$200,000,000
6.30% Putable/Callable Subordinated Notes
Due April 15, 2028
Underwriting Agreement
April 16, 1998
To the Representative named in Schedule I hereto of the
Underwriters named in Schedule II hereto
Dear Sirs:
First Union Corporation ("First Union"), a North Carolina
corporation, proposes to sell to the underwriters named in Schedule II hereto
(the "Underwriters"), for whom you are acting as Representative (the
"Representative"), its designated debt securities named in Schedule I hereto
(the "Securities"), in the aggregate principal amount set forth in such Schedule
I. The Securities will be issued under the indenture referenced in Schedule I
hereto (the "Indenture"), between First Union and the trustee named in Schedule
I (the "Trustee").
1. Representations and Warranties. First Union represents and
warrants to, and agrees with, each Underwriter that:
(a) The registration statement (File No. 33- 61941) on Form
S-3, and the registration statement (File No. 333-34151) on Form S-3
(the "registration statements"), including a prospectus which, as
supplemented, shall be used in connection with the sale of the
Securities, have been filed with the Securities and Exchange Commission
(the "Commission"), in the forms heretofore delivered to the
Representative. Each registration statement, as it may have been
amended prior to the date of this Agreement, has become effective under
the Securities Act of 1933, as amended (the "Act"). (The registration
statements, as amended
to the date of this Agreement, are hereinafter collectively referred to
as the "Registration Statement"; such prospectus (which shall be in
the form in which it has been most recently filed, or transmitted for
filing, with the Commission on or before the date of this Agreement, as
the same is proposed to be added to or changed), as supplemented by a
prospectus supplement relating to the Securities, filed or transmitted
for filing with the Commission pursuant to Rule 424 under the Act and
used in connection with the sale of the Securities, is hereinafter
referred to as the "Prospectus"; and such prospectus supplement is
hereinafter referred to as the "Prospectus Supplement". Any reference
herein to the Registration Statement, a preliminary prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), on or before the date of this Agreement, and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement or the Prospectus shall be deemed
to refer to and include the filing of any document under the Exchange
Act deemed to be incorporated therein by reference after the date of
this Agreement.)
(b) The Registration Statement, at the time it became
effective, and any amendments thereof filed prior to the date hereof,
as of their respective effective dates, conformed in all material
respects to the requirements of the Act, the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the respective rules
and regulations of the Commission thereunder; the Registration
Statement and the Prospectus, as of the date of the Prospectus
Supplement, and any amendments thereof and supplements thereto, as of
their respective effective or issue dates, will conform in all material
respects to the requirements of the Act, the Trust Indenture Act and
the respective rules and regulations of the Commission thereunder, and
no such document, as of such respective dates and, in the case of the
Prospectus and any amendments thereof or supplements thereto, as of the
Closing Date (as hereinafter defined), included or will include any
untrue statement of a material fact or omitted or will omit to state
any material fact required to be stated
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therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, provided that
First Union makes no representations or warranties as to (i) the
Statement of Eligibility (Form T-1) under the Trust Indenture Act of
the Trustee or (ii) the information contained in or omitted from the
Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to First
Union by or on behalf of any Underwriter specifically for use in
connection with the preparation of the Prospectus or any amendment
thereof or supplement thereto.
(c) First Union has been duly incorporated, is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has all power and authority
(corporate and other) necessary to own or hold its material properties
and to conduct its business substantially in the manner in which it
presently conducts such business.
(d) The Securities have been duly authorized, and, when
issued, delivered and paid for pursuant to this Agreement, will have
been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of First Union
entitled to the benefits provided by the Indenture; the Indenture has
been duly authorized and, at the Closing Date (as defined in Section 3
hereof), the Indenture will be duly qualified under the Trust Indenture
Act and will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles; the
letter agreement referenced in Schedule I hereto (the "Option
Agreement") and the calculation agency agreement referenced in Schedule
I hereto (the "Calculation Agency Agreement") have each been duly
authorized and, at the Closing Date, will each constitute a valid and
legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles;
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and the Securities, the Indenture, the Option Agreement, and the
Calculation Agency Agreement conform in all material respects to the
descriptions thereof in the Prospectus.
(e) First Union, First Union National Bank and First Union
Investors, Inc. each has all corporate power and authority necessary to
execute and deliver this Agreement, the Indenture, the Option
Agreement, and the Calculation Agency Agreement and the Securities, as
applicable, and to perform their respective obligations hereunder and
thereunder; the execution, delivery and performance of, as applicable
this Agreement, the Indenture, the Option Agreement, and the
Calculation Agency Agreement and the Securities by First Union, First
Union National Bank and First Union Investors, Inc. and compliance with
the provisions hereof and thereof by First Union, First Union National
Bank and First Union Investors, Inc., as applicable, will not
constitute a breach of or default under, the corporate charter or
by-laws of First Union, or any material agreement, indenture or other
instrument relating to indebtedness for money borrowed to which First
Union is a party, or, to the best of First Union's knowledge, any law,
order, rule, regulation or decree of any court, governmental agency or
authority located in the United States having jurisdiction over First
Union or any property of First Union, which breach or default would be
reasonably likely to have a material adverse effect on First Union and
its subsidiaries taken as a whole; and, no consent, authorization or
order of, or filing or registration with, any court or governmental
agency or authority is required for the execution, delivery and
performance of this Agreement, the Indenture, the Option Agreement, the
Calculation Agency Agreement and the Securities by First Union, First
Union National Bank and First Union Investors, Inc., as applicable,
except such as have been made or obtained or will be made or obtained
on or before the Closing Date (as defined in Section 3) and except such
as may be required under applicable state securities or "blue sky"
laws.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, First
Union agrees to sell to each Underwriter, and each Underwriter agrees, severally
and
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not jointly, to purchase from First Union, at the purchase price set forth in
Schedule I hereto, the principal amount of the Securities set forth opposite
such Underwriter's name in Schedule II hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at the office, on the date and at the time specified in
Schedule I hereto, which date and time may be postponed by agreement between the
Representative and First Union (such date and time of delivery of and payment
for the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to the Representative for the respective accounts of
the several Underwriters against payment by the several Underwriters through the
Representative of the purchase price thereof to or upon the order of First Union
in the manner and type of funds specified in Schedule I. Certificates for the
Securities shall be registered in such names and in such denominations as the
Representative may request not less than one full business day in advance of the
Closing Date.
First Union agrees to have the Securities avail able for
inspection, checking and packaging in New York, New York, on the business day
prior to the Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale as set forth in the
Prospectus.
5. Agreements. First Union agrees with the several
Underwriters that:
(a) First Union will cause the Prospectus to be filed, or
transmitted for filing, with the Commission pursuant to Rule 424 under
the Act and will promptly advise the Representative when the Prospectus
has been so filed or transmitted for filing, and, prior to the
termination of the offering of the Securities to which such Prospectus
relates, also will promptly advise the Representative (i) when any
amendment to the Registration Statement has become effective or any
further supplement to the Prospectus has been so filed or transmitted
for filing, (ii) of any request by the Commission for any amendment of
the Registration Statement or the Prospectus or for any additional
information, (iii) of the issuance by the Commission of
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any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that
purpose, and (iv) of the receipt by First Union of any notification
with respect to the suspension of the qualification of the Securities
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. First Union will use its reasonable best
efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as reasonably possible the withdrawal thereof. For so
long as a prospectus relating to the Securities is required to be
delivered under the Act, First Union will not file or transmit for
filing any amendment to the Registration Statement or supplement to the
Prospectus which relates to the Securities unless First Union has
furnished you or counsel for the Underwriters a copy for your review
prior to filing or transmission for filing.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or if
it shall be necessary to amend or supplement the Prospectus in
connection with the sale of the Securities to comply with the Act or
the rules and regulations of the Commission thereunder, promptly after
becoming aware thereof, First Union will notify the Representative or
counsel for the Underwriters and, upon either one's reasonable request,
prepare and file or transmit for filing with the Commission an
amendment or supplement which will correct such statement or omission
or effect such compliance.
(c) First Union will make generally available to its security
holders and to the Representative as soon as practicable, but not later
than 45 days after the end of the 12-month period beginning at the end
of the fiscal quarter of First Union during which the filing, or
transmission for filing, of the Prospectus pursuant to Rule 424 under
the Act occurs (except not later than 90 days after the end of such
period if such quarter is the last fiscal quarter), an earnings
statement (which
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need not be audited) of First Union and its subsidiaries, covering
such 12-month period, which will satisfy the provisions of Section
11(a) of the Act.
(d) First Union will use its best efforts to furnish in New
York City to each of the Underwriters prior to 10:00 a.m., New York
City time, on the New York business day next succeeding the date of
this Agreement and from time to time, as many copies of the Prospectus,
each related preliminary prospectus supplement and all amendments of
and supplements to such documents as may be reasonably requested.
(e) First Union will pay all expenses incident to the
performance of its obligations under this Agreement, and will pay the
expenses of printing and filing all documents relating to the offering
and mailing and delivering such to Underwriters and dealers, any filing
fee incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities,
all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws (including the fees and
disbursements of counsel to the Underwriters in connection with such
qualification and the preparation of the Blue Sky and legal investment
surveys), any taxes payable in connection with the sale and delivery of
the Securities by First Union to the Underwriters, and any fees charged
for rating the Securities.
(f) First Union will use its reasonable best efforts to
arrange for the qualification of the Securities for sale under the laws
of such jurisdictions as the Representative may designate and to
maintain such qualifications in effect so long as required for the
distribution of the Securities; provided that First Union shall not be
required to qualify to do business in any jurisdiction where it is not
now qualified or to take any action which would subject it to general
or unlimited service of process in any jurisdiction where it is not now
so subject.
(g) During the period beginning from the date of this
Agreement and continuing until the Closing Date or such longer period
as may be agreed to by First Union and set forth in Schedule I hereto
relating to the Securities, First Union will not offer, sell, contract
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to sell or otherwise dispose of any of its debt securities which mature
more than one year after the Closing Date and which are substantially
similar to the Securities without the prior written consent of the
Representative.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Securities shall be subject to
the accuracy in all material respects of the representations and warranties on
the part of First Union contained herein as of the date hereof and the Closing
Date, to the accuracy in all material respects of the statements of First Union
made in any certificates pursuant to the provisions hereof, to the performance
in all material respects by First Union of its obligations hereunder and to the
following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted and be pending or have been
threatened as of the Closing Date; and all requests for additional
information on the part of the Commission shall have been complied
with.
(b) First Union shall have furnished to the Representative a
certificate, dated the Closing Date, of First Union, signed by the
principal financial or accounting officer of First Union, to the effect
that, to the best of his knowledge after reasonable investigation:
(i) The representations and warranties of First Union
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and First Union has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date, in all material respects;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted and are pending or have been
threatened as of such date;
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(iii) Since the date of the most recent financial
statements included in the Prospectus, there has been no
material adverse change in the financial position, results of
operations, cash flows or prospects relating thereto of First
Union and its subsidiaries consolidated, except as set forth
in or contemplated by the Prospectus; and
(iv) Since the date of this Agreement, (A) no downgrading
has occurred in the rating accorded First Union's unsecured
debt securities or preferred stock as described in Section
6(h)(i) and (B) no announcement has been made with respect to
any rating accorded First Union's unsecured debt securities or
preferred stock as described in Section 6(h)(ii).
(c) First Union shall have furnished to the Underwriters the
opinion, dated the Closing Date, of Marion A. Cowell, Jr., Executive
Vice President, Secretary and General Counsel of First Union, to the
effect that:
(i) First Union has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of North Carolina, with corporate power and
authority under such laws to own its material properties and
to conduct its business substantially as described in the
Prospectus;
(ii) The Securities have been duly authorized, executed,
issued and delivered and, assuming authentication by the
Trustee in the manner contemplated in its certificate,
constitute valid and legally binding obligations of First
Union entitled to the benefits provided by the Indenture; and
the Securities, the Indenture, the Option Agreement, and the
Calculation Agency Agreement conform in all material respects
to the descriptions thereof in the Prospectus as amended or
supplemented;
(iii) The Indenture has been duly authorized, executed and
delivered by First Union, has been duly qualified under the
Trust Indenture Act and constitutes a valid and legally
binding obligation
9
of First Union enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles; and the Option Agreement and the
Calculation Agency Agreement have each been duly authorized,
executed and delivered by the parties thereto and constitutes
a valid and legally binding obligation of such parties;
(iv) First Union, First Union National Bank and First
Union Investors, Inc. each has all corporate power and
authority necessary to execute and deliver this Agreement, the
Indenture, the Securities, the Option Agreement, and the
Calculation Agency Agreement, as applicable, and to perform
their respective obligations hereunder and thereunder; this
Agreement has been duly authorized, executed and delivered by
First Union; the execution, delivery and performance of, as
applicable, this Agreement, the Indenture, the Securities, the
Option Agreement, and the Calculation Agency Agreement by
First Union, First Union National Bank and First Union
Investors, Inc. and compliance with the provisions hereof and
thereof by First Union, First Union National Bank and First
Union Investors, Inc. as applicable, will not constitute a
breach of or default under, the corporate charter or by-laws
of First Union, or any material agreement, indenture or other
instrument relating to indebtedness for money borrowed known
to such counsel to which First Union is a party, or, to the
best of such counsel's knowledge, any law, order, rule,
regulation or decree of any court, governmental agency or
authority located in the United States having jurisdiction
over First Union or any property of First Union, which breach
or default would be reasonably likely to have a material
adverse effect on First Union and its subsidiaries taken as a
whole; and no consent, authorization or order of, or filing or
registration with, any court or governmental agency is
required for the execution, delivery and performance of this
Agreement, the Indenture, the Option Agreement,
10
the Calculation Agency Agreement or the Securities by First
Union, First Union National Bank and First Union Investors,
Inc., as applicable, except such as may be required under
applicable state securities or "blue sky" laws or as have been
duly made or obtained;
(v) The Registration Statement has become effective
under the Act, and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or threatened
under the Act, and each part of the Registration Statement,
when such part became effective, any amendments thereof filed
prior to the date of this Agreement, as of their respective
effective dates, and the Registration Statement and the
Prospectus, as of the date of the Prospectus Supplement, and
each amendment thereof or supplement thereto, as of their
respective effective or issue dates, appeared on their face to
be appropriately responsive in all material respects to the
requirements of the Act, the Trust Indenture Act and the
respective rules and regulations of the Commission
thereunder; such counsel has no reason to believe that any
part of the Registration Statement, when such part became
effective, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus, as of the date of the
Prospectus Supplement, or any amendments thereof or
supplements thereto, as of their respective effective or issue
dates, contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, or that, as of the
Closing Date, either the Prospectus or any further amendment
or supplement thereto made by the Company prior to the Closing
Date contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not
11
misleading; it being understood that such counsel need express
no opinion as to the Statement of Eligibility (Form T-1) under
the Trust Indenture Act of the Trustee, as to the financial
statements or other financial data contained in any part of
the Registration Statement or the Prospectus, as to any
statements or omissions made in reliance upon or in conformity
with information furnished in writing to First Union by or on
behalf of an Underwriter for use therein; and
(vi) First Union Investors, Inc. is not an
"investment company" within the meaning of the
Investment Company Act of 1940.
As to those matters which relate to the Trustee, such counsel
may rely upon the certificate or certificates of such Trustee, and as
to matters governed by New York law, upon the opinion of Sullivan &
Cromwell.
(d) The Representative shall have received from Sullivan &
Cromwell, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Representative
may reasonably require.
As to matters governed by North Carolina law,
Sullivan & Cromwell may rely upon the opinion of
Marion A. Cowell, Jr. delivered pursuant to
Section 6(c).
(e) KPMG Peat Marwick LLP, as independent accountants of First
Union, shall have furnished to the Representative a letter, dated as of
the Closing Date, to the effect set forth in Schedule III hereto. Ernst
& Young, LLP, as independent accountants of CoreStates Financial Corp,
shall have furnished to the Representative a letter, dated as of the
Closing Date, to the effect set forth in Schedule IV hereto.
(f) Subsequent to the date hereof, there shall not have
occurred any change, or any development involving a prospective change,
in or affecting the financial position, long-term debt, stockholders'
equity or results of operations of First Union and its consolidated
subsidiaries which the Representative concludes, after consultation
with First Union, in the
12
judgment of the Representative is so material and adverse as to make it
impractical or inadvisable to proceed with the public offering or the
delivery of the Securities as contemplated by the Prospectus.
(g) First Union shall have furnished to the Representative
such further information, certificates and documents as it may
reasonably request prior to the Closing Date.
(h) Subsequent to the date of this Agreement, (i) no
downgrading shall have occurred in the rating accorded First Union's
unsecured debt securities or preferred stock by Standard & Poor's
Ratings Group or by Moody's Investors Service, Inc. and (ii) neither
such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating
of any of First Union's unsecured debt securities or preferred stock.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representative and its counsel, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representative. Notice of such
cancellation shall be given to First Union in writing or by telephone or
telegraph confirmed in writing.
7. Indemnification and Contribution. (a) First
Union agrees to indemnify and hold harmless each Underwriter
and each person who controls any Underwriter within the
meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a
material fact contained in the registration statement or in
any amendment thereof filed prior to the date hereof, or in
the Registration Statement or the Prospectus, or in any
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amendment thereof or supplement thereto, or in any related preliminary
prospectus or preliminary prospectus supplement, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) First Union will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to First Union by or on behalf of any Underwriter through the
Representative specifically for use in the Prospectus or any supplement thereto
or any related preliminary prospectus or preliminary prospectus supplement or of
the Statement of Eligibility (Form T-1) under the Trust Indenture Act of the
Trustee, and (ii) such indemnity with respect to any related preliminary
prospectus or preliminary prospectus supplement shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) from whom the
person asserting any such loss, claim, damage or liability purchased the
Securities which are the subject thereof if such person was not sent or given a
copy of the Prospectus (or the Prospectus as amended or supplemented), excluding
documents incorporated therein by reference, at or prior to the confirmation of
the sale of such Securities to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a material fact
contained in such related preliminary prospectus or preliminary prospectus
supplement was corrected in the Prospectus (or the Prospectus as amended or
supplemented). This indemnity agreement will be in addition to any liability
which First Union may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless First Union, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls First Union within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from First Union to each Underwriter, but only with
reference to written information furnished to First Union by or on behalf of
such Underwriter through the Representative specifically for use in the Pro-
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spectus or any supplement thereto or any related preliminary prospectus or
preliminary prospectus supplement. This indemnity agreement will be in addition
to any liability which any Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under
Section 7(a) or (b) of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any liability
which it may have to any indemnified party otherwise than under Section 7(a) or
(b). In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent that it may
elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided
that, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under Section 7(a) or (b) for any legal or other expenses
subsequently incurred by such indemnified party (other than reasonable costs of
investigation) in connection with the defense thereof unless (i) the indemnified
party shall have employed separate counsel in connection with the assertion of
legal defenses in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate national counsel, approved by the
Representative, representing the indemnified parties who are parties to such
action), (ii) the indemnifying party shall not have employed
15
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by First Union on the one hand and the Underwriters
of the Securities on the other from the offering of the Securities to which such
loss, claim, damage or liability (or action in respect thereof) relates. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of First Union on the one hand and the Underwriters of the
Securities on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by First Union on the one hand and such Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by First Union bear to
the total underwriting discounts and commissions received by such Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by First Union on the one hand or such Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent
16
such statement or omission. First Union and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the applicable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters of Securities in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations with respect to the Securities and not joint.
8. Termination. This Agreement shall be subject to termination
in the absolute discretion of the Representative, by notice given to First Union
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in securities generally on the New York Stock Exchange shall have been
suspended or materially limited, (ii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities, or (iii) there shall have occurred any material outbreak or
escalation of hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the reasonable
judgment of the Representative, impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities as contemplated by the
Prospectus.
17
9. Substituted Underwriters. If, on the Closing Date, any one
or more of the Underwriters shall fail or refuse to purchase Securities that it
or they have agreed to purchase hereunder on such date, and the aggregate number
of Securities which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Securities to be purchased on the Closing Date, the other Underwriters
shall be obligated severally in the proportions that the number of Securities
set forth opposite their respective names in Schedule II bears to the aggregate
number of Securities set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as the Underwriters may agree, to
purchase the Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on the Closing Date; provided that in no event
shall the number of Securities that any Underwriter has agreed to purchase
pursuant to Section 2 above be increased pursuant to this Section 9 by an amount
in excess of one-ninth of such number of Securities without the written consent
of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters
shall fail or refuse to purchase Securities and the aggregate number of
Securities with respect to which such default occurs is more than one-tenth of
the aggregate number of Securities to be purchased on the Closing Date, and
arrangements satisfactory to the Underwriters and First Union for the purchase
of such Securities are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or First Union. In such case either the Underwriters or First Union
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. Any action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. Certain Liabilities Upon Termination. If this Agreement
shall be terminated pursuant to Section 9 hereof, the Company shall not then be
under any liability to any Underwriter except as provided in Sections 5(e) and 7
hereof; but, if for any other reason, any Securities are not delivered by or on
behalf of the Company as provided herein, the Company will reimburse the
Underwriters through you for all actual out-of-pocket expenses approved in
writing by
18
you, including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Securities not so delivered, but the Company shall then be under no further
liability to any Underwriter in respect of the Securities not so delivered
except as provided in Sections 5(e) and 7 hereof.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
First Union or its officers and of the Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or First Union or any
of the officers, directors or controlling persons referred to in Section 7
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 5(e), 7, 9, 12, 13 and 14 hereof shall survive the
termination or cancellation of this Agreement.
12. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto (including any Underwriter or
Underwriters added pursuant to Section 9 hereof) and their respective
successors, heirs, executors, administrators and the officers and directors and
controlling persons referred to in Section 7 hereof, and no other person will
have any right or obligation hereunder.
13. Applicable Law. This Agreement will be
governed by and construed in accordance with the laws of the
State of New York.
14. Counterparts; Notices. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, which taken
together shall constitute one and the same instrument.
15. Remarketing. If a prospectus is required by the Act to be
delivered in connection with offers and sales of the Securities (including any
offers and sales of Securities by the Callholder (as defined in the Prospectus
Supplement, including any assignee or successor of the Callholder) or the
Underwriters or any of their affiliates) following any proposed exercise of the
Call Option, the Floater Option or any other right resulting in an interest rate
reset and remarketing of the Securities (the "Call Option" and "Floater Option"
being as described in the
19
Prospectus Supplement), and it is necessary, in the reasonable opinion of
counsel for the Underwriters or for First Union, at any such time to amend any
registration statement or amend or supplement any prospectus or prospectus
supplement in order that such prospectus or prospectus supplement will not
include any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances under which made, or if it shall be necessary, in the
reasonable opinion of either such counsel, at any such time to amend any
registration statement or file a new registration statement or amend or
supplement any prospectus or issue a new prospectus or prospectus supplement in
order to comply with the requirements of the Act or the Commission's rules,
regulations or interpretations under the Act, First Union shall promptly prepare
and file with the Commission such amendment or supplement as may be necessary to
correct such statement or omission or to make any such registration statement or
any such prospectus or prospectus supplement comply with such requirements, or
promptly prepare and file any such new registration statement and prospectus as
either of such counsel may reasonably deem necessary for such purpose, and
furnish to the Callholder, the Underwriters, and any other persons participating
in the proposed distribution such number of copies of such amendment,
supplement, prospectus or other documents as they may reasonably request. In
addition, First Union shall, in connection with any such proposed offer or sale
of Securities by the Callholder, the Underwriters or any such other persons in
which a prospectus is required by the Act to be delivered, (i) execute and
deliver or cause to be executed and delivered legal documentation (including,
without limitation, a purchase agreement or underwriting agreement and
registration rights agreement with customary indemnities and contribution,
covenants, representations and warranties, expense provisions (but without
provision for express underwriting discounts or commissions), conditions,
comfort letters and legal opinions) in form and substance reasonably
satisfactory to First Union and counsel for the Underwriters, (ii) provide
promptly upon request updated consolidated financial statements to the date of
its latest report filed with the Commission, and (iii) to the extent First Union
and the Callholder, the Underwriters or any such other persons deem reasonably
necessary for successful completion of such offering and sale of the Securities,
make available senior management of First Union for road show and
20
one-on-one presentations. This Section 15 shall not supercede or modify the
provisions of Section 5(d) of this Agreement.
All notices hereunder shall be in writing or by telegram if
promptly confirmed in writing, and if to the Underwriters shall be sufficient in
all respects if delivered or sent by registered mail to the address of the
Representative as set forth in Schedule I hereto; and if to First Union shall be
sufficient in all respects if delivered or sent by registered mail to the
address of First Union set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 7(c) hereof shall be delivered or sent by registered mail to such
Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to First
Union by the Representative upon request.
15. Action by Underwriters. Any action under this Agreement
taken by the Underwriters jointly or by the firm signing below on behalf of you
as the Representative will be binding upon all the Underwriters.
21
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between First Union and the Underwriters.
Very truly yours,
FIRST UNION CORPORATION
/s/ Kenneth R. Stancliff
---------------------------
Name: Kenneth R. Stancliff
Title: Senior Vice President
The foregoing Agreement is
hereby confirmed and
accepted as of the date
first above written.
By: FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
On behalf of the Underwriters
set forth in Schedule II
By: /s/ William B. Cameron
---------------------------
Name: William B. Cameron
Title: Vice President
22
SCHEDULE I
Title of Designated Securities:
6.30% Putable/Callable Subordinated Notes Due April 15,
2028
Aggregate Principal Amount:
$200,000,000
Price to Public:
99.622% of the principal amount of the Designated
Securities
Purchase Price by Underwriters:
98.970% of the principal amount of the Designated
Securities
Specified Funds for Payment of Purchase Price:
Immediately available funds by wire
Indenture:
Indenture, dated as of March 15, 1986, as supplemented by the First
Supplemental Indenture, dated as of August 1, 1990, the Second
Supplemental Indenture, dated as of November 15, 1992, and the Third
Supplemental Indenture, dated as of February 7, 1996, between First
Union and Harris Trust and Savings Bank, as Successor Trustee to The
Bank of New York (formerly Irving Trust Company)
Maturity:
April 15, 2028
Interest Rate:
6.30% per annum until April 15, 2008; potentially reset thereafter as
described in the Prospectus Supplement
Interest Payment Dates:
April 15 and October 15 of each year, commencing
October 15, 1998
Regular Record Dates:
April 1 and October 1 of each year
Mandatory Redemption:
See Prospectus Supplement
Call Option and Second Call Option:
See Prospectus Supplement
Put Option:
See Prospectus Supplement
Floater Option and Call Option Override:
See Prospectus Supplement
Coupon Reset Process and Floater Option Coupon Reset
Process:
See Prospectus Supplement
Option Agreement:
Letter Agreement dated April 23, 1998 among First Union
Corporation, First Union Investors, Inc. and First
Union Capital Markets, a division of First Wheat
Securities, Inc., as Agent
Calculation Agency Agreement:
Calculation Agency Agreement dated April 23, 1998
between First Union Corporation and First Union
National Bank
Sinking Fund Provisions:
None
I-2
Conversion Provisions:
None
Exchange Provisions:
None
Other Terms:
See the Prospectus Supplement
Additional Comfort Letter Coverage:
Ernst & Young, LLP (for CoreStates Financial Corp)
Form of Designated Security:
Global securities, fully registered in denominations set forth in the
Prospectus Supplement, and maintained in book-entry form by or through
The Depository Trust Company
Closing Date and Place:
April 23, 1998 at 10:00 A.M. (E.S.T.)
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Restricted Period Under Section 5(g) of Underwriting
Agreement:
April 23, 1998 through Closing Date
Office for Payment for Designated Securities:
To be paid by wire in immediately available funds
Name of Representative:
First Union Capital Markets, a division of Wheat First
Securities, Inc.
I-3
Address for Notices, etc.:
First Union Capital Markets Group
One First Union Center
Charlotte, North Carolina 28288
Attention: William Cameron
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Robert B. Hiden, Jr.
I-4
SCHEDULE II
Principal
Amount of
Securities
to be
Underwriter Purchased
----------- ---------
First Union Capital Markets, a division
of Wheat First Securities, Inc.......................................................$ 50,000,000
Credit Suisse First Boston Corporation............................................... 50,000,000
Lehman Brothers Inc. ............................................................... 50,000,000
Morgan Stanley & Co. Incorporated.................................................... 50,000,000
Total............................................................................... $200,000,000
SCHEDULE III
Pursuant to Section 6(e) of the Underwriting Agreement, the
independent accountants of First Union shall provide a comfort letter to the
effect that:
(i) They are independent certified public accountants with
respect to First Union and its subsidiaries within the meaning of the Act and
the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules examined by them and included
or incorporated by reference in the Prospectus as amended or supplemented comply
as to form in all material respects with the applicable accounting requirements
of the Act or the Exchange Act, as applicable, and the published rules and
regulations thereunder;
(iii) On the basis of limited procedures, not constituting an
audit, consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of First Union and its subsidiaries, inspection of the
minute books of First Union and its subsidiaries since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus as amended or supplemented, inquiries of officials of First Union and
its subsidiaries responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of changes in
financial position included or incorporated by reference in First
Union's most recent Quarterly Report on Form 10-Q incorporated by
reference in the Prospectus (if any) as amended or supplemented does
not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form 10-Q
and the related published rules and regulations thereunder or are not
in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of the audited consolidated
financial
statements included or incorporated by reference in
First Union's most recent Annual Report on Form 10-K;
(B) any unaudited financial data included in the Prospectus as
amended or supplemented as at any time, or for any period ending, after
the end of the latest interim period covered by a Quarterly Report on
Form 10-Q of First Union or year ended for which First Union has filed
an Annual Report on Form 10-K (whichever is more recent) (and any data
for any comparable prior period included therein) do not agree with the
corresponding amounts in the unaudited consolidated financial
statements from which such data are derived, or any such unaudited
financial data were not deter mined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included or incorporated by
reference in First Union's most recent Annual Report on Form 10-K;
(C) the unaudited pro forma consolidated condensed financial
statements (if any) included or incorporated by reference in the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the published rules
and regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(D) as of a specified date not more than five days prior to
the date of delivery of such letter there have been any changes in the
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest audited financial
statements included or incorporated by reference in the Prospectus as
amended or supplemented) or long-term debt of First Union or any of its
subsidiaries, or any decreases in consolidated stockholders' equity,
consolidated assets, consolidated deposits, or allowance for loan
losses of First Union or other items specified by the Representative,
or any increases in any items specified by the Representative, in each
case as compared with amounts shown in the latest balance sheet
included or
III-2
incorporated by reference in the Prospectus as amended or supplemented
except in each case for changes, increases or decreases which the
Prospectus as amended or supplemented discloses have occurred or may
occur or which are described in such letter; and
(E) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus as
amended or supplemented to the end of the latest period for which
financial statements are available there were any decreases in
consolidated net interest income, net interest income after provision
for loan losses, or the total or per share amounts of net income of
First Union or other items specified by the Representative, or any
increases in any items specified by the Representative, in each case as
compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Representative,
except in each case for increases or decreases which the Prospectus as
amended or supplemented discloses have occurred or may occur or which
are described in such letter;
(iv) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures referred
to in subparagraph (iii) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information specified by the Representative which are
derived from the general accounting records of First Union and its subsidiaries,
which appear in the Prospectus as amended or supplemented (excluding documents
incorporated by reference), in exhibits to the Registration Statement specified
by the Representative, or in documents incorporated by reference in the
Prospectus specified by the Representative, and have compared certain of such
amounts, percentages and financial information with the accounting records of
First Union and its subsidiaries and have found them to be in agreement.
III-3
SCHEDULE IV
Pursuant to Section 6(e) of the Underwriting Agreement, the
independent accountants of CoreStates Financial Corp ("CoreStates") shall
provide a comfort letter to the effect that:
(i) They are independent certified public accountants with
respect to CoreStates and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules examined by them and included
or incorporated by reference in the Prospectus as amended or supplemented comply
as to form in all material respects with the applicable accounting requirements
of the Act or the Exchange Act, as applicable, and the published rules and
regulations thereunder;
(iii) On the basis of limited procedures, not constituting an
audit, consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of CoreStates and its subsidiaries, inspection of the
minute books of CoreStates and its subsidiaries since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus as amended or supplemented, inquiries of officials of CoreStates and
its subsidiaries responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) as of a specified date not more than five days prior to
the date of delivery of such letter there have been any changes in the
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest audited financial
statements included or incorporated by reference in the Prospectus as
amended or supplemented) or long-term debt of CoreStates or any of its
subsidiaries, or any decreases in consolidated stockholders' equity,
consolidated
assets, consolidated deposits, or allowance for loan losses of
CoreStates or other items specified by the Representative, or any
increases in any items specified by the Representative, in each case as
compared with amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus as amended or supplemented
except in each case for changes, increases or decreases which the
Prospectus as amended or supplemented discloses have occurred or may
occur or which are described in such letter; and
(B) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus as
amended or supplemented to the end of the latest period for which
financial statements are available there were any decreases in
consolidated net interest income, net interest income after provision
for loan losses, or the total or per share amounts of net income of
CoreStates or other items specified by the Representative, or any
increases in any items specified by the Representative, in each case as
compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Representative,
except in each case for increases or decreases which the Prospectus as
amended or supplemented discloses have occurred or may occur or which
are described in such letter.
IV-2