration of Trust relating to the Trust among the Corporation, as Sponsor,
The First National Bank of Chicago, as Property Trustee (the "Property
Trustee"), First Chicago Delaware Inc., as Delaware Trustee (the "Delaware
Trustee"), and the Administrative Trustees named therein (collectively, with the
Property Trustee and Delaware Trustee, the "Issuer Trustees"), (iii) the
"Guarantee" means the Guarantee Agreement relating to the Capital Securities
between the Corporation and The First National Bank of Chicago, as trustee (the
"Guarantee Trustee") and (iv) the "Common Guarantee" means the Common Securities
Guarantee Agreement of the Corporation. Each of the other capitalized terms used
in this Prospectus Supplement and not otherwise defined in this Prospectus
Supplement has the meaning set forth in the accompanying Prospectus.
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement and in the
accompanying Prospectus.
WACHOVIA CORPORATION
Wachovia Corporation ("Wachovia" or the "Corporation"), a North
Carolina corporation, is an interstate bank holding company serving regional,
national and international markets and maintains dual headquarters in Atlanta,
Georgia and Winston-Salem, North Carolina. At June 30, 1998, Wachovia had total
assets of $64.7 billion, deposits of $39.9 billion, and a market capitalization
of $17.5 billion. Based on its consolidated asset size and market capitalization
at June 30, 1998, Wachovia was ranked 18 and 16. respectively, among domestic
U.S. bank holding companies. The Corporation has one principal banking
subsidiary, Wachovia Bank, National Association ("Wachovia Bank"), the assets of
which currently constitute substantially all of the assets of the Corporation.
The Corporation also has subsidiaries engaged in large corporate and
institutional relationship management and business development, corporate
leasing, remittance processing, insurance and brokerage services. Wachovia is a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended, and is a savings and loan holding company within the meaning of the
Home Owners' Loan Act of 1933, as amended. Wachovia's common stock is traded on
the New York Stock Exchange under the symbol WB.
WACHOVIA CAPITAL TRUST VI
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) a Declaration executed by the Corporation, as Sponsor, The First
National Bank of Chicago, as Property Trustee, and First Chicago Delaware Inc.,
as Delaware Trustee, and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on March 24, 1998. The Trust's affairs are conducted
by the Issuer Trustees: the Property Trustee, the Delaware Trustee, and the
three individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the proceeds from the
sale of the Trust Securities to acquire the Junior Subordinated Debentures
issued by the Corporation, and (iii) engaging in only those other activities
necessary, advisable or incidental thereto (such as registering the transfer of
the Trust Securities). Accordingly, the Junior Subordinated Debentures will be
the sole assets of the Trust, and payments under the Junior Subordinated
Debentures will be the sole revenue of the Trust. All of the Common Securities
will be owned by the Corporation.
THE OFFERING
Securities Offered $___,000,000 aggregate
Liquidation Amount ____% Capital
Securities (Liquidation Amount $1,000 per
Capital Security).
Offering Price $1,000 per Capital Security plus
accumulated Distributions, if any, from
________, 1998.
Distribution Dates ________ and __________ of each year, commencing _________, 1998.
Extension Periods So long as no Debenture Event of Default (as defined herein) has occurred
and is continuing, Distributions on Capital Securities may be deferred for
the duration of any Extension Period elected by the
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Corporation with respect to the payment of interest on the Junior Subordinated Debentures.
No Extension Period will exceed 10 consecutive semi-annual periods or extend beyond the
Stated Maturity Date. See "Description of Junior Subordinated Debentures--Option to Extend
Interest Payment Date" and "Certain Federal Income Tax Considerations--Interest Income and
Original Issue Discount."
Ranking The Capital Securities will rank pari passu, and payments thereon will be made pro rata,
with the Common Securities except as described under "Description of Preferred
Securities--Subordination of Common Securities." The Junior Subordinated Debentures will
rank pari passu with the 7.64% Junior Subordinated Deferrable Interest Debentures due
January 15, 2027 of the Corporation, the Floating Rate Junior Subordinated Deferrable
Interest Debentures Due January 15, 2027 of the Corporation, the Floating Rate Junior
Subordinated Debt Securities Due April 15, 2027 of Central Fidelity Banks, Inc. (the
obligations with respect to which were assumed by the Corporation in connection with the
merger, on December 15, 1997, of the Corporation and Central Fidelity Banks, Inc.), the
7.965% Junior Subordinated Deferrable Interest Debentures due June 1, 2027 of the
Corporation and with all other junior subordinated debentures to be issued by the
Corporation ("Other Debentures"), which will be issued and sold (if at all) to other trusts
to be established by the Corporation (if any), in each case similar to the Trust ("Other
Trusts"), and will be unsecured and subordinate and rank junior in right of payment to all
Senior Indebtedness to the extent and in the manner set forth in the Indenture. See
"Description of Junior Subordinated Debentures." The Guarantee will constitute an unsecured
obligation of the Corporation and will be subordinate and rank junior in right of payment to
all Senior Indebtedness to the extent and in the manner set forth in the Guarantee
Agreement. See "Description of the Guarantee."
Redemption The Trust Securities will be subject to mandatory redemption in a Like Amount, (i) in whole
but not in part, on the Stated Maturity Date upon repayment of the Junior Subordinated
Debentures, (ii) in whole but not in part, at any time before _______, 2008
contemporaneously with the optional prepayment of the Junior Subordinated Debentures by the
Corporation upon the occurrence and continuation, if certain conditions are met, of a
Special Event and (iii) in whole or in part, on or after ________, 2008 contemporaneously
with the optional prepayment by the Corporation of the Junior Subordinated Debentures, in
each case at the applicable Redemption Price. See "Description of Capital
Securities--Redemption."
ERISA Considerations Prospective purchasers should consider the restrictions on purchase set forth under "ERISA
Considerations."
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Use of Proceeds The proceeds to the Trust from the sale of the Capital Securities will be invested by the
Trust in the Junior Subordinated Debentures. The Corporation intends to use the net proceeds
from the sale of the Junior Subordinated Debentures for general corporate purposes which may
include, but not be limited to, investments in and advances to the Corporation's
subsidiaries and the redemption of certain of the Corporation's outstanding debt securities.
The Capital Securities will be eligible to qualify as Tier I Capital under the capital
guidelines of the Federal Reserve, provided that under current Federal Reserve guidelines no
more than 25% of the Corporation's Tier I Capital may comprise Capital Securities and other
capital securities and cumulative preferred stock of the Corporation. See "Use of Proceeds."
Risk Factors Prospective investors should carefully consider the matters set forth under "Risk Factors."
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RISK FACTORS
Prospective purchasers of Capital Securities should carefully review
the information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following matters.
In addition, because holders of Capital Securities may receive Junior
Subordinated Debentures in exchange therefor upon liquidation of the Trust,
prospective purchasers of Capital Securities are also making an investment
decision with regard to the Junior Subordinated Debentures and should carefully
review all the information regarding the Junior Subordinated Debentures
contained herein.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND JUNIOR SUBORDINATED
DEBENTURES
The obligations of the Corporation under the Guarantee and under the
Junior Subordinated Debentures will be unsecured and subordinate and rank junior
in right of payment to the extent and in the manner set forth in the Indenture
to all present and future Senior Indebtedness of the Corporation. No payment may
be made of the principal of, or premium, if any, or interest on the Junior
Subordinated Debentures, or in respect of any redemption, retirement, purchase
or other acquisition of any of the Junior Subordinated Debentures, at any time
when (i) there is a default in the payment of the principal of, or premium, if
any, or interest on or otherwise in respect of any Senior Indebtedness, whether
at maturity or at a date fixed for prepayment or by declaration or otherwise, or
(ii) any event of default with respect to any Senior Indebtedness has occurred
and is continuing, or would occur as a result of such payment on the Junior
Subordinated Debentures or any redemption, retirement, purchase or other
acquisition of any of the Junior Subordinated Debentures, permitting the holders
of such Senior Indebtedness (or a trustee on behalf of the holders thereof) to
accelerate the maturity thereof. At June 30, 1998, the aggregate principal
amount of outstanding Senior Indebtedness of the Corporation was approximately
$1.67 billion. This amount does not reflect $.35 billion of 6.25% Subordinated
Notes due August 4, 2008 issued by the Corporation on August 4, 1998 which
constitute Senior Indebtedness. Because the Corporation is a bank holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization or
otherwise (and thus the ability of holders of the Capital Securities to benefit
indirectly from such distribution) is subject to the prior claims of creditors
of that subsidiary, except to the extent that the Corporation may itself be
recognized as a creditor of that subsidiary. At June 30, 1998, the subsidiaries
of the Corporation had total liabilities (excluding liabilities owed to the
Corporation) of approximately $55.2 billion. Accordingly, the Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders of Junior
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Junior Subordinated Debentures. None of the Indenture, the
Guarantee, the Common Guarantee or the Declaration places any limitation on the
amount of secured or unsecured debt, including Senior Indebtedness, that may be
incurred by the Corporation or any of its subsidiaries. See "Description of the
Guarantees--Status of the Guarantees" and "Description of the Junior
Subordinated Debentures--Subordination" in the accompanying Prospectus.
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The ability of the Trust to pay amounts due on the Capital Securities
is dependent upon the Corporation making payments on the Junior Subordinated
Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSIDERATIONS
So long as no Debenture Event of Default shall have occurred and be
continuing, the Corporation will have the right under the Indenture to defer
payments of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity Date. Upon any such deferral, semi-annual
Distributions on the Capital Securities by the Trust will be deferred (and the
amount of Distributions to which holders of the Capital Securities are entitled
will accumulate additional Distributions thereon at the rate of ____% per annum,
compounded semi-annually, but not exceeding the interest rate then accruing on
the Junior Subordinated Debentures) from the relevant payment date for such
Distributions during any such Extension Period.
The Corporation may extend any existing Extension Period, provided that
such extension does not cause such Extension Period to exceed 10 consecutive
semi-annual periods or to extend beyond the Stated Maturity Date. Upon the
expiration of any Extension Period and the payment of all interest then accrued
and unpaid on the Junior Subordinated Debentures (together with interest thereon
at the annual rate of ____%, compounded semi-annually, to the extent permitted
by applicable law), the Corporation may elect to begin a new Extension Period,
subject to the above requirements. There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period. See "Description of
Capital Securities--Distributions" and "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Date."
The Corporation has no current plan to exercise its right to defer
payments of interest on the Junior Subordinated Debentures. However, should the
Corporation exercise its right to defer payments of interest on the Junior
Subordinated Debentures, each holder of Capital Securities will be required to
accrue income (as original issue discount ("OID")) in respect of the deferred
stated interest allocable to its Capital Securities for United States federal
income tax purposes, which will be allocated but not distributed to holders of
Capital Securities. As a result, during an Extension Period, each holder of
Capital Securities will recognize income for United States federal income tax
purposes in advance of the receipt of cash and will not receive the cash related
to such income from the Trust if the holder disposes of the Capital Securities
prior to the record date for the payment of Distributions thereafter. See
"Certain Federal Income Tax Considerations--Interest Income and Original Issue
Discount" and "--Sales of Capital Securities."
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures, the market price of the Capital
Securities is likely to be affected. A holder that disposes of its Capital
Securities during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its Capital
Securities. In addition, the mere existence of the Corporation's right to defer
payments of interest on the Junior Subordinated Debentures may cause the market
price of the Capital Securities to be more volatile than the market prices of
other securities on which OID accrues that are not subject to such deferrals.
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REDEMPTION OR DISTRIBUTION
Upon the occurrence and continuation of a Special Event (including a
Tax Event or a Regulatory Capital Event, in each case, as defined under
"Description of Junior Subordinated Debentures--Special Event Prepayment"),
prior to ______________ the Corporation will have the right to prepay the Junior
Subordinated Debentures in whole (but not in part) at the Special Event
Prepayment Price within 90 days following the occurrence of such Special Event
and therefore cause a mandatory redemption of the Capital Securities at the
Special Event Redemption Price. On or after _______________, the Corporation may
redeem the Junior Subordinated Debentures in whole or in part for any reason and
thereby cause an optional redemption of the Capital Securities, in whole or in
part, at the Optional Redemption Price. The Corporation also will have the right
at any time to terminate the Trust and, after satisfaction of claims of
creditors as provided by applicable law, to cause the Junior Subordinated
Debentures to be distributed to the holders of the Trust Securities. Any such
distribution or redemption is subject to the Corporation having received prior
approval of the Federal Reserve to do so if then required under applicable
guidelines or policies of the Federal Reserve. See "Description of Capital
Securities--Redemption" and "--Liquidation of the Trust and Distribution of the
Junior Subordinated Debentures."
Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of the Trust would not be a
taxable event to holders of the Capital Securities. If, however, the Trust is
characterized for United States federal income tax purposes as an association
taxable as a corporation at the time of dissolution of the Trust, the
distribution of the Junior Subordinated Debentures may constitute a taxable
event to holders of Capital Securities. Moreover, upon the occurrence of a
Special Event, a dissolution of the Trust in which holders of the Capital
Securities receive cash would be a taxable event to such holders. See "Certain
Federal Income Tax Considerations--Receipt of Junior Subordinated Debentures or
Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Capital Securities if a dissolution or liquidation of the Trust
were to occur. Accordingly, the Capital Securities or the Junior Subordinated
Debentures may trade at a discount to the price that an investor pays to
purchase the Capital Securities offered hereby. Because holders of Capital
Securities may receive Junior Subordinated Debentures, prospective purchasers of
Capital Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See "Description
of Capital Securities--Redemption" and "--Liquidation of the Trust and
Distribution of the Junior Subordinated Debentures" and "Description of Junior
Subordinated Debentures."
On February 6, 1997, as part of the Clinton Administration's Fiscal
1998 Budget Proposal, the Treasury Department proposed legislation (the
"Proposed Legislation") which would, among other things, have generally denied
corporate issuers a deduction for interest in respect of certain debt
obligations, such as the Junior Subordinated Debentures, if such debt
obligations have a maximum term in excess of 15 years and are not shown as
indebtedness on the issuer's applicable consolidated balance sheet. As of the
date of this Prospectus Supplement,
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no such legislation has been enacted. Furthermore, no similar legislation was
proposed as part of President Clinton's Fiscal 1999 Budget Proposal. No
assurance can be given that a similar proposal will not be enacted in the future
that may give rise to a Tax Event, in which event the Corporation would be
permitted, upon approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve, to cause a
redemption of the Trust Securities at the Special Event Redemption Price by
electing to prepay the Junior Subordinated Debentures at the Special Event
Prepayment Price. See "Description of Capital Securities--Redemption,"
"--Description of Junior Subordinated Debentures--Special Event Prepayment" and
"Certain Federal Income Tax Considerations--Proposed Tax Legislation."
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for Capital
Securities or Junior Subordinated Debentures distributed to the holders of
Capital Securities if a termination of the Trust were to occur. Accordingly, the
Capital Securities or the Junior Subordinated Debentures may trade at a discount
from the price that the investor paid to purchase the Capital Securities offered
hereby. Because holders of Capital Securities may receive Junior Subordinated
Debentures in liquidation of the Trust and because Distributions are otherwise
limited to payments on the Junior Subordinated Debentures, prospective
purchasers of Capital Securities are also making an investment decision with
regard to the Junior Subordinated Debentures and should carefully review all the
information regarding the Junior Subordinated Debentures contained herein. See
"Description of Junior Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The First
National Bank of Chicago will act as indenture trustee under the Guarantee (the
"Guarantee Trustee") for the purpose of compliance with the Trust Indenture Act
and will hold the Guarantee for the benefit of the holders of the Capital
Securities. The First National Bank of Chicago will also act as Property Trustee
under the Declaration and as Debenture Trustee under the Indenture. First
Chicago Delaware Inc. will act as Delaware Trustee under the Declaration. The
Guarantee will guarantee to the holders of the Capital Securities the following
payments, to the extent not paid by the Trust: (i) any accumulated and unpaid
Distributions required to be paid on the Capital Securities, to the extent that
the Trust has funds on hand legally available therefor; (ii) the applicable
Redemption Price with respect to any Capital Securities called for redemption,
to the extent that the Trust has funds on hand legally available therefor; and
(iii) upon a voluntary or involuntary termination, winding up or liquidation of
the Trust (unless the Junior Subordinated Debentures are distributed to holders
of the Capital Securities), the lesser of (a) the aggregate of the Liquidation
Amount and all accumulated and unpaid Distributions to the date of payment, to
the extent that the Trust has funds on hand legally available therefor on such
date and (b) the amount of assets of the Trust remaining available for
distribution to holders of the Capital Securities on such date. The holders of a
majority in Liquidation Amount of the Capital Securities will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct the
exercise of any trust power conferred upon the Guarantee Trustee. Any holder of
the Capital Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Guarantee without first
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instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person or entity. If the Corporation defaults on its obligation to pay
amounts payable under the Junior Subordinated Debentures, the Trust will not
have sufficient funds for the payment of Distributions or amounts payable on
redemption of the Capital Securities or otherwise, and, in such event, holders
of the Capital Securities will not be able to rely upon the Guarantee for
payment of such amounts. Instead, in the event a Debenture Event of Default
shall have occurred and be continuing and such event is attributable to the
failure of the Corporation to pay principal of or premium, if any, or interest
on the Junior Subordinated Debentures on the payment date on which such payment
is due and payable, then a holder of Capital Securities may institute a legal
proceeding directly against the Corporation for enforcement of payment to such
holder of the principal of or premium, if any, or interest on such Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Capital Securities of such holder (a "Direct Action").
Notwithstanding any payments made to a holder of Capital Securities by the
Corporation in connection with a Direct Action, the Corporation shall remain
obligated to pay the principal of and premium, if any, and interest on the
Junior Subordinated Debentures, and the Corporation shall be subrogated to the
rights of the holder of such Capital Securities with respect to payments on the
Capital Securities to the extent of any payments made by the Corporation to such
holder in any Direct Action. Except as described herein, holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures or to assert directly any
other rights in respect of the Junior Subordinated Debentures. See "Description
of Junior Subordinated Debentures--Enforcement of Certain Rights by Holders of
Preferred Securities" and "--Debenture Events of Default" and "Description of
Guarantees" in the accompanying Prospectus. The Declaration will provide that
each holder of Capital Securities by acceptance thereof agrees to the provisions
of the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities generally will have voting rights
relating only to the modification of the terms of the Capital Securities, the
termination or liquidation of the Trust, and the exercise of the Trust's rights
as holder of the Junior Subordinated Debentures. Holders of Capital Securities
will not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, the Issuer Trustees, which voting rights are vested
exclusively in the holder of the Common Securities, except as described under
"Description of Preferred Securities--Removal of Issuer Trustees" in the
accompanying Prospectus. The Property Trustee, the Administrative Trustees and
the Corporation may amend the Declaration without the consent of holders of
Capital Securities to ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust even if such action adversely
affects the interests of such holders. See "Description of Preferred
Securities--Voting Rights; Amendment of each Declaration" in the accompanying
Prospectus.
TRADING PRICE
The Corporation does not intend to have the Capital Securities listed
on the New York Stock Exchange or any other securities exchange. There is no
existing market for the Capital Securities and there can be no assurance as to
the liquidity of any markets that may develop for the Capital Securities, the
ability of the holders to sell their Capital Securities or at what price
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holders of the Capital Securities will be able to sell their Capital Securities
as the case may be. Future trading prices of the Capital Securities will depend
on many factors including, among other things, prevailing interest rates, the
Corporation's operating results, and the market for similar securities. The
Underwriters have informed the Trust and the Corporation that they intend to
make a market in the Capital Securities as permitted by applicable laws and
regulations. However, the Underwriters are not obligated to do so and any such
market making activity may be terminated at any time without notice to the
holders of the Capital Securities.
The Capital Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who uses the accrual method of accounting for
tax purposes (and a cash method holder, if the Junior Subordinated Debentures
are deemed to have been issued with OID) and who disposes of its Capital
Securities between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Junior Subordinated
Debentures through the date of disposition in income as ordinary income (i.e.,
interest or, possibly, OID), and to add such amount to its adjusted tax basis in
its share of the underlying Junior Subordinated Debentures deemed disposed of.
To the extent the selling price is less than the holder's adjusted tax basis
(which will include all accrued but unpaid interest), a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "Certain Federal Income Tax Considerations--Interest Income and Original
Issue Discount" and "--Sales of Capital Securities."
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WACHOVIA CAPITAL TRUST VI
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of March 24, 1998, executed by
the Corporation, as Sponsor, the Delaware Trustee and the Administrative
Trustees named therein (the "Initial Declaration"), and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
March 24, 1998. The Initial Declaration will be replaced by an amended and
restated declaration of trust executed on or prior to ___________, 1998 (the
"Issue Date") by the Corporation, as Sponsor, and the Issuer Trustees (the
"Declaration"). The Trust exists for the exclusive purposes of (i) issuing and
selling the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust, (ii) investing the gross proceeds from the sale of the
Trust Securities in the Junior Subordinated Debentures and (iii) engaging in
only those other activities necessary, advisable or incidental thereto.
Accordingly, the Junior Subordinated Debentures will be the sole assets of the
Trust and payments under the Junior Subordinated Debentures will be the sole
revenues of the Trust. All of the Common Securities will be owned directly or
indirectly by the Corporation. The Common Securities will rank pari passu, and
payments will be made thereon pro rata, with the Capital Securities, except that
upon the occurrence and during the continuance of an Event of Default under the
Declaration resulting from a Debenture Event of Default, the rights of the
Corporation as holder of the Common Securities to payments in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated and rank junior to the rights of the holders of the Capital
Securities. See "Description of Preferred Securities--Subordination of Common
Securities" in the accompanying Prospectus. The Corporation will acquire,
directly or indirectly, Common Securities in a Liquidation Amount equal to at
least 3% of the total capital of the Trust. The Trust has a term of 55 years,
but may terminate earlier as provided in the Declaration. The Trust's business
and affairs will be conducted by the Issuer Trustees appointed by the
Corporation as the direct or indirect holder of the Common Securities. The
Issuer Trustees will be The First National Bank of Chicago as the Property
Trustee (the "Property Trustee"), First Chicago Delaware Inc. as the Delaware
Trustee (the "Delaware Trustee"), and three individual trustees (the
"Administrative Trustees"). The First National Bank of Chicago, as Property
Trustee, will act as sole indenture trustee under the Declaration. The First
National Bank of Chicago will also act as indenture trustee under the Guarantee
and the Indenture. See "Description of the Guarantee" and "Description of Junior
Subordinated Debentures." The holder of the Common Securities of the Trust or,
if an Event of Default under the Declaration has occurred and is continuing, the
holders of a majority in Liquidation Amount of the Capital Securities, will be
entitled to appoint, remove or replace the Property Trustee and/or the Delaware
Trustee. In no event will the holders of the Capital Securities have the right
to vote to appoint, remove or replace the Administrative Trustees; such voting
rights will be vested exclusively in the holder of the Common Securities. The
duties and obligations of each Issuer Trustee are governed by the Declaration.
The Corporation will pay, directly or indirectly, all fees, expenses, debts and
obligations (other than the Trust Securities) related to the Trust and the
offering of the Capital Securities, including all ongoing costs, expenses and
liabilities of the Trust. The principal executive office of the Trust is
Wachovia Capital Trust VI, c/o Wachovia Corporation, 100 North Main Street,
Winston-Salem, North Carolina 27150, Attention: Chief Financial Officer. See
"The Trusts" in the accompanying Prospectus.
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It is anticipated that the Trust will not be subject to the reporting
requirements under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
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WACHOVIA CORPORATION
Wachovia Corporation (the "Corporation" or "Wachovia"), a North
Carolina corporation, is an interstate bank holding company serving regional,
national and international markets and maintains dual headquarters in Atlanta,
Georgia and Winston-Salem, North Carolina. At June 30, 1998, Wachovia had total
assets of $64.7 billion, deposits of $39.9 billion, and a market capitalization
of $17.5 billion. Based on its consolidated asset size and market capitalization
at June 30, 1998, Wachovia ranked 18 and 16, respectively, among domestic U.S.
bank holding companies. Wachovia is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended, and is a savings and loan holding
company within the meaning of the Home Owner's Loan Act of 1933, as amended.
Wachovia's common stock is traded on the New York Stock Exchange under the
symbol WB.
The Corporation has one principal banking subsidiary, Wachovia Bank,
National Association ("Wachovia Bank"), the assets of which currently constitute
substantially all of the assets of the Corporation. Wachovia Bank is a national
banking association headquartered in Winston-Salem, North Carolina. As of June
30, 1998, Wachovia Bank had total assets of $61.5 billion and deposits of $39.9
billion.
Wachovia Bank currently offers credit and deposit services and
investment and trust services to consumers primarily located in Georgia, North
Carolina, South Carolina, Virginia and Florida and to corporations located both
inside and outside of the United States. Consumer products and services are
provided through a network of retail branches and ATMs as listed in the
following table, 1-800-WACHOVIA On-Call 24 hour telephone banking, automated
Phone Access, and internet-based investing and banking at www.wachovia.com.
The Corporation also has subsidiaries engaged in large corporate and
institutional relationship management and business development, corporate
leasing, remittance processing, insurance and brokerage services. In addition to
its domestic banking offices and international banking offices in London and the
Cayman Islands, the Corporation's subsidiaries have offices in Chicago, New
York, Hong Kong, Sao Paulo and Tokyo.
The Corporation's growth strategy includes using acquisitions to gain
access to additional customers in attractive markets and to enhance product and
service capabilities. As such, the Corporation regularly evaluates acquisition
opportunities and conducts due diligence activities in connection with possible
acquisitions. As a result, acquisition discussions and, in some cases,
negotiations may take place and future acquisitions involving cash, debt or
equity securities may occur.
At June 30, 1998, the Corporation had no significant concentrations of
loans in any one industry. The Corporation has foreign credits outstanding
consisting of loans and lease financing to companies and financial institutions
primarily in Europe, Canada and Latin America. Extensions of credit in Asia were
not significant. There were no extensions of credit in Russia. At June 30, 1998,
foreign credits outstanding totaled $1.439 billion, representing 3.2% of total
loans.
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USE OF PROCEEDS
The proceeds to the Trust (without giving effect to expenses of the
offering payable by the Corporation) from the offering of the Capital Securities
will be $____. All of the proceeds from the sale of Capital Securities (together
with the proceeds of the Common Securities) will be invested by the Trust in the
Junior Subordinated Debentures. The Corporation intends that the net proceeds
from the sale of the Junior Subordinated Debentures will be used for general
corporate purposes, which may include, but not be limited to, investments in and
advances to the Corporation's subsidiaries and the redemption of certain of the
Corporation's outstanding debt securities. The precise amount and timing of the
application of such net proceeds used for such corporate purposes will depend on
the funding requirements and the availability of other funds to the Corporation
and its subsidiaries. Pending such application by the Corporation, such net
proceeds may be temporarily invested in short-term interest bearing securities.
The Capital Securities will be eligible to qualify as Tier I Capital under the
capital guidelines of the Federal Reserve, provided that under current Federal
Reserve guidelines no more than 25% of the Corporation's Tier I Capital may
comprise Capital Securities and other capital securities and cumulative
preferred stock of the Corporation.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to
fixed charges of the Corporation for the respective periods indicated.
YEARS ENDED DECEMBER 31,
SIX MONTHS --------------------------------------------------
ENDED
JUNE 30, 1998 1997 1996 1995 1994 1993
------------- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed
Charges:
Excluding interest on deposits 2.24x 1.98 2.22 2.15 2.47 3.38
Including interest on deposits 1.51x 1.40 1.52 1.50 1.64 1.73
The consolidated ratio of earnings to fixed charges has been computed
by dividing net income plus all applicable income taxes plus fixed charges by
fixed charges. Fixed charges represent all interest expense (ratios are
presented both including and excluding interest on deposits), and the portion of
net rental expense which is deemed to be equivalent to interest on long-term
debt. Interest expense (other than on deposits) includes interest on long-term
debt, federal funds purchased and securities sold under agreements to
repurchase, mortgages, commercial paper and other funds borrowed.
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CAPITALIZATION
The following table sets forth the actual unaudited consolidated
capitalization of the Corporation at June 30, 1998, as adjusted to give effect
to the consummation of the offering of Capital Securities and the application of
the estimated net proceeds from the sale of the Capital Securities. See "Use of
Proceeds." The table should be read in conjunction with the Corporation's
consolidated financial statements and notes thereto included in the documents
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference."
At June 30, 1998
----------------------------------------
Actual As Adjusted
--------------- ---------------
(in thousands)
Long-Term Debt(1)................................................ $ 4,910,623 $ 4,910,623
Redeemable capital securities of subsidiaries(2)................. 996,180 [ ]
--------------- ---------------
Total Long-Term Debt............................................. 5,906,803 [ ]
--------------- ---------------
STOCKHOLDERS' EQUITY
Preferred Stock.................................................. - -
Common Stock at $5 par value..................................... 1,033,115 1,033,115
Capital surplus.................................................. 970,584 970,584
Retained earnings................................................ 3,297,105 3,297,105
Net unrealized gain on securities available
for sale, net of tax........................................ 74,990 74,990
--------------- ---------------
Total stockholders' equity....................................... 5,375,794 5,375,794
--------------- ---------------
Total................................................... $ 11,282,597 $ [ ]
=============== ===============
- -----------------------
(1) Does not include $350 million of 6.25% Subordinated Notes due August 4,
2008 issued by the Corporation on August 4, 1998.
(2) The item "Redeemable capital securities of subsidiaries" reflects the
Capital Securities previously issued and outstanding. On December 16, 1996,
Wachovia Capital Trust I issued $300 million of 7.64% Capital Securities.
Wachovia Capital Trust I invested the proceeds of the offering of such
Capital Securities, together with $9.280 million paid by the Corporation
for Wachovia Capital Trust I's Common Securities, in $309.280 million of
7.64% Junior Subordinated Deferrable Interest Debentures Due January 15,
2027 of the Corporation. On January 31, 1997, Wachovia Capital Trust II
issued $300 million of Floating Rate Capital Securities. Wachovia Capital
Trust II invested the proceeds of the offering of such Capital Securities,
together with $9.280 million paid by the Corporation for Wachovia Capital
Trust II's Common Securities, in $305.692 million, net of discount of
$3.588 million, of the Floating Rate Junior Subordinated Deferrable
Interest Debentures Due January 15, 2027 of the Corporation. On April 23,
1997, Central
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Fidelity Capital Trust I issued $100 million of Floating Rate Capital
Securities. Central Fidelity Capital Trust I invested the proceeds of the
offering of such Capital Securities, together with $3.093 million paid by
Central Fidelity Banks, Inc. for Central Fidelity Capital Trust I's Common
Securities, in $103.093 million of the Floating Rate Junior Subordinated
Debt Securities due April 15, 2027 of Central Fidelity Banks, Inc. On
December 15, 1997, the Corporation merged with Central Fidelity Banks, Inc.
and thereby assumed Central Fidelity Banks, Inc.'s position as obligor for
the Floating Rate Junior Subordinated Debt Securities. On June 6, 1997,
Wachovia Capital Trust V issued $300 million of 7.965% Capital Securities.
Wachovia Capital Trust V invested the proceeds of the offering of such
Capital Securities, together with $9.280 million paid by the Corporation
for Wachovia Capital Trust V's Common Securities, in $309.280 million of
the 7.965% Junior Subordinated Deferrable Interest Debentures Due June 1,
2027 of the Corporation.
The Capital Securities will be issued by Wachovia Capital Trust VI.
Wachovia Capital Trust VI will invest the proceeds of the offering of the
Capital Securities, together with the amounts to be paid by the Corporation
for Wachovia Capital Trust VI's Common Securities, in $____ million of
____% Junior Subordinated Deferrable Interest Debentures Due ________, 2028
of the Corporation. The Trust is a wholly-owned subsidiary of the
Corporation and will hold the Junior Subordinated Debentures as its sole
asset. The item "Redeemable capital securities of subsidiaries" is reported
in "Other long-term debt" in the Consolidated Statements of Condition.
SUMMARY FINANCIAL DATA
The summary below should be read in connection with the financial
information included in the Corporation's 1997 Annual Report on Form 10-K and
its Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
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Six Months Ended
June 30, Year Ended December 31,
------------------ ------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(unaudited)
(dollars in millions, except per share data)
INCOME STATEMENT DATA:
Net interest income $ 1,152 $ 1,014 $ 2,094 $ 1,924 $ 1,779 $ 1,656 $ 1,609
Provision for loan losses 143 125 265 194 131 96 172
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision for loan losses 1,009 889 1,829 1,730 1,648 1,560 1,437
Other income 605 488 1,007 879 817 668 752
Other expense 1,011 809 1,967 1,509 1,442 1,343 1,354
-------- -------- -------- -------- -------- -------- --------
Income before income taxes 603 568 869 1,100 1,023 885 835
Income taxes 198 178 276 343 315 261 240
-------- -------- -------- -------- -------- -------- --------
Net income $ 405 $ 390 $ 593 $ 757 $ 708 $ 624 $ 595
======== ======== ======== ======== ======== ======== ========
PER COMMON SHARE:
Net income:
Basic $ 1.96 $ 1.97 $ 2.99 $ 3.70 $ 3.40 $ 3.00 $ 2.84
Diluted 1.93 1.94 2.94 3.65 3.36 2.96 2.80
Book value 26.02 23.07 25.13 22.90 22.08 18.79 17.98
Cash dividends declared .88 .80 1.68 1.52 1.38 1.23 1.11
Average shares outstanding (in thousands):
Basic 206,308 198,384 198,290 204,889 208,230 208,117 208,880
Diluted 210,412 201,553 201,901 207,432 210,600 210,651 212,584
AVERAGE BALANCE SHEET DATA:
Loans $ 43,862 $ 38,664 $ 39,716 $ 36,739 $ 33,510 $ 29,533 $ 25,776
Total earning assets 56,320 51,213 52,021 50,337 46,779 41,783 38,148
Total assets 63,527 56,690 57,607 55,584 51,703 46,542 42,529
Deposits 39,909 35,856 36,517 34,100 31,835 29,139 29,059
Long-term debt 6,100 6,263 6,122 6,693 5,695 5,154 2,530
Stockholders' equity 5,160 4,427 4,533 4,458 4,164 3,812 3,519
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DESCRIPTION OF CAPITAL SECURITIES
GENERAL
The following summary of certain terms and provisions of the Capital
Securities supplements the description of the terms and provisions of the
Preferred Securities set forth in the accompanying Prospectus under the heading
"Description of Preferred Securities," to which description reference is hereby
made. This summary of certain terms and provisions of the Capital Securities,
which describes the material provisions thereof, does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the
Declaration, to which reference is hereby made. The form of the Declaration has
been filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and accompanying Prospectus form a part.
DISTRIBUTIONS
The Capital Securities represent beneficial ownership interests in the
Trust, and Distributions on each Capital Security will be payable at the annual
rate of ___% of the stated Liquidation Amount of $1,000, payable semi-annually
in arrears on __________ and __________ of each year, to the holders of the
Capital Securities on the relevant record dates. The record dates for the
Capital Securities will be, for so long as the Capital Securities remain in
book-entry form, one Business Day (as defined in the accompanying Prospectus)
prior to the relevant Distribution Date (as defined herein) and, in the event
the Capital Securities are not in book-entry form, the first day of the month in
which the relevant Distribution Date (as defined herein) falls. Distributions
will accumulate from the date of original issuance. The first Distribution Date
for the Capital Securities will be __________. The amount of Distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months and, for any period of less than a full calendar month, the number
of days elapsed in such month. In the event that any date on which Distributions
are payable on the Capital Securities is not a Business Day (as defined herein),
then payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), with the same force and effect as if made on the
date such payment was originally payable (each date on which Distributions are
payable in accordance with the foregoing, a "Distribution Date"). A "Business
Day" shall mean any day other than a Saturday or a Sunday, or a day on which
banking institutions in New York, New York or Winston-Salem, North Carolina are
authorized or required by law to close. See "Description of Preferred
Securities--Distributions" in the accompanying Prospectus.
So long as no Debenture Event of Default under the Indenture has
occurred and is continuing, the Corporation has the right under the Indenture to
defer the payment of interest on the Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity Date of the Junior Subordinated
Debentures. Upon any such election, semi-annual Distributions on the Capital
Securities by the
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Trust will be deferred during such Extension Period. Distributions to which
holders of the Capital Securities are entitled will accumulate additional
Distributions thereon at the rate per annum of ___% thereof, compounded
semi-annually from the relevant Distribution Date, but not exceeding the
interest rate then accruing on the Junior Subordinated Debentures. The term
"Distributions" as used herein shall include any such additional Distributions.
During any such Extension Period, the Corporation may extend such Extension
Period, provided that such extension does not cause such Extension Period to
exceed 10 consecutive semi-annual periods including the first semi-annual period
during such Extension Period or to extend beyond the Stated Maturity Date. Upon
the termination of any such Extension Period and the payment of all amounts then
due, and subject to the foregoing limitations, the Corporation may elect to
begin a new Extension Period. The Corporation must give the Property Trustee,
the Administrative Trustees and the Debenture Trustee notice of its election of
any Extension Period or any extension thereof at least five Business Days prior
to the earlier of (i) the date the Distributions on the Capital Securities would
have been payable except for the election to begin or extend such Extension
Period and (ii) the date the Administrative Trustees are required to give notice
to any securities exchange or to holders of the Capital Securities of the record
date or the date such Distributions are payable, but in any event not less than
five Business Days prior to such record date. There is no limitation on the
number of times that the Corporation may elect to begin an Extension Period. See
"Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Date" and "Certain Federal Income Tax Considerations--Interest Income
and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal of or premium, if any, or interest on or
repay, repurchase or redeem any debt securities of the Corporation (including
other junior subordinated debentures issued by the Corporation) that rank pari
passu with or junior in right of payment to the Junior Subordinated Debentures
or (iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation if such
guarantee ranks pari passu with or junior in right of payment to the Junior
Subordinated Debentures (other than (a) dividends or distributions in shares of,
or options, warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Guarantee, (d) as a result of a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class, or series of the Corporation's capital stock for
another class or series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees or any of the Corporation's dividend
reinvestment plans).
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Although the Corporation may in the future exercise its option to defer
payments of interest on the Junior Subordinated Debentures, the Corporation has
no such current intention.
The revenue of the Trust available for distribution to holders of the
Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the Trust will invest the proceeds from the issuance and
sale of the Trust Securities. See "Description of Junior Subordinated
Debentures--General." If the Corporation does not make interest payments on the
Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Capital Securities. The payment of
Distributions (if and to the extent the Trust has funds on hand legally
available for the payment of such Distributions) will be guaranteed by the
Corporation on a limited basis as set forth herein under "Description of the
Guarantee."
REDEMPTION
Upon the repayment on the Stated Maturity Date or prepayment prior to
the Stated Maturity Date of the Junior Subordinated Debentures, the proceeds
from such repayment or prepayment shall be applied by the Property Trustee to
redeem a Like Amount (as defined below) of the Trust Securities, upon not less
than 30 nor more than 60 days' notice of a date of redemption (the "Redemption
Date") at the applicable Redemption Price, which shall be equal to (i) in the
case of the repayment of the Junior Subordinated Debentures on the Stated
Maturity Date, the Maturity Redemption Price (equal to the principal of and
accrued interest on the Junior Subordinated Debentures), (ii) in the case of the
optional prepayment of the Junior Subordinated Debentures prior to __________
upon the occurrence and continuation of a Special Event, the Special Event
Redemption Price (equal to the Special Event Prepayment Price in respect of the
Junior Subordinated Debentures) and (iii) in the case of the optional prepayment
of the Junior Subordinated Debentures other than as contemplated in clause (ii)
above, the Optional Redemption Price (equal to the Optional Prepayment Price in
respect of the Junior Subordinated Debentures). See "Description of Junior
Subordinated Debentures--Optional Prepayment" and "--Special Event Prepayment."
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Junior Subordinated Debentures to be paid in accordance with their
terms and (ii) with respect to a distribution of Junior Subordinated Debentures
upon the liquidation of the Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Junior Subordinated Debentures are distributed.
The Corporation will have the option to prepay the Junior Subordinated
Debentures, (i) in whole or in part, on or after __________, at the applicable
Optional Prepayment Price and (ii) in whole but not in part, at any time prior
to __________, upon the occurrence of a Special Event, at the Special Event
Prepayment Price, in each case subject to receipt of prior approval by the
Federal Reserve if then required under applicable capital guidelines or policies
of the Federal Reserve.
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LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Trust
and cause the Junior Subordinated Debentures to be distributed to the holders of
the Capital Securities in exchange therefor upon liquidation of the Trust. Such
right is subject to (i) the Corporation having received an opinion of counsel to
the effect that such distribution will not be a taxable event to holders of
Capital Securities and (ii) the prior approval of the Federal Reserve if then
required under applicable capital guidelines or policies of the Federal Reserve.
If the Corporation elects not to prepay the Junior Subordinated
Debentures prior to maturity in accordance with their terms and either elects
not to or is unable to liquidate the Trust and distribute the Junior
Subordinated Debentures to holders of the Trust Securities, the Trust Securities
will remain outstanding until the repayment of the Junior Subordinated
Debentures on the Stated Maturity Date.
LIQUIDATION VALUE
The amount payable on the Capital Securities in the event of any
liquidation of the Trust is $1,000 per Capital Security plus accumulated and
unpaid Distributions, which amount may be paid in the form of a distribution of
a Like Amount of Junior Subordinated Debentures, subject to certain exceptions.
See "Description of Preferred Securities--Liquidation Distribution Upon
Termination" in the accompanying Prospectus.
REGISTRATION OF CAPITAL SECURITIES
The Capital Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Capital Securities will be shown on, and transfers
thereof will be effected only through, records maintained by participants in
DTC. Except as described below and in the accompanying Prospectus, Capital
Securities in certificated form will not be issued in exchange for the global
certificates. See "Book-Entry Issuance" in the accompanying Prospectus.
A global security shall be exchangeable for Capital Securities
registered in the names of persons other than DTC or its nominee only if (i) DTC
notifies the Trust that it is unwilling or unable to continue as a depositary
for such global security and no successor depositary shall have been appointed,
or if at any time DTC ceases to be a clearing agency registered under the
Exchange Act at a time when DTC is required to be so registered to act as such
depositary, (ii) the Trust in its sole discretion determines that such global
security shall be so exchangeable or (iii) there shall have occurred and be
continuing an event of default under the Indenture with respect to the Junior
Subordinated Debentures. Any global security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for definitive certificates
registered in such names as DTC shall direct. It is expected that such
instructions will be based upon directions received by DTC from its Participants
(as defined in the accompanying Prospectus) with respect to ownership of
beneficial interests in such global security. In the event that Capital
Securities are issued in definitive form, such Capital Securities will be in
denominations of $1,000 and integral multiples thereof and may be transferred or
exchanged at the offices described below.
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Payments on Capital Securities represented by a global security will be
made to DTC, as the depositary for the Capital Securities. In the event Capital
Securities are issued in certificated form, the Liquidation Amount and
Distributions will be payable, the transfer of the Capital Securities will be
registrable, and Capital Securities will be exchangeable for Capital Securities
of other denominations of a like aggregate Liquidation Amount, at the corporate
office of the Property Trustee in New York, New York, or at the offices of any
paying agent or transfer agent appointed by the Administrative Trustees,
provided that payment of any Distribution may be made at the option of the
Administrative Trustees by check mailed to the address of the persons entitled
thereto or by wire transfer. In addition, if the Capital Securities are issued
in certificated form, the record dates for payment of Distributions will be the
first day of the month preceding the month in which the relevant Distribution
payment is scheduled to be paid. For a description of DTC and the terms of the
depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Book-Entry Issuance" in
the accompanying Prospectus.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Junior
Subordinated Debentures supplements the description of the terms and provisions
of the Corresponding Junior Subordinated Debentures (as defined in the
accompanying Prospectus) set forth in the accompanying Prospectus under the
heading "Description of Junior Subordinated Debentures" to which description
reference is hereby made. The summary of certain terms and provisions of the
Junior Subordinated Debentures set forth below, which describes the material
provisions thereof, does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Indenture, to which reference is
hereby made. The form of Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and accompanying
Prospectus form a part.
Concurrently with the issuance of the Capital Securities, the Trust
will invest the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in the Junior Subordinated Debentures
issued by the Corporation. The Junior Subordinated Debentures will bear interest
at the annual rate of ____% of the principal amount thereof, payable
semi-annually in arrears on _________ and of _________ each year (each, an
"Interest Payment Date"), commencing ________, 1998, to the person in whose name
each Junior Subordinated Debenture is registered at the close of business on the
first day of the month in which the relevant payment date falls. It is
anticipated that, until the liquidation, if any, of the Trust, each Junior
Subordinated Debenture will be held in the name of the Property Trustee in trust
for the benefit of the holders of the Trust Securities. The amount of interest
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months
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and, for any period of less than a full calendar month, the number of days
elapsed in such month. In the event that any date on which interest is payable
on the Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of ___% thereof, compounded
semi-annually from the relevant Interest Payment Date. The term "interest" as
used herein shall include semi-annual interest payments, interest on semi-annual
interest payments not paid on the applicable Interest Payment Date and
Additional Sums (as defined below), as applicable.
The Junior Subordinated Debentures will be issued in denominations of
$1,000 and integral multiples thereof. The Junior Subordinated Debentures will
mature on _________.
The Junior Subordinated Debentures will rank pari passu with all other
junior subordinated debentures issued and to be issued by the Corporation and
will be unsecured and subordinate and rank junior in right of payment to the
extent and in the manner set forth in the Indenture to all Senior Indebtedness
of the Corporation. See "Description of Junior Subordinated
Debentures--Subordination" in the accompanying Prospectus. The Corporation is a
non-operating holding company and almost all of the operating assets of the
Corporation and its consolidated subsidiaries are owned by such subsidiaries.
The Corporation relies primarily on dividends from such subsidiaries to meet its
obligations. The Corporation is a legal entity separate and distinct from its
banking and non-banking affiliates. The principal sources of the Corporation's
income are dividends, interest and fees from its banking and non-banking
affiliates. The Bank is subject to certain restrictions imposed by federal law
on any extensions of credit to, and certain other transactions with, the
Corporation and certain other affiliates, and on investments in stock or other
securities thereof. Such restrictions prevent the Corporation and such other
affiliates from borrowing from the Bank unless the loans are secured by various
types of collateral. Further, such secured loans, other transactions and
investments by the Bank are generally limited in amount as to the Corporation
and as to each of such other affiliates to 10% of the Bank's capital and surplus
and as to the Corporation and all of such other affiliates to an aggregate of
20% of the Bank's capital and surplus. In addition, payment of dividends to the
Corporation by the Bank is subject to ongoing review by banking regulators and
is subject to various statutory limitations and in certain circumstances
requires approval by banking regulatory authorities. Because the Corporation is
a holding company, the right of the Corporation to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise, is subject to the prior claims of creditors of the
subsidiary, except to the extent the Corporation may itself be recognized as a
creditor of that subsidiary. Accordingly, the Junior Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Junior Subordinated Debentures should
look only to the assets of the Corporation for payments on the Junior
Subordinated Debentures. The Indenture does not limit the incurrence or issuance
of other secured or unsecured debt of the Corporation, including Senior
Indebtedness. See "Description of Junior Subordinated Debentures--Subordination"
in the accompanying Prospectus.
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OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no Debenture Event of Default has occurred and is
continuing, the Corporation will have the right under the Indenture at any time
during the term of the Junior Subordinated Debentures to defer the payment of
interest at any time or from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period, provided
that no Extension Period may extend beyond the Stated Maturity Date. At the end
of an Extension Period, the Corporation must pay all interest then accrued and
unpaid (together with interest then accrued at the annual rate of _____%,
compounded semi-annually, to the extent permitted by applicable law). During an
Extension Period, interest will continue to accrue and holders of Junior
Subordinated Debentures (and holders of the Trust Securities while Trust
Securities are outstanding) will be required to accrue interest income for
United States federal income tax purposes prior to the receipt of cash
attributable to such income. See "Certain Federal Income Tax
Considerations--Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including other
junior subordinated debentures issued by the Corporation) that rank pari passu
with or junior in right of payment to the Junior Subordinated Debentures or
(iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation if such
guarantee ranks pari passu with or junior in right of payment to the Junior
Subordinated Debentures (other than (a) dividends or distributions in shares of,
or options, warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Guarantee, (d) as a result of a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of the Corporation's capital stock for another
class or series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees or any of the Corporation's dividend
reinvestment plans).
Prior to the termination of any such Extension Period, the Corporation
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods or to
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due on any Interest Payment
Date, the Corporation may elect to begin a new Extension Period, subject to the
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above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Corporation must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of its
election of any Extension Period (or an extension thereof) at least five
Business Days prior to the earlier of (i) the date the Distributions on the
Trust Securities would have been payable except for the election to begin or
extend such Extension Period or (ii) the date the Administrative Trustees are
required to give notice to any securities exchange or to holders of Capital
Securities of the record date or the date such Distributions are payable, but in
any event not less than five Business Days prior to such record date. The
Debenture Trustee shall give notice of the Corporation's election to begin or
extend a new Extension Period to the holders of the Capital Securities. There is
no limitation on the number of times that the Corporation may elect to begin an
Extension Period. See "Description of Junior Subordinated Debentures--Option to
Defer Interest Payments" in the accompanying Prospectus.
OPTIONAL PREPAYMENT
The Junior Subordinated Debentures will be prepayable, in whole or in
part, at the option of the Corporation, on or after __________ (the "Initial
Optional Prepayment Date"), subject to the Corporation having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve, at a prepayment price (the
"Optional Prepayment Price") equal to the percentage of the outstanding
principal amount of the Junior Subordinated Debentures specified below, plus, in
each case, accrued interest thereon to the date of prepayment if redeemed during
the 12-month period beginning __________ of the years indicated below:
YEAR PERCENTAGE
---- ----------
2008 ................................................................. %
2009 ................................................................. %
2010 ................................................................. %
2011 ................................................................. %
2012 ................................................................. %
2013 ................................................................. %
2014 ................................................................. %
2015 ................................................................. %
2016 ................................................................. %
2017 ................................................................. %
2018 and thereafter .................................................. %
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SPECIAL EVENT PREPAYMENT
If a Special Event shall occur and be continuing, the Corporation may,
at any time prior to the Initial Optional Prepayment Date, at its option and
subject to receipt of prior approval of the Federal Reserve if then required
under applicable capital guidelines or policies of the Federal Reserve, prepay
the Junior Subordinated Debentures in whole (but not in part) at any time within
90 days of the occurrence of such Special Event, at a prepayment price (the
"Special Event Prepayment Price") equal to the greater of (i) 100% of the
principal amount of such Junior Subordinated Debentures or (ii) the sum, as
determined by a Quotation Agent, of the present values of the principal amount
and premium payable as part of the Optional Prepayment Price with respect to an
optional redemption of such Junior Subordinated Debentures on ______, together
with scheduled payments of interest from the prepayment date to the Initial
Optional Prepayment Date (the "Remaining Life"), in each case discounted to the
prepayment date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus, in either case,
accrued and unpaid interest thereon to the date of prepayment.
A "Special Event" means a Tax Event or a Regulatory Capital Event, as
the case may be.
A "Tax Event" means the receipt by the Corporation and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the Issue Date, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90 days
of the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures,
(ii) interest payable by the Corporation on the Junior Subordinated Debentures
is not, or within 90 days of the date of such opinion will not be, deductible by
the Corporation, in whole or in part, for United States federal income tax
purposes, or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
A "Regulatory Capital Event" means that the Corporation shall have
received an opinion of independent bank regulatory counsel experienced in such
matters to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of the
Federal Reserve or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement or decision is announced on or after
the Issue Date, the Capital Securities do not constitute, or within 90 days of
the date of such opinion, will not constitute, Tier I Capital (or its then
equivalent); provided, however, that the distribution of the Junior Subordinated
Debentures in connection with the liquidation of the Trust by the Corporation
shall not in and of itself constitute a Regulatory Capital Event unless such
liquidation shall have occurred in connection with a Tax Event.
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"Adjusted Treasury Rate" means, with respect to any prepayment date,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such prepayment date plus (i) _________% if such prepayment
date occurs on or prior to __________ and (ii) ________% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Remaining
Life that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the Remaining Life.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Debenture Trustee after consultation with the Corporation. "Reference Treasury
Dealer" means: (i) ____________ and its respective successors; provided,
however, that if the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), the
Corporation shall substitute therefor another Primary Treasury Dealer, and (ii)
any other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Corporation.
"Comparable Treasury Price" means, with respect to any prepayment date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such prepayment date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Debenture Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such prepayment date.
"Additional Sums" means such additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Trust on the
outstanding Capital Securities and Common Securities shall not be reduced as a
result of any additional taxes, duties or other governmental charges to which
the Trust has become subject as a result of a Tax Event.
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Notice of any prepayment will be mailed at least 30 days but not more
than 60 days before the prepayment date to each holder of Junior Subordinated
Debentures to be prepaid at its registered address. Unless the Corporation
defaults in payment of the prepayment price, on and after the prepayment date
interest ceases to accrue on such Junior Subordinated Debentures called for
prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the Junior Subordinated Debentures the Additional Sums.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
As described under "Description of Capital Securities--Liquidation of
the Trust and Distribution of Junior Subordinated Debentures," under certain
circumstances involving the termination of the Trust, Junior Subordinated
Debentures may be distributed to the holders of the Capital Securities in
exchange therefor upon liquidation of the Trust after satisfaction of
liabilities to creditors of the Trust as provided by applicable law. If
distributed to holders of Capital Securities, the Junior Subordinated Debentures
will initially be issued in the form of one or more global securities and DTC,
or any successor depositary for the Capital Securities, will act as depositary
for the Junior Subordinated Debentures. It is anticipated that the depositary
arrangements for the Junior Subordinated Debentures would be substantially
identical to those in effect for the Capital Securities. There can be no
assurance as to the market price of any Junior Subordinated Debentures that may
be distributed to the holders of Capital Securities.
REGISTRATION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures will be registered in the name of
the Trust. In the event that the Junior Subordinated Debentures are distributed
to holders of Capital Securities, it is anticipated that the depositary and
other arrangements for the Junior Subordinated Debentures will be substantially
identical to those in effect for the Capital Securities as applicable. See
"Description of Capital Securities--Registration of Capital Securities."
DESCRIPTION OF THE GUARANTEE
The Guarantee will be executed and delivered by the Corporation
concurrently with the issuance by the Trust of the Capital Securities for the
benefit of the holders from time to time of the Capital Securities. The First
National Bank of Chicago will act as indenture trustee ("Guarantee Trustee")
under the Guarantee. The Guarantee will be qualified as an indenture under the
Trust Indenture Act. First National Bank of Chicago will act as the Guarantee
Trustee for the purposes of compliance with the Trust Indenture Act and will
hold the Guarantee for the benefit of the holders of the Capital Securities.
First National Bank of Chicago will also act as Debenture Trustee for the Junior
Subordinated Debentures and as Property Trustee. This summary of certain
provisions of the Guarantee does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of the
Guarantee, including the definitions therein of certain terms, and the Trust
Indenture Act.
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The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Capital Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
Capital Securities, to the extent not paid by or on behalf of the Trust (the
"Guarantee Payments"), will be subject to the Guarantee: (i) any accumulated and
unpaid Distributions required to be paid on Capital Securities, to the extent
the Trust has funds on hand legally available therefor, (ii) the Redemption
Price with respect to any Capital Securities called for redemption, to the
extent that the Trust has funds on hand legally available therefor, or (iii)
upon a voluntary or involuntary termination and liquidation of the Trust (unless
the Junior Subordinated Debentures are distributed to holders of the Capital
Securities), the lesser of (a) the Liquidation Distribution and (b) the amount
of assets of the Trust remaining available for distribution to holders of
Capital Securities. The Corporation's obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by the Corporation to the
holders of the Capital Securities or by causing the Trust to pay such amounts to
such holders.
The holders of a majority in Liquidation Amount of the Capital
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power conferred
upon the Guarantee Trustee under the Guarantee. Any holder of the Capital
Securities may institute a legal proceeding directly against the Corporation to
enforce its rights under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. If the Corporation were to default on its obligation to pay amounts
payable under the Junior Subordinated Debentures, the Trust would lack funds for
the payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, if an event of default under the Indenture shall have occurred and be
continuing and such event is attributable to the failure of the Corporation to
pay interest or premium, if any, on or principal of the Junior Subordinated
Debentures on the applicable payment date, then a holder of Capital Securities
may institute a Direct Action against the Corporation pursuant to the terms of
the Indenture for enforcement of payment to such holder of the principal of or
interest or premium, if any, on such Junior Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Capital
Securities of such holder. In connection with such Direct Action, the
Corporation will have a right of set-off under the Indenture to the extent of
any payment made by the Corporation to such holder of Capital Securities in the
Direct Action. Except as described herein, holders of Capital Securities will
not be able to exercise directly any other remedy available to the holders of
the Junior Subordinated Debentures or assert directly any other rights in
respect of the Junior Subordinated Debentures. See "Description of Guarantees"
in the accompanying Prospectus. The Declaration provides that each holder of
Capital Securities by acceptance thereof agrees to the provisions of the
Guarantee and the Indenture.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of Brown & Wood LLP, special federal income tax counsel
to the Corporation and the Trust ("Tax Counsel"), the following is a summary of
certain of the material United States federal income tax consequences of the
purchase, ownership and disposition of Capital Securities held as capital assets
by a holder who purchases such Capital Securities upon initial issuance. It does
not deal with special classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, tax-exempt investors, or persons that will hold the
Capital Securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. This summary also does not address
the tax consequences to persons that have a functional currency other than the
U.S. dollar or the tax consequences to shareholders, partners or beneficiaries
of a holder of Capital Securities. Further, it does not include any description
of any alternative minimum tax consequences or the tax laws of any state or
local government or of any foreign government that may be applicable to the
Capital Securities. This summary is based on the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury regulations thereunder, and the administrative
and judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Junior Subordinated Debentures,
Tax Counsel will render its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Indenture (and
certain other documents), and based on certain facts and assumptions contained
in such opinion, the Junior Subordinated Debentures will be classified for
United States federal income tax purposes as indebtedness of the Corporation. An
opinion of Tax Counsel, however, is not binding on the Internal Revenue Service
(the "IRS") or the courts. Prospective investors should note that no rulings
have been or are expected to be sought from the IRS with respect to any of these
issues and no assurance can be given that the IRS will not take contrary
positions. Moreover, no assurance can be given that any of the opinions
expressed herein will not be challenged by the IRS or, if challenged, that such
a challenge would not be successful.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Capital Securities, Tax Counsel
will render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, the Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Capital Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debentures, and each holder will
be required to include in its gross income any interest (or OID accrued) with
respect to its allocable share of those Junior Subordinated Debentures.
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INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under Treasury regulations (the "Regulations") applicable to debt
instruments issued on or after August 13, 1996, a "remote" contingency that
stated interest will not be timely paid will be ignored in determining whether a
debt instrument is issued with OID. The Corporation believes that the likelihood
of its exercising its option to defer payments of interest is "remote" since
exercising that option would prevent the Corporation from declaring dividends on
any class of its equity securities. Accordingly, the Corporation intends to take
the position, based on the advice of Tax Counsel, that the Junior Subordinated
Debentures will not be considered to be issued with OID and, accordingly, stated
interest on the Junior Subordinated Debentures generally will be taxable to a
holder as ordinary income at the time it is paid or accrued in accordance with
such holder's method of accounting.
Under the Regulations, if the Corporation were to exercise its option
to defer payments of interest, the Junior Subordinated Debentures would at that
time be treated as issued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID as long as the Junior
Subordinated Debentures remain outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures would
thereafter be accounted for on an economic accrual basis regardless of such
holder's method of tax accounting, and actual distributions of stated interest
would not be reported as taxable income. Consequently, a holder of Capital
Securities would be required to include in gross income OID even though the
Corporation would not make actual cash payments during an Extension Period.
Moreover, under the Regulations, if the option to defer the payment of interest
was determined not to be "remote," the Junior Subordinated Debentures would be
treated as having been originally issued with OID. In such event, all of a
holder's taxable interest income with respect to the Junior Subordinated
Debentures would be accounted for on an economic accrual basis regardless of
such holder's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income.
Prospective investors should be aware that it is possible that the IRS
could take a position contrary to Tax Counsel's interpretation herein.
Because income on the Capital Securities will constitute interest or
OID, corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
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RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
The Corporation will have the right at any time to liquidate the Trust
and cause the Junior Subordinated Debentures to be distributed to the holders of
the Trust Securities, subject to (i) the Corporation having received an opinion
of counsel to the effect that such distribution will not be a taxable event to
holders of Capital Securities and (ii) the prior approval of the Federal Reserve
if then required under applicable capital guidelines or policies of the Federal
Reserve. Such a distribution, for United States federal income tax purposes,
would be treated as a nontaxable event to each holder, and each holder would
receive an aggregate tax basis in the Junior Subordinated Debentures equal to
such holder's aggregate tax basis in its Capital Securities. A holder's holding
period in the Junior Subordinated Debentures so received in liquidation of the
Trust would include the period during which the Capital Securities were held by
such holder. If, however, the Trust is characterized for United States federal
income tax purposes as an association taxable as a corporation at the time of
its dissolution, the distribution of the Junior Subordinated Debentures may
constitute a taxable event to holders of Capital Securities and a holder's
holding period in Junior Subordinated Debentures would begin on the date such
Junior Subordinated Debentures were received.
Under certain circumstances described herein (see "Description of
Capital Securities--Redemption"), the Junior Subordinated Debentures may be
prepaid for cash and the proceeds of such prepayment distributed to holders in
redemption of their Capital Securities. Under current law, such a redemption
would, for United States federal income tax purposes, constitute a taxable
disposition of the redeemed Capital Securities, and a holder would recognize
gain or loss as if it sold such redeemed Capital Securities for cash. See
"--Sales of Capital Securities" below.
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities (including a redemption of such
Capital Securities by the Corporation) will recognize gain or loss equal to the
difference between its adjusted tax basis in the Capital Securities and the
amount realized on the sale of such Capital Securities (other than with respect
to accrued and unpaid interest which has not yet been included in income, which
will be treated as ordinary income). A holder's adjusted tax basis in the
Capital Securities generally will be its initial purchase price increased by OID
(if any) previously includable in such holder's gross income to the date of
disposition and decreased by payments (if any) received on the Capital
Securities in respect of OID. Such gain or loss generally will be a capital gain
or loss and generally will be a long-term capital gain or loss if the Capital
Securities have been held for more than one year.
The Taxpayer Relief Act of 1997 reduces the maximum rates on long-term
capital gains recognized on capital assets held by individual taxpayers for more
than eighteen months as of the date of disposition to 20% (and would further
reduce the maximum rates on such gains in the year 2001 and thereafter for
certain individual taxpayers who meet specified conditions). Gain recognized by
individual taxpayers on assets held more than twelve but not more than eighteen
months continue to be taxed at a 28% rate. Prospective investors should consult
their tax advisors concerning these tax law changes.
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The Capital Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debentures are deemed to have been issued with OID) who disposes of
his Capital Securities between record dates for payments of distributions
thereon will be required to include accrued but unpaid interest on the Junior
Subordinated Debentures through the date of disposition in income as ordinary
income (i.e., interest or, possibly, OID), and to add such amount to his
adjusted tax basis in such holder's pro rata share of the underlying Junior
Subordinated Debentures deemed disposed of. To the extent the selling price is
less than the holder's adjusted tax basis (which will include all accrued but
unpaid interest), a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "U.S. Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes. A "U.S. Holder" is a holder of
Capital Securities who or which is (i) a citizen or individual resident (or is
treated as a citizen or individual resident) of the United States for federal
income tax purposes, (ii) a corporation or partnership created or organized (or
treated as created or organized for federal income tax purposes) in or under the
laws of the United States or any state thereof or the District of Columbia
(unless, in the case of a partnership, Treasury regulations provide otherwise),
(iii) an estate the income of which is includible in its gross income for
federal income tax purposes without regard to its source or (iv) a trust if, and
only if, (a) a court within the United States is able to exercise primary
supervision over the administration of the trust and (b) one or more United
States persons have the authority to control all substantial decisions of the
trust). Notwithstanding the preceding sentence, to the extent provided in
Treasury regulations, certain trusts in existence on August 20, 1996, and
treated as United States persons prior to such date, that elect to continue to
be treated as United States persons will also be a U.S. Holder.
Under present United States federal income tax laws: (i) payments by
the Trust or any of its paying agents to any holder of a Capital Security who or
which is a U.S. Alien Holder will not be subject to United States federal
withholding tax; provided that, (a) the beneficial owner of the Capital Security
does not actually or constructively own 10 percent or more of the total combined
voting power of all classes of stock of the Corporation entitled to vote, (b)
the beneficial owner of the Capital Security is not a controlled foreign
corporation that is related to the Corporation through stock ownership, and (c)
either (A) the beneficial owner of the Capital Security certifies to the Trust
or its agent, under penalties of perjury, that it is not a U.S. Holder and
provides its name and address or (B) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and holds the
Capital Security in such capacity, certifies to the Trust or its agent, under
penalties of perjury, that such statement has been received from the beneficial
owner by it or by a Financial Institution between it and the beneficial owner
and furnishes the Trust or its agent with a copy thereof; and (ii) a U.S. Alien
Holder of a Capital Security will not be subject to United States federal
withholding tax on any gain realized upon the sale or other disposition of a
Capital Security.
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INFORMATION REPORTING TO HOLDERS
Generally, income on the Capital Securities will be reported to holders
on Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities
may be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the IRS.
NEW WITHHOLDING REGULATIONS
On October 6, 1997, the Treasury Department issued new regulations (the
"New Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules described above. The New Regulations
attempt to unify certification requirements and modify reliance standards. The
New Regulations will generally be effective for payments made after December 31,
1998, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Corporation, the obligor with respect to the Junior Subordinated
Debentures held by the Trust, and its affiliates and the Property Trustee may be
considered a "party in interest" (within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to many employee
benefit plans ("Plans") that are subject to ERISA. Any purchaser proposing to
acquire Capital Securities with assets of any Plan should consult with its
counsel. The purchase and/or holding of Capital Securities by a Plan that is
subject to the fiduciary
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responsibility provisions of ERISA or the prohibited transaction provisions of
Section 4975 of the Code (including individual retirement arrangements and other
plans described in Section 4975(e)(1) of the Code) and with respect to which the
Corporation, the Property Trustee or any affiliate is a service provider (or
otherwise is a party in interest or a disqualified person) may constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Code,
unless such Capital Securities are acquired pursuant to and in accordance with
an applicable exemption, such as Prohibited Transaction Class Exemption ("PTCE")
84-14 (an exemption for certain transactions determined by an independent
qualified professional asset manager), PTCE 91-38 (an exemption for certain
transactions involving bank collective investment funds), PTCE 90-1 (an
exemption for certain transactions involving insurance company pooled separate
accounts), PTCE 95-60 (an exemption for transactions involving certain insurance
company general accounts) or PTCE 96-23 (an exception for certain transactions
determined by an in-house asset manager). The Department of Labor has issued a
regulation (29 C.F.R. section 2510.3-101)(the "Plan Assets Regulation")
concerning the definition of what constitutes the assets of a Plan. The Plan
Assets Regulation provides that, as a general rule, the underlying assets and
properties of corporations, partnerships, trusts and certain other entities in
which a Plan makes an "equity" investment will be deemed, for purposes of ERISA,
to be assets of the investing Plan unless certain exceptions apply. It is
anticipated that the Capital Securities will not meet the criteria for any of
the exceptions under the Plan Assets Regulation, including the exception for
"publicly offered securities" that are widely held. Accordingly, a Plan
fiduciary considering the purchase of Capital Securities should be aware that
the assets of the Trust may be considered "plan assets" for ERISA purposes.
Therefore, a Plan fiduciary should consider whether the purchase of Capital
Securities could result in a delegation of fiduciary authority to the Property
Trustee, and, if so, whether such a delegation of authority is permissible under
the Plan's governing instrument or any investment management agreement with the
Plan. In making such determination, a Plan fiduciary should note that the
Property Trustee is a U.S. bank qualified to be an investment manager (within
the meaning of section 3(38) of ERISA) to which such a delegation of authority
generally would be permissible under ERISA. Further, prior to an Event of
Default with respect to the Junior Subordinated Debentures, the Property Trustee
will have only limited custodial and ministerial authority with respect to Trust
assets.
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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement dated ____________, 1998 (the "Underwriting Agreement"), among the
Corporation, the Trust and ______________ (each an "Underwriter" and
collectively the "Underwriters"), the Corporation and the Trust have agreed that
the Trust will sell to each of the Underwriters named below, and each of such
Underwriters, for whom ______________________ is acting as representative (the
"Representative"), has severally agreed to purchase from the Trust, the
respective number of Capital Securities set forth opposite its name below.
NUMBER
OF
CAPITAL
NAME SECURITIES
- ------------------------------------------------------------------------------------- -----------------------------
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
-----------------------------
Total......................................................................
=============================
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the
Capital Securities offered hereby if any of the Capital Securities are
purchased. In the event of default by an Underwriter, the Underwriting Agreement
provides that, in certain circumstances, the purchase commitments of the
nondefaulting Underwriters may be increased or the Underwriting Agreement may be
terminated.
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Capital Securities are
subject to the approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are committed to take and pay for all of the
Capital Securities if any are taken.
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The Underwriters propose initially to offer the Capital Securities to
the public at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession not
in excess of $____ per Capital Security. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of $____ per Capital Security to
certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
In view of the fact that the proceeds from the sale of the Capital
Securities will be used to purchase the Junior Subordinated Debentures issued by
the Corporation, the Underwriting Agreement provides that the Corporation will
pay as Underwriters' compensation for the Underwriters' arranging the investment
therein of such proceeds an amount of $____ per Capital Security for the
accounts of the several Underwriters.
During a period of 30 days from the date of this Prospectus Supplement,
neither the Trust nor the Company will, without the prior written consent of the
Representative, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any Capital Securities, any security
convertible into or exchangeable into or exercisable for Capital Securities or
Junior Subordinated Debentures or any debt securities substantially similar to
the Junior Subordinated Debentures or equity securities substantially similar to
the Capital Securities (except for the Junior Subordinated Debentures and the
Capital Securities offered hereby).
The Capital Securities are a new issue of securities with no
established trading market. The Trust does not intend to apply for listing of
the Capital Securities on a national securities exchange, but has been advised
by the Underwriters that they presently intend to make a market in the Capital
Securities as permitted by applicable laws and regulations. The Underwriters are
not obligated, however, to make a market in the Capital Securities and any such
market making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Capital Securities.
The Corporation and the Trust have agreed to indemnify the several
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities under
the Securities Act.
In connection with certain offerings of Capital Securities made hereby,
the Underwriters may purchase and sell the Capital Securities in the open
market. These transactions may include over-allotment and stabilizing
transactions and purchases to cover short positions in connection with such
offerings. Stabilizing transactions consist of certain bids or purchases for the
purpose of preventing or retarding a decline in the market price of the Capital
Securities and short positions involve the sale by the Underwriters of a greater
number of Capital Securities than they are required to purchase from the Trust
in the offering. The Underwriters also may impose penalty bids, whereby selling
concessions allowed to broker-dealers in respect of the Capital Securities sold
in the offering may be reclaimed by the Underwriters if such Capital Securities
are repurchased by the Underwriters in stabilizing transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Capital Securities, which may be higher than the price that might otherwise
prevail in the open market; and these activities, if commenced,
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may be discontinued at any time. These transactions may be effected in the
over-the-counter market or otherwise.
______________ will serve as Quotation Agent with respect to the
Capital Securities and in certain instances will calculate the Redemption
Price thereof.
Certain of the Underwriters or their affiliates have provided from time
to time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Capital
Securities, the enforceability of the Declaration and the formation of the Trust
will be passed upon by Richards, Layton & Finger, special Delaware counsel to
the Corporation and the Trust. The validity of the Guarantee and the Junior
Subordinated Debentures will be passed upon for the Corporation by Kenneth W.
McAllister, General Counsel of the Corporation and for the Underwriters by Brown
& Wood LLP. Kenneth W. McAllister and Brown & Wood LLP will rely on the opinion
of Richards, Layton & Finger as to matters of Delaware law. Brown & Wood LLP
from time to time performs legal services for the Corporation. Certain matters
relating to United States federal income tax considerations described in this
Prospectus Supplement will be passed upon for the Corporation by Brown & Wood
LLP.
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Information contained herein is subject to completion or amendment. A
registration statement to these securities has been filed with the Securities
and Exchange Commission. These securities may not be sold nor may offers to buy
be accepted prior to the time the registration statement becomes effective. This
prospectus shall not constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 1998
$[ ]
WACHOVIA CORPORATION
JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES
WACHOVIA CAPITAL TRUST VI
WACHOVIA CAPITAL TRUST VII
WACHOVIA CAPITAL TRUST VIII
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
WACHOVIA CORPORATION
Wachovia Corporation, a North Carolina corporation ("Wachovia" or the
"Corporation"), may from time to time offer in one or more series or issuances
its junior subordinated deferrable interest debentures (the "Junior Subordinated
Debentures"). The Junior Subordinated Debentures will be unsecured and
subordinate and junior in right of payment to the extent and in the manner set
forth herein to Senior Indebtedness (as defined in "Description of Junior
Subordinated Debentures--Subordination") of the Corporation. If provided in an
accompanying Prospectus Supplement, the Corporation will have the right to defer
payments of interest on any series of Junior Subordinated Debentures by
extending the interest payment period thereon at any time or from time to time
for up to such number of consecutive interest payment periods (which shall not
extend beyond the Stated Maturity Date (as defined herein) of the Junior
Subordinated Debentures) with respect to each deferral period as may be
specified in such Prospectus Supplement (each, an "Extension Period"). In such
circumstance, however, the Corporation would not be permitted, subject to
certain exceptions set forth herein, to declare or pay any dividends,
distributions or other payments with respect to, or repay, repurchase, redeem or
otherwise acquire, the Corporation's capital stock or debt securities that rank
pari passu with or junior to such series of Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures--Option to Defer Interest
Payments" and "--Restrictions on Certain Payments."
Wachovia Capital Trust VI, Wachovia Capital Trust VII and Wachovia
Capital Trust VIII, each a trust created under the laws of the State of Delaware
(each, a "Trust," and collectively, the "Trusts"), may severally offer, from
time to time, preferred securities (the "Preferred Securities") representing
beneficial ownership interests in such Trust. The Corporation will be the owner
of the common securities (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities") representing common beneficial
ownership interests in such Trust. Holders of the Preferred Securities will be
entitled to receive preferential cumulative cash distributions ("Distributions")
accumulating from the date of original issuance and payable periodically as
specified in an accompanying Prospectus Supplement.
(continued on next page)
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-----------------
The date of this Prospectus is ____________, 1998.
45
(cover page continued)
Concurrently with the issuance by a Trust of its Preferred Securities,
such Trust will invest the proceeds thereof and of contributions received in
respect of the Common Securities in a corresponding series of the Corporation's
Junior Subordinated Debentures (the "Corresponding Junior Subordinated
Debentures") with terms corresponding to the terms of that Trust's Preferred
Securities (the "Related Preferred Securities"). Accordingly, if, as provided in
an accompanying Prospectus Supplement, the Corporation has the right to defer
the payment of interest on a series of Corresponding Junior Subordinated
Debentures, then, if interest payments are so deferred, Distributions on the
Related Preferred Securities would also be deferred, but would continue to
accumulate at the rate per annum set forth in the related Prospectus Supplement.
See "Description of Preferred Securities--Distributions."
Taken together, the Corporation's obligations under each series of
Corresponding Junior Subordinated Debentures, the Indenture and the related
Declaration and the related Guarantee (each, as defined herein), in the
aggregate, provide a full, irrevocable and unconditional guarantee of payments
of Distributions and other amounts due on the Related Preferred Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees--Full and Unconditional Guarantee."
The payment of Distributions with respect to the Preferred Securities of each
Trust and payments on liquidation of such Trust or redemption of such Preferred
Securities, in each case out of funds held by such Trust, are each irrevocably
guaranteed by the Corporation to the extent described herein (each, a
"Guarantee"). See "Description of Guarantees." The obligations of the
Corporation under each Guarantee will be unsecured and subordinate and junior in
right of payment to all Senior Indebtedness of the Corporation to the extent and
in the manner set forth herein.
The Corresponding Junior Subordinated Debentures will be the sole
assets of each Trust, and payments under the Corresponding Junior Subordinated
Debentures will be the only revenue of each Trust. If so provided in an
accompanying Prospectus Supplement, the Corporation may, upon receipt of
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") (if such approval is then required under the applicable capital
guidelines or policies), redeem the Corresponding Junior Subordinated Debentures
(and thereby cause the redemption of the Trust Securities) or may terminate each
Trust and, after satisfaction of liabilities to the creditors of such Trust as
required by applicable law, cause the Corresponding Junior Subordinated
Debentures to be distributed to the holders of Preferred Securities in exchange
therefor upon liquidation of their interests in such Trust. See "Description of
Preferred Securities--Liquidation Distribution Upon Termination."
The Junior Subordinated Debentures and Preferred Securities may be
offered in amounts, at prices and on terms to be determined at the time of
offering; provided, however, the aggregate initial public offering price of all
Junior Subordinated Debentures (other than Corresponding Junior Subordinated
Debentures) and Preferred Securities (including the Corresponding Junior
Subordinated Debentures) issued pursuant to the Registration Statement of which
this Prospectus
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46
forms a part shall not exceed $_________. Certain specific terms of the Junior
Subordinated Debentures or Preferred Securities in respect of which this
Prospectus is being delivered will be described in an accompanying Prospectus
Supplement, including without limitation and where applicable and to the extent
not set forth herein, (a) in the case of Junior Subordinated Debentures, the
specific designation, aggregate principal amount, denominations, Stated Maturity
Date (including any provisions for the shortening or extension thereof),
interest payment dates, interest rate (which may be fixed or variable) or method
of calculating interest, if any, applicable Extension Period or interest
deferral terms, if any, place or places where principal, premium, if any, and
interest, if any, will be payable, any terms of redemption, any sinking fund
provisions, terms for any conversion or exchange into other securities, initial
offering or purchase price, methods of distribution and any other special terms,
and (b) in the case of Preferred Securities, the identity of the Trust, specific
title, aggregate stated liquidation amount, number of securities, Distribution
rate or method of calculating such rate, Distribution payment dates, applicable
Distribution deferral terms, if any, place or places where Distributions will be
payable, any terms of redemption, exchange, initial offering or purchase price,
methods of distribution and any other special terms.
The Prospectus Supplement also will contain information, as applicable,
about certain United States federal income tax consequences relating to the
Junior Subordinated Debentures or Preferred Securities.
The Junior Subordinated Debentures and Preferred Securities may be sold
to or through underwriters, through dealers, remarketing firms or agents or
directly to purchasers. See "Plan of Distribution." The names of any
underwriters, dealers, remarketing firms or agents involved in the sale of
Junior Subordinated Debentures or Preferred Securities in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them will be set forth in a Prospectus Supplement. The
Prospectus Supplement will state whether the Junior Subordinated Debentures or
Preferred Securities will be listed on any national securities exchange or
automated quotation system. If the Junior Subordinated Debentures or Preferred
Securities are not listed on any national securities exchange or automated
quotation system, there can be no assurance that there will be a secondary
market for the Junior Subordinated Debentures or Preferred Securities.
This Prospectus may not be used to consummate sales of Junior
Subordinated Debentures or Preferred Securities unless accompanied by a
Prospectus Supplement.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission located
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47
at 7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and
Suite 1400, Citicorp Center, 14th Floor, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can also be obtained at prescribed rates
by writing to the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Such material may also be
accessed electronically by means of the Commission's home page on the Internet
at http://www.sec.gov. In addition, such reports, proxy statements and other
information concerning the Corporation can be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Corporation and the Trusts have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. For further information with
respect to the Corporation and the securities offered hereby, reference is made
to the Registration Statement and the exhibits and the financial statements,
notes and schedules filed as a part thereof or incorporated by reference
therein, which may be inspected at the public reference facilities of the
Commission at the addresses set forth above or through the Commission's home
page on the Internet. Statements made in this Prospectus concerning the contents
of any documents referred to herein are not necessarily complete, and in each
instance are qualified in all respects by reference to the copy of such document
filed as an exhibit to the Registration Statement.
No separate financial statements of any Trust have been included
herein. The Corporation and the Trusts do not consider that such financial
statements would be material to holders of the Preferred Securities because each
Trust is a newly formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to engage in
any activity other than holding as trust assets the Corresponding Junior
Subordinated Debentures of the Corporation and issuing the Trust Securities. See
"The Trusts," "Description of Preferred Securities," "Description of Junior
Subordinated Debentures--Corresponding Junior Subordinated Debentures" and
"Description of Guarantees." In addition, the Corporation does not expect that
any of the Trusts will be filing reports under the Exchange Act with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission
are incorporated into this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31,
1997;
2. Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998; and
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48
2. Current Report on Form 8-K dated January 31, 1998.
Each document or report filed by the Corporation pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to: Wachovia
Corporation, 100 North Main Street, Winston-Salem, North Carolina 27150,
Attention: Chief Financial Officer of Wachovia Corporation, telephone number
336-770-5000.
5
49
WACHOVIA CORPORATION
Wachovia Corporation (the "Corporation" or "Wachovia"), a North
Carolina corporation, is an interstate bank holding company serving regional,
national and international markets and maintains dual headquarters in Atlanta,
Georgia and Winston-Salem, North Carolina. At June 30, 1998, Wachovia had total
assets of $64.7 billion, deposits of $39.9 billion, and a market capitalization
of $17.5 billion. Based on its consolidated asset size and market capitalization
at June 30, 1998, Wachovia ranked 18 and 16, respectively, among domestic U.S.
bank holding companies. Wachovia is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended, and is a savings and loan holding
company within the meaning of the Home Owner's Loan Act of 1933, as amended.
Wachovia's common stock is traded on the New York Stock Exchange under the
symbol WB.
The Corporation has one principal banking subsidiary, Wachovia Bank,
National Association ("Wachovia Bank"), the assets of which currently constitute
substantially all of the assets of the Corporation. Wachovia Bank is a national
banking association headquartered in Winston-Salem, North Carolina. As of June
30, 1998, Wachovia Bank had total assets of $61.5 billion and deposits of $39.9
billion.
Wachovia Bank currently offers credit and deposit services and
investment and trust services to consumers primarily located in Georgia, North
Carolina, South Carolina, Virginia and Florida and to corporations located both
inside and outside of the United States. Consumer products and services are
provided through a network of retail branches and ATMs as listed in the
following table, 1-800-WACHOVIA On-Call 24 hour telephone banking, automated
Phone Access, and internet-based investing and banking at www.wachovia.com.
AS OF
JUNE 30, 1998
-------------
Banking offices:
North Carolina 199
Georgia 132
South Carolina 122
Virginia 264
Florida 39
----
TOTAL 756
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AS OF
JUNE 30, 1998
-------------
Automated banking machines:
North Carolina 445
Georgia 299
South Carolina 282
Virginia 308
Florida 30
-------
TOTAL 1,364
The Corporation also has subsidiaries engaged in large corporate and
institutional relationship management and business development, corporate
leasing, remittance processing, insurance and brokerage services. In addition to
its domestic banking offices and international banking offices in London and the
Cayman Islands, the Corporation's subsidiaries have offices in Chicago, New
York, Hong Kong, Sao Paulo and Tokyo.
The Corporation's growth strategy includes using acquisitions to gain
access to additional customers in attractive markets and to enhance product and
service capabilities. As such, the Corporation regularly evaluates acquisition
opportunities and conducts due diligence activities in connection with possible
acquisitions. As a result, acquisition discussions and, in some cases,
negotiations may take place and future acquisitions involving cash, debt or
equity securities may occur. Acquisitions typically involve the payment of a
premium over book value and, therefore, some dilution of the Corporation's book
value and net income per share may occur in connection with any future
transactions.
The Corporation's executive offices are located at 100 North Main
Street, Winston-Salem, North Carolina 27101 and 191 Peachtree Street, N.E.,
Atlanta, Georgia 30303, and its telephone numbers are (336) 770-5000 and (404)
332-5000, respectively.
THE TRUSTS
Each Trust is a statutory business trust created under Delaware law
pursuant to (i) a declaration of trust executed by the Corporation, as Sponsor
of the Trust, the Delaware Trustee and three Administrative Trustees (each as
defined herein) of such Trust and (ii) the filing of a certificate of trust with
the Delaware Secretary of State. Each declaration of trust will be amended and
restated in its entirety (each, as so amended and restated, a "Declaration")
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. Each Declaration will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Each Trust exists for the exclusive purposes of (i) issuing and
selling its Trust Securities, which represent undivided beneficial interests in
the assets of such Trust, (ii) investing the gross proceeds from the sale of
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51
such Trust Securities in a series of Corresponding Junior Subordinated
Debentures issued by the Corporation, and (iii) engaging in only those other
activities necessary, advisable or incidental thereto (such as registering the
transfer of Trust Securities). Accordingly, the Corresponding Junior
Subordinated Debentures will be the sole assets of each Trust, and payments
under the Corresponding Junior Subordinated Debentures will be the sole revenue
of each Trust.
All of the Common Securities of each Trust will be owned directly or
indirectly by the Corporation. The Common Securities of a Trust will rank pari
passu, and payments will be made thereon pro rata, with the Preferred Securities
of such Trust, except that upon the occurrence and continuance of an event of
default under a Declaration resulting from an event of default under the
Indenture, the rights of the Corporation as holder of the Common Securities to
payment in respect of Distributions and payments upon liquidation or redemption
will be subordinated to the rights of the holders of the Preferred Securities of
such Trust. See "Description of Preferred Securities--Subordination of Common
Securities." The Corporation will acquire, directly or indirectly, Common
Securities in an aggregate Liquidation Amount equal to at least 3% of the total
capital of each Trust.
Unless otherwise specified in the applicable Prospectus Supplement,
each Trust has a term of approximately 55 years, but may terminate earlier as
provided in the applicable Declaration. Each Trust's business and affairs are
conducted by its trustees, each appointed by the Corporation as holder of the
Common Securities. The trustees for each Trust will be The First National Bank
of Chicago, as the Property Trustee (the "Property Trustee"), First Chicago
Delaware Inc., as the Delaware Trustee (the "Delaware Trustee"), and three
individual trustees (the "Administrative Trustees") who are employees or
officers of or affiliated with the Corporation (collectively, the "Issuer
Trustees"). The First National Bank of Chicago, as Property Trustee, will act as
sole trustee under each Declaration for purposes of compliance with the Trust
Indenture Act. The First National Bank of Chicago will also act as trustee under
the Guarantees and the Indenture. See "Description of Guarantees" and
"Description of Junior Subordinated Debentures." The holder of the Common
Securities of a Trust, or the holders of a majority in Liquidation Amount of the
Related Preferred Securities if an event of default under the Declaration for
such Trust has occurred and is continuing, will be entitled to appoint, remove
or replace the Property Trustee and/or the Delaware Trustee for such Trust. In
no event will the holders of the Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees; such voting rights are
vested exclusively in the holder of the Common Securities. The duties and
obligations of each Issuer Trustee are governed by the applicable Declaration.
The Corporation will pay all fees and expenses related to each Trust and the
offering of the Preferred Securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of each Trust.
The principal executive office of each Trust is c/o Wachovia
Corporation, 100 North Main Street, Winston-Salem, North Carolina 27150,
Attention: Chief Financial Officer of Wachovia Corporation and its telephone
number is 336-770-5000.
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USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement,
the Corporation intends to use the net proceeds from the sale of its Junior
Subordinated Debentures (including Corresponding Junior Subordinated Debentures
issued to the Trusts in connection with the investment by the Trusts of all of
the proceeds from the sale of Trust Securities) for general corporate purposes,
which may include, but not be limited to, investments in and advances to the
Corporation's subsidiaries and the redemption of certain of the Corporation's
outstanding debt securities. The precise amount and timing of the application
of such net proceeds used for such corporate purposes will depend on the
funding requirements and the availability of other funds to the Corporation and
its subsidiaries. Pending such application by the Corporation, such net
proceeds may be temporarily invested in short-term interest bearing securities.
The Preferred Securities will be eligible to qualify as Tier I Capital under
current capital guidelines of the Federal Reserve, provided that under current
Federal Reserve guidelines no more than 25% of the Corporation's Tier I Capital
may comprise Preferred Securities and other similar preferred securities and
cumulative preferred stock of the Corporation.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more
series under a Junior Subordinated Indenture, as supplemented from time to time
(as so supplemented, the "Indenture"), between the Corporation and The First
National Bank of Chicago, as trustee (the "Debenture Trustee"). This summary of
certain terms and provisions of the Junior Subordinated Debentures,
Corresponding Junior Subordinated Debentures and the Indenture, which
summarizes the material provisions thereof, does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the Indenture,
the form of which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and to the Trust Indenture Act, to each of which
reference is hereby made. The Indenture is qualified under the Trust Indenture
Act. Whenever particular defined terms of the Indenture (as supplemented or
amended from time to time) are referred to herein or in a Prospectus
Supplement, such defined terms are incorporated herein or therein by reference.
GENERAL
Each series of Junior Subordinated Debentures will rank pari passu
with all other series of Junior Subordinated Debentures and will be unsecured
and subordinate and junior in right of payment to the extent and in the manner
set forth in the Indenture to all Senior Indebtedness (as defined below) of the
Corporation. See "--Subordination." Because the Corporation is a holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary, including the Bank, upon such subsidiary's
liquidation or reorganization or otherwise, is subject to the prior claims of
creditors of the subsidiary, except to the extent the Corporation may itself be
recognized as a creditor of that subsidiary. Accordingly, the Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders of Junior
Subordinated Debentures should look only
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53
to the assets of the Corporation for payments on the Junior Subordinated
Debentures. Except as otherwise provided in the applicable Prospectus
Supplement, the Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation, including Senior Indebtedness,
whether under the Indenture, any other existing indenture or any other
indenture that the Corporation may enter into in the future or otherwise. See
"--Subordination" and the applicable Prospectus Supplement relating to any
offering of Preferred Securities or Junior Subordinated Debentures.
The Junior Subordinated Debentures will be issuable in one or more
series pursuant to an indenture supplemental to the Indenture or a resolution
of the Corporation's Board of Directors or a committee thereof.
The applicable Prospectus Supplement will describe the following terms
of the Junior Subordinated Debentures: (1) the title of the Junior Subordinated
Debentures; (2) any limit upon the aggregate principal amount of the Junior
Subordinated Debentures; (3) the date or dates on which the principal of the
Junior Subordinated Debentures is payable (the "Stated Maturity Date") or the
method of determination thereof; (4) the rate or rates, if any, at which the
Junior Subordinated Debentures shall bear interest, the dates on which any such
interest shall be payable (the "Interest Payment Dates"), the right, if any, of
the Corporation to defer or extend an Interest Payment Date, and the record
dates for any interest payable on any Interest Payment Date (the "Regular
Record Dates") or the method by which any of the foregoing shall be determined;
(5) the place or places where, subject to the terms of the Indenture as
described below under "--Payment and Paying Agents," the principal of and
premium, if any, and interest on the Junior Subordinated Debentures will be
payable and where, subject to the terms of the Indenture as described below
under "--Denominations, Registration and Transfer," the Junior Subordinated
Debentures may be presented for registration of transfer or exchange and the
place or places where notices and demands to or upon the Corporation in respect
of the Junior Subordinated Debentures and the Indentures may be made ("Place of
Payment"); (6) any period or periods within which, or date or dates on which,
the price or prices at which and the terms and conditions upon which Junior
Subordinated Debentures may be redeemed, in whole or in part, at the option of
the Corporation or a holder thereof; (7) the obligation or the right, if any,
of the Corporation or a holder thereof to redeem, purchase or repay the Junior
Subordinated Debentures and the period or periods within which, the price or
prices at which, the currency or currencies (including currency unit or units)
in which and the other terms and conditions upon which the Junior Subordinated
Debentures shall be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation; (8) the denominations in which any Junior
Subordinated Debentures shall be issuable if other than denominations of $1,000
and any integral multiple thereof; (9) if other than in U.S. Dollars, the
currency or currencies (including currency unit or units) in which the
principal of (and premium, if any) and interest, if any, on the Junior
Subordinated Debentures shall be payable, or in which the Junior Subordinated
Debentures shall be denominated; (10) any additions, modifications or deletions
in the events of default under the Indenture or covenants of the Corporation
specified in the Indenture with respect to the Junior Subordinated Debentures;
(11) if other than the principal amount thereof, the portion of the principal
amount of Junior Subordinated Debentures that shall be payable upon declaration
of acceleration of the maturity
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54
thereof; (12) any additions or changes to the Indenture with respect to a
series of Junior Subordinated Debentures as shall be necessary to permit or
facilitate the issuance of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; (13) any
index or indices used to determine the amount of payments of principal of and
premium, if any, on the Junior Subordinated Debentures and the manner in which
such amounts will be determined; (14) the terms and conditions relating to the
issuance of a temporary Global Security representing all of the Junior
Subordinated Debentures of such series and the exchange of such temporary
Global Security for definitive Junior Subordinated Debentures of such series;
(15) subject to the terms described herein under "--Global Junior Subordinated
Debentures," whether the Junior Subordinated Debentures of the series shall be
issued in whole or in part in the form of one or more Global Securities and, in
such case, the depositary for such Global Securities, which depositary shall be
a clearing agency registered under the Exchange Act; (16) the appointment of
any paying agent or agents; (17) the terms and conditions of any obligation or
right of the Corporation or a holder to convert or exchange the Junior
Subordinated Debentures into Preferred Securities; (18) the form of Declaration
and Guarantee Agreement, if applicable; (19) the relative degree, if any, to
which such Junior Subordinated Debentures of the series shall be senior to or
be subordinated to other series of such Junior Subordinated Debentures or other
indebtedness of the Corporation in right of payment, whether such other series
of Junior Subordinated Debentures or other indebtedness are outstanding or not;
and (20) any other terms of the Junior Subordinated Debentures not inconsistent
with the provisions of the Indenture.
Junior Subordinated Debentures may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Certain United States
federal income tax consequences and special considerations applicable to any
such Junior Subordinated Debentures will be described in the applicable
Prospectus Supplement.
If the purchase price of any of the Junior Subordinated Debentures is
payable in one or more foreign currencies or currency units or if any Junior
Subordinated Debentures are denominated in one or more foreign currencies or
currency units or if the principal of, premium, if any, or interest on any
Junior Subordinated Debentures is payable in one or more foreign currencies or
currency units, the restrictions, elections, certain United States federal
income tax consequences, specific terms and other information with respect to
such series of Junior Subordinated Debentures and such foreign currency or
currency units will be set forth in the applicable Prospectus Supplement.
If any index is used to determine the amount of payments of principal
of, premium, if any, or interest on any series of Junior Subordinated
Debentures, special United States federal income tax, accounting and other
considerations applicable thereto will be described in the applicable
Prospectus Supplement.
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DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement,
the Junior Subordinated Debentures will be issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
Junior Subordinated Debentures of any series will be exchangeable for other
Junior Subordinated Debentures of the same issue and series, of any authorized
denominations, of a like aggregate principal amount, of the same original issue
date and stated maturity and bearing the same interest rate.
Junior Subordinated Debentures may be presented for exchange as
provided above, and may be presented for registration of transfer (with the
form of transfer endorsed thereon, or a satisfactory written instrument of
transfer, duly executed), at the office of the appropriate securities registrar
or at the office of any transfer agent designated by the Corporation for such
purpose with respect to any series of Junior Subordinated Debentures and
referred to in the applicable Prospectus Supplement, without service charge and
upon payment of any taxes and other governmental charges as described in the
Indenture. The Corporation will appoint the Debenture Trustee as securities
registrar under the Indenture. If the applicable Prospectus Supplement refers
to any transfer agents (in addition to the securities registrar) initially
designated by the Corporation with respect to any series of Junior Subordinated
Debentures, the Corporation may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, provided that the Corporation maintains a transfer agent
in each place of payment for such series. The Corporation may at any time
designate additional transfer agents with respect to any series of Junior
Subordinated Debentures.
In the event of any redemption, neither the Corporation nor the
Debenture Trustee shall be required to (i) issue, register the transfer of or
exchange Junior Subordinated Debentures of any series during a period beginning
at the opening of business 15 days before the day of selection for redemption
of Junior Subordinated Debentures of that series and ending at the close of
business on the day of mailing of the relevant notice of redemption or (ii)
transfer or exchange any Junior Subordinated Debentures so selected for
redemption, except, in the case of any Junior Subordinated Debentures being
redeemed in part, any portion thereof not to be redeemed.
GLOBAL JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole
or in part in the form of one or more Global Junior Subordinated Debentures
that will be deposited with, or on behalf of, a depositary (the "Depositary")
identified in the Prospectus Supplement relating to such series. Global Junior
Subordinated Debentures may be issued only in fully registered form and in
either temporary or permanent form. Unless and until it is exchanged in whole
or in part for the individual Junior Subordinated Debentures represented
thereby, a Global Junior Subordinated Debenture may not be transferred except
as a whole by the Depositary for such Global Junior Subordinated Debenture to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by the Depositary or any
nominee to a successor Depositary or any nominee of such successor.
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The specific terms of the depositary arrangement with respect to a
series of Junior Subordinated Debentures will be described in the Prospectus
Supplement relating to such series. The Corporation anticipates that the
following provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Junior Subordinated Debenture, and the
deposit of such Global Junior Subordinated Debenture with or on behalf of the
Depositary, the Depositary for such Global Junior Subordinated Debenture or its
nominee will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture to the accounts of
persons that have accounts with such Depositary ("Participants"). Such accounts
shall be designated by the dealers, underwriters or agents with respect to such
Junior Subordinated Debentures or by the Corporation if such Junior
Subordinated Debentures are offered and sold directly by the Corporation.
Ownership of beneficial interests in a Global Junior Subordinated Debenture
will be limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in such Global Junior
Subordinated Debenture will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the applicable Depositary
or its nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Junior Subordinated Debenture.
So long as the Depositary for a Global Junior Subordinated Debenture,
or its nominee, is the registered owner of such Global Junior Subordinated
Debenture, such Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture for all purposes under
the Indenture governing such Junior Subordinated Debentures. Except as provided
below, owners of beneficial interests in a Global Junior Subordinated Debenture
will not be entitled to have any of the individual Junior Subordinated
Debentures of the series represented by such Global Junior Subordinated
Debenture registered in their names, will not receive or be entitled to receive
physical delivery of any such Junior Subordinated Debentures of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payments of principal of (and premium, if any) and interest on
individual Junior Subordinated Debentures represented by a Global Junior
Subordinated Debenture registered in the name of a Depositary or its nominee
will be made to the Depositary or its nominee, as the case may be, as the
registered owner of the Global Junior Subordinated Debenture representing such
Junior Subordinated Debentures. None of the Corporation, the Debenture Trustee,
any Paying Agent, or the Securities Registrar for such Junior Subordinated
Debentures will have any
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responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global Junior
Subordinated Debenture representing such Junior Subordinated Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Corporation expects that the Depositary for a series of Junior
Subordinated Debentures or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of a permanent Global Junior
Subordinated Debenture representing any of such Junior Subordinated Debentures,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount
of such Global Junior Subordinated Debenture for such Junior Subordinated
Debentures as shown on the records of such Depositary or its nominee. The
Corporation also expects that payments by Participants to owners of beneficial
interests in such Global Junior Subordinated Debenture held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." Such payments will be the responsibility
of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if
a Depositary for a series of Junior Subordinated Debentures is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Corporation within 90 days or there shall
have occurred and be continuing an Event of Default with respect to such Global
Security, the Corporation will issue individual Junior Subordinated Debentures
of such series in exchange for the Global Junior Subordinated Debenture
representing such series of Junior Subordinated Debentures. In addition, the
Corporation may at any time and in its sole discretion, subject to any
limitations described in the Prospectus Supplement relating to such Junior
Subordinated Debentures, determine not to have any Junior Subordinated
Debentures of such series represented by one or more Global Junior Subordinated
Debentures and, in such event, will issue certificated Junior Subordinated
Debentures of such series in exchange for the Global Junior Subordinated
Debenture. Further, if the Corporation so specifies with respect to the Junior
Subordinated Debentures of a series, an owner of a beneficial interest in a
Global Junior Subordinated Debenture representing Junior Subordinated
Debentures of such series may, on terms acceptable to the Corporation, the
Debenture Trustee and the Depositary for such Global Junior Subordinated
Debenture, receive certificated Junior Subordinated Debentures of such series
in exchange for such beneficial interests, subject to any limitations described
in the Prospectus Supplement relating to such Junior Subordinated Debentures.
In any such instance, an owner of a beneficial interest in a Global Junior
Subordinated Debenture will be entitled to physical delivery of certificated
Junior Subordinated Debentures of the series represented by such Global Junior
Subordinated Debenture equal in principal amount to such beneficial interest
and to have such Junior Subordinated Debentures registered in its name.
Individual Junior Subordinated Debentures of such series so issued will be
issued in denominations, unless otherwise specified by the Corporation, of
$1,000 and integral multiples thereof.
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PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of principal of (and premium, if any) and any interest on Junior
Subordinated Debentures will be made at the office of the Debenture Trustee in
the City of New York or at the office of such paying agent or paying agents as
the Corporation may designate from time to time in the applicable Prospectus
Supplement, except that at the option of the Corporation payment of any
interest may be made (i) except in the case of Global Junior Subordinated
Debentures, by check mailed to the address of the person entitled thereto as
such address shall appear in the securities register or (ii) by transfer to an
account maintained by the person entitled thereto as specified in the
securities register, provided that proper transfer instructions have been
received by the Regular Record Date. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of any interest on Junior
Subordinated Debentures will be made to the person in whose name such Junior
Subordinated Debenture is registered at the close of business on the Regular
Record Date for such interest, except in the case of defaulted interest. The
Corporation may at any time designate additional paying agents or rescind the
designation of any paying agent; however the Corporation will at all times be
required to maintain a paying agent in each place of payment for each series of
Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent,
or then held by the Corporation in trust, for the payment of the principal of
(and premium, if any) or interest on any Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall, at the request of the Corporation,
be repaid to the Corporation and the holder of such Junior Subordinated
Debenture shall thereafter look, as a general unsecured creditor, only to the
Corporation for payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
If provided in the applicable Prospectus Supplement, the Corporation
will have the right at any time and from time to time during the term of any
series of Junior Subordinated Debentures to defer payment of interest for up to
such number of consecutive interest payment periods as may be specified in the
applicable Prospectus Supplement (each, an "Extension Period"), subject to the
terms, conditions and covenants, if any, specified in such Prospectus
Supplement, provided that such Extension Period may not extend beyond the
Stated Maturity Date of such series of Junior Subordinated Debentures. Certain
United States federal income tax consequences and special considerations
applicable to any such Junior Subordinated Debentures will be described in the
applicable Prospectus Supplement.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement,
Junior Subordinated Debentures will not be subject to any sinking fund.
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Unless otherwise indicated in the applicable Prospectus Supplement,
the Corporation may, at its option and subject to receipt of prior approval by
the Federal Reserve if then required under applicable capital guidelines or
policies, redeem the Junior Subordinated Debentures of any series in whole at
any time or in part from time to time. If the Junior Subordinated Debentures of
any series are so redeemable only on or after a specified date or upon the
satisfaction of additional conditions, the applicable Prospectus Supplement
will specify such date or describe such conditions. Junior Subordinated
Debentures in denominations larger than $1,000 may be redeemed in part but only
in integral multiples of $1,000. Except as otherwise specified in the
applicable Prospectus Supplement, the redemption price for any Junior
Subordinated Debenture so redeemed shall equal any accrued and unpaid interest
thereon to the redemption date, plus 100% of the principal amount thereof.
Except as otherwise specified in the applicable Prospectus Supplement,
if a Tax Event (as defined below) in respect of a series of Junior Subordinated
Debentures or a Regulatory Capital Event (as defined herein) shall occur and be
continuing, the Corporation may, at its option and subject to receipt of prior
approval by the Federal Reserve if then required under applicable capital
guidelines or policies, redeem such series of Junior Subordinated Debentures in
whole (but not in part) at any time within 90 days following of the occurrence
of such Tax Event or Regulatory Capital Event, at a redemption price equal to
100% of the principal amount of such Junior Subordinated Debentures then
outstanding plus accrued and unpaid interest to the date fixed for redemption,
except as otherwise specified in the applicable Prospectus Supplement.
"Tax Event" means the receipt by the Corporation of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced proposed change) in, the laws
or any regulations thereunder of the United States or any political subdivision
or taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after the date of issuance of the
applicable series of Junior Subordinated Debentures under the Indenture, there
is more than an insubstantial risk that (i) the Trust is, or will be within 90
days of the date of such opinion, subject to United States federal income tax
with respect to income received or accrued on such series of Junior
Subordinated Debentures, (ii) interest payable by the Corporation on such
series of Junior Subordinated Debentures is not, or within 90 days of the date
of such opinion will not be, deductible by the Corporation, in whole or in
part, for United States federal income tax purposes, or (iii) the Trust is, or
will be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that the Corporation shall have
received an opinion of independent bank regulatory counsel experienced in such
matters to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of the
Federal Reserve or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or
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such pronouncement or decision is announced on or after the date of issuance of
the applicable series of Junior Subordinated Debentures under the Indenture,
the applicable Preferred Securities do not constitute, or within 90 days of the
date of such opinion, will not constitute, Tier I Capital (or its then
equivalent); provided, however, that the distribution of such series of Junior
Subordinated Debentures in connection with the liquidation of the Trust by the
Corporation shall not in and of itself constitute a Regulatory Capital Event
unless such liquidation shall have occurred in connection with a Tax Event.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Corporation
defaults in payment of the redemption price, on and after the redemption date
interest ceases to accrue on such Junior Subordinated Debentures or portions
thereof called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation will also covenant, as to each series of Junior
Subordinated Debentures, that it will not, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Corporation's capital stock, (ii) make any payment
of principal, interest or premium, if any, on or repay or repurchase or redeem
any debt securities of the Corporation (including other series of Junior
Subordinated Debentures) that rank pari passu with or junior in right of
payment to the Junior Subordinated Debentures or (iii) make any guarantee
payments with respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation if such guarantee ranks pari
passu with or junior in right of payment to the Junior Subordinated Debentures
(other than (a) dividends or distributions in shares of, or options, warrants
or rights to subscribe for or purchase shares of, common stock of the
Corporation, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Guarantee with respect to the series
of Related Preferred Securities, (d) as a result of a reclassification of the
Corporation's capital stock or the exchange or conversion of one class or
series of the Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (f) purchases of common stock related to the issuance of common stock or
rights under any of the Corporation's benefit plans for its directors, officers
or employees or any of the Corporation's dividend reinvestment plans) if at
such time (i) there shall have occurred any event of which the Corporation has
actual knowledge (a) that with the giving of notice or the lapse of time, or
both, would constitute an "Event of Default" under the Indenture with respect
to the Junior Subordinated Debentures of such series and (b) in respect of
which the Corporation shall not have taken reasonable steps to cure, (ii) the
Corporation shall be in default with respect to its payment of any obligations
under the Guarantee relating to the Related Preferred Securities or (iii) the
Corporation shall have given notice of its election of an Extension Period, or
any extension thereof, as provided in the Indenture with respect to the Junior
Subordinated Debentures of such series and shall not have rescinded such
notice, and such Extension Period, or any extension thereof, shall have
commenced.
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MODIFICATION OF INDENTURE
From time to time the Corporation and the Debenture Trustee may,
without the consent of the holders of any series of Junior Subordinated
Debentures, amend, waive or supplement the Indenture for specified purposes,
including, among other things, curing ambiguities, defects or inconsistencies
(provided that any such action does not materially adversely affect the
interest of the holders of any series of Junior Subordinated Debentures) and
qualifying, or maintaining the qualification of, the Indenture under the Trust
Indenture Act. The Indenture contains provisions permitting the Corporation and
the Debenture Trustee, with the consent of the holders of not less than a
majority in principal amount of each outstanding series of Junior Subordinated
Debentures affected, to modify the Indenture in a manner adversely affecting
the rights of the holders of such series of the Junior Subordinated Debentures
in any material respect; provided, that no such modification may, without the
consent of the holder of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity Date of any series of Junior
Subordinated Debentures (except as otherwise specified in the applicable
Prospectus Supplement), or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon or (ii) reduce the
percentage of principal amount of Junior Subordinated Debentures of any series,
the holders of which are required to consent to any such modification of the
Indenture.
In addition, the Corporation and the Debenture Trustee may execute,
without the consent of any holder of Junior Subordinated Debentures, any
supplemental Indenture for the purpose of creating any new series of Junior
Subordinated Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to a series of Junior Subordinated Debentures that has
occurred and is continuing constitutes a "Debenture Event of Default" with
respect to such series of Junior Subordinated Debentures (whatever the reason
for such Debenture Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court of any order, rule or regulation or any
administrative or governmental body):
(i) failure for 30 days to pay any interest on such
series of Junior Subordinated Debentures or any other series of Junior
Subordinated Debentures when due (subject to the deferral of any due
date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any,
on such series of Junior Subordinated Debentures or any other series
of Junior Subordinated Debentures when due whether at maturity, upon
redemption, by declaration of acceleration of maturity or otherwise;
or
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(iii) failure to observe or perform in any material
respect certain other covenants contained in the Indenture for 90 days
after written notice to the Corporation from the Debenture Trustee or
to the Corporation and the Debenture Trustee from the holders of at
least 25% in aggregate outstanding principal amount of such affected
series of outstanding Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or
reorganization of the Corporation.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures of each series affected have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee. The Debenture Trustee or the holders of not
less than 25% in aggregate outstanding principal amount of Junior Subordinated
Debentures of each series affected may declare the principal due and payable
immediately upon a Debenture Event of Default. The holders of a majority in
aggregate outstanding principal amount of Junior Subordinated Debentures of
each series affected may annul such declaration and waive the default if the
default (other than the nonpayment of the principal of such Junior Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of
each series of the Junior Subordinated Debentures affected thereby may, on
behalf of the holders of all the Junior Subordinated Debentures, waive any past
default, except a default in the payment of principal or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Junior Subordinated Debenture. The Corporation
is required to file annually with the Debenture Trustee a certificate as to
whether or not the Corporation is in compliance with all the conditions and
covenants applicable to it under the Indenture.
In case a Debenture Event of Default shall occur and be continuing as
to a series of Corresponding Junior Subordinated Debentures, the Property
Trustee will have the right to declare the principal of and the interest on
such Corresponding Junior Subordinated Debentures, and any other amounts
payable under the Indenture, to be forthwith due and payable and to enforce its
other rights as a creditor with respect to such Corresponding Junior
Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default with respect to a series of
Corresponding Junior Subordinated Debentures has occurred and is continuing and
such event is attributable to the failure of the Corporation to pay interest,
or premium, if any, on or principal of such Corresponding Junior Subordinated
Debentures on the due date, a holder of Preferred Securities
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may institute a legal proceeding directly against the Corporation for
enforcement of payment to such holder of the principal of, or premium, if any,
or interest on such Corresponding Junior Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Related
Preferred Securities of such holder (a "Direct Action"). The Corporation may
not amend the Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of the holders of all of the Preferred
Securities outstanding. If the right to bring a Direct Action is removed, the
applicable Trust may become subject to the reporting obligations under the
Exchange Act. Notwithstanding any payments made to a holder of Preferred
Securities by the Corporation in connection with a Direct Action, the
Corporation shall remain obligated to pay the principal of or premium, if any,
or interest on the Corresponding Junior Subordinated Debentures, and the
Corporation shall be subrogated to the rights of the holder of such Preferred
Securities with respect to payments on the Preferred Securities to the extent
of any payments made by the Corporation to such holder in any Direct Action.
The holders of the Preferred Securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an event of default under the Declaration. See "Description of
Preferred Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Corporation shall not consolidate with
or merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Corporation or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to the
Corporation, unless (i) in case the Corporation consolidates with or merges
into another Person or conveys or transfers its properties and assets
substantially as an entirety to any Person, the successor Person is organized
under the laws of the United States or any state or the District of Columbia,
and such successor Person expressly assumes the Corporation's obligations on
the Junior Subordinated Debentures issued under the Indenture; (ii) immediately
after giving effect thereto, no Debenture Event of Default, and no event which,
after notice or lapse of time or both, would become a Debenture Event of
Default, shall have occurred and be continuing; and (iii) certain other
conditions as prescribed by the Indenture are met.
The general provisions of the Indenture do not afford holders of the
Junior Subordinated Debentures protection in the event of a highly leveraged or
other transaction involving the Corporation that may adversely affect holders
of the Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and
payable at their Stated Maturity Date within one year of the date of deposit or
(iii) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in
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the name, and at the expense of, the Corporation, and the Corporation deposits
or causes to be deposited with the Debenture Trustee funds, in trust, for the
purpose and in an amount in the currency or currencies in which the Junior
Subordinated Debentures are payable sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Debenture Trustee for cancellation, for the principal (and premium, if any)
and interest to the date of the deposit or to the Stated Maturity Date or
redemption date, as the case may be, then the Indenture will cease to be of
further effect (except as to the Corporation's obligations to pay all other
sums due pursuant to the Indenture and to provide the officers' certificates
and opinions of counsel described therein), and the Corporation will be deemed
to have satisfied and discharged the Indenture.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus
Supplement, the Junior Subordinated Debentures of any series may be convertible
or exchangeable into Junior Subordinated Debentures of another series or into
Preferred Securities of another series. The specific terms on which Junior
Subordinated Debentures of any series may be so converted or exchanged will be
set forth in the applicable Prospectus Supplement. Such terms may include
provisions for conversion or exchange, either mandatory, at the option of the
holder, or at the option of the Corporation, in which case the number of shares
of Preferred Securities or other securities to be received by the holders of
Junior Subordinated Debentures would be calculated as of a time and in the
manner stated in the applicable Prospectus Supplement.
SUBORDINATION
In the Indenture, the Corporation has covenanted and agreed that any
Junior Subordinated Debentures issued thereunder will be subordinate and junior
in right of payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets of the Corporation upon
any liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, the holders of Senior Indebtedness
will first be entitled to receive payment in full of all Allocable Amounts (as
defined below) in respect of such Senior Indebtedness before the holders of
Junior Subordinated Debentures will be entitled to receive or retain any
payment in respect thereof.
In the event of the acceleration of the maturity of any Junior
Subordinated Debentures, the holders of all Senior Indebtedness outstanding at
the time of such acceleration will first be entitled to receive payment in full
of all Allocable Amounts in respect of such Senior Indebtedness before the
holders of Junior Subordinated Debentures will be entitled to receive or retain
any payment in respect of the Junior Subordinated Debentures.
No payments on account of principal (or premium, if any) or interest
in respect of the Junior Subordinated Debentures may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
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"Allocable Amounts," when used with respect to any Senior
Indebtedness, means all amounts due or to become due on such Senior
Indebtedness less, if applicable, any amount which would have been paid to, and
retained by, the holders of such Senior Indebtedness (whether as a result of
the receipt of payments by the holders of such Senior Indebtedness from the
Corporation or any other obligor thereon or from any holders of, or trustee in
respect of, other indebtedness that is subordinate and junior in right of
payment to such Senior Indebtedness pursuant to any provision of such
indebtedness for the payment over of amounts received on account of such
indebtedness to the holders of such Senior Indebtedness or otherwise) but for
the fact that such Senior Indebtedness is subordinate or junior in right of
payment to (or subject to a requirement that amounts received on such Senior
Indebtedness be paid over to obligees on) trade accounts payable or accrued
liabilities arising in the ordinary course of business.
"Indebtedness" shall mean (i) any obligation of, or any obligation
guaranteed by, the Corporation for the repayment of borrowed money, whether or
not evidenced by bonds, debentures, notes or other written instruments and any
deferred obligation for the payment of the purchase price of property or assets
acquired other than in the ordinary course of business and (ii) all
indebtedness of the Corporation for claims in respect of derivative products
such as interest and foreign exchange rate contracts, commodity contracts and
similar arrangements, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred. For purposes of this
definition "claim" shall have the meaning assigned in Section 101(5) of the
Bankruptcy Code of 1978, as amended and in effect on the date of the execution
of the Indenture.
"Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures" shall mean (i) all Indebtedness, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, which
specifically by its terms ranks equally with and not prior to the Junior
Subordinated Debentures in the right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation
and (ii) the 7.64% Junior Subordinated Deferrable Interest Debentures Due
January 15, 2027 of the Corporation, the Floating Rate Junior Subordinated
Deferrable Interest Debentures Due January 15, 2027 of the Corporation, the
Floating Rate Junior Subordinated Debt Securities Due April 15, 2027 of Central
Fidelity Banks, Inc. (the obligations with respect to which were assumed by the
Corporation in connection with the merger, on December 15, 1997, of the
Corporation and Central Fidelity Banks, Inc.), and the 7.965% Junior
Subordinated Deferrable Interest Debentures Due June 1, 2027 of the
Corporation.
"Indebtedness Ranking Junior to the Junior Subordinated Debentures"
shall mean any Indebtedness, whether outstanding on the date of execution of
the Indenture or thereafter created, assumed or incurred, which specifically by
its terms ranks junior to and not equally with or prior to the Junior
Subordinated Debentures (and any other Indebtedness Ranking on a Parity with
the Junior Subordinated Debentures) in right of payment upon the happening of
the dissolution or
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winding-up or liquidation or reorganization of the Corporation. The securing of
any Indebtedness, otherwise constituting Indebtedness Ranking on a Parity with
the Junior Subordinated Debentures or Indebtedness Ranking Junior to the Junior
Subordinated Debentures, as the case may be, shall not be deemed to prevent
such Indebtedness from constituting Indebtedness Ranking On a Parity with the
Junior Subordinated Debentures or Indebtedness Ranking Junior to the Junior
Subordinated Debentures, as the case may be.
"Senior Indebtedness" shall mean all Indebtedness, whether outstanding
on the date of execution of the Indenture or thereafter created, assumed or
incurred, except Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures or Indebtedness Ranking Junior to the Junior Subordinated
Debentures, and any deferrals, renewals or extensions of such Senior
Indebtedness.
The Corporation is a non-operating holding company and almost all of
the operating assets of the Corporation are owned by the Corporation's
subsidiaries. The Corporation relies primarily on dividends from such
subsidiaries to meet its obligations for payment of principal and interest on
its outstanding debt obligations and corporate expenses. The Corporation is a
legal entity separate and distinct from its banking and non-banking affiliates.
The principal sources of the Corporation's income are dividends, interest and
fees from its banking and non-banking affiliates. The Bank is subject to
certain restrictions imposed by federal law on any extensions of credit to, and
certain other transactions with, the Corporation and certain other affiliates,
and on investments in stock or other securities thereof. Such restrictions
prevent the Corporation and such other affiliates from borrowing from the Bank
unless the loans are secured by various types of collateral. Further, such
secured loans, other transactions and investments by the Bank are generally
limited in amount as to the Corporation and as to each of such other affiliates
to 10% of the Bank's capital and surplus and as to the Corporation and all of
such other affiliates to an aggregate of 20% of the Bank's capital and surplus.
In addition, payment of dividends to the Corporation by the Bank is subject to
ongoing review by banking regulators and is subject to various statutory
limitations and in certain circumstances requires approval by banking
regulatory authorities. Accordingly, the Junior Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries. Holders of Junior Subordinated Debentures should
look only to the assets of the Corporation for payments of interest and
principal and premium, if any.
The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Corporation. The Corporation expects
from time to time to incur additional indebtedness constituting Senior
Indebtedness.
TRUST EXPENSES
Pursuant to the Indenture, the Corporation will irrevocably and
unconditionally agree with each Trust that holds Junior Subordinated Debentures
that the Corporation will pay to such Trust, and reimburse such Trust for, the
full amount of any costs, expenses or liabilities of the Trust, other than
obligations of the Trust to pay to the holders of any Preferred Securities or
other
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similar interests in the Trust the amounts due such holders pursuant to the
terms of the Preferred Securities or such other similar interests, as the case
may be. Such payment obligation will include any such costs, expenses or
liabilities of the Trust that are required by applicable law to be satisfied in
connection with a termination of such Trust.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed
by and construed in accordance with the laws of the State of New York, and for
all purposes shall be governed by and construed in accordance with the laws of
such State, without regard to the conflicts of laws principles thereof.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to
expend or risk its own funds or otherwise incur personal financial liability in
the performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures may be issued in one
or more series of Junior Subordinated Debentures under the Indenture with terms
corresponding to the terms of a series of Related Preferred Securities. In that
event, concurrently with the issuance of each Trust's Preferred Securities,
such Trust will invest the proceeds thereof and the consideration paid by the
Corporation for the Common Securities of such Trust in such series of
Corresponding Junior Subordinated Debentures issued by the Corporation to such
Trust. Each series of Corresponding Junior Subordinated Debentures will be in
the principal amount equal to the aggregate stated Liquidation Amount of the
Related Preferred Securities and the Common Securities of such Trust and will
rank pari passu with all other series of Junior Subordinated Debentures.
Unless otherwise specified in the applicable Prospectus Supplement, if
a Tax Event or a Regulatory Capital Event in respect of a Trust shall occur and
be continuing, the Corporation may, at its option and subject to prior approval
of the Federal Reserve if then so required under applicable capital guidelines
or policies, redeem the Corresponding Junior Subordinated Debentures at any
time within 90 days of the occurrence of such Tax Event or Regulatory Capital
Event, in whole but not in part, subject to the provisions of the Indenture and
whether or not such Corresponding Junior Subordinated Debentures are then
otherwise redeemable at the option of the Corporation. The redemption price for
any Corresponding Junior Subordinated Debentures shall be set forth in the
applicable Prospectus Supplement. For so long as the
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applicable Trust is the holder of all the outstanding Corresponding Junior
Subordinated Debentures of such series, the proceeds of any such redemption
will be used by the Trust to redeem the corresponding Trust Securities in
accordance with their terms. The Corporation may not redeem a series of
Corresponding Junior Subordinated Debentures in part unless all accrued and
unpaid interest has been paid in full on all outstanding Corresponding Junior
Subordinated Debentures of such series for all interest periods terminating on
or prior to the Redemption Date.
The Corporation will covenant in the Indenture, as to each series of
Corresponding Junior Subordinated Debentures, that if and so long as (i) the
Trust of the related series of Trust Securities is the holder of all such
Corresponding Junior Subordinated Debentures, (ii) a Tax Event in respect of
such Trust has occurred and is continuing and (iii) the Corporation has
elected, and has not revoked such election, to pay Additional Sums (as defined
under "Description of Preferred Securities--Redemption or Exchange") in respect
of such Trust Securities, the Corporation will pay to such Trust such
Additional Sums. The Corporation will also covenant, as to each series of
Corresponding Junior Subordinated Debentures, (i) to directly or indirectly
maintain 100 percent ownership of the Common Securities; provided, however,
that any permitted successor of the Corporation under the Indenture may succeed
to the Corporation's ownership of the Common Securities, (ii) to use its
reasonable efforts to cause the Trust (a) to remain a business trust, except in
connection with the distribution of Junior Subordinated Debentures to the
holders of Trust Securities in liquidation of the Trust, the redemption of all
of the Trust Securities of the Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the related Declaration of the Trust, and
(b) to continue not to be classified as a grantor trust and not as an
association taxable as a corporation or a partnership for United States federal
income tax purposes and (iii) to use its reasonable efforts to cause each
holder of Trust Securities to be treated as owning an undivided beneficial
interest in the Corresponding Junior Subordinated Debentures.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Declaration for each Trust, the Issuer
Trustees on behalf of such Trust will issue the Preferred Securities and the
Common Securities. The Preferred Securities of a particular issue will
represent beneficial ownership interests in the Trust and the holders thereof
will be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption or liquidation over the Common
Securities of such Trust, as well as other benefits as described in the
corresponding Declaration. This summary of certain provisions of the Preferred
Securities and each Declaration, which summarizes the material terms thereof,
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of each Declaration, including the
definitions therein of certain terms, and the Trust Indenture Act, to each of
which reference is hereby made. Wherever particular defined terms of a
Declaration (as amended or supplemented from time to time) are referred to
herein or in a Prospectus Supplement, such defined terms are incorporated
herein or therein by reference. The form of the Declaration has been filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
Each of the Trusts is a legally separate entity and the assets of one are not
available to satisfy the obligations of any of the others.
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GENERAL
The Preferred Securities of a Trust will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Trust except
as described under "--Subordination of Common Securities." Legal title to the
Corresponding Junior Subordinated Debentures will be held by the Property
Trustee in trust for the benefit of the holders of the related Preferred
Securities and Common Securities. Each Guarantee Agreement executed by the
Corporation for the benefit of the holders of a Trust's Trust Securities (the
"Guarantee") will be a guarantee on a subordinated basis with respect to the
related Trust Securities but will not guarantee payment of Distributions or
amounts payable on redemption or liquidation of such Trust Securities when the
related Trust does not have funds on hand available to make such payments. See
"Description of Guarantees."
DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable Prospectus Supplement. Except as otherwise
provided in the Prospectus Supplement, in the event that any date on which
Distributions are payable on the Preferred Securities is not a Business Day (as
defined below), payment of the Distribution payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), in either case with the same force
and effect as if made on the date such payment was originally payable (each
date on which Distributions are payable in accordance with the foregoing, a
"Distribution Date"). A "Business Day" shall mean any day other than a Saturday
or a Sunday, or a day on which banking institutions in New York, New York or
Winston-Salem, North Carolina are authorized or required by law or executive
order to close.
Each Trust's Preferred Securities represent beneficial ownership
interests in the applicable Trust, and the Distributions on each Preferred
Security will be payable at a rate specified in the applicable Prospectus
Supplement for such Preferred Securities. The amount of Distributions payable
for any period will be computed on the basis of a 360-day year of twelve 30-day
months and, for any period of less than a full calendar month, the number of
days elapsed in such month, unless otherwise specified in the applicable
Prospectus Supplement. Distributions to which holders of Preferred Securities
are entitled will accumulate additional Distributions at the rate per annum if
and as specified in the applicable Prospectus Supplement. The term
"Distributions" as used herein includes any such additional Distributions
unless otherwise stated.
If provided in the applicable Prospectus Supplement, the Corporation
has the right under the Indenture, pursuant to which it will issue the
Corresponding Junior Subordinated Debentures, to elect to defer the payment of
interest at any time or from time to time on any series of the
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Corresponding Junior Subordinated Debentures for up to such number of
consecutive interest payment periods which will be specified in such Prospectus
Supplement relating to such series (each, an "Extension Period"), provided that
no Extension Period may extend beyond the Stated Maturity Date of the
Corresponding Junior Subordinated Debentures. As a consequence of any such
deferral, Distributions on the Related Preferred Securities would be deferred
(but would continue to accumulate additional Distributions thereon at the rate
per annum set forth in the Prospectus Supplement for such Preferred Securities)
by the Trust of such Preferred Securities during any such Extension Period.
During such Extension Period, the Corporation may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal of or premium, if any, or interest on or
repay, repurchase or redeem any debt securities of the Corporation that rank
pari passu with or junior in right of payment to the Corresponding Junior
Subordinated Debentures or (iii) make any guarantee payments with respect to
any guarantee by the Corporation of the debt securities of any subsidiary of
the Corporation if such guarantee ranks pari passu with or junior in right of
payment to the Corresponding Junior Subordinated Debentures (other than (a)
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee with respect to such Preferred Securities, (d)
as a result of a reclassification of the Corporation's capital stock or the
exchange or conversion of one class, or series of the Corporation's capital
stock for another class or series of the Corporation's capital stock, (e) the
purchase of fractional interests in shares of the Corporation's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) purchases of common stock
related to the issuance of common stock or rights under any of the
Corporation's benefit plans for its directors, officers or employees or any of
the Corporation's dividend reinvestment plans).
The revenue of each Trust available for distribution to holders of its
Preferred Securities will be limited to payments under the Corresponding Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of its Trust Securities. See "Description of Junior
Subordinated Debentures--Corresponding Junior Subordinated Debentures." If the
Corporation does not make interest payments on such Corresponding Junior
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Related Preferred Securities. The payment of
Distributions (if and to the extent the Trust has funds legally available for
the payment of such Distributions and cash sufficient to make such payments) is
guaranteed by the Corporation on the basis set forth herein under "Description
of Guarantees."
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Distributions on the Preferred Securities will be payable to the
holders thereof as they appear on the register of such Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
form, will be one Business Day prior to the relevant Distribution Date. Subject
to any applicable laws and regulations and the provisions of the applicable
Declaration, each such payment will be made as described under "Book-Entry
Issuance." In the event any Preferred Securities are not in book-entry form,
the relevant record date for such Preferred Securities shall be the date at
least 15 days prior to the relevant Distribution Date, as specified in the
applicable Prospectus Supplement.
REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Corresponding Junior Subordinated Debentures, whether at maturity
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days notice, at a redemption price (the "Redemption Price")
equal to the aggregate Liquidation Amount of such Trust Securities plus
accumulated and unpaid Distributions thereon to the date of redemption (the
"Redemption Date") and the related amount of the premium, if any, paid by the
Corporation upon the concurrent redemption of such Corresponding Junior
Subordinated Debentures. See "Description of Junior Subordinated
Debentures--Redemption." If less than all of any series of Corresponding Junior
Subordinated Debentures are to be repaid or redeemed on a Redemption Date, then
the proceeds from such repayment or redemption shall be allocated to the
redemption pro rata of the related Preferred Securities and the Common
Securities. The amount of premium, if any, paid by the Corporation upon the
redemption of all or any part of any series of any Corresponding Junior
Subordinated Debentures to be repaid or redeemed on a Redemption Date shall be
allocated to the redemption pro rata of the related Preferred Securities and
the Common Securities.
The Corporation will have the right to redeem any series of
Corresponding Junior Subordinated Debentures (i) on or after such date as may
be specified in the applicable Prospectus Supplement, in whole at any time or
in part from time to time, or (ii) at any time, in whole (but not in part),
upon the occurrence of a Tax Event or Regulatory Capital Event, in either case
subject to receipt of prior approval by the Federal Reserve if then required
under applicable capital guidelines or policies.
Distribution of Corresponding Junior Subordinated Debentures. Subject
to the Corporation having received prior approval of the Federal Reserve to do
so if then required under applicable capital guidelines or policies, the
Corporation has the right at any time to liquidate the related Trust and, after
satisfaction of the liabilities of creditors of such Trust as provided by
applicable law, cause such Corresponding Junior Subordinated Debentures in
respect of the Preferred Securities and Common Securities issued by such issuer
to be distributed to the holders of such Preferred Securities and Common
Securities in exchange therefor upon liquidation of the Trust.
Tax Event or Regulatory Capital Event Redemption. If a Tax Event or
Regulatory Capital Event in respect of a series of Preferred Securities and
Common Securities shall occur and be continuing, the Corporation has the right
to redeem the Corresponding Junior Subordinated Debentures in whole (but not in
part) and thereby cause a mandatory redemption of
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such Preferred Securities and Common Securities in whole (but not in part) at
the Redemption Price within 90 days following the occurrence of such Tax Event
or Regulatory Capital Event. In the event a Tax Event or Regulatory Capital
Event in respect of a series of Preferred Securities and Common Securities has
occurred and is continuing and the Corporation does not elect to redeem the
Corresponding Junior Subordinated Debentures and thereby cause a mandatory
redemption of such Preferred Securities and Common Securities or to liquidate
the related Trust and cause the Corresponding Junior Subordinated Debentures to
be distributed to holders of such Preferred Securities and Common Securities in
exchange therefor upon liquidation of the Trust as described above, such
Preferred Securities will remain outstanding and, if a Tax Event has occurred,
Additional Sums (as defined below) may be payable on the Corresponding Junior
Subordinated Debentures.
Possible Tax Law Changes. On February 6, 1997, as part of the Clinton
Administration's Fiscal 1998 Budget Proposal, the Treasury Department proposed
legislation (the "Proposed Legislation") which would, among other things, have
generally denied corporate issuers a deduction for interest in respect of
certain debt obligations, such as the Corresponding Junior Subordinated
Debentures, if such debt obligations have a maximum term in excess of 15 years
and are not shown as indebtedness on the issuer's applicable consolidated
balance sheet. As of the date of this Prospectus, no such legislation has been
enacted. Furthermore, no similar legislation was proposed as part of President
Clinton's Fiscal 1999 Budget Proposal. No assurance can be given that a similar
proposal will not be enacted in the future that may give rise to a Tax Event,
in which event the Corporation would be permitted, upon approval of the Federal
Reserve if then required under applicable capital guidelines or policies of the
Federal Reserve, to cause a redemption of the Trust Securities by electing to
prepay the Corresponding Junior Subordinated Debentures as described herein
under "--Tax Event or Regulatory Capital Event Redemption."
"Additional Sums" means such additional amounts as may be necessary in
order that the amount of Distributions then due and payable by a Trust on the
outstanding Preferred Securities and Common Securities of the Trust shall not
be reduced as a result of any additional taxes, duties and other governmental
charges to which such Trust has become subject as a result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount (as defined below)
equal to the principal amount of Corresponding Junior Subordinated Debentures
to be paid in accordance with their terms and (ii) with respect to a
distribution of Corresponding Junior Subordinated Debentures upon the
liquidation of the related Trust, Corresponding Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Corresponding Junior Subordinated
Debentures are distributed.
"Liquidation Amount" means (unless otherwise provided in the
Prospectus Supplement) the stated amount of $1,000 per Trust Security.
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After the liquidation date is fixed for any distribution of
Corresponding Junior Subordinated Debentures to holders of the Trust
Securities, (i) the Trust Securities will no longer be deemed to be
outstanding, (ii) each holder of Trust Securities will receive a registered
certificate or certificates representing the Corresponding Junior Subordinated
Debentures to be delivered upon such distribution and (iii) Trust Securities
will be deemed to represent Corresponding Junior Subordinated Debentures having
a principal amount equal to the Liquidation Amount of such Trust Securities,
and bearing accrued and unpaid interest in an amount equal to the accumulated
and unpaid Distributions on such Trust Securities, until such Trust Securities
are presented to the Administrative Trustees or their agent for cancellation,
whereupon the Corporation will issue to such holder, and the Debenture Trustee
will authenticate, a certificate representing such Corresponding Junior
Subordinated Debentures.
There can be no assurance as to the market prices for the Preferred
Securities or the Corresponding Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of a Trust were to occur. Accordingly, the Preferred Securities
that an investor may purchase, or the Corresponding Junior Subordinated
Debentures that the investor may receive on dissolution and liquidation of a
Trust, may trade at a discount to the price that the investor paid to purchase
the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Corresponding Junior Subordinated Debentures.
Redemptions of the Preferred Securities shall be made and the Redemption Price
shall be payable on each Redemption Date only to the extent that the related
Trust has funds on hand available for the payment of such Redemption Price. See
also "--Subordination of Common Securities."
If a Trust gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, the Property Trustee will pay the Redemption
Price to The Depository Trust Company ("DTC"). See "Book-Entry Issuance." If
such Preferred Securities are no longer in book-entry form, the Property
Trustee, to the extent funds are available, will irrevocably deposit with the
paying agent for such Preferred Securities funds sufficient to pay or cause the
paying agent to pay the applicable Redemption Price to the holders thereof upon
surrender of their certificates evidencing such Preferred Securities.
Distributions payable on or prior to the Redemption Date for any Preferred
Securities called for redemption shall be payable to the holders of such
Preferred Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of the holders of such
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price, and such Preferred Securities will
cease to be outstanding. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the
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next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay). In the event that payment of the
Redemption Price in respect of Preferred Securities called for redemption is
improperly withheld or refused and not paid either by the Trust or by the
Corporation pursuant to the Guarantee as described under "Description of
Guarantees," (i) Distributions on such Preferred Securities will continue to
accrue at the then applicable rate, from the Redemption Date originally
established by the Trust for such Preferred Securities to the date such
Redemption Price is actually paid, and (ii) the actual payment date will be the
date fixed for redemption for purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United
States federal securities law and the regulations of the Federal Reserve), the
Corporation or its subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by private
agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Corresponding Junior Subordinated Debentures to holders of
Preferred Securities shall be made to the applicable recordholders thereof as
they appear on the register for such Preferred Securities on the relevant
record date, which shall be one Business Day prior to the relevant Redemption
Date or liquidation date, as applicable; provided, however, that in the event
that any Preferred Securities are not in book-entry form, the relevant record
date for such Preferred Securities shall be a date at least 15 days prior to
the Redemption Date or liquidation date, as applicable, as specified in the
applicable Prospectus Supplement.
If less than all of the Preferred Securities and Common Securities
issued by a Trust are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Preferred Securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property
Trustee from the outstanding Preferred Securities not previously called for
redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or an integral multiple of $1,000 in excess thereof) of the
Liquidation Amount of Preferred Securities of a denomination larger than
$1,000. The Property Trustee shall promptly notify the trust registrar in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation
Amount thereof to be redeemed. For all purposes of each Declaration, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each holder of Trust Securities to
be redeemed at its registered address.
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SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Trust's
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date a Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Trust's
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid Distributions on
all of the Trust's outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all of the Trust's
outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Trust's Preferred Securities then due and payable.
In the case of any event of default under the applicable Declaration
resulting from a Debenture Event of Default, the Corporation as holder of such
Trust's Common Securities will be deemed to have waived any right to act with
respect to any such event of default under the applicable Declaration until the
effect of all such events of default with respect to such Preferred Securities
have been cured, waived or otherwise eliminated. Until all events of default
under the applicable Declaration with respect to the Preferred Securities have
been so cured, waived or otherwise eliminated, the Property Trustee shall act
solely on behalf of the holders of such Preferred Securities and not on behalf
of the Corporation as holder of the Trust's Common Securities, and only the
holders of such Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to each Declaration, each Trust shall automatically terminate
upon expiration of its term and shall terminate on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Corresponding Junior Subordinated
Debentures to the holders of its Trust Securities, if the Corporation, as
Sponsor, has given written direction to the Property Trustee to terminate such
Trust (which direction is optional and, except as otherwise provided herein,
wholly within the discretion of the Corporation, as Sponsor); (iii) redemption
of all of the Trust Securities as described under --Redemption or
Exchange--Mandatory Redemption;" (iv) expiration of the term of the Trust; and
(v) the entry of an order for the dissolution of the Trust by a court of
competent jurisdiction.
If an early termination occurs as described in clause (i), (ii), (iv)
or (v) above, the Trust shall be liquidated by the Administrative Trustees as
expeditiously as the Administrative Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of such Trust as
provided by applicable law, to the holders of such Trust Securities in exchange
therefor a Like Amount of the Corresponding Junior Subordinated Debentures,
unless such
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distribution is determined by the Property Trustee not to be practicable, in
which event such holders will be entitled to receive out of the assets of the
Trust available for distribution to holders, after satisfaction of liabilities
to creditors of such Trust as provided by applicable law, an amount equal to,
in the case of holders of Preferred Securities, the aggregate of the
Liquidation Amount plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If such Liquidation
Distribution can be paid only in part because such Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then
the amounts payable directly by such Trust on its Trust Securities shall be
paid on a pro rata basis, except that if a Debenture Event of Default has
occurred and is continuing, the Preferred Securities shall have a priority over
the Common Securities.
EVENTS OF DEFAULT; NOTICE
The occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures--Debenture Events of
Default") constitutes an "Event of Default" under each Declaration with respect
to the Preferred Securities issued thereunder.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Trust's Preferred
Securities, the Administrative Trustees and the Corporation, as Sponsor, unless
such Event of Default shall have been cured or waived. The Corporation, as
Sponsor, and the Administrative Trustees are required to file annually with the
Property Trustee a certificate as to whether or not they are in compliance with
all the conditions and covenants applicable to them under each Declaration.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities as
described above. See "--Subordination of Common Securities" and "--Liquidation
Distribution Upon Termination." The existence of an Event of Default does not
entitle the holders of Preferred Securities to accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be
continuing, any Issuer Trustee may be removed at any time by the holder of the
Common Securities. If a Debenture Event of Default has occurred and is
continuing, the Property Trustee and the Delaware Trustee may be removed at
such time by the holders of a majority in Liquidation Amount of the outstanding
Preferred Securities. In no event will the holders of the Preferred Securities
have the right to vote to appoint, remove or replace the Administrative
Trustees, which voting rights are vested exclusively in the Corporation as the
holder of the Common Securities. No resignation or removal of an Issuer Trustee
and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the applicable Declaration.
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CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at
any time or from time to time, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any
part of the Trust Property may at the time be located, the Corporation, as the
holder of the Common Securities shall have power to appoint one or more persons
either to act as a co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to act as separate trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the applicable Declaration. In case a Debenture Event of Default
has occurred and is continuing, the Property Trustee alone shall have power to
make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or
any Administrative Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which such Issuer Trustee shall be a
party, or any Person succeeding to all or substantially all the corporate trust
business of such Issuer Trustee, shall be the successor of such Issuer Trustee
under each Declaration, provided such Person shall be otherwise qualified and
eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUSTS
A Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. A Trust may, at the request of the Corporation, with the
consent of the Administrative Trustees but without the consent of the holders
of the Preferred Securities, the Property Trustee or the Delaware Trustee,
merge with or into, consolidate, amalgamate, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, a trust organized as such under the laws of any State;
provided, that (i) such successor entity either (a) expressly assumes all of
the obligations of such Trust with respect to the Preferred Securities or (b)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Preferred Securities in
priority with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) the Corporation expressly appoints a trustee of
such successor entity possessing the same powers and duties as the Property
Trustee as the holder of the Corresponding Junior Subordinated Debentures,
(iii) the Successor Securities are listed or quoted, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Preferred Securities are
then listed or quoted, if any, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance,
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transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the Preferred Securities (including any Successor
Securities) in any material respect (other than any dilution of such holders'
interests in the new entity), (vi) such successor entity has a purpose
identical to that of the Trust, (vii) prior to such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Corporation has received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (a) such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Preferred Securities (including any Successor Securities) in any material
respect (other than any dilution of such holders' interests in the new entity),
and (b) following such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such
successor entity will be required to register as an investment company under
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
and (viii) the Corporation or any permitted successor or assignee owns all of
the Common Securities of such successor entity and guarantees the obligations
of such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, a Trust shall not,
except with the consent of holders of 100% in Liquidation Amount of the
Preferred Securities, consolidate, amalgamate, merge or convert with or into,
or be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety or substantially as an entirety to any other
entity or permit any other entity to consolidate, amalgamate, merge or convert
with or into, or replace it if such consolidation, amalgamation, merger,
conversion, replacement, conveyance, transfer or lease would cause the Trust or
the successor entity not to be classified as a grantor trust for United States
federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF EACH DECLARATION
Except as provided below and under "Description of
Guarantees--Amendments and Assignment" and as otherwise required by law and the
applicable Declaration, the holders of the Preferred Securities will have no
voting rights.
Each Declaration may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of
the holders of the Trust Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Declaration that may be inconsistent with any
other provision, or to make any other provisions with respect to matters or
questions arising under such Declaration, which shall not be inconsistent with
the other provisions of such Declaration, or (ii) to modify, eliminate or add
to any provisions of such Declaration to such extent as shall be necessary to
ensure that the Trust will be classified for United States federal income tax
purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that the Trust will not be required to register as an
"investment company" under the Investment Company Act; provided, however, that
in the case of clause (i) such action shall not adversely affect in any
material respect the interests of the holders of the Trust Securities, and any
amendments of such Declaration shall become effective when notice thereof is
given to the holders of Trust Securities. Each Declaration may be amended by
the Issuer Trustees and the Corporation with (i) the consent of holders
representing not less than a
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majority (based upon Liquidation Amounts) of the outstanding Trust Securities,
and (ii) upon receipt by the Issuer Trustees of an opinion of counsel to the
effect that such amendment or the exercise of any power granted to the Issuer
Trustees in accordance with such amendment will not affect the Trust's status
as a grantor trust for United States federal income tax purposes or the Trust's
exemption from status as an "investment company" under the Investment Company
Act, provided that, without the consent of each holder of Trust Securities,
such Declaration may not be amended to (i) change the amount or timing of any
Distribution or other payment on the Trust Securities or otherwise adversely
affect the amount of any Distribution or other payment required to be made in
respect of the Trust Securities as of a specified date or (ii) restrict the
right of a holder of Trust Securities to institute suit for the enforcement of
any such payment on or after such date.
So long as any Corresponding Junior Subordinated Debentures are held
by the Property Trustee, the Issuer Trustees shall not (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to such Corresponding Junior Subordinated Debentures, (ii)
waive certain past defaults under the Indenture, (iii) exercise any right to
rescind or annul a declaration of acceleration of the maturity of principal of
such Corresponding Junior Subordinated Debentures or (iv) consent to any
amendment, modification or termination of the Indenture or such Corresponding
Junior Subordinated Debentures, where such consent shall be required, without,
in each case, obtaining the prior approval of the holders of a majority in
aggregate Liquidation Amount of all outstanding Preferred Securities; provided,
however, that where a consent under the Indenture would require the consent of
each holder of Corresponding Junior Subordinated Debentures affected thereby,
no such consent shall be given by the Property Trustee without the prior
consent of each holder of the Related Preferred Securities. The Issuer Trustees
shall not revoke any action previously authorized or approved by a vote of the
holders of the Preferred Securities except by subsequent vote of the holders of
the Preferred Securities. The Property Trustee shall notify each holder of
Preferred Securities of any notice of default with respect to the Corresponding
Junior Subordinated Debentures. In addition to obtaining the foregoing
approvals of the holders of the Preferred Securities, prior to taking any of
the foregoing actions, the Issuer Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not be classified
as an association taxable as a corporation for United States federal income tax
purposes on account of such action.
Any required approval of holders of Preferred Securities may be given
at a meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be given to each holder of record of Preferred Securities in the manner set
forth in each Declaration.
No vote or consent of the holders of Preferred Securities will be
required for a Trust to redeem and cancel its Preferred Securities in
accordance with the applicable Declaration.
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Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Corporation or any affiliate of the
Corporation shall, for purposes of such vote or consent, be treated as if they
were not outstanding.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part
in the form of one or more Global Preferred Securities that will be deposited
with, or on behalf of, the Depositary identified in the Prospectus Supplement
relating to such series. Unless otherwise indicated in the applicable
Prospectus Supplement for such series, the Depositary will be DTC. Global
Preferred Securities may be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual Preferred Securities represented thereby, a Global
Preferred Security may not be transferred except as a whole by the Depositary
for such Global Preferred Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.
The specific terms of the depositary arrangement with respect to a
series of Preferred Securities will be described in the Prospectus Supplement
relating to such series. The Corporation anticipates that the following
provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of
such Global Preferred Security with or on behalf of the Depositary, the
Depositary for such Global Preferred Security or its nominee will credit, on
its book-entry registration and transfer system, the respective aggregate
Liquidation Amounts of the individual Preferred Securities represented by such
Global Preferred Securities to the accounts of Participants. Such accounts
shall be designated by the dealers, underwriters or agents with respect to such
Preferred Securities or by the Corporation if such Preferred Securities are
offered and sold directly by the Corporation. Ownership of beneficial interests
in a Global Preferred Security will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in
such Global Preferred Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Preferred Security.
So long as the Depositary for a Global Preferred Security, or its
nominee, is the registered owner of such Global Preferred Security, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such Global
Preferred Security for all purposes under the Indenture governing such
Preferred Securities. Except as provided below, owners of beneficial interests
in a Global Preferred
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Security will not be entitled to have any of the individual Preferred
Securities of the series represented by such Global Preferred Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Preferred Securities of such series in definitive form and
will not be considered the owners or holders thereof under the Indenture.
Payments of principal of (and premium, if any) and interest on
individual Preferred Securities represented by a Global Preferred Security
registered in the name of a Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
Global Preferred Security representing such Preferred Securities. None of the
Corporation, the Property Trustee, any Paying Agent, or the Securities
Registrar for such Preferred Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of the Global Preferred Security representing
such Preferred Securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Corporation expects that the Depositary for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount,
Redemption Price, premium or Distributions in respect of a permanent Global
Preferred Security representing any of such Preferred Securities, immediately
will credit Participants' accounts with payments in amounts proportionate to
their respective beneficial interest in the aggregate Liquidation Amount of
such Global Preferred Security for such Preferred Securities as shown on the
records of such Depositary or its nominee. The Corporation also expects that
payments by Participants to owners of beneficial interests in such Global
Preferred Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if
a Depositary for a series of Preferred Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is
not appointed by the Trust within 90 days, the Trust will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security representing such series of Preferred Securities. In addition, the
Trust may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities,
determine not to have any Preferred Securities of such series represented by
one or more Global Preferred Securities and, in such event, will issue
individual Preferred Securities of such series in exchange for the Global
Preferred Security or Securities representing such series of Preferred
Securities. Further, if the Trust so specifies with respect to the Preferred
Securities of a series, an owner of a beneficial interest in a Global Preferred
Security representing Preferred Securities of such series may, on terms
acceptable to the Trust, the Property Trustee and the Depositary for such
Global Preferred Security, receive individual Preferred Securities of such
series in exchange for such beneficial interests, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities.
In any such instance, an owner of a beneficial interest in a Global Preferred
Security will be entitled to physical delivery of individual Preferred
Securities of the series represented by such Global
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Preferred Security equal in principal amount to such beneficial interest and to
have such Preferred Securities registered in its name. Individual Preferred
Securities of such series so issued will be issued in denominations, unless
otherwise specified by the Trust, of $1,000 and integral multiples thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Trust's Preferred Securities are not
held by the Depositary, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Corporation. In the event that the Property Trustee
shall no longer be the Paying Agent, the Administrative Trustees shall appoint
a successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and the Corporation) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement,
the Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of each Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Trusts will not be required to register or cause to be
registered the transfer of their Preferred Securities after such Preferred
Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in each Declaration and, after such Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the applicable Declaration at the request of any holder
of Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
the applicable Declaration or is unsure of the application of any provision of
the applicable Declaration, and the matter is not one on which holders of
Preferred Securities are entitled under such Declaration to vote, then the
Property Trustee shall take such action as is directed by the Corporation and
if not so directed, shall take such action as it deems advisable and in the
best interests of the holders of the Trust Securities and will have no
liability except for its own bad faith, negligence or willful misconduct.
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MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trusts in such a way that no Trust will be deemed
to be an "investment company" required to be registered under the Investment
Company Act or classified as an association taxable as a corporation for United
States federal income tax purposes and so that Corresponding Junior
Subordinated Debentures will be treated as indebtedness of the Corporation for
United States federal income tax purposes. In this connection, the Corporation
and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of each Trust or
each Declaration, that the Corporation and the Administrative Trustees
determine in their discretion to be necessary or desirable for such purposes,
as long as such action does not materially adversely affect the interests of
the holders of the Related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar
rights.
No Trust may borrow money or issue debt or mortgage or pledge any of
its assets.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Preferred
Securities and the Junior Subordinated Debentures, unless otherwise referred to
in the Prospectus Supplement relating to an offering of Preferred Securities or
Junior Subordinated Debentures. The Preferred Securities and the Junior
Subordinated Debentures will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates will be issued for the Preferred
Securities of each Trust and the Junior Subordinated Debentures, representing
in the aggregate the total number of such Trust's Preferred Securities or
aggregate principal balance of Junior Subordinated Debentures, respectively,
and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds securities that its Participants deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. "Direct
Participants" include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a number
of its Direct
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Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures
within the DTC system must be made by or through Direct Participants, which
will receive a credit for the Preferred Securities or Junior Subordinated
Debentures on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security and each Junior Subordinated Debenture ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect Participants'
records. Beneficial Owners will not receive written confirmation from DTC of
their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Preferred Securities or Junior
Subordinated Debentures. Transfers of ownership interests in the Preferred
Securities or Junior Subordinated Debentures are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Preferred Securities or Junior Subordinated Debentures, except in
the event that use of the book-entry system for the Preferred Securities of
such Trust or Junior Subordinated Debentures is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities or Junior Subordinated Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Securities
or Junior Subordinated Debentures are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder
of the Preferred Securities or Junior Subordinated Debentures. If less than all
of a Trust's Preferred Securities or the Junior Subordinated Debentures are
being redeemed, DTC's current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or Junior Subordinated Debentures, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Preferred Securities or Junior Subordinated Debentures. Under its
usual procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to the
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relevant Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts such Preferred Securities or Junior Subordinated Debentures
are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Distribution payments on the Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Trustee to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payments on such payment
date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices and will be the responsibility of
such Participant and not of DTC, the relevant Trustee, the Trust thereof or the
Corporation, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of Distributions to DTC is the responsibility
of the relevant Trustee, disbursement of such payments to Direct Participants
is the responsibility of DTC, and disbursements of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary
with respect to any of the Preferred Securities or the Junior Subordinated
Debentures at any time by giving reasonable notice to the relevant Trustee and
the Corporation. In the event that a successor securities depositary is not
obtained, definitive Preferred Security or Junior Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. The Corporation, at its
option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After a Debenture Event of Default,
the holders of a majority in liquidation preference of Preferred Securities or
aggregate principal amount of Junior Subordinated Debentures may determine to
discontinue the system of book-entry transfers through DTC. In any such event,
definitive certificates for such Preferred Securities or Junior Subordinated
Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Trusts and the Corporation
believe to be accurate, but the Trusts and the Corporation assume no
responsibility for the accuracy thereof. Neither the Trusts nor the Corporation
has any responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Corporation
concurrently with the issuance by each Trust of its Preferred Securities for
the benefit of the holders from time to time of such Preferred Securities. The
First National Bank of Chicago will act as indenture trustee ("Guarantee
Trustee") under each Guarantee for the purposes of compliance with the Trust
Indenture Act and each Guarantee will be qualified as an indenture under the
Trust Indenture
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Act. This summary of certain provisions of the Guarantees, which summarizes the
material terms thereof, does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all of the provisions of each
Guarantee, including the definitions therein of certain terms, and the Trust
Indenture Act, to each of which reference is hereby made. The form of the
Guarantee has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. Reference in this summary to Preferred Securities
means that Trust's Preferred Securities to which a Guarantee relates. The
Guarantee Trustee will hold each Guarantee for the benefit of the holders of
the related Trust's Preferred Securities.
GENERAL
The Corporation will irrevocably agree to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined below) to the holders of the Preferred Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that such Trust may
have or assert other than the defense of payment. The following payments with
respect to the Preferred Securities, to the extent not paid by or on behalf of
the related Trust (the "Guarantee Payments"), will be subject to the Guarantee:
(i) any accumulated and unpaid Distributions required to be paid on such
Preferred Securities, to the extent that such Trust has funds on hand available
therefor at such time, (ii) the Redemption Price with respect to any Preferred
Securities called for redemption, to the extent that such Trust has funds on
hand available therefor, or (iii) upon a voluntary or involuntary termination
and liquidation of such Trust (unless the Corresponding Junior Subordinated
Debentures are distributed to holders of such Preferred Securities in exchange
therefor), the lesser of (a) the Liquidation Distribution and (b) the amount of
assets of such Trust remaining available for distribution to holders of
Preferred Securities. The Corporation's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Corporation
to the holders of the applicable Preferred Securities or by causing the Trust
to pay such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated
basis of the related Trust's obligations under the Preferred Securities, but
will apply only to the extent that such related Trust has funds sufficient to
make such payments, and is not a guarantee of collection.
If the Corporation does not make interest payments on the
Corresponding Junior Subordinated Debentures held by the Trust, the Trust will
not be able to pay Distributions on the Preferred Securities and will not have
funds legally available therefor. Each Guarantee will rank subordinate and
junior in right of payment to all Senior Indebtedness of the Corporation to the
extent and in the manner set forth in the Guarantee. See "--Status of the
Guarantees." Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise, is subject to the
prior claims of creditors of that subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Corporation's obligations under the Guarantees will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and claimants should look only to the assets of the
Corporation for payments thereunder. See "Wachovia Corporation." Except as
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otherwise provided in the applicable Prospectus Supplement, the Guarantees do
not limit the incurrence or issuance of other secured or unsecured debt of the
Corporation, including Senior Indebtedness, whether under the Indenture, any
other existing indenture or any other indenture that the Corporation may enter
into in the future or otherwise. See the applicable Prospectus Supplement
relating to any offering of Preferred Securities.
The Corporation will, through the applicable Guarantee, the applicable
Declaration, the applicable series of Corresponding Junior Subordinated
Debentures and the Indenture, taken together, fully, irrevocably and
unconditionally guarantee all of the Trust's obligations under the Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only
the combined operation of these documents that has the effect of providing a
full, irrevocable and unconditional guarantee of the Trust's obligations under
the Preferred Securities. See "Relationship Among the Preferred Securities, the
Corresponding Junior Subordinated Debentures and the Guarantees."
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the
Corporation and will rank subordinate and junior in right of payment to all
Senior Indebtedness of the Corporation in the same manner as the Junior
Subordinated Debentures.
Each Guarantee will rank pari passu with all other guarantees issued
by the Corporation with respect to preferred securities issued by other issuers
to be established by the Corporation similar to the Trusts. Each Guarantee will
constitute a guarantee of payment and not of collection (i.e., the guaranteed
party may institute a legal proceeding directly against the Corporation to
enforce its rights under the Guarantee without first instituting a legal
proceeding against any other person or entity). Each Guarantee will be held for
the benefit of the holders of the related Preferred Securities. Each Guarantee
will not be discharged except by payment of the Guarantee Payments in full to
the extent not paid by the Trust or upon distribution to the holders of the
Preferred Securities of the Corresponding Junior Subordinated Debentures. None
of the Guarantees places a limitation on the amount of additional Senior
Indebtedness that may be incurred by the Corporation. The Corporation expects
from time to time to incur additional indebtedness constituting Senior
Indebtedness.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure
of the Corporation to perform any of its payment or other obligations
thereunder. The holders of not less than a majority in aggregate Liquidation
Amount of the Related Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of such Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under such Guarantee.
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Any holder of the Preferred Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under such
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
CERTAIN COVENANTS OF THE CORPORATION
In each Guarantee, the Corporation will covenant that, so long as any
Related Preferred Securities remain outstanding, if there shall have occurred
any event that would constitute an event of default under the Guarantee or the
Declaration, then the Corporation will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Corporation's capital stock, (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Corporation that rank pari passu with or junior in
right of payment to the Junior Subordinated Debentures or (iii) make any
guarantee payments with respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation if such guarantee ranks pari
passu with or junior in right of payment to the Junior Subordinated Debentures
(other than (a) dividends or distributions in shares of or options, warrants or
rights to subscribe for or purchase shares of, common stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee, (d) as a result of a reclassification of the
Corporation's capital stock or the exchange or conversion of one class or
series of the Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (f) purchases of common stock related to the issuance of common stock or
rights under any of the Corporation's benefit plans for its directors, officers
or employees or any of the Corporation's dividend reinvestment plans).
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and
continuance of a default by the Corporation in performance of any Guarantee,
undertakes to perform only such duties as are specifically set forth in each
Guarantee and, after default with respect to any Guarantee, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by
any Guarantee at the request of any holder of any Preferred Securities unless
it is offered reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby. The Guarantee Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if it reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
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AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely
affect the rights of holders of the Related Preferred Securities (in which case
no vote will be required), no Guarantee may be amended without the prior
approval of the holders of not less than a majority of the aggregate
Liquidation Amount of such outstanding Preferred Securities. The manner of
obtaining any such approval will be as set forth under "Description of
Preferred Securities--Voting Rights; Amendment of Each Declaration." All
guarantees and agreements contained in each Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Corporation
and shall inure to the benefit of the holders of the related Preferred
Securities then outstanding.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect
upon full payment of the Redemption Price of the Related Preferred Securities,
upon full payment of the Liquidation Amount payable upon liquidation of the
related Trust or upon distribution of Corresponding Junior Subordinated
Debentures to the holders of the Related Preferred Securities. Each Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder of the Related Preferred Securities must restore payment of
any sums paid under such Preferred Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of laws
principles thereof.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Corporation as and to the
extent set forth under "Description of Guarantees." Taken together, the
Corporation's obligations under each series of Corresponding Junior
Subordinated Debentures, the Indenture, the related Declaration and the related
Guarantee provide, in the aggregate, a full, irrevocable and unconditional
guarantee of payments of Distributions and other amounts due on the Related
Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes
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such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Related Preferred Securities. If and to the
extent that the Corporation does not make payments on any series of
Corresponding Junior Subordinated Debentures, such Trust will not pay
Distributions or other amounts due on the Related Preferred Securities. The
Guarantees do not cover payment of Distributions when the related Trust does
not have sufficient funds to pay such Distributions. In such event, the remedy
of a holder of a series of Preferred Securities is to institute a legal
proceeding directly against the Corporation pursuant to the terms of the
Indenture for enforcement of payment of amounts equal to such Distributions to
such holder. The obligations of the Corporation under each Guarantee are
subordinate and junior in right of payment to all Senior Indebtedness of the
Corporation in the same manner as the Junior Subordinated Debentures.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due
on each series of Corresponding Junior Subordinated Debentures, such payments
will be sufficient to cover Distributions and other payments due on the Related
Preferred Securities, primarily because (i) the aggregate principal amount of
each series of Corresponding Junior Subordinated Debentures will be equal to
the sum of the aggregate stated Liquidation Amount of the Related Preferred
Securities and related Common Securities; (ii) the interest rate and interest
and other payment dates on each series of Corresponding Junior Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the Related Preferred Securities; (iii) the Corporation shall pay for
all and any costs, expenses and liabilities of such Trust except the Trust's
obligations to holders of its Trust Securities under such Trust Securities; and
(iv) each Declaration further provides that the Trust will not engage in any
activity that is not consistent with the limited purposes of such Trust.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Related Preferred Security may institute a legal
proceeding directly against the Corporation to enforce its rights under the
related Guarantee without first instituting a legal proceeding against the
Guarantee Trustee, the related Trust or any other person or entity.
A default or event of default under any Senior Indebtedness of the
Corporation would not constitute a default or Event of Default under the
Indenture. However, in the event of payment defaults under, or acceleration of,
Senior Indebtedness of the Corporation, the subordination provisions of the
Indenture provide that no payments may be made in respect of the Corresponding
Junior Subordinated Debentures until such Senior Indebtedness has been paid in
full or any payment default thereunder has been cured or waived. Failure to
make required payments on any series of Corresponding Junior Subordinated
Debentures would constitute an Event of Default under the Indenture.
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LIMITED PURPOSE OF TRUSTS
Each Trust's Preferred Securities evidence a preferred beneficial
interest in such Trust, and each Trust exists for the sole purpose of issuing
and selling the Trust Securities, using the proceeds from the sale of the Trust
Securities to acquire the Corresponding Junior Subordinated Debentures and
engaging in only those other activities necessary, advisable or incidental
thereto. A principal difference between the rights of a holder of a Preferred
Security and a holder of a Corresponding Junior Subordinated Debenture is that
a holder of a Corresponding Junior Subordinated Debenture will be entitled to
receive from the Corporation the principal amount of and premium, if any, and
interest on Corresponding Junior Subordinated Debentures held, while a holder
of Preferred Securities will be entitled to receive Distributions from such
Trust (or, in certain circumstances, from the Corporation under the applicable
Guarantee) if and to the extent such Trust has funds available for the payment
of such Distributions.
RIGHTS UPON TERMINATION
Unless the Corresponding Junior Subordinated Debentures are
distributed to holders of the Trust Securities, upon any voluntary or
involuntary termination and liquidation of any Trust, the holders of the
related Trust Securities will be entitled to receive, out of the assets held by
such Trust, the Liquidation Distribution in cash. See "Description of Preferred
Securities--Liquidation Distribution Upon Termination." Upon any voluntary or
involuntary liquidation or bankruptcy of the Corporation, the Property Trustee,
as holder of the Corresponding Junior Subordinated Debentures, would be a
subordinated creditor of the Corporation, subordinated in right of payment to
all Senior Indebtedness as and in the manner set forth in the Indenture, but
entitled to receive payment in full of principal (and premium, if any) and
interest, before any stockholders of the Corporation receive payments or
distributions. Since the Corporation will be the guarantor under each Guarantee
and will agree to pay for all costs, expenses and liabilities of each Trust
(other than the Trust's obligations to the holders of its Trust Securities),
the positions of a holder of such Preferred Securities and a holder of such
Corresponding Junior Subordinated Debentures relative to other creditors and to
stockholders of the Corporation in the event of liquidation or bankruptcy of
the Corporation are expected to be substantially the same.
PLAN OF DISTRIBUTION
Wachovia may sell the Junior Subordinated Debentures and any Trust may
sell Preferred Securities (such Junior Subordinated Debentures and Preferred
Securities, the "Offered Securities") in any of, or any combination of, the
following ways: (i) directly to purchasers, (ii) through agents and (iii)
through underwriters or dealers. Such underwriters, dealers or agents may be
affiliates of Wachovia, and offers or sales of such securities may include
secondary market transactions by affiliates of Wachovia to the extent permitted
by applicable law.
Offers to purchase Offered Securities may be solicited directly by
Wachovia and/or any Trust, as the case may be, or by agents designated by
Wachovia and/or any Trust, as the case may be, from time to time. Any such
agent, who may be deemed to be an underwriter as that
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term is defined in the Securities Act, involved in the offer or sale of the
Offered Securities in respect of which this Prospectus is delivered will be
named, and any commissions payable by Wachovia to such agent will be set forth,
in the Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the
period of its appointment. Agents, dealers and underwriters may be customers
of, engage in transactions with, or perform services for Wachovia in the
ordinary course of business.
If an underwriter or underwriters are utilized in the sale, Wachovia
will execute an underwriting agreement with such underwriters at the time of
sale to them and the names of the underwriters and the terms of the transaction
will be set forth in the Prospectus Supplement, which will be used by the
underwriters to make resales of the Offered Securities in respect of which this
Prospectus is delivered to the public.
If a dealer is utilized in the sale of the Offered Securities in
respect of which this Prospectus is delivered, Wachovia and/or any Trust, as
the case may be, will sell such Offered Securities to the dealer, as principal.
The dealer may then resell such Offered Securities to the public at varying
prices to be determined by such dealer at the time of resale. The name of the
dealer and the terms of the transaction will be set forth in the Prospectus
Supplement. Agents, underwriters, and dealers may be entitled under the
relevant agreements to indemnification by Wachovia and/or any Trust, as the
case may be, against certain liabilities, including liabilities under the
Securities Act.
This Prospectus and related Prospectus Supplement may be used by
direct or indirect subsidiaries of Wachovia in connection with offers and sales
related to secondary market transactions. Such subsidiaries may act as
principal or agent in such transactions. Such sales may be made at prices
related to prevailing market prices at the time of sale.
In connection with the offering of the Preferred Securities of any
Trust, such Trust may grant to the underwriters an option to purchase
additional Preferred Securities to cover over-allotments, if any, at the
initial public offering price (with an additional underwriting commission), as
may be set forth in the accompanying Prospectus Supplement. If such Trust
grants any over-allotment option, the terms of such over-allotment option will
be set forth in the Prospectus Supplement for such Preferred Securities.
In connection with certain offerings of Preferred Securities made
hereby, the agents, underwriters or dealers may purchase and sell the Preferred
Securities in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover short positions in
connection with such offerings. Stabilizing transactions consist of certain
bids or purchases for the purpose of preventing or retarding a decline in the
market price of the Preferred Securities and short positions involve the sale
by the agents, underwriters, or dealers of a greater number of Preferred
Securities than they are required to purchase from Wachovia and/or any Trust in
the offering. The agents, underwriters, or dealers also may impose penalty
bids, whereby selling concessions allowed to broker-dealers in respect of the
Preferred Securities sold in the offering may be reclaimed by the agents,
underwriters, or dealers if such Preferred
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Securities are repurchased by the agents, underwriters, or dealers in
stabilizing transactions. These activities may stabilize, maintain or otherwise
affect the market price of the Preferred 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 in the over-the-counter market or otherwise.
Underwriters and dealers may engage in transactions with, or perform
services for, the Corporation and/or the applicable Trust and/or any of their
affiliates in the ordinary course of business.
The Offered Securities will be new issues of securities and will have
no established trading market. Any underwriters to whom Offered Securities are
sold for public offering and sale may make a market in such Offered Securities,
but such underwriters will not be obligated to do so and may discontinue any
market making at any time without notice. Such Offered Securities may or may
not be listed on a national securities exchange or the Nasdaq National Market.
No assurance can be given as to the liquidity of or the existence of trading
markets for any Offered Securities.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement,
certain legal matters will be passed upon for the Corporation by Kenneth W.
McAllister, General Counsel of the Corporation, and for the Trusts by Richards,
Layton & Finger, special Delaware counsel to the Trusts and the Corporation.
The validity of the Guarantees and the Junior Subordinated Debentures will be
passed upon for the Underwriters by Brown & Wood LLP. Kenneth W. McAllister and
Brown & Wood LLP will rely on the opinion of Richards, Layton & Finger as to
matters of Delaware law.
EXPERTS
The consolidated financial statements of Wachovia Corporation and
subsidiaries at December 31, 1997 and 1996, and for each of the three years in
the period ended December 31, 1997, incorporated by reference in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon and incorporated
herein by reference, which is based in part on the reports of KPMG Peat Marwick
LLP, independent auditors. Such consolidated financial statements are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
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No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
Supplement or the Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by Wachovia
Corporation, Wachovia Capital Trust VI or any Underwriter. This Prospectus
Supplement and the Prospectus do not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus Supplement
and the Prospectus at any time does not imply that the information they contain
is correct as of any time subsequent to their respective dates.
------------------
TABLE OF CONTENTS
Page
-----
Summary............................................ S-6
Risk Factors....................................... S-9
Wachovia Capital Trust VI.......................... S-15
Wachovia Corporation............................... S-17
Use of Proceeds.................................... S-18
Consolidated Ratio of Earnings to Fixed Charges.... S-18
Capitalization..................................... S-19
Summary Financial Data............................. S-20
Description of Capital Securities.................. S-22
Description of Junior Subordinated Debentures...... S-26
Description of the Guarantee....................... S-32
Certain Federal Income Tax Considerations.......... S-34
Erisa Considerations............................... S-38
Underwriting....................................... S-40
Validity of Securities............................. S-42
PROSPECTUS
Available Information.............................. 3
Incorporation of Certain Documents by Reference.... 4
Wachovia Corporation............................... 6
The Trusts......................................... 7
Use of Proceeds.................................... 9
Description of Junior Subordinated Debentures...... 9
Description of Preferred Securities................ 25
Book-Entry Issuance................................ 40
Description of Guarantees.......................... 42
Relationship Among the Preferred Securities,
the Corresponding Junior Subordinated
Debentures and the Guarantees................. 46
Plan of Distribution............................... 48
Validity of Securities............................. 50
Experts............................................ 50
WACHOVIA CAPITAL TRUST VI
$
% Capital Securities
(Liquidation Amount $1,000 per Capital Security)
fully and unconditionally guaranteed,
to the extent set forth herein, by
WACHOVIA CORPORATION
--------------------------
PROSPECTUS SUPPLEMENT
--------------------------
,1998
-----------
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95
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are:
Securities and Exchange Commission Registration Fee............................................ $295.00
Printing and Engraving Expenses...................................................................[ * ]
Legal Fees and Expenses...........................................................................[ * ]
Accounting Fees and Expenses......................................................................[ * ]
Transfer Agent and Registrar Fees.................................................................[ * ]
Blue Sky Fees and Expenses........................................................................[ * ]
Trustee Fees and Expenses.........................................................................[ * ]
Rating Agency Fees and Expenses...................................................................[ * ]
Miscellaneous.....................................................................................[ * ]
Total................................................................................. $ [ * ]
* To be supplied by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the North Carolina Business Corporation Act (the
"NCBCA"), the Corporation's Articles of Incorporation provide that no director
of the Corporation will be held personally liable for monetary damages for such
director's breach of duty as a director. This limitation of liability does not
relieve directors from liability for (i) acts or omissions that the director at
the time of such breach knew or believed were clearly in conflict with the best
interests of the Corporation, (ii) any liability under Section 55-8-33 of the
NCBCA for unlawful distributions or other acts for which the director is
personally liable to the Corporation, (iii) any transaction from which the
director is adjudged to have derived an improper personal benefit, or (iv) acts
or omissions occurring prior to the date the provision in the Articles of
Incorporation became effective.
Pursuant to the NCBCA, Sections 55-8-50, et seq., as amended, a
director may be indemnified against liability and litigation expense, including
reasonable attorneys' fees, arising out of his status as such or his activities
in such capacity, provided, however, that such person (i) conducted himself in
good faith; (ii) reasonably believed (x) in the case of conduct in his official
capacity with the Corporation, that his conduct was in its best interests, and
(y) in all other cases that his conduct was at least not opposed to its best
interests; and (iii) in the case of any criminal proceeding, had no reason to
believe his conduct was unlawful.
Mandatory indemnification is available under the NCBCA for a director
who is wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a director of the
Corporation, against reasonable expenses incurred by him in connection with the
proceeding.
A corporation may not indemnify under the NCBCA in connection with any
proceeding by or in the right of a corporation in which the director was
adjudged liable to the corporation, or with any other proceeding charging
improper personal benefit to him, whether or not in connection with his
official capacity, in which he was adjudged liable on the basis that personal
benefit was improperly received by him. Where a proceeding is by or in the
right of a corporation, indemnification of a director is limited to reasonable
expenses if the proceeding is concluded without a final adjudication of the
issue of liability.
The NCBCA provides for an advance for expenses incurred by a director
in defending a proceeding. The expenses may be paid by a corporation in advance
of the final disposition of such proceeding as authorized by the board of
directors in specific cases or as authorized or required under any provision in
the articles of incorporation or bylaws or by any applicable resolution or
contract upon receipt of an undertaking by or on behalf of the director to
repay such amount unless it shall ultimately be determined that he is entitled
to be indemnified by the corporation against such expenses.
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ITEM 16. EXHIBITS.
1 -- Form of Underwriting Agreement for offering of Preferred Securities. +
4(a)(i) -- Certificate of Trust of Wachovia Capital Trust VI. +
4(a)(ii) -- Certificate of Trust of Wachovia Capital Trust VII. +
4(a)(iii) -- Certificate of Trust of Wachovia Capital Trust VIII. +
4(b)(i) -- Declaration of Trust of Wachovia Capital Trust VI. +
4(b)(ii) -- Declaration of Trust of Wachovia Capital Trust VII. +
4(b)(iii) -- Declaration of Trust of Wachovia Capital Trust VIII. +
4(b)(iv) -- Form of Amended and Restated Declaration of Trust to be used in connection with the issuance of
the Preferred Securities. +
4(c) -- Indenture between Wachovia Corporation and The First National Bank of Chicago, as Trustee. +
4(d) -- Form of Second Supplemental Indenture to be used in connection with the issuance of the Junior
Subordinated Deferrable Interest Debentures and Preferred Securities. +
4(e) -- Form of Preferred Security (included in Exhibit 4(b)(iv)). +
4(f) -- Form of Junior Subordinated Deferrable Interest Debenture (included in Exhibit 4(c)). +
4(g) -- Form of Preferred Securities Guarantee. +
5(a) -- Opinion of Richards, Layton & Finger LLP. *
5(b) -- Opinion of Kenneth W. McAllister, General Counsel of Wachovia Corporation. *
8 -- Tax Opinion of Brown & Wood LLP. *
12 -- Statement setting forth computation of the ratio of earnings to fixed charges (incorporated by
reference from Exhibit 12 to Wachovia Corporation's Annual Report on Form 10-K for the year ended
December 31, 1997).
23(a) -- Consent of Ernst & Young LLP as to Wachovia Corporation. +
23(b) -- Consent of KPMG Peat Marwick LLP as to Central Fidelity. +
23(c) -- Consent of Richards, Layton & Finger LLP (included in Exhibit 5(a)). *
23(d) -- Consent of Kenneth W. McAllister, General Counsel of Wachovia Corporation (included in Exhibit 5(b)). *
23(e) -- Consent of Brown & Wood LLP (included in Exhibit 8). *
24(a) -- Powers of Attorney for Wachovia Corporation. +
24(b) -- Powers of Attorney for Wachovia Corporation, as sponsor, to sign the Registration Statement on
behalf of Wachovia Capital Trust VI, Wachovia Capital Trust VII and Wachovia Capital Trust VIII
(included in Exhibit 4(b)(i), 4(b)(ii) and 4(b)(iii)). +
25(a) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Indenture. +
25(b) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Amended and Restated Declaration of Trust of
Wachovia Capital Trust VI. +
25(c) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Amended and Restated Declaration of Trust of
Wachovia Capital Trust VII. +
25(d) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Amended and Restated Declaration of Trust of
Wachovia Capital Trust VIII. +
25(e) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Preferred Securities Guarantee of Wachovia
Corporation with respect to the Preferred Securities of Wachovia Capital Trust VI. +
25(f) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Preferred Securities Guarantee of Wachovia
Corporation with respect to the Preferred Securities of Wachovia Capital Trust VII. +
25(g) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Preferred Securities Guarantee of Wachovia
Corporation with respect to the Preferred Securities of Wachovia Capital Trust VIII. +
+ Filed herewith.
* To be filed by amendment.
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ITEM 17. UNDERTAKINGS.
a. The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement; (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement
(notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation or Registration Fee"
table in the effective registration statement); and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
Provided, however, that (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
items is contained in periodic reports filed with the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
b. The undersigned registrants hereby undertake that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
c. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrants pursuant to the foregoing provisions, or otherwise,
the registrants have been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in said Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a
registrant of expenses incurred or paid by a director, officer or controlling
person of such registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, such registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against policy as expressed in the Act and will
be governed by the final adjudication of such issue.
d. The undersigned registrants hereby undertake that;
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430 and
contained in a form of prospectus filed by the registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
98
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Winston-Salem, State of North Carolina, on
September 10, 1998.
WACHOVIA CORPORATION
By: /s/ L.M. Baker, Jr.
-------------------------------------
L.M. Baker, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on behalf
of the registrant and in the capacities indicated, on September 10, 1998.
SIGNATURE CAPACITY
--------- --------
/s/ L.M. Baker, Jr. President, Chief Executive Officer and
------------------------------------ Chairman (Principal Executive Officer)
L.M. Baker, Jr.
/s/ John G. Medlin, Jr. * Director
------------------------------------
John G. Medlin, Jr.
/s/ James S. Balloun * Director
------------------------------------
James S. Balloun
/s/ James F. Betts * Director
------------------------------------
James F. Betts
/s/ Peter C. Browning * Director
------------------------------------
Peter C. Browning
/s/ John T. Casteen, III * Director
------------------------------------
John T. Casteen, III
/s/ John L. Clendenin * Director
------------------------------------
John L. Clendenin
/s/ Lawrence M. Gressette, Jr. * Director
------------------------------------
Lawrence M. Gressette, Jr.
II-4
99
SIGNATURE CAPACITY
--------- --------
/s/ Thomas K. Hearn, Jr. * Director
------------------------------------
Thomas K. Hearn, Jr.
/s/ George W. Henderson, III * Director
------------------------------------
George W. Henderson, III
/s/ W. Hayne Hipp * Director
------------------------------------
W. Hayne Hipp
------------------------------------ Director
Robert A. Ingram
/s/ George R. Lewis * Director
------------------------------------
George R. Lewis
/s/ Lloyd U. Noland, III * Director
------------------------------------
Lloyd U. Noland, III
/s/ Sherwood H. Smith, Jr.* Director
------------------------------------
Sherwood H. Smith, Jr.
Director
------------------------------------
John C. Whitaker, Jr.
/s/ Robert S. McCoy, Jr. Senior Executive Vice President and Chief
------------------------------------ Financial Officer (Principal Financial Officer)
Robert S. McCoy, Jr.
/s/ Donald K. Truslow Executive Vice President, Comptroller and
------------------------------------ Treasurer (Principal Accounting Officer)
Donald K. Truslow
*By: /s/ Alice Washington Grogan
----------------------------------
Alice Washington Grogan
Attorney-in-Fact
II-5
100
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Wachovia
Capital Trust VI, Wachovia Capital Trust VII and Wachovia Capital Trust VIII
each certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Winston-Salem, State of North Carolina on September
10, 1998.
WACHOVIA CAPITAL TRUST VI
by Wachovia Corporation
by /s/ L.M. Baker, Jr.
----------------------------------------
Name: L.M. Baker, Jr.
Title: President and Chief Executive Officer
WACHOVIA CAPITAL TRUST VII
by Wachovia Corporation
by /s/ L.M. Baker, Jr.
----------------------------------------
Name: L.M. Baker, Jr.
Title: President and Chief Executive Officer
WACHOVIA CAPITAL TRUST VIII
by Wachovia Corporation
by /s/ L.M. Baker, Jr.
----------------------------------------
Name: L.M. Baker, Jr.
Title: President and Chief Executive Officer
II-6
101
Exhibit Sequentially
No. Description Numbered Page
- ------- ----------- -------------
1 -- Form of Underwriting Agreement for offering of Preferred Securities. +
4(a)(i) -- Certificate of Trust of Wachovia Capital Trust VI. +
4(a)(ii) -- Certificate of Trust of Wachovia Capital Trust VII. +
4(a)(iii) -- Certificate of Trust` of Wachovia Capital Trust VIII. +
4(b)(i) -- Declaration of Trust of Wachovia Capital Trust VI. +
4(b)(ii) -- Declaration of Trust of Wachovia Capital Trust VII. +
4(b)(iii) -- Declaration of Trust of Wachovia Capital Trust VIII. +
4(b)(iv) -- Form of Amended and Restated Declaration of Trust to be used in connection with the issuance of
the Preferred Securities. +
4(c) -- Indenture between Wachovia Corporation and The First National Bank of Chicago, as Trustee. +
4(d) -- Form of Second Supplemental Indenture to be used in connection with the issuance of the Junior
Subordinated Deferrable Interest Debentures and Preferred Securities. +
4(e) -- Form of Preferred Security (included in Exhibit 4(b)(iv)). +
4(f) -- Form of Junior Subordinated Deferrable Interest Debenture (included in Exhibit 4(c)). +
4(g) -- Form of Preferred Securities Guarantee. +
5(a) -- Opinion of Richards, Layton & Finger LLP. *
5(b) -- Opinion of Kenneth W. McAllister, General Counsel of Wachovia Corporation. *
8 -- Tax Opinion of Brown & Wood LLP. *
12 -- Statement setting forth computation of the ratio of earnings to fixed charges (incorporated by
reference from Exhibit 12 to Wachovia Corporation's Annual Report on Form 10-K for the year
ended December 31, 1997).
23(a) -- Consent of Ernst & Young LLP as to Wachovia Corporation. +
23(b) -- Consent of KPMG Peat Marwick LLP as to Central Fidelity. +
23(c) -- Consent of Richards, Layton & Finger LLP (included in Exhibit 5(a)). *
23(d) -- Consent of Kenneth W. McAllister, General Counsel of Wachovia Corporation (included in Exhibit 5(b)). *
23(e) -- Consent of Brown & Wood LLP (included in Exhibit 8). *
24(a) -- Powers of Attorney for Wachovia Corporation. +
24(b) -- Powers of Attorney for Wachovia Corporation, as sponsor, to sign the Registration Statement on
behalf of Wachovia Capital Trust VI, Wachovia Capital Trust VII and Wachovia Capital Trust VIII
(included in Exhibit 4(b)(i), 4(b)(ii) and 4(b)(iii)). +
25(a) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Indenture. +
25(b) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Amended and Restated Declaration of Trust of
Wachovia Capital Trust VI. +
25(c) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Amended and Restated Declaration of Trust of
Wachovia Capital Trust VII. +
25(d) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Amended and Restated Declaration of Trust of
Wachovia Capital Trust VIII. +
25(e) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Preferred Securities Guarantee of Wachovia
Corporation with respect to the Preferred Securities of Wachovia Capital Trust VI. +
25(f) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Preferred Securities Guarantee of Wachovia
Corporation with respect to the Preferred Securities of Wachovia Capital Trust VII. +
25(g) -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First
National Bank of Chicago, as Trustee under the Preferred Securities Guarantee of Wachovia
Corporation with respect to the Preferred Securities of Wachovia Capital Trust VIII. +
+ Filed herewith.
* To be filed by amendment.