First Union Institutional Capital I, et al. – ‘S-4’ on 12/30/96

As of:  Monday, 12/30/96   ·   Accession #:  950168-96-2527   ·   File #s:  333-19039, -01, -02   ·   Correction:  This Filing was Corrected by the SEC on 1/15/97. ®

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Registration of Securities Issued in a Business-Combination Transaction   —   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4         First Union (Funb) S-4 46934.1                        69    431K 
 2: EX-4        Exhibit 4A                                            76    299K 
 3: EX-4        Exhibit 4C                                            91    313K 
 4: EX-4        Exhibit 4E                                            23     75K 
 5: EX-4        Exhibit 4F                                            22     98K 
 6: EX-23       Exhibit 23(A)                                          1      7K 
 7: EX-24       Power of Attorney                                      4     22K 

S-4   —   First Union (Funb) S-4 46934.1
Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 30, 1996 

                             REGISTRATION NOS. 333-       AND 333-

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
FORM S-4

REGISTRATION STATEMENT

UNDER 

THE SECURITIES ACT OF 1933

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                   FIRST UNION CORPORATION                                      FIRST UNION INSTITUTIONAL CAPITAL I               

                                                                                                                                  
    (Exact name of registrant as specified in its charter)        (Exact name of registrant as specified in its Issuer Agreement) 

                        NORTH CAROLINA                                                       DELAWARE                             

(State or other jurisdiction of incorporation or organization)    (State or other jurisdiction of incorporation or organization)  

                             6711                                                              6719                               

                 (Primary standard industrial                                      (Primary standard industrial                   

                 classification code number)                                        classification code number)                   

                          56-0898180                                                        APPLIED FOR                           

             (I.R.S. Employer Identification No.)                              (I.R.S. Employer Identification No.)               

                    ONE FIRST UNION CENTER                                          C/O FIRST UNION CORPORATION                   

             CHARLOTTE, NORTH CAROLINA 28288-0013                                     ONE FIRST UNION CENTER                      

                        (704) 374-6565                                         CHARLOTTE, NORTH CAROLINA 28288-0013               

                                                                                          (704) 374-6565                          

(Address, including zip code, and telephone number, including   (Address, including zip code, and telephone number, including area

   area code, of registrant's principal executive offices)              code, of registrant's principal executive offices)        


MARION A. COWELL, JR., ESQ. 
EXECUTIVE VICE PRESIDENT & GENERAL COUNSEL
FIRST UNION CORPORATION 
ONE FIRST UNION CENTER
CHARLOTTE, NORTH CAROLINA 28288-1306
(216) 689-6300
(Name, address, including zip code, and telephone number, including area code,
of agent for service) 

WITH A COPY TO: 
MITCHELL S. EITEL, ESQ. 
SULLIVAN & CROMWELL 
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000

APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC:
As promptly as practicable after the effective date of this Registration
Statement.

If the securities being registered on this Form are being offered in  
connection with the formation of a holding company and there is compliance with 
General Instruction G, please check the following box. [ ]                      

CALCULATION OF REGISTRATION FEE   

[CAPTION]                                                                       

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           TITLE OF EACH CLASS                            PROPOSED MINIMUM   PROPOSED MAXIMUM 
             OF SECURITIES TO             AMOUNT TO BE     OFFERING PRICE   AGGREGATE OFFERING
              BE REGISTERED              REGISTERED (1)     PER UNIT (2)         PRICE (2)    
                                                                                              
Junior Subordinated Deferrable Interest                                                       
  Debentures of First Union Corporation                                                       
  (2)...................................  $500,000,000        $1,000.00        $500,000,000   
8.04% Capital Securities of First Union                                                       
  Institutional Capital I (3)...........     500,000          $1,000.00        $500,000,000   
First Union Corporation Guarantee with                                                        
  respect to Capital Securties (3)(4)...       N/A               N/A                N/A       
Total................................... $500,000,000(5)        100%          $500,000,000(5) 


           TITLE OF EACH CLASS              AMOUNT OF                                         
             OF SECURITIES TO             REGISTRATION                                        
              BE REGISTERED                    FEE                                            
                                                                                              
Junior Subordinated Deferrable Interest                                                       
  Debentures of First Union Corporation                                                       
  (2)...................................       N/A                                            
8.04% Capital Securities of First Union                                                       
  Institutional Capital I (3)...........    $151,516                                          
First Union Corporation Guarantee with                                                        
  respect to Capital Securties (3)(4)...       N/A                                            
Total...................................    $151,516                                          

(1) Estimated solely for the purpose of computing the registration fee.         
(2) The Junior Subordinated Deferrable Interest Debentures were purchased by    
First Union Institutional Capital I with the proceeds of the sale of the
Capital Securities. No separate consideration will be received from     
purchasers of Capital Securities for the Junior Subordinated Deferrable 
Interest Debentures.                                                    
(3) This Registration Statement is deemed to cover the Junior Subordinated      
Deferrable Interest Debentures of First Union Corporation, the rights of
    holders of Junior Subordinated Deferrable Interest Debentures of First Union
    Corporation under the Indenture, the rights of holders of Capital Securities
    of First Union Institutional Capital I under the Trust Agreement, the rights
of holders of the Capital Securities under the Guarantee of First Union 
Corporation and the Expense Agreement entered into by First Union       
 Corporation, which taken together fully and unconditionally guarantee the
obligations of First Union Institutional Capital I under the Capital    
Securities.                                                             
(4) No separate consideration will be received for the First Union Corporation  
Guarantee.                                                              
(5) Such amounts represent the aggregate liquidation amount of Capital          
   Securities to be issued and exchanged hereunder and the principal amount of
  Junior Subordinated Deferrable Interest Debentures that may be distributed
upon liquidation of First Union Institutional Capital I.                

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE OR 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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CROSS-REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K 
SHOWING THE LOCATION IN THE PROSPECTUS OF THE RESPONSES 
TO THE ITEMS OF PART I OF FORM S-4. 

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FORM S-4 ITEM                                                                 LOCATION IN PROSPECTUS                          
                                                                                                                              
   1.    Forepart of Registration Statement and Outside Front Cover Page of                                                   
         Prospectus.........................................................  OUTSIDE FRONT COVER PAGE; FACING PAGE           
   2.    Inside Front and Outside Back Cover Pages of Prospectus............  AVAILABLE INFORMATION; TABLE OF CONTENTS        
   3.    Risk Factors, Ratio of Earnings to Fixed Charges and Other                                                           
         Information........................................................  RISK FACTORS; CONSOLIDATED RATIOS OF EARNINGS TO
                                                                              FIXED CHARGES                                   
   4.    Terms of the Transaction...........................................  OUTSIDE FRONT COVER PAGE; SUMMARY; THE ISSUER;  
                                                                              THE CORPORATION; USE OF PROCEEDS;               
                                                                              CAPITALIZATION; ACCOUNTING TREATMENT; THE       
                                                                              EXCHANGE OFFER; DESCRIPTION OF NEW SECURITIES;  
                                                                              DESCRIPTION OF OLD SECURITIES; RELATIONSHIP     
                                                                              AMONG CAPITAL SECURITIES, SUBORDINATED          
                                                                              DEBENTURES AND GUARANTEE; CERTAIN FEDERAL INCOME
                                                                              TAX CONSEQUENCES; CERTAIN ERISA CONSIDERATIONS; 
                                                                              PLAN OF DISTRIBUTION                            
   5.    Pro Forma Financial Information....................................  INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
                                                                              CAPITALIZATION                                  
   6.    Material Contacts with the Company Being Acquired..................                         *                        
   7.    Additional Information Required for Reoffering by Persons and                                                        
         Parties Deemed to Be Underwriters..................................                         *                        
   8.    Interests of Named Experts and Counsel.............................  VALIDITY OF NEW SECURITIES; EXPERTS             
   9.    Disclosure of Commission Position on Indemnification for Securities                                                  
         Act Liabilities....................................................                         *                        
  10.    Information with Respect to S-3 Registrants........................  INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
                                                                              SUMMARY; THE CORPORATION                        
  11.    Incorporation of Certain Information by Reference..................  INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 
  12.    Information with Respect to S-2 or S-3 Registrants.................                         *                        
  13.    Incorporation of Certain Information by Reference..................                         *                        
  14.    Information with Respect to Registrants Other Than S-3 or S-2                                                        
         Registrants........................................................  AVAILABLE INFORMATION; THE ISSUER               
  15.    Information with Respect to S-3 Companies..........................                         *                        
  16.    Information with Respect to S-2 or S-3 Companies...................                         *                        
  17.    Information with Respect to Companies Other Than S-2 or S-3                                                          
         Companies..........................................................                         *                        
  18.    Information if Proxies, Consents or Authorizations are to be                                                         
         Solicited..........................................................                         *                        
  19.    Information if Proxies, Consents or Authorizations are not to be                                                     
         Solicited, or in an Exchange Offer.................................  INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

* Not Applicable.                                                               

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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A           
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE     
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY    
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES  
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE         
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES 
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR  
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.        

SUBJECT TO COMPLETION, DATED DECEMBER   , 1996
PROSPECTUS                                                                      
(First Union                     $500,000,000                                   
logo appears           FIRST UNION INSTITUTIONAL CAPITAL I                    
here)           OFFER TO EXCHANGE ITS 8.04% CAPITAL SECURITIES                
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY 
AND ALL OF ITS OUTSTANDING 8.04% CAPITAL SECURITIES 

(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
FIRST UNION CORPORATION 

The Exchange Offer and Withdrawal Rights will expire at 5:00 p.m.,
New York City time, on             , 1997, unless extended. 
     First Union Institutional Capital I, a business trust formed under the laws
of the State of Delaware (the "Issuer"), hereby offers, upon the terms and      
subject to the conditions set forth in this Prospectus (as the same may be      
amended or supplemented from time to time, the "Prospectus") and in the         
accompanying Letter of Transmittal (which together constitute the "Exchange     
Offer"), to exchange up to $500,000,000 aggregate Liquidation Amount of its     
8.04% Capital Securities (Liquidation Amount $1,000 per Capital Security) (the  
"New Capital Securities") which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a Registration Statement   
(as defined herein) of which this Prospectus constitutes a part, for a like     
Liquidation Amount of its outstanding 8.04% Capital Securities (Liquidation     
Amount $1,000 per Capital Security) (the "Old Capital Securities"), of which    
$500,000,000 aggregate Liquidation Amount is outstanding. Pursuant to the       
Exchange Offer, First Union Corporation, a North Carolina corporation (the      
"Corporation"), is also exchanging (i) its guarantee with respect to the payment
of Distributions (as defined herein) and payments on liquidation or redemption  
of the Old Capital Securities (the "Old Guarantee") for a like guarantee with   
respect to the New Capital Securities (the "New Guarantee"), and (ii) all of its
outstanding 8.04% Junior Subordinated Deferrable Interest Debentures (the "Old  
Subordinated Debentures"), of which $515,464,000 aggregate principal amount is  
outstanding, for a like aggregate principal amount of its 8.04% Junior          
Subordinated Deferrable Interest Debentures (the "New Subordinated Debentures"),
which New Guarantee and New Subordinated Debentures also have been registered   
under the Securities Act. The Old Capital Securities, the Old Guarantee and the 
Old Subordinated Debentures are collectively referred to herein as the "Old     
Securities" and the New Capital Securities, the New Guarantee and the New       
Subordinated Debentures are collectively referred to herein as the "New         
Securities".                                                                    
   The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the New Securities  
have been registered under the Securities Act and therefore will not be subject 
to certain restrictions on transfer applicable to the Old Securities, (ii) the  
New Capital Securities will not provide for any increase in the Distribution    
rate thereon and (iii) the New Subordinated Debentures will not provide for any 
increase in the interest rate thereon. See "Description of New Securities" and  
"Description of Old Securities". The New Capital Securities are being offered   
for exchange in order to satisfy certain obligations of the Corporation and the 
Issuer under the Registration Rights Agreement, dated as of November 27, 1996   
(the "Registration Rights Agreement"), among the Corporation, the Issuer and the
Initial Purchasers (as defined herein) of the Old Capital Securities. In the    
event that the Exchange Offer is consummated, any Old Capital Securities which  
remain outstanding after consummation of the Exchange Offer and the New Capital 
Securities issued in the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage in          
outstanding Liquidation Amount thereof have taken certain actions or exercised  
certain rights under the Trust Agreement (as defined herein).                   
                                                        (CONTINUED ON NEXT PAGE)
     SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR CERTAIN INFORMATION RELEVANT TO
AN INVESTMENT IN THE CAPITAL SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES 
DURING AND UNDER WHICH PAYMENT OF DISTRIBUTIONS ON THE CAPITAL SECURITIES MAY BE
DEFERRED AND CERTAIN RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.     
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                   , 1996.

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The New Capital Securities represent preferred undivided beneficial   
interests in the assets of the Issuer. The Corporation is the owner of all of   
the beneficial interests represented by the common securities of the Issuer (the
"Common Securities" and, collectively with the Capital Securities, the "Trust   
Securities"). The Issuer exists for the sole purpose of issuing the Trust       
Securities and investing the proceeds thereof in the Subordinated Debentures.   
The Subordinated Debentures will mature on December 1, 2026 (the "Stated        
Maturity"). The Capital Securities will have a preference under certain         
circumstances with respect to cash distributions and amounts payable on         
liquidation, redemption or otherwise over the Common Securities. See            
"Description of New Securities" -- "Description of Capital Securities;          
SUBORDINATION OF COMMON SECURITIES".                                            

     As used herein, (i) the "Indenture" means the Junior Subordinated Indenture
relating to the Subordinated Debentures, as amended and supplemented from time  
to time, between the Corporation and Wilmington Trust Company, as trustee (the  
"Debenture Trustee"), (ii) the "Trust Agreement" means the Amended and Restated 
Trust Agreement relating to the Issuer among the Corporation, as Depositor,     
Wilmington Trust Company, as Property Trustee (the "Property Trustee") and      
Wilmington Trust Company, as Delaware Trustee (the "Delaware Trustee") (the     
Property Trustee and Delaware Trustee collectively, the "Issuer Trustees"),     
(iii) the "Guarantee Agreement" means the Guarantee Agreement between the       
Corporation and Wilmington Trust Company, as trustee (the "Guarantee Trustee")  
providing a guarantee, on the terms and conditions described herein, for the    
benefit of holders of the Capital Securities (the "Guarantee"), and (iv) the    
"Expense Agreement" means the Expense Agreement between the Corporation and the 
Issuer. In addition, as the context may require, unless expressly stated        
otherwise, (i) the "Capital Securities" includes the Old Capital Securities and 
the New Capital Securities, (ii) the "Subordinated Debentures" includes the Old 
Subordinated Debentures and the New Subordinated Debentures and (iii) the       
"Guarantee" includes the Old Guarantee and the New Guarantee.                   

 Except as provided below, the Capital Securities will be represented by
global Capital Securities in fully registered form, deposited with a custodian  
for and registered in the name of a nominee of The Depository Trust Company     
("DTC"). Beneficial interests in such Capital Securities will be shown on, and  
transfers thereof will be effected through, records maintained by DTC and its   
participants. Beneficial interests in such Capital Securities will trade in     
DTC's Same-Day Funds Settlement System and secondary market trading activity in 
such interests will therefore settle in immediately available funds. The Capital
Securities will be issued, and may be transferred, only in blocks having a      
Liquidation Amount of not less than $100,000 (100 Capital Securities). See      
"Description of New Securities -- Description of Capital Securities; FORM,      
DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER".                              

    Holders of the Capital Securities will be entitled to receive preferential
cumulative cash distributions accruing from the date of original issuance and   
payable semi-annually in arrears on June 1 and December 1 of each year,         
commencing June 1, 1997, at the annual rate of 8.04% of the Liquidation Amount  
of $1,000 per Capital Security ("Distributions"). The Corporation has the right 
to defer payment of interest on the 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 of the 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 interest payments on the       
Subordinated Debentures are so deferred, Distributions on the Capital 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 or debt securities of the       
Corporation that rank PARI PASSU with or junior to the Subordinated Debentures. 
During an Extension Period, interest on the Subordinated Debentures will        
continue to accrue (and the amount of Distributions to which holders of the     
Capital Securities are entitled will accumulate) at the rate of 8.04% per annum,
compounded semi-annually, and holders of the Capital Securities will be required
to accrue interest income for United States federal income tax purposes. See    
"Description of New Securities -- Description of Subordinated Debentures; OPTION
TO EXTEND INTEREST PAYMENT PERIOD" and "Certain Federal Income Tax              
Consequences -- Interest Income and Original Issue Discount".                   

The Corporation has, through the Guarantee, the Trust Agreement, the  
Subordinated Debentures, the Indenture and the Expense Agreement, taken         
together, fully and unconditionally guaranteed all of the Issuer's obligations  
under the Capital Securities. See "Relationship Among Capital Securities,       
Subordinated Debentures and Guarantee -- Full and Unconditional Guarantee". The 
Guarantee of the Corporation guarantees the payment of Distributions and        
payments on liquidation or redemption of the Capital Securities, but only in    
each case to the extent of funds held by the Issuer, as described herein. See   
"Description of Guarantee". If the Corporation does not make interest payments  
on the Subordinated Debentures held by the Issuer, the Issuer will have         
insufficient funds to pay Distributions on the Capital Securities. The Guarantee
does not cover payment of Distributions when the Issuer does not have sufficient
funds to pay such Distributions. In such event, under the                       

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Indenture a holder of the Capital Securities may institute a legal proceeding   
directly against the Corporation to enforce payment of such amounts. See        
"Description of New Securities -- Description of Subordinated Debentures;       
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES". The obligations
of the Corporation under the Guarantee and the Subordinated Debentures are      
subordinate and junior in right of payment to all Senior Debt (as defined       
herein) of the Corporation. See "Description of New Securities -- Description of
Subordinated Debentures; SUBORDINATION").                                       

    The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Subordinated Debentures at maturity or their earlier
redemption. The Subordinated Debentures are redeemable prior to maturity at the 
option of the Corporation (i) on or after December 1, 2006, in whole at any time
or in part from time to time at the redemption prices set forth herein, or (ii) 
at any time, in whole (but not in part), upon the occurrence and continuation of
a Special Event (as defined herein), at a redemption price equal to the Special 
Event Redemption Price (as defined herein). See "Description of New             
Securities -- Description of Capital Securities; REDEMPTION".                   

   The holder of the Common Securities (I.E., the Corporation) will have the
right at any time to terminate the Issuer and, after satisfaction of liabilities
to creditors of the Issuer in accordance with applicable law and the Expense    
Agreement, cause the Subordinated Debentures to be distributed to the holders of
the Capital Securities in liquidation of the Issuer, subject to the Issuer      
having received an opinion of counsel to the effect that such distribution will 
not be a taxable event to holders of Capital Securities. See "Description of New
Securities -- Description of Capital Securities; LIQUIDATION OF ISSUER AND      
DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS".                            

   The Subordinated Debentures are unsecured and are subordinated and junior
in right of payment to all Senior Debt of the Corporation.                      

In the event of the termination of the Issuer, after satisfaction of  
liabilities to creditors of the Issuer in accordance with applicable law and the
Expense Agreement, the holders of the Capital Securities will be entitled to    
receive as a preference a Liquidation Amount of $1,000 per Capital Security plus
accumulated and unpaid Distributions thereon to the date of payment, which may  
be in the form of a distribution of a Like Amount (as defined herein) in        
Subordinated Debentures, subject to certain exceptions. See "Description of New 
Securities -- Description of Capital Securities; LIQUIDATION DISTRIBUTION UPON  
Termination".                                                                   

  The Issuer is making the Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of 
the Securities and Exchange Commission (the "Commission") as set forth in       
certain interpretive letters addressed to third parties in other transactions.  
However, neither the Corporation nor the Issuer has sought its own interpretive 
letter, and there can be no assurance that the staff of the Division of         
Corporation Finance of the Commission would make a similar determination with   
respect to the Exchange Offer as it has in such interpretive letters to third   
parties. Based on these interpretations by the staff of the Division of         
Corporation Finance, and subject to the two immediately following sentences, the
Corporation and the Issuer believe that New Capital Securities issued pursuant  
to this Exchange Offer in exchange for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a holder thereof (other than a      
holder who is a broker-dealer) without further compliance with the registration 
and prospectus delivery requirements of the Securities Act, provided that such  
New Capital Securities are acquired in the ordinary course of such holder's     
business and that such holder is not participating, and has no arrangement or   
understanding with any person to participate, in a distribution (within the     
meaning of the Securities Act) of such New Capital Securities. However, any     
holder of Old Capital Securities who is an "affiliate" of the Corporation or the
Issuer within the meaning of Rule 405 under the Securities Act (an "Affiliate") 
or who intends to participate in the Exchange Offer for the purpose of          
distributing New Capital Securities, or any broker-dealer who purchased Old     
Capital Securities from the Issuer to resell pursuant to Rule 144A under the    
Securities Act ("Rule 144A") or any other available exemption under the         
Securities Act, (i) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the       
above-mentioned interpretive letters, (ii) will not be entitled to tender such  
Old Capital Securities in the Exchange Offer and (iii) must comply with the     
registration and prospectus delivery requirements of the Securities Act in      
connection with any sale or other transfer of such Old Capital Securities unless
such sale is made pursuant to an exemption from such requirements. In addition, 
as described below, if any broker-dealer (a "Participating Broker-Dealer") holds
Old Capital Securities acquired for its own account as a result of market-making
or other trading activities and exchanges such Old Capital Securities for New   
Capital Securities, then such Participating Broker-Dealer must deliver a        
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Capital Securities.                                         

  Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to 
represent that (i) it is not an Affiliate, (ii) any New Capital Securities to be
received by it                                                                  

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are being acquired in the ordinary course of its business, (iii) it has no      
arrangement or understanding with any person to participate in a distribution   
(within the meaning of the Securities Act) of such New Capital Securities, and  
(iv) if such holder is not a broker-dealer, such holder is not engaged in, and  
does not intend to engage in, a distribution (within the meaning of the         
Securities Act) of such New Capital Securities. In addition, the Corporation and
the Issuer may require such holder, as a condition to such holder's eligibility 
to participate in the Exchange Offer, to furnish to the Corporation and the     
Issuer (or an agent thereof) in writing information as to the number of         
"beneficial owners" (within the meaning of Rule 13d-3 under the Securities      
Exchange Act of 1934, as amended (the "Exchange Act")) on behalf of whom such   
holder holds the Capital Securities to be exchanged in the Exchange Offer. Each 
Participating Broker-Dealer that receives New Capital Securities for its own    
account pursuant to the Exchange Offer must acknowledge that it acquired the Old
Capital Securities for its own account as the result of market-making activities
or other trading activities and must agree that it will deliver a prospectus    
meeting the requirements of the Securities Act in connection with any resale of 
such New Capital Securities. The Letter of Transmittal states that by so        
acknowledging and by delivering a prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the    
Securities Act. Based on the position taken by the staff of the Division of     
Corporation Finance of the Commission in the interpretive letters referred to   
above, the Corporation and the Issuer believe that Participating Broker-Dealers,
may fulfill their prospectus delivery requirements with respect to the New      
Capital Securities received upon exchange of such Old Capital Securities (other 
than Old Capital Securities which represent an unsold allotment from the        
original sale of the Old Capital Securities) with a prospectus meeting the      
requirements of the Securities Act, which may be the prospectus prepared for an 
exchange offer so long as it contains a description of the plan of distribution 
with respect to the resale of such New Capital Securities. Accordingly, this    
Prospectus, as it may be amended or supplemented from time to time, may be used 
by a Participating Broker-Dealer during the period referred to below in         
connection with resales of New Capital Securities received in exchange for Old  
Capital Securities where such Old Capital Securities were acquired by such      
Participating Broker-Dealer for its own account as a result of market-making or 
other trading activities. Subject to certain provisions set forth in the        
Registration Rights Agreement, the Corporation and the Issuer have agreed that  
this Prospectus, as it may be amended or supplemented from time to time, may be 
used by a Participating Broker-Dealer in connection with resales of such New    
Capital Securities for a period ending 180 days after the Expiration Date (as   
defined herein) or, if earlier, when all such New Capital Securities have been  
disposed of by such Participating Broker-Dealer. See "Plan of Distribution". Any
person, including any Participating Broker-Dealer, who is an Affiliate may not  
rely on such interpretive letters and must comply with the registration and     
prospectus delivery requirements of the Securities Act in connection with any   
resale transaction. See "The Exchange Offer -- Resales of New Capital           
Securities".                                                                    

     In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by     
execution of the Letter of Transmittal or delivery of an Agent's Message (as    
defined herein) that, upon receipt of notice from the Corporation or the Issuer 
of the occurrence of any event or the discovery of any fact which makes any     
statement contained or incorporated by reference in this Prospectus untrue in   
any material respect or which causes this Prospectus to omit to state a material
fact necessary in order to make the statements contained or incorporated by     
reference herein, in the light of the circumstances under which they were made, 
not misleading, or of the occurrence of certain other events specified in the   
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
sale of New Securities pursuant to this Prospectus until the Corporation or the 
Issuer has amended or supplemented this Prospectus to correct such misstatement 
or omission and has furnished copies of the amended or supplemented Prospectus  
to such Participating Broker-Dealer, or the Corporation or the Issuer has given 
notice that the sale of the New Capital Securities (or the Guarantee or the     
Subordinated Debentures, as applicable) may be resumed, as the case may be.     

     Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities 
will be a new issue of securities for which there currently is no market.       
Although the Initial Purchasers have informed the Corporation and the Issuer    
that they each currently intend to make a market in the New Capital Securities, 
they are not obligated to do so, and any such market making may be discontinued 
at any time without notice. Accordingly, there can be no assurance as to the    
development or liquidity of any market for the New Capital Securities. The      
Corporation currently does not intend to apply for listing of the New Capital   
Securities on any securities exchange or for quotation through the National     
Association of Securities Dealers Automated Quotation System.                   

    Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be 
subject to the same limitations applicable thereto under the Trust Agreement    
(except for those rights which terminate upon consummation of the Exchange      
Offer). Following consummation of the Exchange Offer, the holders of Old Capital
Securities will continue to be subject to all of the existing restrictions upon 
transfer thereof and neither the Corporation nor the Issuer will have any       
further obligation to such holders (other than under certain limited            

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(cover page continued)                                                          
circumstances) to provide for registration under the Securities Act of the Old  
Capital Securities held by them. To the extent that Old Capital Securities are  
tendered and accepted in the Exchange Offer, a holder's ability to sell         
untendered Old Capital Securities could be adversely affected. See "Risk Factors
-- Consequences of a Failure to Exchange Old Capital Securities".             

 THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO      
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.             

 Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on              , 1997 (such time on such date being  
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation and the Issuer (in which case the term "Expiration Date"     
shall mean the latest date and time to which the Exchange Offer is extended).   
Tenders of Old Capital Securities may be withdrawn at any time on or prior to   
the Expiration Date. The Exchange Offer is not conditioned upon any minimum     
Liquidation Amount of Old Capital Securities being tendered for exchange.       
However, the Exchange Offer is subject to certain events and conditions which   
may be waived by the Corporation or the Issuer and to the terms and provisions  
of the Registration Rights Agreement. Old Capital Securities may be tendered in 
whole or in part having a Liquidation Amount of not less than $100,000 (100     
Capital Securities) and or any integral multiple of $1,000 Liquidation Amount (1
Capital Security) in excess thereof. The Corporation has agreed to pay all      
expenses of the Exchange Offer, except as otherwise specified herein. See "The  
Exchange Offer -- Fees and Expenses". Each New Capital Security will pay        
cumulative Distributions from the most recent Distribution Date (as defined     
herein) on the Old Capital Securities surrendered in exchange for such New      
Capital Securities or, if no Distributions have been paid on such Old Capital   
Securities, from November 27, 1996. Holders of the Old Capital Securities whose 
Old Capital Securities are accepted for exchange will not receive accumulated   
Distributions on such Old Capital Securities for any period from and after the  
last Distribution Date on such Old Capital Securities prior to the original     
issue date of the New Capital Securities or, if no such Distributions have been 
paid, will not receive any accumulated Distributions on such Old Capital        
Securities, and will be deemed to have waived the right to receive any          
Distributions on such Old Capital Securities accumulated from and after such    
Distribution Date or, if no such interest has been paid or duly provided for,   
from and after November 27, 1996. This Prospectus, together with the Letter of  
Transmittal, is being sent to all registered holders of Old Capital Securities  
as of              ,      .                                                     

   Neither the Corporation nor the Issuer will receive any proceeds from the
issuance of the New Capital Securities offered hereby. No dealer-manager is     
being used in connection with this Exchange Offer. See "Use of Proceeds" and    
"Plan of Distribution".                                                         

This Prospectus may be used by First Union Capital Markets Corp., an  
affiliate of the Corporation, in connection with offers and sales related to    
market-making transactions in New Securities effected from time to time after   
the commencement of the offering to which this Prospectus relates. First Union  
Capital Markets Corp. may act as principal or agent in such transactions,       
including as agent for the counterparty when acting as principal or as agent for
both counterparties, and may receive compensation in the form of discounts and  
commissions, including from both counterparties when it acts as agent for both. 
Such sales will be made at prevailing market prices at the time of sale, at     
prices related thereto or at negotiated prices.                                 

FOR NORTH CAROLINA RESIDENTS ONLY 

THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT  
APPROVED OR DISAPPROVED THIS OFFERING, NOR HAS THE COMMISSIONER PASSED UPON THE 
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.                                        

  THE NEW CAPITAL SECURITIES WILL BE ISSUED, AND CAPITAL SECURITIES MAY BE
TRANSFERRED, ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN        
$100,000. ANY TRANSFER, SALE OR OTHER DISPOSITION OF CAPITAL SECURITIES IN A    
BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE   
VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT 
TO BE THE HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT  
LIMITED TO THE RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH    
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL       
SECURITIES.                                                                     

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NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE  
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO 
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S    
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN 
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY INTEREST 
THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF   
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 
("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH PURCHASE OR    
HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY INTEREST      
THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF  
THAT IT EITHER (I) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING   
SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN, OR (II) IS      
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1
OR 84-14 WITH RESPECT TO SUCH PURCHASE OR HOLDING.                              

TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]

                                                                                                                        PAGE
                                                                                                                            
Available Information..................................................................................................    7
Incorporation of Certain Documents by Reference........................................................................    7
Summary................................................................................................................    8
Risk Factors...........................................................................................................   12
The Issuer.............................................................................................................   16
The Corporation........................................................................................................   17
Consolidated Ratios of Earnings to Fixed Charges.......................................................................   21
Use of Proceeds........................................................................................................   21
Capitalization.........................................................................................................   22
Accounting Treatment...................................................................................................   23
The Exchange Offer.....................................................................................................   24
Description of New Securities..........................................................................................   32
Description of Old Securities..........................................................................................   52
Relationship Among Capital Securities, Subordinated Debentures and Guarantee...........................................   52
Certain Federal Income Tax Consequences................................................................................   54
Certain ERISA Considerations...........................................................................................   56
Plan of Distribution...................................................................................................   57
Validity of New Capital Securities.....................................................................................   58
Experts................................................................................................................   58

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY  
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH     
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED 
BY THE CORPORATION OR THE ISSUER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER  
OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO  
ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE  
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY        
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE 
AFFAIRS OF THE CORPORATION OR THE ISSUER SINCE THE DATE HEREOF.                 

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AVAILABLE INFORMATION 

The Corporation is subject to the informational requirements of the   
Exchange Act and in accordance therewith, files reports, proxy statements and   
other information with 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., Washington, D.C. 20549 and 
at the regional offices of the Commission located 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., 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 Issuer have filed with the Commission a       
Registration Statement on Form S-4 (together with all amendments and exhibits   
thereto, the "Registration Statement") under 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 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.       
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 the Issuer have been included herein.
The Corporation and the Issuer do not consider that such financial statements   
would be material to holders of the Capital Securities because the Issuer 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 Subordinated Debentures of the           
Corporation and issuing the Trust Securities. The Corporation has, through the  
Guarantee, the Trust Agreement, the Subordinated Debentures, the Indenture and  
the Expense Agreement, taken together, fully and unconditionally guaranteed all 
of the Issuer's obligations under the Capital Securities. See "The Issuer" and  
"Description of New Securities". In addition, the Corporation does not expect   
that the Issuer 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 (File
No. 1-10000) pursuant to Section 13(a) or 15(d) of the Exchange Act are         
incorporated into this Prospectus by reference:                                 

   1. the Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;                                              

    2. the Corporation's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996, and September 30, 1996; and      

     3. the Corporation's Current Reports on Form 8-K dated January 10, February
9, August 20, September 6, and October 16, 1996.                

     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 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 or therein, shall be deemed to be modified or superseded for purposes of 
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 this Prospectus.                                        

     This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. 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: Investor Relations, First Union Corporation, Two First Union       
Center, Charlotte, North Carolina 28288-0206, telephone number (704) 374-6782.  

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SUMMARY 

THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED HEREIN AND
SHOULD BE READ IN CONJUNCTION WITH SUCH INFORMATION CONTAINED ELSEWHERE IN THIS 
PROSPECTUS AND IS SUBJECT TO, AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO,    
SUCH INFORMATION. CAPITALIZED TERMS USED HEREIN HAVE THE RESPECTIVE MEANINGS    
ASCRIBED TO THEM ELSEWHERE IN THIS PROSPECTUS.                                  

THE EXCHANGE OFFER                                                              

   Up to $500,000,000 aggregate Liquidation Amount of New Capital Securities
are being offered in exchange for a like aggregate Liquidation Amount of Old    
Capital Securities. Old Capital Securities may be tendered for exchange in whole
or in part in a Liquidation Amount of $100,000 (100 Capital Securities) or any  
integral multiple of $1,000 in excess thereof. The Corporation and the Issuer   
are making the Exchange Offer in order to satisfy their obligations under the   
Registration Rights Agreement relating to the Old Capital Securities. For a     
description of the procedures for tendering Old Capital Securities, see "The    
Exchange Offer -- Procedures for Tendering Old Capital Securities".             

EXPIRATION DATE                                                                 

    The Expiration Date of the Exchange Offer will be 5:00 p.m., New York City
time, on                   , 1997 unless the Exchange Offer is extended by the  
Corporation and the Issuer. See "The Exchange Offer -- Expiration Date;         
Extensions; Amendments".                                                        

CONDITIONS TO EXCHANGE OFFER                                                    

     The Exchange Offer is subject to certain conditions, which may be waived by
the Corporation and the Issuer in their sole discretion. The Exchange Offer is  
not conditioned upon any minimum Liquidation Amount of Old Capital Securities   
being tendered. See "The Exchange Offer -- Conditions to Exchange Offer". The   
Corporation and the Issuer reserve the right in their sole discretion, subject  
to applicable law, at any time and from time to time, (i) to delay the          
acceptance of the Old Capital Securities for exchange, (ii) to terminate the    
Exchange Offer if certain specified conditions have not been satisfied, (iii) to
extend the Expiration Date of the Exchange Offer and retain all Old Capital     
Securities tendered pursuant to the Exchange Offer, subject, however, to the    
right of holders of Old Capital Securities to withdraw their tendered Old       
Capital Securities, or (iv) to waive any condition or otherwise amend the terms 
of the Exchange Offer in any respect. See "The Exchange Offer -- Expiration     
Date; Extensions; Amendments".                                                  

WITHDRAWAL RIGHTS                                                               

    Tenders of Old Capital Securities may be withdrawn at any time on or prior
to the Expiration Date by delivering a written notice of such withdrawal to     
Wilmington Trust Company, as Exchange Agent (the "Exchange Agent"), in          
conformity with certain procedures set forth below under "The Exchange          
Offer -- Withdrawal Rights".                                                    

PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES                                 

     Tendering holders of Old Capital Securities must complete and sign a Letter
of Transmittal in accordance with the instructions contained therein and forward
the same by mail, facsimile or hand delivery, together with any other required  
documents, to the Exchange Agent, either with the Old Capital Securities to be  
tendered or in compliance with the specified procedures for guaranteed delivery 
of Old Capital Securities. Certain brokers, dealers, commercial banks, trust    
companies and other nominees may also effect tenders by book-entry transfer,    
including an Agent's Message in lieu of the Letter of Transmittal. Holders of   
Old Capital Securities registered in the name of a broker, dealer, commercial   
bank, trust company or other nominee are urged to contact such person promptly  
if they wish to tender Old Capital Securities pursuant to the Exchange Offer.   
See "The Exchange Offer -- Procedures for Tendering Old Capital Securities".    
Letters of Transmittal and certificates representing Old Capital Securities     
should not be sent to the Corporation or the Issuer. Such documents should only 
be sent to the Exchange Agent. Questions regarding how to tender and requests   
for information should be directed to the Exchange Agent. See "The Exchange     
Offer -- Exchange Agent".                                                       

RESALES OF NEW CAPITAL SECURITIES                                               

     The Corporation and the Issuer are making the Exchange Offer in reliance on
the position of the staff of the Division of Corporation Finance of the         
Commission as set forth in certain interpretive letters addressed to third      
parties in other transactions. However, neither the Corporation nor the Issuer  
has sought its own interpretive letter and there can be no assurance that the   
staff of the Division of Corporation Finance of the Commission would make a     
similar determination with respect to the                                       

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Exchange Offer as it has in such interpretive letters to third parties. Based on
these interpretations by the staff of the Division of Corporation Finance, and  
subject to the two immediately following sentences, the Corporation and the     
Issuer believe that New Capital Securities issued pursuant to this Exchange     
Offer in exchange for Old Capital Securities may be offered for resale, resold  
and otherwise transferred by a holder thereof (other than a holder who is a     
broker-dealer) without further compliance with the registration and prospectus  
delivery requirements of the Securities Act, provided that such New Capital     
Securities are acquired in the ordinary course of such holder's business and    
that such holder is not participating, and has no arrangement or understanding  
with any person to participate, in a distribution (within the meaning of the    
Securities Act) of such New Capital Securities. However, any holder of Old      
Capital Securities who is an Affiliate or who intends to participate in the     
Exchange Offer for the purpose of distributing the New Capital Securities, or   
any broker-dealer who purchased the Old Capital Securities from the Issuer to   
resell pursuant to Rule 144A or any other available exemption under the         
Securities Act, (i) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the       
above-mentioned interpretive letters, (ii) will not be permitted or entitled to 
tender such Old Capital Securities in the Exchange Offer and (iii) must comply  
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities    
unless such sale is made pursuant to an exemption from such requirements. In    
addition, as described below, any Participating Broker-Dealer must deliver a    
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Capital Securities.                                         

   Each holder of Old Capital Securities that wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to 
represent that (i) it is not an Affiliate, (ii) any New Capital Securities to be
received by it are being acquired in the ordinary course of its business, (iii) 
it has no arrangement or understanding with any person to participate in a      
distribution (within the meaning of the Securities Act) of such New Capital     
Securities, and (iv) if such holder is not a broker-dealer, such holder is not  
engaged in, and does not intend to engage in, a distribution (within the meaning
of the Securities Act) of such New Capital Securities. Each Participating       
Broker-Dealer must acknowledge that it acquired the Old Capital Securities for  
its own account as the result of market-making activities or other trading      
activities and must agree that it will deliver a prospectus meeting the         
requirements of the Securities Act in connection with any resale of such New    
Capital Securities. The Letter of Transmittal states that by so acknowledging   
and by delivering a prospectus, a Participating Broker-Dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.  
Based on the position taken by the staff of the Division of Corporation Finance 
of the Commission in the interpretive letters referred to above, the Corporation
and the Issuer believe that Participating Broker-Dealers may fulfill their      
prospectus delivery requirements with respect to the New Capital Securities     
received upon exchange of such Old Capital Securities (other than Old Capital   
Securities which represent an unsold allotment from the original sale of the Old
Capital Securities) with a prospectus meeting the requirements of the Securities
Act, which may be the prospectus prepared for an exchange offer so long as it   
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended 
or supplemented from time to time, may be used by a Participating Broker-Dealer 
in connection with resales of New Capital Securities received in exchange for   
Old Capital Securities where such Old Capital Securities were acquired by such  
Participating Broker-Dealer for its own account as a result of market-making or 
other trading activities. Subject to certain provisions set forth in the        
Registration Rights Agreement and to the limitations described below under "The 
Exchange Offer -- Resale of New Capital Securities", the Corporation and the    
Issuer have agreed that this Prospectus, as it may be amended or supplemented   
from time to time, may be used by a Participating Broker-Dealer in connection   
with resales of such New Capital Securities for a period ending 180 days after  
the Expiration Date or, if earlier, when all such New Capital Securities have   
been disposed of by such Participating Broker-Dealer. See "Plan of              
Distribution". Any person, including any Participating Broker-Dealer, who is an 
Affiliate may not rely on such interpretive letters and must comply with the    
registration and prospectus delivery requirements of the Securities Act in      
connection with any resale transaction. See "The Exchange Offer -- Resales of   
New Capital Securities".                                                        

EXCHANGE AGENT                                                                  

The Exchange Agent is Wilmington Trust Company. The addresses, and    
telephone and facsimile numbers of the Exchange Agent are set forth in "The     
Exchange Offer -- Exchange Agent" and in the Letter of Transmittal.             

USE OF PROCEEDS                                                                 

   Neither the Corporation nor the Issuer will receive any proceeds from the
issuance of the New Capital Securities offered hereby. See "Use of Proceeds".   

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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS; CERTAIN ERISA CONSIDERATIONS         

   Holders of Old Capital Securities should review the information set forth
under "Certain Federal Income Tax Considerations" and "Certain ERISA            
Considerations" prior to tendering Old Capital Securities in the Exchange Offer.

DESCRIPTION OF NEW SECURITIES                                                   

GENERAL                                                                         

   The Capital Securities represent preferred undivided beneficial interests
in the assets of the Issuer and will have a preference under certain            
circumstances with respect to Distributions and amounts payable on liquidation, 
redemption or otherwise over the Common Securities. See "Description of Capital 
Securities -- Subordination of Common Securities". The sole assets of the Issuer
are the Subordinated Debentures, and payments under the Subordinated Debentures 
will be the sole revenue of the Issuer. The Subordinated Debentures are         
unsecured subordinated debt securities issued under the Indenture between the   
Corporation and Wilmington Trust Company, as trustee.                           

SECURITIES OFFERED                                                              

   The Issuer is offering up to $500,000,000 aggregate Liquidation Amount of
the Issuer's 8.04% Capital Securities which have been registered under the      
Securities Act (Liquidation Amount $1,000 per Capital Security). The New Capital
Securities will be issued, and the Old Capital Securities were issued, under the
Trust Agreement. The New Capital Securities and any Old Capital Securities which
remain outstanding after consummation of the Exchange Offer will constitute a   
single series of Capital Securities under the Trust Agreement and, accordingly, 
will vote together as a single class for purposes of determining whether holders
of the requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Trust Agreement. See      
"Description of New Securities -- Description of New Capital Securities;        
GENERAL". The terms of the New Capital Securities are identical in all material 
respects to the terms of the Old Capital Securities, except that the New Capital
Securities have been registered under the Securities Act and therefore are not  
subject to certain restrictions on transfer applicable to the Old Capital       
Securities and will not provide for any increase in the Distribution rate       
thereon. See "The Exchange Offer -- Purpose of Exchange Offer", "Description of 
New Securities" and "Description of Old Securities".                            

DISTRIBUTIONS                                                                   

Holders of the Capital Securities will be entitled to receive as a    
preference cumulative cash Distributions accruing from the date of original     
issuance and payable semi-annually in arrears on June 1 and December 1 of each  
year, commencing June 1, 1997, at the per annum rate set forth on the cover page
of this Prospectus to the persons in whose names the Capital Securities are     
registered at the close of business on the relevant record dates. See           
"Description of New Securities -- Description of Capital Securities;            
DISTRIBUTIONS".                                                                 

   The Subordinated Debentures are unsecured and rank subordinate and junior
in right of payment to all Senior Debt of the Corporation. The ability of the   
Issuer to pay amounts due on the Capital Securities is solely dependent upon the
Corporation making payments on the Subordinated Debentures as and when required.
See "Risk Factors -- Ranking of Subordinated Obligations Under Guarantee and    
Subordinated Debentures".                                                       

OPTION TO EXTEND INTEREST PAYMENT PERIOD                                        

   So long as no Debenture Event of Default (as defined herein) has occurred
and is continuing, the Corporation has the right to defer payments of interest  
on the Subordinated Debentures at any time or from time to time by extending the
interest payment period thereon for Extension Periods of up to 10 consecutive   
semi-annual periods with respect to each deferral period; provided, however,    
that no Extension Period may extend beyond the Stated Maturity of the           
Subordinated Debentures. If interest payments on the Subordinated Debentures are
deferred, Distributions on the Capital Securities also will be deferred and the 
Corporation will not be permitted, subject to certain exceptions set forth      
herein, to declare or pay any cash distributions with respect to the            
Corporation's capital stock or debt securities of the Corporation that rank PARI
PASSU with or junior to the Subordinated Debentures. During an Extension Period,
Distributions on the Capital Securities will continue to accumulate and         
Distributions that are in arrears will bear interest on the amount thereof at   
the per annum rate set forth on the cover page of this Prospectus (to the extent
permitted by applicable law), compounded semi-annually, and holders of the      
Capital Securities will be required to accrue interest income for United States 
federal income tax purposes in advance of receipt of cash related to such       
income. Upon the termination of any 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.                                   

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     The Corporation has no current plan to exercise its right to defer payments
of interest by extending the interest payment period on the Subordinated        
Debentures. However, should the Corporation elect to exercise such right in the 
future, the market price of the Capital Securities is likely to be affected. See
"Risk Factors -- Option to Extend Interest Payment Period; TAX CONSEQUENCES",   
"Description of New Securities -- Description of Subordinated Debentures; OPTION
TO EXTEND INTEREST PAYMENT PERIOD" and "Certain Federal Income Tax              
Consequences -- Interest Income and Original Issue Discount".                   

REDEMPTION; SPECIAL EVENT                                                       

    The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Subordinated Debentures at maturity or upon their   
earlier redemption. The Subordinated Debentures are redeemable, at the option of
the Corporation, (i) on or after December 1, 2006, 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 and continuation of a Special Event, including a Tax Event or a      
Regulatory Capital Event (each as defined herein). See "Risk Factors -- Special 
Event -- Redemption" and "Description of New Securities -- Description of       
Capital Securities; REDEMPTION".                                                

     See "Risk Factors -- Possible Tax Law Changes Affecting Capital Securities"
for a discussion of certain legislative proposals that, if adopted, could give  
rise to a Tax Event, which may permit the Corporation to cause a redemption of  
the Capital Securities prior to December 1, 2006.                               

No sinking fund will be established for the benefit of the Capital    
Securities.                                                                     

EXCHANGE OF CAPITAL SECURITIES FOR SUBORDINATED DEBENTURES                      

   The holder of the Common Securities (I.E., the Corporation) has the right
to terminate the Issuer at any time and, after satisfaction of liabilities to   
creditors of the Issuer in accordance with applicable law and the Expense       
Agreement, cause the Subordinated Debentures to be distributed to the holders of
the Capital Securities in liquidation of the Issuer, subject to the Issuer      
having received an opinion of counsel to the effect that such distribution will 
not be a taxable event to holders of Capital Securities. See "Description of New
Securities -- Description of Capital Securities; LIQUIDATION OF ISSUER AND      
DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS".                            

GUARANTEE                                                                       

    The payment of Distributions and payments on the liquidation of the Issuer
or the redemption of the Capital Securities are guaranteed by the Corporation to
the extent that the Issuer has sufficient funds available therefor. Such        
guarantee is subordinate and junior in right of payment to all Senior Debt of   
the Corporation. See "Risk Factors -- Rights Under Guarantee" and "Description  
of New Securities -- Description of Guarantee".                                 

TRANSFER                                                                        

The Capital Securities will be issued, and may be transferred, only in
blocks having a Liquidation Amount of not less than $100,000 (100 Capital       
Securities). Any transfer, sale or other disposition of Capital Securities      
resulting in a block having a Liquidation Amount of less than $100,000 shall be 
deemed to be void and of no legal effect whatsoever.                            

ABSENCE OF MARKET FOR NEW CAPITAL SECURITIES                                    

The New Capital Securities will be a new issue of securities for which
there currently is no market. Although Morgan Stanley & Co. Incorporated, Credit
Suisse First Boston Corporation, Goldman, Sachs & Co., and J. P. Morgan         
Securities Inc., the initial purchasers of the Old Capital Securities (the      
"Initial Purchasers"), have informed the Corporation and the Issuer that they   
each currently intend to make a market in the New Capital Securities, they are  
not obligated to do so, and any such market making may be discontinued at any   
time without notice. Accordingly, there can be no assurance as to the           
development or liquidity of any market for the New Capital Securities. The      
Corporation and the Issuer do not intend to apply for listing the New Capital   
Securities on any securities exchange or for quotation through the National     
Association of Securities Dealers Automated Quotation System.                   

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RISK FACTORS

Holders of the Old Capital Securities should carefully review the     
information contained elsewhere in this Prospectus and should particularly      
consider the following matters prior to tendering Old Capital Securities in the 
Exchange Offer.                                                                 

RANKING OF SUBORDINATED OBLIGATIONS UNDER GUARANTEE AND SUBORDINATED DEBENTURES 

  The obligations of the Corporation under the Subordinated Debentures and
the Guarantee are unsecured and rank subordinate and junior in right of payment 
to all Senior Debt of the Corporation. At September 30, 1996, the aggregate     
outstanding Senior Debt of the Corporation was $123.3 billion. 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 (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.          
Accordingly, the Subordinated Debentures will be effectively subordinated to all
existing and future liabilities of the Corporation's subsidiaries, and holders  
of Subordinated Debentures should look only to the assets of the Corporation for
payments on the Subordinated Debentures. See "The Corporation". None of the     
Indenture, the Guarantee, the Trust Agreement or the Expense Agreement places   
any limitation on the amount of secured or unsecured debt, including Senior     
Debt, that may be incurred by the Corporation. See "Description of New          
Securities -- Description of Guarantee; STATUS OF GUARANTEE" and "Description of
New Securities -- Description of Subordinated Debentures; SUBORDINATION,".      

   The ability of the Issuer to pay amounts due on the Capital Securities is
solely dependent upon the Corporation making payments on the Subordinated       
Debentures as and when required.                                                

OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES                      

  So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture to defer the payment of       
interest on the 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 of the Subordinated Debentures. As a consequence of any such deferral, 
semi-annual Distributions on the Capital Securities by the Issuer 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 8.04% per annum, compounded semi-annually from the relevant payment date
for such Distributions) during any such Extension Period. During any such       
Extension Period, the Corporation may not, and may not permit any subsidiary of 
the Corporation to, (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, or (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 interest to the Subordinated 
Debentures or 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 interest to the Subordinated       
Debentures (other than (a) dividends or distributions in common stock of the    
Corporation, (b) any declaration of a dividend in connection with the           
implementation of the Corporation's stockholders' rights plan or any successor  
to such plan, the issuance of rights, stock, or other property under any such   
plan, or the redemption or repurchase of any such rights pursuant thereto, (c)  
payments under the Guarantee, and (d) 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, related to the issuance of common     
stock under a dividend reinvestment and stock purchase plan or related to the   
issuance of common stock (or securities convertible into or exchangeable for    
common stock) as consideration in an acquisition transaction entered into prior 
to such Extension Period). Prior to the termination of any such Extension       
Period, the Corporation may further defer the payment of interest, provided that
no Extension Period may exceed 10 consecutive semi-annual periods or extend     
beyond the Stated Maturity of the Subordinated Debentures. Upon the termination 
of any Extension Period and the payment of all interest then accrued and unpaid 
(together with interest thereon at the annual rate of 8.04%, 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 New Securities -- Description of       
Capital Securities; DISTRIBUTIONS" and "Description of New                      
Securities -- Description of Subordinated Debentures; OPTION TO EXTEND INTEREST 
PAYMENT PERIOD".                                                                

   Should an Extension Period occur, a holder of the Capital Securities will
continue to accrue income (in the form of original issue discount) in respect of
its PRO RATA share of the Subordinated Debentures held by the Issuer for United 
States federal income tax purposes. As a result, a holder of the Capital        
Securities will include such income in gross income for                         

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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 Issuer if the holder  
disposes of the Capital Securities prior to the record date for the payment of  
Distributions. See "Certain Federal Income Tax Consequences -- Interest Income  
and Original Issue Discount" and " -- Sales or Redemption of Capital            
Securities".                                                                    

     The Corporation has no current plan to exercise its right to defer payments
of interest by extending the interest payment period on the Subordinated        
Debentures. However, should the Corporation elect to exercise such right in the 
future, 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, as a result of the existence of the            
Corporation's right to defer interest payments, the market price of the Capital 
Securities (which represent preferred undivided beneficial interests in the     
Issuer) may be more volatile than the market prices of other securities on which
original issue discount accrues that are not subject to such deferrals.         

SPECIAL EVENT -- REDEMPTION                                                     

     Upon the occurrence and continuation of a Tax Event or a Regulatory Capital
Event, the Corporation has the right to redeem the Subordinated Debentures in   
whole (but not in part) within 90 days following the occurrence of such Tax     
Event or Regulatory Capital Event and therefore cause a mandatory redemption of 
the Capital Securities before, as well as after, December 1, 2006. The          
Corporation has committed to the Federal Reserve Bank of Richmond that it will  
not exercise this redemption right without the Corporation having received the  
prior approval of the Board of Governors of the Federal Reserve System (the     
"Federal Reserve Board"), if then so required under applicable capital          
guidelines or policies of the Federal Reserve Board.                            

A "Tax Event" means the receipt by the Issuer 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 date of issuance of the  
Capital Securities under the Trust Agreement, there is more than an             
insubstantial risk that (i) the Issuer 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 Subordinated Debentures, (ii) interest payable
by the Corporation on the Subordinated Debentures is not, or within 90 days 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 Issuer is, or will  
be within 90 days of the date of the opinion, subject to more than a DE MINIMIS 
amount of other taxes, duties or other governmental charges. See " -- Possible  
Tax Law Changes Affecting Capital Securities" for a discussion of certain       
legislative proposals that, if adopted, could give rise to a Tax Event, which   
may permit the Corporation to cause a redemption of the Capital Securities prior
to December 1, 2006.                                                            

"Regulatory Capital Event" means the receipt by the Corporation of an 
opinion of an independent bank regulatory counsel experienced in such matters to
the effect that, as a result of (i) 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   
Board, or (ii) 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 Capital Securities under the Trust Agreement, the Capital Securities
do not constitute, or within 90 days of the date thereof, will not constitute,  
tier 1 capital (or its then equivalent); provided, however, that the            
distribution of the Subordinated Debentures in connection with the liquidation  
of the Issuer shall not in and of itself constitute a Regulatory Capital Event  
unless such liquidation shall have occurred in connection with a Tax Event.     

See "Description of New Securities -- Description of Subordinated     
Debentures; REDEMPTION".                                                        

EXCHANGE OF CAPITAL SECURITIES FOR SUBORDINATED DEBENTURES                      

   The holder of the Common Securities (I.E., the Corporation) will have the
right at any time to terminate the Issuer and, after satisfaction of liabilities
to creditors of the Issuer in accordance with applicable law and the Expense    
Agreement, cause the Subordinated Debentures to be distributed to the holders of
the Capital Securities in liquidation of the Issuer, subject to the Issuer      
having received an opinion of counsel to the effect that the distribution will  
not be taxable to the holders of Capital Securities. The Corporation has        
committed to the Federal Reserve Bank of Richmond that it will not exercise this
right without the Corporation having received the prior approval of the Federal 
Reserve Board, if then so required under applicable                             

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capital guidelines or policies of the Federal Reserve Board. See "Description of
New Securities -- Description of Capital Securities; LIQUIDATION OF ISSUER AND  
DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS".                            

MARKET PRICES                                                                   

There can be no assurance as to the market prices for the Capital     
Securities or the Subordinated Debentures that may be distributed in exchange   
for Capital Securities if a liquidation of the Issuer occurs. Accordingly, the  
Capital Securities that an investor may purchase, whether pursuant to the offer 
made hereby or in the secondary market, or the Subordinated Debentures that a   
holder of the Capital Securities may receive on liquidation of the Issuer, may  
trade at a discount to the price that the investor paid to purchase the Capital 
Securities offered hereby. Because holders of the Capital Securities may receive
Subordinated Debentures on termination of the Issuer, prospective purchasers of 
the Capital Securities are also making an investment decision with respect to   
the Subordinated Debentures and should carefully review all the information     
regarding the Subordinated Debentures contained herein. See "Description of New 
Securities -- Description of Subordinated Debentures".                          

RIGHTS UNDER GUARANTEE                                                          

  Wilmington Trust Company will act as the Guarantee Trustee and will hold
the Guarantee for the benefit of the holders of the Capital Securities.         
Wilmington Trust Company will also act as Debenture Trustee for the Subordinated
Debentures under the Indenture, and as Property Trustee and Delaware Trustee    
under the Trust Agreement. The Guarantee guarantees to the holders of the       
Capital Securities the following payments, to the extent not paid by the Issuer:
(i) any accumulated and unpaid Distributions required to be paid on the Capital 
Securities, to the extent that the Issuer has funds on hand available therefor  
at such time, (ii) the redemption price with respect to any Capital Securities  
called for redemption, to the extent that the Issuer has funds on hand available
therefor at such time, and (iii) upon a voluntary or involuntary termination,   
winding up or liquidation of the Issuer (unless the 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 Issuer has funds on hand available
therefor at such time, and (b) the amount of assets of the Issuer remaining     
available for distribution to holders of the Capital Securities in liquidation  
of the Issuer. The holders of not less than a majority in aggregate Liquidation 
Amount of the Capital 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 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 Issuer, the Guarantee Trustee or any other person
or entity. If the Corporation were to default on its obligation to pay amounts  
payable under the Subordinated Debentures, the Issuer 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, in the event (i) a Debenture Event of Default shall have occurred and  
be continuing, and (ii) such event is attributable to the failure of the        
Corporation to pay interest on or principal of the Subordinated Debentures on   
the payment date on which such payment is due and payable, then a holder of the 
Capital Securities may institute a legal proceeding directly against the        
Corporation for enforcement of payment to such holder of the principal of or    
interest on such Subordinated Debentures having a principal amount equal to the 
aggregate Liquidation Amount of the Capital Securities of such holder (a "Direct
Action"). 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 the Capital Securities in the Direct Action.      
Except as described herein, holders of the Capital Securities will not be able  
to exercise directly any other remedy available to the holders of the           
Subordinated Debentures or assert directly any other rights in respect of the   
Subordinated Debentures. See "Description of New Securities -- Description of   
Subordinated Debentures; ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL    
SECURITIES", " -- Debenture Events of Default" and " -- Description of          
Guarantee". The Trust Agreement provides that each holder of the Capital        
Securities, by acceptance thereof, agrees to the provisions of the Guarantee and
the Indenture.                                                                  

LIMITED VOTING RIGHTS                                                           

     Holders of the Capital Securities generally will have limited voting rights
relating only to the modification of the Capital Securities and the exercise of 
the Issuer's rights as holder of Subordinated Debentures and the Guarantee.     
Holders of the Capital Securities will not be entitled to vote to appoint,      
remove or replace the Property Trustee or the Delaware Trustee except upon the  
occurrence of certain events described herein. The Property Trustee and the     
holder of the Common Securities may amend the Trust Agreement without the       
consent of holders of the Capital Securities to ensure that the Issuer will be  
classified for United States federal income tax purposes as other than an       
association taxable as a corporation or as a grantor trust, provided that such  
action does not adversely affect the interests of such holders. See "Description
of New Securities -- Description of Capital Securities; VOTING RIGHTS; AMENDMENT
OF TRUST AGREEMENT" AND ";REMOVAL OF ISSUER TRUSTEES".                          

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POSSIBLE TAX LAW CHANGES AFFECTING CAPITAL SECURITIES                           

  On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Revenue
Reconciliation Bill"), the revenue portion of President Clinton's budget        
proposal, was introduced in the 104th Congress. The Revenue Reconciliation Bill,
if enacted into law, would, among other things, have generally denied interest  
deductions for interest on an instrument issued by a corporation that has a     
maximum weighted average maturity of more than 40 years. The Revenue            
Reconciliation Bill also would have generally denied interest deductions for    
interest on an instrument, issued by a corporation, that has a maximum term of  
more than 20 years and that is not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a      
related instrument that is not shown as indebtedness on the issuer's            
consolidated balance sheet. For purposes of determining the weighted average    
maturity or the term of an instrument, any right to extend would be treated as  
if exercised. The above-described provisions were proposed to be effective as to
instruments issued on or after December 7, 1995. If either provision were to    
have applied to the Subordinated Debentures, the Corporation would have been    
unable to deduct interest on the Subordinated Debentures. However, on March 29, 
1996, the Chairmen of the Senate Finance and House Ways and Means Committees    
issued a joint statement to the effect that it was their intention that the     
effective date of the President's legislative proposals, presumably including   
the Revenue Reconciliation Bill, if adopted, would be no earlier than the date  
of appropriate Congressional action. Under current law, the Corporation will be 
able to deduct interest on the Subordinated Debentures. Although the 104th      
Congress adjourned without enacting the above-described provisions of the       
Revenue Reconciliation Bill, there can be no assurance that current or future   
legislative proposals or final legislation will not adversely affect the ability
of the Corporation to deduct interest on the Subordinated Debentures.           
Accordingly, there can be no assurance that a Tax Event will not occur. See     
"Description of New Securities -- Description of Subordinated Debentures;       
REDEMPTION" and " -- Description of Capital Securities; REDEMPTION". See also   
"Certain Federal Income Tax Consequences -- Possible Tax Law Changes".          

CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES                    

  The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or      
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an  
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital          
Securities which remain outstanding after consummation of the Exchange Offer    
will continue to bear a legend reflecting such restrictions on transfer. In     
addition, upon consummation of the Exchange Offer, holders of Old Capital       
Securities which remain outstanding will not be entitled to any rights to have  
such Old Capital Securities registered under the Securities Act or to any       
similar rights under the Registration Rights Agreement (subject to certain      
limited exceptions). The Corporation and the Issuer do not intend to register   
under the Securities Act any Old Capital Securities which remain outstanding    
after consummation of the Exchange Offer (subject to such limited exceptions, if
applicable).                                                                    

    To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities    
could be adversely affected. In addition, although the Old Capital Securities   
have been designated for trading in the Private Offerings, Resale and Trading   
through Automatic Linkages ("PORTAL") market, to the extent that Old Capital    
Securities are tendered and accepted in connection with the Exchange Offer, any 
trading market for Old Capital Securities which remain outstanding after the    
Exchange Offer could be adversely affected.                                     

The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single   
series of Capital Securities under the Trust Agreement and, accordingly, will   
vote together as a single class for purposes of determining whether holders of  
the requisite percentage in outstanding Liquidation Amount thereof have taken   
certain actions or exercised certain rights under the Trust Agreement. See      
"Description of New Securities -- Description of Capital Securities; GENERAL".  

The Old Capital Securities provide that, if the Exchange Offer is not 
consummated within 30 days of the date hereof, the Distribution rate borne by   
the Old Capital Securities will increase by 0.25% per annum commencing on the   
31st day after the date hereof, until the Exchange Offer is consummated. See    
"Description of Old Capital Securities". Following consummation of the Exchange 
Offer, the Old Capital Securities will not be entitled to any increase in the   
Distribution rate thereon. The New Capital Securities will not be entitled to   
any such increase in the Distribution rate thereon.                             

ABSENCE OF PUBLIC MARKET                                                        

  The Old Capital Securities have not been registered under the Securities
Act and will be subject to restrictions on transferability to the extent that   
they are not exchanged for the New Capital Securities. Although the New Capital 
Securities will generally be permitted to be resold or otherwise transferred by 
the holders (who are not Affiliates) without compliance with the registration   
requirements under the Securities Act, they will constitute a new issue of      
securities with no established trading market. Capital Securities may be        
transferred by the holders thereof only in blocks having a Liquidation Amount of

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not less than $100,000 (100 Capital Securities). The Corporation and the Issuer 
have been advised by the Initial Purchasers that the Initial Purchasers         
presently intend to make a market in the New Capital Securities. However, the   
Initial Purchasers are not obligated to do so and any market-making activity    
with respect to the New Capital Securities may be discontinued at any time      
without notice. In addition, such market-making activity will be subject to the 
limits imposed by the Securities Act and the Exchange Act and may be limited    
during the Exchange Offer. Accordingly, no assurance can be given that an active
public or other market will develop for the New Capital Securities or the Old   
Capital Securities or as to the liquidity of or the trading market for the New  
Capital Securities or the Old Capital Securities. If an active public market    
does not develop, the market price and liquidity of the New Capital Securities  
may be adversely affected.                                                      

    If a public trading market develops for the New Capital Securities, future
trading prices of such securities will depend on many factors, including, among 
other things, prevailing interest rates, results of operations and the market   
for similar securities. Depending on prevailing interest rates, the market for  
similar securities and other factors, including the financial condition of the  
Corporation, the New Capital Securities may trade at a discount.                

Notwithstanding the registration of the New Capital Securities in the 
Exchange Offer, holders who are Affiliates may publicly offer for sale or resell
the New Capital Securities only in compliance with the provisions of Rule 144   
under the Securities Act.                                                       

   Each Participating Broker-Dealer that receives New Capital Securities for
its own account must acknowledge that it will deliver a prospectus in connection
with any resale of such New Capital Securities. See "Plan of Distribution".     

EXCHANGE OFFER PROCEDURES                                                       

Issuance of the New Capital Securities in exchange for Old Capital    
Securities pursuant to the Exchange Offer will be made only after a timely      
receipt by the Exchange Agent of such Old Capital Securities, a properly        
completed and duly executed Letter of Transmittal or Agent's Message in lieu    
thereof and all other required documents. Therefore, holders of the Old Capital 
Securities desiring to tender such Old Capital Securities in exchange for New   
Capital Securities should allow sufficient time to ensure timely delivery.      
Neither the Corporation, the Issuer, nor the Exchange Agent is under any duty to
give notification of defects or irregularities with respect to the tenders of   
Old Capital Securities for exchange.                                            

THE ISSUER

The Issuer is a statutory business trust created under Delaware law   
pursuant to (i) the Trust Agreement and (ii) the filing of a certificate of     
trust with the Delaware Secretary of State on November 21, 1996. The Issuer's   
business and affairs are conducted by the Issuer Trustees: Wilmington Trust     
Company, as Property Trustee and Delaware Trustee. In addition, two individuals 
who are employees or officers of or affiliated with the Corporation act as      
administrators with respect to the Issuer (the "Administrators"). The           
Administrators were selected by the holder of the Common Securities (I.E., the  
Corporation). The Issuer exists exclusively for the purposes of (i) issuing and 
selling the Trust Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Subordinated Debentures, and (iii) engaging in only   
those other activities necessary, advisable or incidental thereto (such as      
registering the transfer of the Capital Securities). Accordingly, the           
Subordinated Debentures are the sole assets of the Issuer, and payments under   
the Subordinated Debentures are the sole revenue of the Issuer. All of the      
Common Securities are owned by the Corporation. The Common Securities rank PARI 
PASSU, and payments will be made thereon PRO RATA, with the Capital Securities, 
except that upon the occurrence and continuance of an Event of Default (as      
defined herein) under the Trust Agreement resulting from a Debenture 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, redemption or otherwise will be subordinated to the rights of the  
holders of the Capital Securities. See "Description of New                      
Securities -- Description of Capital Securities; SUBORDINATION OF COMMON        
SECURITIES". The Corporation acquired the Common Securities in an aggregate     
Liquidation Amount equal to three percent of the total capital of the Issuer.   
The Issuer has a term of 31 years, but may terminate earlier as provided in the 
Trust Agreement. The holders of a majority in Liquidation Amount of the Capital 
Securities, if an Event of Default under the Trust Agreement has occurred and is
continuing, will be entitled to appoint, remove or replace the Property Trustee 
and/or the Delaware Trustee. The duties and obligations of each Issuer Trustee  
are governed by the Trust Agreement. The holder of the Common Securities (I.E., 
the Corporation) will pay all fees and expenses related to the Issuer and the   
Exchange Offer except as provided herein, and will pay, directly or indirectly, 
all ongoing costs, expenses and liabilities of the Issuer.                      

The principal executive office of the Issuer is in care of First Union
Corporation, One First Union Center, Charlotte, North Carolina 28288-0013,      
Attention: Secretary, and its telephone number is (704) 374-6565.               

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THE CORPORATION 

GENERAL                                                                         

The Corporation is a North Carolina-based, multi-bank holding company 
registered under the Bank Holding Company Act of 1956, as amended (the "BHCA"). 
Through its banking subsidiaries, the Corporation provides a wide range of      
commercial and retail banking services and trust services in North Carolina,    
Florida, South Carolina, Georgia, Tennessee, Virginia, Maryland, Delaware,      
Pennsylvania, New Jersey, New York, Connecticut and Washington, D.C. The        
Corporation also provides various other financial services, including mortgage  
banking, leasing, investment banking, insurance and securities brokerage        
services, through other subsidiaries. As of September 30, 1996, and for the nine
months then ended, the Corporation reported assets of $133.9 billion, net loans 
of $92.5 billion, deposits of $91.4 billion, stockholders' equity of $8.7       
billion and net income applicable to common stockholders of $1.0 billion, and as
of such date the Corporation operated through 2,138 offices in 38 states,       
Washington, D.C. and four foreign countries. The Corporation is the sixth       
largest bank holding company in the United States, based on assets at September 
30, 1996.                                                                       

HISTORY AND BUSINESS                                                            

    The Corporation was incorporated under the laws of North Carolina in 1967.
Pursuant to a corporate reorganization in 1968, First Union National Bank of    
North Carolina and First Union Mortgage Corporation, a mortgage banking firm    
acquired by First Union National Bank of North Carolina in 1964, became         
subsidiaries of the Corporation.                                                

     Since the 1985 Supreme Court decision upholding regional interstate banking
legislation, the Corporation has concentrated its efforts on building a large,  
regional banking organization in what it perceives to be some of the better     
banking markets in the eastern region of the United States. Since November 1985,
the Corporation has completed 71 banking-related acquisitions, including the    
more significant acquisitions (I.E., involving the acquisition of $3.0 billion  
or more of assets or deposits) set forth in the following table.                

                                                        [Enlarge/Download Table]

                                                                  ASSETS/            CONSIDERATION/                    
NAME                                       HEADQUARTERS       DEPOSITS (1)(2)     ACCOUNTING TREATMENT  COMPLETION DATE
                                                                                                                       
Atlantic Bancorporation................... Florida             $  3.8 billion  common stock/pooling     November 1985  
Northwestern Financial Corporation........ North Carolina         3.0 billion  common stock/pooling     December 1985  
First Railroad & Banking Company of        Georgia                3.7 billion  common stock/pooling     November 1986  
  Georgia.................................                                                                             
Florida National Banks of                  Florida                7.9 billion  cash/preferred           January 1990   
  Florida, Inc............................                                     stock/purchase                          
Southeast banks........................... Florida                9.9 billion  cash, notes/preferred    September 1991 
                                                                               stock/purchase                          
Resolution Trust Company ("RTC")           Florida, Georgia,      5.3 billion  cash/purchase            1991-1994      
  acquisitions............................ Virginia                                                                    
Dominion Bankshares Corporation........... Virginia               8.9 billion  common stock/preferred   March 1993     
                                                                               stock/pooling                           
Georgia Federal Bank, FSB................. Georgia                4.0 billion  cash/purchase            June 1993      
First American Metro Corp................. Virginia               4.6 billion  cash/purchase            June 1993      
American Savings of Florida, F.S.B........ Florida                3.3 billion  common stock/purchase    July 1995      
First Fidelity Bancorporation ("FFB")..... New Jersey,           35.3 billion  common stock/preferred   January 1996   
                                           Pennsylvania                        stock/pooling                           
Center Financial Corporation.............. Connecticut         $  4.0 billion  common stock/purchase    November 1996  

(1) The dollar amounts indicated represent the assets of the related            
 organization as of the last reporting period prior to acquisition, except
for (i) the dollar amount relating to RTC acquisitions, which represents
   savings and loan deposits acquired from the RTC, and (ii) the dollar amount
relating to Southeast banks, which represent assets of the two banking  
subsidiaries of Southeast Banking Corporation acquired from the Federal 
Deposit Insurance Corporation (the "FDIC").                             

(2) In addition, the Corporation acquired (i) Lieber & Company ("Lieber"), a    
    mutual fund advisory company with approximately $3.4 billion in assets under
   management, in June 1994, and (ii) Keystone Investments, Inc. ("Keystone"),
a mutual fund advisory company with $11.8 billion in assets under       
   management, in December 1996. The consideration paid by the Corporation was
 in the form of the Corporation's common stock; and both acquisitions were
accounted for as poolings of interests.                                 

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 The Corporation is continually evaluating acquisition opportunities and
frequently conducts due diligence activities in connection with possible        
acquisitions. As a result, acquisition discussions and, in some cases           
negotiations, frequently take place and future acquisitions involving cash, debt
or equity securities can be expected. Acquisitions typically involve the payment
of a premium over book and market values, and therefore, some dilution of the   
Corporation's book value and net income per common share may occur in connection
with any future transactions.                                                   

SUPERVISION AND REGULATION                                                      

     The following discussion sets forth certain of the material elements of the
regulatory framework applicable to bank holding companies and their subsidiaries
and provides certain specific information relevant to the Corporation. This     
regulatory framework is intended primarily for the protection of depositors and 
the federal deposit insurance funds and not for the protection of security      
holders. To the extent that the following information describes statutory and   
regulatory provisions, it is qualified in its entirety by reference to the      
applicable statutory and regulatory provisions. A change in applicable statutes,
regulations or regulatory policy may have a material effect on the business of  
the Corporation.                                                                

GENERAL. As a bank holding company, the Corporation is subject to     
regulation under the BHCA and to its examination and reporting requirements.    
Under the BHCA, bank holding companies may not directly or indirectly acquire   
the ownership or control of more than five percent of the voting shares or      
substantially all of the assets of any company, including a bank, without the   
prior approval of, or a waiver of such approval by, the Federal Reserve Board.  
In addition, bank holding companies are generally prohibited under the BHCA from
engaging in nonbanking activities, subject to certain exceptions.               

The earnings of the Corporation are affected by general economic      
conditions, management policies and the legislative and governmental actions of 
various regulatory authorities, including the Federal Reserve Board, the Office 
of the Comptroller of the Currency (the "OCC"), which is the principal regulator
of the Corporation's national bank subsidiaries, and the FDIC, which is the     
principal federal regulator of the Corporation's state-chartered bank           
subsidiaries. In addition, there are numerous governmental requirements and     
regulations which affect the activities of the Corporation.                     

PAYMENT OF DIVIDENDS. The Corporation is a legal entity separate and  
distinct from its banking and other subsidiaries. A major portion of the        
Corporation's revenues result from amounts paid as dividends to the Corporation 
by its national bank subsidiaries. The prior approval of the OCC is required if 
the total of all dividends declared by a national bank in any calendar year will
exceed the sum of such bank's net profits for that year and its retained net    
profits for the preceding two calendar years, less any required transfers to    
surplus. Federal law also prohibits any national bank from paying dividends     
which would be greater than such bank's undivided profits after deducting       
statutory bad debt in excess of such bank's allowance for loan losses.          

In addition to its national bank subsidiaries, the Corporation has two
state-chartered bank subsidiaries, each of which is subject to dividend         
limitations under applicable state laws.                                        

Under the foregoing dividend restrictions and certain restrictions    
applicable to certain of the Corporation's nonbanking subsidiaries, as of       
September 30, 1996, the Corporation's subsidiaries, without obtaining           
affirmative governmental approvals, could pay aggregate dividends of $430       
million to the Corporation. In the first nine months of 1996, the Corporation's 
subsidiaries paid $1.1 billion in cash dividends to the Corporation.            

In addition, the Corporation and its bank subsidiaries are subject to 
various general regulatory policies and requirements relating to the payment of 
dividends, including requirements to maintain adequate capital above regulatory 
minimums. The appropriate federal regulatory authority is authorized to         
determine under certain circumstances relating to the financial condition of a  
national bank or bank holding company that the payment of dividends would be an 
unsafe or unsound practice and to prohibit payment thereof. The OCC (the        
appropriate agency with respect to the Corporation's national bank subsidiaries)
and the FDIC (the appropriate agency with respect to the Corporation's          
state-chartered bank subsidiaries) have indicated that paying dividends that    
deplete a bank's capital base to an inadequate level would be an unsound and    
unsafe banking practice. The OCC, the FDIC and the Federal Reserve Board have   
each indicated that banking organizations should generally pay dividends only   
out of current operating earnings.                                              

     BORROWINGS, ETC. There are also various legal restrictions on the extent to
which each of the Corporation and its nonbank subsidiaries can borrow or        
otherwise obtain credit from its bank subsidiaries. In general, these           
restrictions require that any such extensions of credit must be secured by      
designated amounts of specified collateral and are limited, as to any one of the
Corporation or such nonbank subsidiaries, to ten percent of the lending bank's  
capital stock and surplus, and as to the Corporation and all such nonbank       
subsidiaries in the aggregate, to 20 percent of such lending bank's capital     
stock and surplus.                                                              

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 The Federal Deposit Insurance Act, as amended (the "FDIA"), among other
things, imposes liability on an institution the deposits of which are insured by
the FDIC, such as the Corporation's subsidiary national banks, for certain      
potential obligations to the FDIC incurred in connection with other FDIC-insured
institutions under common control with such institution.                        

 Under the National Bank Act, if the capital stock of a national bank is
impaired by losses or otherwise, the OCC is authorized to require payment of the
deficiency by assessment upon the bank's stockholders, pro rata and, to the     
extent necessary, if any such assessment is not paid by any stockholder after   
three months' notice, to sell the stock of such stockholder to make good the    
deficiency. Under Federal Reserve Board policy, the Corporation is expected to  
act as a source of financial strength to each of its subsidiary banks and to    
commit resources to support each of such subsidiaries. This support may be      
required at times when, absent such Federal Reserve Board policy, the           
Corporation may not find itself willing or able to provide it.                  

    Any capital loans by a bank holding company to any of its subsidiary banks
are subordinate in right of payment to deposits and to certain other            
indebtedness of such subsidiary banks. In the event of a bank holding company's 
bankruptcy, any commitment by the bank holding company to a federal bank        
regulatory agency to maintain the capital of a subsidiary bank will be assumed  
by the bankruptcy trustee and entitled to a priority of payment.                

CAPITAL ADEQUACY. The minimum guidelines for the ratio of capital to  
risk-weighted assets (including certain off-balance sheet activities, such as   
standby letters of credit) is eight percent. At least half of the total capital 
is to be composed of common equity, retained earnings and a limited amount of   
qualifying perpetual preferred stock, less certain intangibles ("tier 1 capital"
and, together with tier 2 capital, "total capital"). The remainder may consist  
of subordinated debt, qualifying preferred stock and a limited amount of the    
loan loss allowance ("tier 2 capital"). At September 30, 1996, the Corporation's
tier 1 and total capital ratios were 6.38 percent and 10.94 percent,            
respectively.                                                                   

 In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a     
minimum leverage ratio of tier 1 capital to adjusted average quarterly assets   
("leverage ratio") equal to three percent for bank holding companies that meet  
certain specified criteria, including having the highest regulatory rating. All 
other bank holding companies will generally be required to maintain a leverage  
ratio of from at least four to five percent. The Corporation's leverage ratio at
September 30, 1996, was 5.23 percent. The guidelines also provide that bank     
holding companies experiencing internal growth or making acquisitions will be   
expected to maintain strong capital positions substantially above the minimum   
supervisory levels without significant reliance on intangible assets.           
Furthermore, the guidelines indicate that the Federal Reserve Board will        
continue to consider a "tangible tier 1 leverage ratio" (deducting all          
intangibles) in evaluating proposals for expansion or new activity. The Federal 
Reserve Board has not advised the Corporation of any specific minimum leverage  
ratio or tangible tier 1 leverage ratio applicable to it.                       

   Each of the Corporation's subsidiary national banks is subject to similar
capital requirements adopted by the OCC or the FDIC. Each of the Corporation's  
subsidiary banks had a leverage ratio in excess of 5.17 percent, as of September
30, 1996. As of that date, the federal banking agencies have not advised any of 
the subsidiary national banks of any specific minimum leverage ratio applicable 
to it.                                                                          

Banking regulators continue to indicate their desire to raise capital 
requirements applicable to banking organizations, including a proposal to add an
interest rate risk component to risk-based capital guidelines.                  

PROMPT CORRECTIVE ACTION. The FDIA, among other things, requires the  
federal banking agencies to take "prompt corrective action" in respect of       
depository institutions that do not meet minimum capital requirements. The FDIA 
establishes five capital tiers: "well capitalized"; "adequately capitalized";   
"undercapitalized"; "significantly undercapitalized"; and "critically           
undercapitalized". A depository institution's capital tier will depend upon how 
its capital levels compare to various relevant capital measures and certain     
other factors, as established by regulation.                                    

    The federal bank regulatory agencies have adopted regulations establishing
relevant capital measures and relevant capital levels applicable to FDIC-insured
banks. The relevant capital measures are the total capital ratio, tier 1 capital
ratio and the leverage ratio. See " -- CAPITAL ADEQUACY". Under the regulations,
a FDIC-insured bank will be (i) "well capitalized" if it has a total capital    
ratio of ten percent or greater, a tier 1 capital ratio of six percent or       
greater and a leverage ratio of five percent or greater and is not subject to   
any order or written directive by the OCC to meet and maintain a specific       
capital level for any capital measure; (ii) "adequately capitalized" if it has a
total capital ratio of eight percent or greater, a tier 1 capital ratio of four 
percent or greater and a leverage ratio of four percent or greater (three       
percent in certain circumstances) and is not "well capitalized"; (iii)          
"undercapitalized" if it has a total capital ratio of less than eight percent, a
tier 1 capital ratio of less than four percent or a leverage ratio of less than 
four percent (three percent in certain circumstances); (iv) "significantly      
undercapitalized" if it has a total capital ratio of less than six percent, a   
tier 1 capital ratio of less than three percent or a                            

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leverage ratio of less than three percent; and (v) "critically undercapitalized"
if its tangible equity is equal to or less than two percent of average quarterly
tangible assets. As of September 30, 1996, all of the Corporation's             
deposit-taking subsidiary banks had capital levels that qualify them as being   
"well capitalized" under such regulations.                                      

 The FDIA generally prohibits a FDIC-insured depository institution from
making any capital distribution (including payment of a dividend) or paying any 
management fee to its holding company if the depository institution would       
thereafter be undercapitalized. "Undercapitalized" depository institutions are  
subject to growth limitations and are required to submit a capital restoration  
plan. The federal banking agencies may not accept a capital plan without        
determining, among other things, that the plan is based on realistic assumptions
and is likely to succeed in restoring the depository institution's capital. In  
addition, for a capital restoration plan to be acceptable, the depository       
institution's parent holding company must guarantee that the institution will   
comply with such capital restoration plan. The aggregate liability of the parent
holding company is limited to the lesser of: (i) an amount equal to five percent
of the depository institution's total assets at the time it became              
"undercapitalized"; and (ii) the amount which is necessary (or would have been  
necessary) to bring the institution into compliance with all capital standards  
applicable with respect to such institution as of the time it fails to comply   
with the plan. If a depository institution fails to submit an acceptable plan,  
it is treated as if it is "significantly undercapitalized".                     

 "Significantly undercapitalized" insured depository institutions may be
subject to a number of requirements and restrictions, including orders to sell  
sufficient voting stock to become "adequately capitalized", requirements to     
reduce total assets, and cessation of receipt of deposits from correspondent    
banks. "Critically undercapitalized" institutions are subject to the appointment
of a receiver or conservator.                                                   

DEPOSITOR PREFERENCE STATUTE. Under federal law, deposits and certain 
claims for administrative expenses and employee compensation against an insured 
depository institution would be afforded a priority over other general unsecured
claims against such an institution, including federal funds and letters of      
credit, in the "liquidation or other resolution" of such an institution by any  
receiver.                                                                       

  INTERSTATE BANKING AND BRANCHING LEGISLATION. The Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (the "IBBEA") authorizes interstate
acquisitions of banks and bank holding companies without geographic limitation  
beginning one year after enactment. In addition, beginning June 1, 1997, a bank 
may merge with a bank in another state as long as neither of the states has     
opted out of interstate branching between the date of enactment of the IBBEA and
May 31, 1997. The IBBEA further provides that states may enact laws permitting  
interstate merger transactions prior to June 1, 1997. A bank may establish and  
operate a DE NOVO branch in a state in which the bank does not maintain a branch
if that state expressly permits DE NOVO branching. Once a bank has established  
branches in a state through an interstate merger transaction, the bank may      
establish and acquire additional branches at any location in the state where any
bank involved in the interstate merger transaction could have established or    
acquired branches under applicable federal or state law. A bank that has        
established a branch in a state through DE NOVO branching may establish and     
acquire additional branches in such state in the same manner and to the same    
extent as a bank having a branch in such state as a result of an interstate     
merger. If a state opts out of interstate branching within the specified time   
period, no bank in any other state may establish a branch in the opting out     
state, whether through an acquisition or DE NOVO.                               

   FDIC INSURANCE ASSESSMENTS; DIFA. The FDIC reduced the insurance premiums
it charges on bank deposits insured by the Bank Insurance Fund ("BIF") to the   
statutory minimum of $2,000.00 for "well capitalized" banks, effective January  
1, 1996. Premiums related to deposits assessed by the Savings Association       
Insurance Fund ("SAIF"), including savings association deposits acquired by     
banks, continued to be assessed at a rate of between 23 cents and 31 cents per  
$100.00 of deposits. On September 30, 1996, the Deposit Insurance Funds Act of  
1996 ("DIFA") was enacted and signed into law. DIFA is expected to reduce the   
amount of semi-annual FDIC insurance premiums for savings association deposits  
acquired by banks to the same levels assessed for deposits insured by BIF. The  
Corporation currently estimates such reductions in premiums may amount to       
approximately $35 million pre-tax per year.                                     

  DIFA also provides for a special one-time assessment imposed on deposits
insured by the SAIF, including such deposits held by banks, to recapitalize the 
SAIF to bring the SAIF up to statutory required levels. The Corporation accrued 
for the one-time assessment in the third quarter of 1996 in the amount of $86   
million after tax in connection with the SAIF recapitalization.                 

   DIFA further provides for assessments to be imposed on insured depository
institutions with respect to deposits insured by the BIF (in addition to        
assessments currently imposed on depository institutions with respect to        
SAIF-insured deposits) to pay for the cost of Financing Corporation funding. The
Corporation currently estimates assessments may amount to up to $14 million     
after-tax in 1997 with similar assessments per year through 1999 (or earlier if 
no savings associations exist prior to December 31, 1999) in connection with    
such funding.                                                                   

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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES

The following table sets forth the Corporation's ratios of earnings to
fixed charges for the years and periods indicated:                              

                                                        [Enlarge/Download Table]

                                                              NINE MONTHS                                         
                                                                 ENDED                                            
                                                             SEPTEMBER 30,         YEARS ENDED DECEMBER 31,       
                                                                 1996       1995    1994     1993     1992   1991 
                                                                                                                  
Consolidated Ratios of Earnings to Fixed Charges                                                                  
  Excluding interest on deposits............................      2.23X      2.75    3.55     3.95     2.71   1.80
  Including interest on deposits............................      1.46X      1.54    1.73     1.70     1.32   1.17
Consolidated Ratios of Earnings to Fixed Charges                                                                  
  and Preferred Stock Dividends                                                                                   
  Excluding interest on deposits............................      2.22X      2.67    3.10     3.59     2.43   1.69
  Including interest on deposits............................      1.45X      1.53    1.67     1.67     1.30   1.15


                                                                                                                  
Consolidated Ratios of Earnings to Fixed Charges                                                                  
  Excluding interest on deposits............................                                                      
  Including interest on deposits............................                                                      
Consolidated Ratios of Earnings to Fixed Charges                                                                  
  and Preferred Stock Dividends                                                                                   
  Excluding interest on deposits............................                                                      
  Including interest on deposits............................                                                      

For purposes of computing these ratios, earnings represent income from
continuing operations before extraordinary items and cumulative effect of a     
change in accounting principle plus income taxes and fixed charges (excluding   
capitalized interest). Fixed charges, excluding interest on deposits, represent 
interest (other than on deposits, but including capitalized interest), one-third
(the proportion deemed representative of the interest factor) of rents and all  
amortization of debt issuance costs. Fixed charges, including interest on       
deposits, represent all interest (including capitalized interest), one-third    
(the proportion deemed representative of the interest factor) of rents and all  
amortization of debt issuance costs.                                            

USE OF PROCEEDS 

    Neither the Corporation nor the Issuer will receive cash proceeds from the
issuance of the New Capital Securities offered hereby. In consideration for     
issuing the New Capital Securities in exchange for Old Capital Securities as    
described in this Prospectus, the Issuer will receive Old Capital Securities in 
like Liquidation Amount. The Old Capital Securities surrendered in exchange for 
the New Capital Securities will be retired and cancelled.                       

The net proceeds to the Issuer from the offering of the Old Capital   
Securities was approximately $500 million (before deducting expenses associated 
with the offering). All of the proceeds from the sale of Capital Securities were
invested by the Issuer in the Old Subordinated Debentures. The net proceeds from
the sale of the Old Subordinated Debentures were added by the Corporation to its
general corporate funds and have been and will be used for general corporate    
purposes. Pending such application by the Corporation, such net proceeds may be 
temporarily invested in short-term interest bearing securities.                 

The Corporation is required by the Federal Reserve Board to maintain  
certain levels of capital for bank regulatory purposes. See "The                
Corporation -- Supervision and Regulation; CAPITAL ADEQUACY". On October 21,    
1996, The federal Reserve Board announced that cumulative preferred securities  
having the characteristics of the Capital Securities and which qualify as a     
minority interest could be included as tier 1 capital for bank holding          
companies. Such tier 1 capital treatment, together with the Corporation's       
ability to deduct, for income tax purposes, interest payable on the Subordinated
Debentures, will provide the Corporation with a more cost-effective means of    
obtaining capital for regulatory purposes than other tier 1 capital alternatives
currently available to it.                                                      

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CAPITALIZATION

The following table sets forth the consolidated capitalization of the 
Corporation and its subsidiaries as of September 30, 1996, and as adjusted to   
give effect to the consummation of the offering of the Old Capital Securities.  
The following data should be read in conjunction with the consolidated financial
statements and notes thereto of the Corporation and its subsidiaries            
incorporated herein by reference. See "Incorporation of Certain Documents by    
Reference". Also shown below are certain consolidated regulatory capital ratios 
of the Corporation and its subsidiaries at September 30, 1996. For additional   
discussion of regulatory capital requirements applicable to the Corporation, see
"The Corporation -- Supervision and Regulation; CAPITAL ADEQUACY". The issuance 
of the New Capital Securities in the Exchange Offer will have no effect on the  
capitalization of the Corporation.                                              

                                                        [Enlarge/Download Table]

                                                                                                        SEPTEMBER 30, 1996     
(DOLLARS IN MILLIONS)                                                                               HISTORICAL      AS ADJUSTED
                                                                                                                               
LONG-TERM DEBT....................................................................................   $  7,332           7,332  
GUARANTEED PREFERRED BENEFICIAL INTERESTS IN CORPORATION'S JUNIOR SUBORDINATED DEFERRABLE INTEREST                             
  DEBENTURES (1)..................................................................................         --             500  
STOCKHOLDERS' EQUITY                                                                                                           
  Preferred stock.................................................................................                             
     Preferred stock, no par value per share, authorized 10,000,000 shares, none issued...........         --              --  
     Class A, no par value per share, authorized 40,000,000 shares................................         --              --  
       Series B $2.15 Cumulative Convertible, 1,910,946 issued (2)................................         48              48  
  Common stock, $3.33 1/3 par value; authorized 750,000,000 shares,                                                            
     outstanding 270,507,508 shares...............................................................        901             901  
  Paid-in capital.................................................................................      1,408           1,408  
  Retained earnings...............................................................................      6,431           6,431  
  Unrealized loss on debt and equity securities...................................................        (99)            (99) 
       Total stockholders' equity.................................................................      8,689           8,689  
       Total capitalization.......................................................................   $ 16,021          16,521  

                                                        [Enlarge/Download Table]

                                                                                                         THE      REGULATORY
                                                                                                     CORPORATION   MINIMUM  
                                                                                                                            
CONSOLIDATED REGULATORY CAPITAL RATIOS (as of September 30, 1996)                                                           
  Tier 1 capital to risk-adjusted assets (3)........................................................     6.38%       4.00   
  Total capital to risk-adjusted assets (4).........................................................    10.94        8.00   
  Leverage (5)......................................................................................     5.23            (6)

(1) As described herein, the sole assets of the Issuer are $515 million of the  
Subordinated Debentures, issued by the Corporation to the Issuer. The   
Subordinated Debentures (which accrue interest at the rate of 8.04% per 
annum) will mature on December 1, 2026. The Corporation owns all of the 
  Common Securities of the Issuer which accumulate Distributions at the rate
    of 8.04% per annum. It is anticipated that the Issuer will not be subject to
the reporting requirements under the Exchange Act. See "Accounting      
Treatment".                                                             
(2) The outstanding shares of Series B Cumulative Convertible Class A Preferred 
Stock were redeemed on November 15, 1996.                               
(3) Tier 1 capital consists of common equity, retained earnings and a limited   
amount of qualifying perpetual preferred stock (including the Capital   
Securities), less certain intangibles.                                  
(4) Total capital consists of tier 1 capital and subordinated debt, qualifying  
 preferred stock and a limited amount of the loan loss allowance. At least
  half of a bank holding company's total capital is to be composed of tier 1
capital.                                                                
(5) The leverage ratio is defined as the ratio of tier 1 capital divided by     
adjusted average quarterly assets.                                      
(6) Federal Reserve Board guidelines provide for a minimum leverage ratio of    
three percent for bank holding companies that meet certain specified    
   criteria, including that they have the highest regulatory rating. All other
bank holding companies will be required to maintain a leverage ratio of 
    three percent plus an additional amount of at least 100 to 200 basis points.
    The guidelines also provide that banking organizations experiencing internal
 growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels, without   
significant reliance on intangible assets.                              

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ACCOUNTING TREATMENT

For financial reporting purposes, the Issuer will be treated as a     
subsidiary of the Corporation, and accordingly, the accounts of the Issuer will 
be included in the consolidated financial statements of the Corporation. The    
Capital Securities will be presented as a separate line item in the consolidated
balance sheets of the Corporation, entitled "Guaranteed Preferred Beneficial    
Interests in Corporation's Junior Subordinated Deferrable Interest Debentures", 
and appropriate disclosures about the Capital Securities, the Guarantee and the 
Subordinated Debentures will be included in the notes to the consolidated       
financial statements. For financial reporting purposes, the Corporation will    
record Distributions payable on the Capital Securities as an expense in the     
consolidated statements of income.                                              

     The Corporation has agreed that future financial reports of the Corporation
will: (i) present the Capital Securities issued by the Issuer on the balance    
sheet as a separate line item entitled "Guaranteed Preferred Beneficial         
Interests in Corporation's Junior Subordinated Deferrable Interest Debentures", 
which will be classified similar to minority interests; (ii) include in a       
footnote to the Corporation's consolidated financial statements disclosure that 
the sole assets of the Issuer are the Junior Subordinated Debentures (specifying
the principal amount, interest rate and maturity date of the Subordinated       
Debentures) and whether Staff Accounting Bulletin 53 treatment is sought; (iii) 
include, in an audited footnote to the consolidated financial statements,       
disclosure that (a) the Issuer is wholly-owned; (b) the sole assets of the      
Issuer are the Junior Subordinated Debentures; and (c) the obligations of the   
Corporation under the applicable documents, in the aggregate, constitute a full 
and unconditional guarantee by the Corporation of the Issuer's obligations under
the Capital Securities.                                                         

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THE EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER                                        

    In connection with the sale of the Old Capital Securities, the Corporation
and the Issuer entered into the Registration Rights Agreement with the Initial  
Purchasers, pursuant to which the Corporation and the Issuer agreed to file and 
to use their reasonable best efforts to cause to be declared effective by the   
Commission a registration statement with respect to the exchange of the Old     
Capital Securities for capital securities with terms identical in all material  
respects to the terms of the Old Capital Securities. A copy of the Registration 
Rights Agreement has been filed as an exhibit to the Registration Statement of  
which this Prospectus is a part.                                                

    The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Issuer under the Registration Rights Agreement. The form
and terms of the New Capital Securities are the same as the form and terms of   
the Old Capital Securities, except that the New Capital Securities (i) have been
registered under the Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Old Capital Securities and (ii) will 
not provide for any increase in the Distribution rate thereon. In that regard,  
the Old Capital Securities provide, among other things, that, if the Exchange   
Offer is not consummated by June 26, 1997, the Distribution rate borne by the   
Old Capital Securities commencing on June 27, 1997, will increase by 0.25% per  
annum until the Exchange Offer is consummated. Upon consummation of the Exchange
Offer, holders of Old Capital Securities will not be entitled to any increase in
the Distribution rate thereon or any further registration rights under the      
Registration Rights Agreement, except under limited circumstances. See "Risk    
Factors -- Consequences of a Failure to Exchange Old Capital Securities" and    
"Description of Old Securities".                                                

The Exchange Offer is not being made to, nor will the Issuer or the   
Corporation accept tenders for exchange from, holders of Old Capital Securities 
in any jurisdiction in which the Exchange Offer or the acceptance thereof would 
not be in compliance with the securities or blue sky laws of such jurisdiction. 

  Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Issuer or any other person who has obtained a    
properly completed bond power from the registered holder, or any person whose   
Old Capital Securities are held of record by DTC who desires to deliver such Old
Capital Securities by book-entry transfer at DTC.                               

  Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof, the Old Guarantee for the New Guarantee and  
all of the Old Subordinated Debentures, of which $515,464,000 aggregate         
principal amount is outstanding, for a like, aggregate principal amount of the  
New Subordinated Debentures. The New Guarantee and New Subordinated Debentures  
have been registered under the Securities Act.                                  

TERMS OF EXCHANGE                                                               

    The Issuer hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to      
exchange up to $500,000,000 aggregate Liquidation Amount of New Capital         
Securities for a like aggregate Liquidation Amount of Old Capital Securities    
properly tendered on or prior to the Expiration Date and not properly withdrawn 
in accordance with the procedures described below. The Issuer will issue,       
promptly after the Expiration Date, an aggregate Liquidation Amount of up to    
$500,000,000 of New Capital Securities in exchange for a like Liquidation Amount
of outstanding Old Capital Securities tendered and accepted in connection with  
the Exchange Offer. Holders may tender their Old Capital Securities in whole or 
in part in a Liquidation Amount of not less than $100,000 or any integral       
multiple of $1,000 in excess thereof.                                           

   The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered. As of the date of this Prospectus,    
$500,000,000 aggregate Liquidation Amount of the Old Capital Securities is      
outstanding.                                                                    

    Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are  
not tendered for or are tendered but not accepted in connection with the        
Exchange Offer will remain outstanding and be entitled to the benefits of the   
Trust Agreement, but will not be entitled to any further registration rights    
under the Registration Rights Agreement, except under limited circumstances. See
"Risk Factors -- Consequences of a Failure to Exchange Old Capital Securities"  
and "Description of Old Securities".                                            

If any tendered Old Capital Securities are not accepted for exchange  
because of an invalid tender, the occurrence of certain other events set forth  
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly     
after the Expiration Date.                                                      

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   Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to  
the instructions in the Letter of Transmittal, transfer taxes with respect to   
the exchange of Old Capital Securities in connection with the Exchange Offer.   
The Corporation will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See " -- Fees and 
Expenses".                                                                      

    NEITHER THE BOARD OF DIRECTORS OF THE CORPORATION NOR ANY ADMINISTRATOR OR
TRUSTEE OF THE ISSUER MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL        
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION 
OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION,    
NOONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD       
CAPITAL SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO   
THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO
TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND          
CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION   
AND REQUIREMENTS.                                                               

EXPIRATION DATE; EXTENSIONS; AMENDMENTS                                         

The term "Expiration Date" means 5:00 p.m., New York City time, on    
               , 1997, unless the Exchange Offer is extended by the Issuer
(in which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended).                                          

  The Corporation and the Issuer expressly reserve the right in their sole
discretion, subject to applicable law, at any time and from time to time, (i) to
delay the acceptance of the Old Capital Securities for exchange, (ii) to        
terminate the Exchange Offer (whether or not any Old Capital Securities have    
theretofore been accepted for exchange) if the Corporation and the Issuer       
determine, in their sole discretion, that any of the events or conditions       
referred to under " -- Conditions to the Exchange Offer" have occurred or exist 
or have not been satisfied, (iii) to extend the Expiration Date of the Exchange 
Offer and retain all Old Capital Securities tendered pursuant to the Exchange   
Offer, subject, however, to the right of holders of Old Capital Securities to   
withdraw their tendered Old Capital Securities as described under               
" -- Withdrawal Rights", and (iv) to waive any condition or otherwise amend the 
terms of the Exchange Offer in any respect. If the Exchange Offer is amended in 
a manner determined by the Corporation and the Issuer to constitute a material  
change, or if the Corporation and the Issuer waive a material condition of the  
Exchange Offer, the Corporation and the Issuer will promptly disclose such      
amendment by means of an amended or supplemented Prospectus that will be        
distributed to the registered holders of the Old Capital Securities, and the    
Issuer will extend the Exchange Offer to the extent required by Rule 14e-1 under
the Exchange Act.                                                               

   Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an   
extension will be made no later than 9:00 a.m., New York City time, on the next 
business day after the previously scheduled Expiration Date. Without limiting   
the manner in which the Corporation and the Issuer may choose to make any public
announcement and subject to applicable law, the Corporation and the Issuer shall
have no obligation to publish, advertise or otherwise communicate any such      
public announcement other than by issuing a release to an appropriate news      
agency.                                                                         

ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES                  

 Upon the terms and subject to the conditions of the Exchange Offer, the
Issuer will exchange, and will issue to the Exchange Agent, New Capital         
Securities for Old Capital Securities validly tendered and not withdrawn        
(pursuant to the withdrawal rights described under " -- Withdrawal Rights")     
promptly after the Expiration Date.                                             

In all cases, delivery of New Capital Securities in exchange for Old  
Capital Securities tendered and accepted for exchange pursuant to the Exchange  
Offer will be made only after timely receipt by the Exchange Agent of (i) Old   
Capital Securities or a book-entry confirmation of a book-entry transfer of Old 
Capital Securities into the Exchange Agent's account at DTC, including an       
Agent's Message if the tendering holder has not delivered a Letter of           
Transmittal, (ii) the Letter of Transmittal (or facsimile thereof), properly    
completed and duly executed, with any required signature guarantees or (in the  
case of a book-entry transfer) an Agent's Message or lieu of the Letter of      
Transmittal, and (iii) any other documents required by the Letter of            
Transmittal.                                                                    

The term "book-entry confirmation" means a timely confirmation of a   
book-entry transfer of Old Capital Securities into the Exchange Agent's account 
at DTC. The term "Agent's Message" means a message, transmitted by DTC to and   
received by the Exchange Agent and forming a part of a book-entry confirmation, 
which states that DTC has received an express                                   

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acknowledgement from the tendering participant, which acknowledgement states    
that such participant has received and agrees to be bound by the Letter of      
Transmittal and that the Issuer and the Corporation may enforce such Letter of  
Transmittal against such participant.                                           

    Subject to the terms and conditions of the Exchange Offer, the Corporation
and the Issuer will be deemed to have accepted for exchange, and thereby        
exchanged, Old Capital Securities validly tendered and not withdrawn as, if and 
when the Issuer gives oral or written notice to the Exchange Agent of the       
Corporation's and the Issuer's acceptance of such Old Capital Securities for    
exchange pursuant to the Exchange Offer. The Exchange Agent will act as agent   
for the Corporation and the Issuer for the purpose of receiving tenders of Old  
Capital Securities, Letters of Transmittal and related documents, and as agent  
for tendering holders for the purpose of receiving Old Capital Securities,      
Letters of Transmittal and related documents and transmitting New Capital       
Securities to validly tendering holders. Such exchange will be made promptly    
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital Securities tendered pursuant to the Exchange 
Offer is delayed (whether before or after the Corporation's and the Issuer's    
acceptance for exchange of Old Capital Securities) or the Corporation and the   
Issuer extend the Exchange Offer or are unable to accept for exchange or        
exchange Old Capital Securities tendered pursuant to the Exchange Offer, then,  
without prejudice to the Corporation's and the Issuer's rights set forth herein,
the Exchange Agent may, nevertheless, on behalf of the Corporation and the      
Issuer and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Old 
Capital Securities and such Old Capital Securities may not be withdrawn except  
to the extent tendering holders are entitled to withdrawal rights as described  
under " -- Withdrawal Rights".                                                  

     Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof, a
holder of Old Capital Securities will warrant and agree in the Letter of        
Transmittal that it has full power and authority to tender, exchange, sell,     
assign and transfer Old Capital Securities, that the Issuer will acquire good,  
marketable and unencumbered title to the tendered Old Capital Securities, free  
and clear of all liens, restrictions, charges and encumbrances, and the Old     
Capital Securities tendered for exchange are not subject to any adverse claims  
or proxies. The holder also will warrant and agree that it will, upon request,  
execute and deliver any additional documents deemed by the Corporation, the     
Issuer or the Exchange Agent to be necessary or desirable to complete the       
exchange, sale, assignment, and transfer of the Old Capital Securities tendered 
pursuant to the Exchange Offer.                                                 

PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES                                 

VALID TENDER. Except as set forth below, in order for Old Capital     
Securities to be validly tendered pursuant to the Exchange Offer, a properly    
completed and duly executed Letter of Transmittal (or facsimile thereof), with  
any required signature guarantees, or (in the case of a book-entry tender) an   
Agent's Message in lieu of the Letter of Transmittal, and any other required    
documents, must be received by the Exchange Agent at one of its addresses set   
forth under " -- Exchange Agent" , and either (i) tendered Old Capital          
Securities must be received by the Exchange Agent, or (ii) such Old Capital     
Securities must be tendered pursuant to the procedures for book-entry transfer  
set forth below and a book-entry confirmation, including an Agent's Message if  
the tendering holder has not delivered a Letter of Transmittal, must be received
by the Exchange Agent, in each case on or prior to the Expiration Date, or (iii)
the guaranteed delivery procedures set forth below must be complied with.       

  If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Capital  
Securities delivered to the Exchange Agent will be deemed to have been tendered 
unless otherwise indicated.                                                     

   THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING       
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE     
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT         
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.         

BOOK ENTRY TRANSFER. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer 
within two business days after the date of this Prospectus. Any financial       
institution that is a participant in DTC's book-entry transfer facility system  
may make a book-entry delivery of the Old Capital Securities by causing DTC to  
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of   
Old Capital Securities may be effected through book-entry transfer into the     
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile        
thereof), properly completed and duly                                           

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executed, with any required signature guarantees, or an Agent's Message in lieu 
of the Letter of Transmittal, and any other required documents, must in any case
be delivered to and received by the Exchange Agent at its address set forth     
under " -- Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.                       

   DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT                                       

    SIGNATURE GUARANTEES. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are           
unnecessary unless (i) a certificate for the Old Capital Securities is          
registered in a name other than that of the person surrendering the certificate 
or (ii) such registered holder completes the box entitled "Special Issuance     
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.  
In the case of (i) or (ii) above, such certificates for Old Capital Securities  
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal     
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the       
Exchange Act as an "eligible guarantor institution," including (as such terms   
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities   
broker or dealer or government securities broker or dealer; (iii) a credit      
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a        
Securities Transfer Association (an "Eligible Institution"), unless surrendered 
on behalf of such Eligible Institution. See Instruction 1 to the Letter of      
Transmittal.                                                                    

   GUARANTEED DELIVERY. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital        
Securities are not immediately available or time will not permit all required   
documents to reach the Exchange Agent on or before the Expiration Date, or the  
procedures for book-entry transfer cannot be completed on a timely basis, such  
Old Capital Securities may nevertheless be tendered, provided that all of the   
following guaranteed delivery procedures are complied with:                     

    (i) such tenders are made by or through an Eligible Institution;

    (ii) a properly completed and duly executed Notice of Guaranteed
     Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to  
Expiration Date; and                                                  

          (iii) the certificates (or a book-entry confirmation) representing all
     tendered Old Capital Securities, in proper form for transfer, together with
    a properly completed and duly executed Letter of Transmittal (or facsimile
  thereof or Agent's Message in lieu thereof), with any required signature
   guarantees and any other documents required by the Letter of Transmittal,
 are received by the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed 
Delivery.                                                             

    The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an   
Eligible Institution in the form set forth in such notice.                      

 Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for     
exchange pursuant to the Exchange Offer will in all cases be made only after    
timely receipt by the Exchange Agent of Old Capital Securities, or of a         
book-entry confirmation with respect to such Old Capital Securities, and a      
properly completed and duly executed Letter of Transmittal (or facsimile thereof
or Agent's Message in lieu thereof), together with any required signature       
guarantees and any other documents required by the Letter of Transmittal.       
Accordingly, the delivery of New Capital Securities might not be made to all    
tendering holders at the same time, and will depend upon when Old Capital       
Securities, book-entry confirmations with respect to Old Capital Securities and 
other required documents are received by the Exchange Agent.                    

   The Corporation's and the Issuer's acceptance for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will      
constitute a binding agreement between the tendering holder and the Issuer upon 
the terms and subject to the conditions of the Exchange Offer.                  

DETERMINATION OF VALIDITY. All questions as to the form of documents, 
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Corporation and   
the Issuer, in their sole discretion, whose determination shall be final and    
binding on all parties. The Corporation and the Issuer reserve the absolute     
right, in their sole discretion, to reject any and all tenders determined by    
them not to be in proper form or the acceptance of which, or exchange for, may, 
in the view of counsel to the Corporation or the Issuer, be unlawful. The       
Corporation and the Issuer also reserve the absolute right, subject to          
applicable law, to waive any of the conditions of the Exchange                  

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Offer as set forth under " -- Conditions to the Exchange Offer" or any condition
or irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of   
other holders.                                                                  

The Corporation's and the Issuer's interpretation of the terms and    
conditions of the Exchange Offer (including the Letter of Transmittal and the   
instructions thereto) will be final and binding. No tender of Old Capital       
Securities will be deemed to have been validly made until all irregularities    
with respect to such tender have been cured or waived. Neither the Corporation, 
the Issuer, any affiliates or assigns of the Corporation or the Issuer, the     
Exchange Agent nor any other person shall be under any duty to give any         
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.                                                  

   If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a      
trustee, executor, administrator, guardian, attorney-in-fact, officer of a      
corporation or other person acting in a fiduciary or representative capacity,   
such person should so indicate when signing, and unless waived by the Issuer,   
proper evidence satisfactory to the Corporation and the Issuer, in their sole   
discretion, of such person's authority to so act must be submitted.             

     A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder 
wishes to participate in the Exchange Offer.                                    

RESALES OF NEW CAPITAL SECURITIES                                               

The Issuer is making the Exchange Offer for the Capital Securities in 
reliance on the position of the staff of the Division of Corporation Finance of 
the Commission as set forth in certain interpretive letters addressed to third  
parties in other transactions. However, neither the Corporation nor the Issuer  
sought its own interpretive letter, and there can be no assurance that the staff
of the Division of Corporation Finance of the Commission would make a similar   
determination with respect to the Exchange Offer as it has in such interpretive 
letters to third parties. Based on these interpretations by the staff of the    
Division of Corporation Finance, and subject to the two immediately following   
sentences, the Corporation and the Issuer believe that New Capital Securities   
issued pursuant to this Exchange Offer in exchange for Old Capital Securities   
may be offered for resale, resold and otherwise transferred by a holder thereof 
(other than a holder who is a broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the Securities Act,        
provided that such New Capital Securities are acquired in the ordinary course of
such holder's business and that such holder is not participating, and has no    
arrangement or understanding with any person to participate, in a distribution  
(within the meaning of the Securities Act) of such New Capital Securities.      
However, any holder of Old Capital Securities who is an Affiliate or who intends
to participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any broker-dealer who purchased Old Capital Securities from the  
Issuer to resell pursuant to Rule 144A or any other available exemption under   
the Securities Act, (i) will not be able to rely on the interpretations of the  
staff of the Division of Corporation Finance of the Commission set forth in the 
above-mentioned interpretive letters, (ii) will not be permitted or entitled to 
tender such Old Capital Securities in the Exchange Offer, and (iii) must comply 
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities    
unless such sale is made pursuant to an exemption from such requirements. In    
addition, as described below, Participating Broker-Dealers must deliver a       
prospectus meeting the requirements of the Securities Act in connection with any
resales of New Capital Securities.                                              

  Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to 
represent that (i) it is not an Affiliate, (ii) any New Capital Securities to be
received by it are being acquired in the ordinary course of its business, (iii) 
it has no arrangement or understanding with any person to participate in a      
distribution (within the meaning of the Securities Act) of such New Capital     
Securities, and (iv) if such holder is not a broker-dealer, such holder is not  
engaged in, and does not intend to engage in, a distribution (within the meaning
of the Securities Act) of such New Capital Securities. In addition, the         
Corporation and the Issuer may require such holder, as a condition to such      
holder's eligibility to participate in the Exchange Offer, to furnish to the    
Corporation and the Issuer (or an agent thereof) in writing information as to   
the number of "beneficial owners" (within the meaning of Rule 13d-3 under the   
Exchange Act) on behalf of whom such holder holds the Capital Securities to be  
exchanged in the Exchange Offer. Each Participating Broker-Dealer must          
acknowledge that it acquired the Old Capital Securities for its own account as  
the result of market-making activities or other trading activities and must     
agree that it will deliver a prospectus meeting the requirements of the         
Securities Act in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a       
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation                               

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Finance of the Commission in the interpretive letters referred to above, the    
Corporation and the Issuer believe that Participating Broker-Dealers may fulfill
their prospectus delivery requirements with respect to the New Capital          
Securities received upon exchange of such Old Capital Securities (other than Old
Capital Securities which represent an unsold allotment from the original sale of
the Old Capital Securities) with a prospectus meeting the requirements of the   
Securities Act, which may be the prospectus prepared for an exchange offer so   
long as it contains a description of the plan of distribution with respect to   
the resale of such New Capital Securities. Accordingly, this Prospectus, as it  
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of 
New Capital Securities received in exchange for Old Capital Securities where    
such Old Capital Securities were acquired by such Participating Broker-Dealer   
for its own account as a result of market-making or other trading activities.   
Subject to certain provisions set forth in the Registration Rights Agreement,   
the Corporation and the Issuer have agreed that this Prospectus, as it may be   
amended or supplemented from time to time, may be used by a Participating       
Broker-Dealer in connection with resales of such New Capital Securities for a   
period ending 180 days after the Expiration Date or, if earlier, when all such  
New Capital Securities have been disposed of by such Participating              
Broker-Dealer. See "Plan of Distribution". Any person, including any            
Participating Broker-Dealer, who is an Affiliate may not rely on such           
interpretive letters and must comply with the registration and prospectus       
delivery requirements of the Securities Act in connection with any resale       
transaction.                                                                    

     In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by     
execution of the Letter of Transmittal or delivery of an Agent's Message in lieu
thereof, that, upon receipt of notice from the Corporation or the Issuer of the 
occurrence of any event or the discovery of any fact which makes any statement  
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact        
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration      
Rights Agreement, such Participating Broker-Dealer will suspend the sale of New 
Capital Securities (or the New Guarantee or the New Subordinated Debentures, as 
applicable) pursuant to this Prospectus until the Corporation or the Issuer has 
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such      
Participating Broker-Dealer or the Corporation or the Issuer has given notice   
that the sale of the New Capital Securities (or the New Guarantee or the New    
Subordinated Debentures, as applicable) may be resumed, as the case may be.     

WITHDRAWAL RIGHTS                                                               

    Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.                    

    In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by  
the Exchange Agent at one of its addresses set forth under " -- Exchange Agent" 
on or prior to the Expiration Date. Any such notice of withdrawal must specify  
the name of the person who tendered the Old Capital Securities to be withdrawn, 
the aggregate principal amount of Old Capital Securities to be withdrawn, and   
(if certificates for such Old Capital Securities have been tendered) the name of
the registered holder of the Old Capital Securities as set forth on the Old     
Capital Securities, if different from that of the person who tendered such Old  
Capital Securities. If Old Capital Securities have been delivered or otherwise  
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the certificate numbers    
shown on the particular Old Capital Securities to be withdrawn and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution,      
except in the case of Old Capital Securities tendered for the account of an     
Eligible Institution. If Old Capital Securities have been tendered pursuant to  
the procedures for book-entry transfer set forth in " -- Procedures for         
Tendering Old Capital Securities", the notice of withdrawal must specify the    
name and number of the account at DTC to be credited with the withdrawal of Old 
Capital Securities, in which case a notice of withdrawal will be effective if   
delivered to the Exchange Agent by written, telegraphic, telex or facsimile     
transmission. Withdrawals of tenders of Old Capital Securities may not be       
rescinded. Old Capital Securities properly withdrawn will not be deemed validly 
tendered for purposes of the Exchange Offer, but may be retendered at any       
subsequent time on or prior to the Expiration Date by following any of the      
procedures described above under " -- Procedures for Tendering Old Capital      
Securities".                                                                    

   All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Corporation and   
the Issuer, in their sole discretion, whose determination shall be final and    
binding on all parties. Neither the Corporation, the Issuer, any affiliates or  
assigns of the Corporation or the Issuer, the Exchange Agent nor any other      
person shall be under any duty to give any notification of any irregularities in
any notice of withdrawal or incur any                                           

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liability for failure to give any such notification. Any Old Capital Securities 
which have been tendered but which are withdrawn will be returned to the holder 
thereof promptly after withdrawal.                                              

DISTRIBUTIONS ON THE NEW CAPITAL SECURITIES                                     

     Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital     
Securities for any period from and after the last Distribution Date (as defined 
herein) with respect to such Old Capital Securities prior to the original issue 
date of the New Capital Securities or, if no such Distributions have been made, 
will not receive any accumulated Distributions on such Old Capital Securities,  
and will be deemed to have waived the right to receive any Distributions on such
Old Capital Securities accumulated from and after such Distribution Date or, if 
no such Distributions have been made, from and after November 27, 1996.         

CONDITIONS TO THE EXCHANGE OFFER                                                

Notwithstanding any other provisions of the Exchange Offer, or any    
extension of the Exchange Offer, the Corporation and the Issuer will not be     
required to accept for exchange, or to exchange, any Old Capital Securities for 
any New Capital Securities, and, as described below, may terminate the Exchange 
Offer (whether or not any Old Capital Securities have theretofore been accepted 
for exchange) or may waive any conditions to or amend the Exchange Offer, if any
of the following conditions have occurred or exists or have not been satisfied: 

       (a) there shall occur a change in the current interpretation by the
 staff of the Commission which permits the New Capital Securities issued
     pursuant to the Exchange Offer in exchange for Old Capital Securities to be
 offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an Affiliate) 
     without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Capital Securities are   
    acquired in the ordinary course of such holders' business and such holders
    have no arrangement or understanding with any person to participate in the
distribution of such New Capital Securities;                          

         (b) any action or proceeding shall have been instituted or threatened
   in any court or by or before any governmental agency or body with respect
to the Exchange Offer which, in the Corporation's and the Issuer's    
    judgment, would reasonably be expected to impair the ability of the Issuer
or the Corporation to proceed with the Exchange Offer;                

       (c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Corporation's and the Issuer's judgment, would  
reasonably be expected to impair the ability of the Issuer or the     
Corporation to proceed with the Exchange Offer;                       

      (d) a banking moratorium shall have been declared by United States
federal or North Carolina or New York State authorities which, in the 
  Corporation's and the Issuer's judgment, would reasonably be expected to
 impair the ability of the Issuer or the Corporation to proceed with the
Exchange Offer;                                                       

         (e) trading on the New York Stock Exchange or generally in the United
  States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Issuer's 
    judgment, would reasonably be expected to impair the ability of the Issuer
or the Corporation to proceed with the Exchange Offer;                

          (f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration 
    Statement or proceedings shall have been initiated or, to the knowledge of
     the Corporation or the Issuer, threatened for that purpose any governmental
approval has not been obtained, which approval the Corporation and the
     Issuer shall, in their sole discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby; or                      

         (g) any change, or any development involving a prospective change, in
   the business or financial affairs of the Issuer or the Corporation or any
    of its subsidiaries has occurred which, in the judgment of the Corporation
  and the Issuer, might materially impair the ability of the Issuer or the
Corporation to proceed with the Exchange Offer.                       

   If the Corporation and the Issuer determine in their sole discretion that
any of the foregoing events or conditions has occurred or exists or has not been
satisfied, the Corporation and the Issuer may, subject to applicable law,       
terminate the Exchange Offer (whether or not any Old Capital Securities have    
theretofore been accepted for exchange) or may waive any such condition or      
otherwise amend the terms of the Exchange Offer in any respect. If such waiver  
or amendment constitutes a material change to the Exchange Offer, the           
Corporation and the Issuer will promptly disclose such waiver by means of an    
amended or supplemented Prospectus that will be distributed to the registered   
holders of the Old Capital Securities, and the Corporation and the Issuer will  
extend the Exchange Offer to the extent required by Rule 14e-1 under the        
Exchange Act.                                                                   

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EXCHANGE AGENT                                                                  

Wilmington Trust Company has been appointed as Exchange Agent for the 
Exchange Offer. Delivery of the Letters of Transmittal and any other required   
documents, questions, requests for assistance, and requests for additional      
copies of this Prospectus or of the Letter of Transmittal should be directed to 
the Exchange Agent as follows:                                                  

Wilmington Trust Company                        
Rodney Square North                             
1100 North Market Square                        
Wilmington, Delaware 19890-0001                 
Attention: Corporate Trust Administration       
Telephone:                                      
Facsimile:                                      

Delivery to other than the above address or facsimile number will not 
constitute a valid delivery.                                                    

FEES AND EXPENSES                                                               

The Corporation has agreed to pay the Exchange Agent reasonable and   
customary fees for its services and will reimburse it for its reasonable        
out-of-pocket expenses in connection therewith. The Corporation will also pay   
brokerage houses and other custodians, nominees and fiduciaries the reasonable  
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus 
and related documents to the beneficial owners of Old Capital Securities, and in
handling or tendering for their customers.                                      

  Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New   
Capital Securities are to be delivered to, or are to be issued in the name of,  
any person other than the registered holder of the Old Capital Securities       
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any     
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to    
such tendering holder.                                                          

  Neither the Corporation nor the Issuer will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.                 

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DESCRIPTION OF NEW SECURITIES 

DESCRIPTION OF CAPITAL SECURITIES                                               

     Pursuant to the terms of the Trust Agreement, the Issuer has issued the Old
Capital Securities and the Common Securities and will issue the New Capital     
Securities. The New Capital Securities will represent preferred undivided       
beneficial interests in the Issuer and the holders thereof will be entitled to a
preference in certain circumstances with respect to Distributions and amounts   
payable on redemption of the Trust Securities or liquidation of the Issuer over 
the Common Securities. See " -- SUBORDINATION OF COMMON SECURITIES." The Trust  
Agreement has been qualified under the Trust Indenture Act. This summary of     
certain provisions of the Capital Securities, the Common Securities and the     
Trust Agreement describes the material terms of the New Securities but does not 
purport to be complete and is subject to, and is qualified in its entirety by   
reference to, all the provisions of the Trust Agreement, including the          
definitions therein of certain terms.                                           

GENERAL                                                                     

  The Capital Securities (including the Old Capital Securities and the New
Capital Securities) will be limited to $500,000,000 aggregate Liquidation Amount
at any one time outstanding. The Capital Securities rank PARI PASSU, and        
payments thereon will be made PRO RATA, with the Common Securities of the       
Issuer, except as described under " -- SUBORDINATION OF COMMON SECURITIES".     
Legal title to the Subordinated Debentures is held by the Property Trustee in   
trust for the benefit of the holders of the Capital Securities and the Common   
Securities. The Guarantee is a guarantee on a subordinated and junior basis with
respect to the Capital Securities but does not guarantee payment of             
Distributions or amounts payable on redemption or liquidation of the Capital    
Securities when the Issuer does not have funds on hand available to make such   
payments. See " -- Description of Guarantee".                                   

DISTRIBUTIONS                                                               

 Distributions on the Capital Securities are cumulative from the date of
original issuance and are payable as a preference at the annual rate of 8.04% of
the Liquidation Amount of $1,000, semi-annually in arrears on June 1 and        
December 1 of each year, to the holders of the Capital Securities at the close  
of business on the 15th day of the month preceding the relevant Distribution    
Date. The first Distribution Date for the Capital Securities will be June 1,    
1997. The amount of Distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. 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 Business Day (and without any additional         
Distributions or other payment in respect of any such delay), except that, if   
such Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same      
effect as if made on the date such payment was originally payable.              

     So long as no "Event of Default" (as defined in the Indenture) with respect
to the Subordinated Debentures (a "Debenture Event of Default") has occurred and
is continuing (see " -- Description of Subordinated Debentures; DEBENTURE EVENTS
OF DEFAULT"), the Corporation has the right under the Indenture to defer the    
payment of interest on the 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 of the Subordinated Debentures. See " -- Description of     
Subordinated Debentures; GENERAL". As a consequence of any such election,       
semi-annual Distributions on the Capital Securities will be deferred by the     
Issuer during any such Extension Period. Distributions to which holders of the  
Capital Securities are entitled will accumulate additional Distributions thereon
at the rate per annum of 8.04% thereof, compounded semi-annually from the       
relevant payment date for such Distributions. The term "Distributions" as used  
herein shall include any such additional Distributions. During any such         
Extension Period, the Corporation may not, and may not permit any subsidiary of 
the Corporation to, (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 or (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 interest to the Subordinated 
Debentures or 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 interest to the Subordinated       
Debentures (other than (a) dividends or distributions in Corporation Common     
Stock, (b) any declaration of a dividend in connection with the implementation  
of the Corporation's stockholders' rights plan or any successor to such plan,   
the issuance of rights, stock or other property under any such plan, or the     
redemption or repurchase of any such rights pursuant thereto, (c) payments under
any guarantee of other junior subordinated debentures, and (d) 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, related to
the issuance of common stock under a dividend reinvestment and stock purchase   
plan or                                                                         

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related to the issuance of common stock (or securities convertible into or      
exchangeable for common stock) as consideration in an acquisition transaction   
entered into prior to such Extension Period). Prior to the termination of any   
such Extension Period, the Corporation may further defer the payment of         
interest, provided that no Extension Period may exceed 10 consecutive           
semi-annual periods or extend beyond the Stated Maturity of the 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.
There is no limitation on the number of times that the Corporation may elect to 
begin an Extension Period. See " -- Description of Subordinated Debentures;     
OPTION TO EXTEND INTEREST PAYMENT PERIOD" and "Certain Federal Income Tax       
Consequences -- Interest Income and Original Issue Discount".                   

     The Corporation has no current plan to exercise its right to defer payments
of interest by extending the interest payment period on the Subordinated        
Debentures.                                                                     

    The revenue of the Issuer available for distribution to holders of Capital
Securities will be limited to payments under the Subordinated Debentures. If the
Corporation does not make interest payments on the 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      
Issuer has funds legally available for the payment of such Distributions and    
cash sufficient to make such payments) is guaranteed by the Corporation on a    
limited basis as set forth herein under " -- Description of Guarantee".         

REDEMPTION                                                                  

MANDATORY REDEMPTION. Upon the repayment or redemption, in whole or in
part, of the 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 of  
the Trust Securities, upon not less than 30 nor more than 60 days notice, at the
redemption prices ("Redemption Prices") specified herein plus accumulated but   
unpaid Distributions thereon to the date of redemption (the "Redemption Date"). 
See " -- Description of Subordinated Debentures; REDEMPTION". If less than all  
of the 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 Capital Securities and the Common Securities. The
amount of premium, if any, paid by the Corporation upon the repayment or        
redemption of all or any part of the Subordinated Debentures to be repaid or    
redeemed on a Redemption Date shall be allocated to the redemption PRO RATA of  
the Capital Securities and the Common Securities.                               

    The Corporation has the right to redeem the Subordinated Debentures (i) on
or after December 1, 2006, 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 Special  
Event. The Corporation has committed to the Federal Reserve Bank of Richmond    
that it will not exercise such redemption rights without having received the    
prior approval of the Federal Reserve Board to do so, if then so required under 
applicable capital guidelines or policies of the Federal Reserve Board.         

SPECIAL EVENT REDEMPTION. If a Tax Event or a Regulatory Capital Event
shall occur and be continuing, the Corporation has the right to redeem the      
Subordinated Debentures in whole (but not in part) and thereby cause a mandatory
redemption of the Capital Securities and Common Securities in whole (but not in 
part) at the Special Event Redemption Price (as defined herein) within 90 days  
following the occurrence of such Tax Event or Regulatory Capital Event. In the  
event a Tax Event has occurred and is continuing and the Corporation does not   
elect to redeem the Subordinated Debentures and thereby cause a mandatory       
redemption of such Capital Securities or to terminate the Issuer and, after     
satisfaction of liabilities to creditors of the Issuer in accordance with       
applicable law and the Expense Agreement, cause the Subordinated Debentures to  
be distributed to holders of the Capital Securities and Common Securities in    
liquidation of the Issuer as described below, the Capital Securities will remain
outstanding and Additional Sums (as defined herein) may be payable on the       
Subordinated Debentures.                                                        

As used herein:                                                       

         "Additional Sums" means the additional amounts as may be necessary in
   order that the amount of Distributions then due and payable by the Issuer
  on the outstanding Capital Securities and Common Securities shall not be
    reduced as a result of any additional taxes, duties and other governmental
    charges to which the Issuer has become subject as a result of a Tax Event.

 "Like Amount" means (i) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to that
portion of the principal amount of Subordinated Debentures to be      
   contemporaneously redeemed in accordance with the Indenture, allocated to
     the Common Securities and to the Capital Securities based upon the relative
    Liquidation Amounts of such classes and the proceeds of which will be used
     to pay the Redemption Price of such Trust Securities, and (ii) with respect
     to a distribution of Subordinated Debentures to holders of Trust Securities
in connection                                                         

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  with a dissolution or liquidation of the Issuer, Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Subordinated Debentures are     
distributed.                                                          

    "Liquidation Amount" means the stated amount of $1,000 per Trust
Security.                                                             

        "Tax Event" means the receipt by the Issuer 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 which pronouncement or decision is announced on or
  after the date of issuance of the Old Capital Securities under the Trust
     Agreement, there is more than an insubstantial risk that (i) the Issuer 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
  Subordinated Debentures, (ii) interest payable by the Corporation on the
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 Issuer 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.

         "Regulatory Capital Event" means the receipt by the Corporation of an
opinion of an independent bank regulatory counsel experienced in such 
    matters to the effect that, as a result of (i) 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 Board, or (ii) 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 Old  
     Capital Securities under the Trust Agreement, the Capital Securities do not
 constitute, or within 90 days of the date thereof, will not constitute,
tier 1 capital (or its then equivalent); provided, however, that the  
distribution of the Subordinated Debentures in connection with the    
liquidation of the Issuer shall not in and of itself constitute a     
 Regulatory Capital Event unless such liquidation shall have occurred in
connection with a Tax Event.                                          

REDEMPTION PROCEDURES                                                       

  Capital Securities redeemed on each Redemption Date shall be redeemed at
the applicable Redemption Price with the applicable proceeds from the           
contemporaneous redemption of the Subordinated Debentures. Redemptions of the   
Capital Securities shall be made and the Redemption Price shall be payable on   
each Redemption Date only to the extent that the Issuer has funds on hand and   
available for the payment of such Redemption Price. See ";SUBORDINATION OF      
COMMON SECURITIES".                                                             

If the Issuer gives a notice of redemption in respect of the Capital  
Securities, then by 12:00 noon, New York City time, on the Redemption Date, to  
the extent funds are available, with respect to the Capital Securities held by  
DTC or its nominee the Property Trustee will deposit irrevocably with DTC funds 
sufficient to pay the applicable Redemption Price and will give DTC irrevocable 
instructions and authority to pay the Redemption Price to the holders of the    
Capital Securities. See ";FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND         
TRANSFER". If Capital Securities are held in certificated form, the Property    
Trustee, to the extent funds are available, will irrevocably deposit with the   
paying agent for the Capital Securities funds sufficient to pay the applicable  
Redemption Price and will give such paying agent irrevocable instructions and   
authority to pay the Redemption Price to the holders thereof upon surrender of  
their certificates evidencing the Capital Securities. Notwithstanding the       
foregoing, Distributions payable on or prior to the Redemption Date for any     
Capital Securities called for redemption shall be payable to the holders of such
Capital 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 
Capital Securities so called for redemption will cease, except the right of the 
holders of such Capital Securities to receive the Redemption Price, but without 
interest on such Redemption Price, and such Capital Securities will cease to be 
outstanding. In the event that any date fixed for redemption of Capital         
Securities is not a Business Day, then payment of the Redemption Price payable  
on such date will be made on the next succeeding day which is a Business Day    
(and without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Capital Securities called for redemption is      
improperly withheld or refused and not paid either by the Issuer or by the      
Corporation pursuant to the Guarantee, as described under " -- Description of   
Guarantee", Distributions on such Capital Securities will continue to accrue at 
the then applicable rate, from the Redemption Date originally                   

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established by the Issuer to the date such Redemption Price is actually paid, in
which case 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), the Corporation or its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.                                                 

  Payment of the applicable Redemption Price on the Capital Securities and
any distribution of Subordinated Debentures to holders of Capital Securities    
shall be made to the applicable recordholders thereof as they appear on the     
register for such Capital Securities on the relevant record date, which shall be
a date at least 15 days prior to the Redemption Date or liquidation date, as    
applicable.                                                                     

If less than all of the outstanding Capital Securities and Common     
Securities are to be redeemed on a Redemption Date, then the aggregate          
Liquidation Amount of Capital Securities and Common Securities to be redeemed   
shall be allocated PRO RATA to the outstanding Capital Securities and Common    
Securities based upon the relative Liquidation Amounts of such classes. The     
particular Capital 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 Capital 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 of the Liquidation     
Amount of Capital Securities of a denomination larger than $1,000, provided that
the holder of such Capital Securities has at least 100 Capital Securities       
remaining after the redemption. The Property Trustee shall promptly notify the  
Securities Registrar in writing of the Capital Securities selected for          
redemption, and in the case of any Capital Securities selected for partial      
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of  
the Trust Agreement, unless the context otherwise requires, all provisions      
relating to the redemption of Capital Securities shall relate, in the case of   
any Capital Securities redeemed or to be redeemed only in part, to the portion  
of the aggregate Liquidation Amount of Capital 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. Unless the Corporation defaults in payment  
of the Redemption Price on the Subordinated Debentures, on and after the        
Redemption Date interest will cease to accrue on such Subordinated Debentures or
portions thereof (and Distributions will cease to accrue on the Capital         
Securities or portions thereof) called for redemption.                          

LIQUIDATION OF ISSUER AND DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS

   The holder of the Common Securities (I.E., the Corporation) has the right
at any time to terminate the Issuer and, after satisfaction of liabilities to   
creditors of the Issuer in accordance with applicable law and the Expense       
Agreement, cause the Subordinated Debentures to be distributed to the holders of
the Capital Securities in liquidation of the Issuer, subject to the Issuer      
having received an opinion of counsel to the effect that the distribution will  
not be taxable to holders of Capital Securities. In addition, the Corporation   
has committed to the Federal Reserve Bank of Richmond that as holder of the     
Common Securities it will not exercise the foregoing right as holder of the     
Common Securities without having received the prior approval of the Federal     
Reserve Board to do so, if then so required under applicable capital guidelines 
or policies of the Federal Reserve Board.                                       

After the liquidation date fixed for any distribution of Subordinated 
Debentures (i) the Capital Securities will no longer be deemed to be            
outstanding, (ii) DTC or its nominee, as the record holder of the Capital       
Securities in book-entry form, will receive a registered global certificate or  
certificates representing the Subordinated Debentures to be delivered upon such 
distribution, and (iii) any certificates representing Capital Securities not    
held by DTC or its nominee will be deemed to represent Subordinated Debentures  
having a Like Amount equal to the aggregate Liquidation Amount of such Capital  
Securities, and bearing accrued and unpaid interest in an amount equal to the   
accrued and unpaid Distributions on such Capital Securities until such          
certificates are presented to the Property Trustee or its agent for transfer or 
reissuance.                                                                     

There can be no assurance as to the market prices for the Subordinated
Debentures that may be distributed in exchange for Capital Securities if a      
dissolution and liquidation of the Issuer were to occur. Accordingly, the       
Subordinated Debentures that the investor may receive on dissolution and        
liquidation of the Issuer, may trade at a discount to the price that the        
investor paid to purchase such Capital Securities.                              

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SUBORDINATION OF COMMON SECURITIES                                          

Payment of Distributions on, and the Redemption Price of, the Capital 
Securities and Common Securities, as applicable, shall be made PRO RATA based on
the Liquidation Amount of the Capital 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, the Common Securities, and no other
payment on account of the redemption, liquidation or other acquisition of the   
Common Securities, shall be made unless payment in full in cash of all          
accumulated and unpaid Distributions on all of the outstanding Capital          
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 outstanding Capital 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 Capital Securities then due and   
payable.                                                                        

    In the case of any "Event of Default" under the Trust Agreement (an "Event
of Default") with respect to the Capital Securities (see ";EVENTS OF DEFAULT;   
NOTICE") resulting from a Debenture Event of Default, the Corporation as holder 
of the Common Securities will be deemed to have waived any right to act with    
respect to any such Event of Default under the Trust Agreement until the effect 
of all such Events of Default with respect to the Capital Securities have been  
cured, waived or otherwise eliminated. Until any such Events of Default under   
the Trust Agreement with respect to the Capital Securities have been so cured,  
waived or otherwise eliminated, the Property Trustee shall act solely on behalf 
of the holders of the Capital Securities and not on behalf of the Corporation as
holder of the Common Securities, and only the holders of the Capital Securities 
will have the right to direct the Property Trustee to act on their behalf.      

LIQUIDATION DISTRIBUTION UPON TERMINATION                                       

   Pursuant to the Trust Agreement, the Issuer 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 Subordinated  
Debentures to the holders of the Trust Securities, if the Corporation,
as holder of the Common Securities, has given written direction to the
Property Trustee to terminate the Issuer (which direction is optional 
and wholly within the discretion of the Corporation, as holder of the 
Common Securities);                                                   

   (iii) redemption of all of the Capital Securities in connection
with the redemption of the Subordinated Debentures as described under 
";REDEMPTION; and                                                     

     (iv) the entry of an order for the dissolution of the Issuer by a
court of competent jurisdiction.                                      

 If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of the Issuer in accordance with applicable law and 
the Expense Agreement, to the holders of Trust Securities a Like Amount of the  
Subordinated Debentures, unless such distribution is determined by the Property 
Trustee not to be practical, in which event such holders will be entitled to    
receive out of the assets of the Issuer available for distribution to holders,  
after satisfaction of liabilities to creditors of the Issuer in accordance with 
applicable law and the Expense Agreement, an amount equal to, in the case of    
holders of Capital Securities, the aggregate of the Liquidation Amount plus     
accrued and unpaid Distributions thereon to the date of payment (the            
"Liquidation Distribution"). If such Liquidation Distribution can be paid only  
in part because the Issuer has insufficient assets available to pay in full the 
aggregate Liquidation Distribution, then the amounts payable directly by the    
Issuer on the Capital Securities shall be paid on a PRO RATA basis. The holder  
of the Common Securities (I.E., the Corporation) will be entitled to receive    
distributions upon any such liquidation PRO RATA with the holders of the Capital
Securities, except that if a Debenture Event of Default has occurred and is     
continuing, the Capital Securities shall have a priority over the Common        
Securities. A supplemental Indenture may provide that if an early termination   
occurs as described in clause (iv) above, the Subordinated Debentures may be    
subject to optional redemption in whole (but not in part).                      

EVENTS OF DEFAULT; NOTICE                                                   

   Under the Trust Agreement, any one of the following events constitutes an
Event of Default with respect to the Capital Securities (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be    
effected by                                                                     

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operation of law or pursuant to any judgment, decree or order of any court or   
any order, rule or regulation of any administrative or governmental body):      

(i) the occurrence of a Debenture Event of Default under the
Indenture (see " -- Description of Subordinated Debentures; DEBENTURE 
EVENTS OF DEFAULT"); or                                               

(ii) default by the Property Trustee in the payment of any  
Distribution when it becomes due, and continuation of such default for
a period of 30 days; or                                               

(iii) default by the Property Trustee in the payment of any 
Redemption Price of any Trust Security when it becomes due; or        

(iv) default in the performance, or breach, in any material 
respect, of any covenant or warranty of the Issuer Trustees in the    
Trust Agreement (other than a covenant or warranty a default in the   
performance of which or the breach of which is dealt with in clause   
(ii) or (iii) above), and continuation of such default or breach for a
period of 60 days after there has been given, by registered or        
certified mail, to the defaulting Issuer Trustee or Trustees by the   
holders of at least 25 percent in aggregate Liquidation Amount of the 
outstanding Capital Securities, a written notice specifying such      
default or breach and requiring it to be remedied and stating that    
such notice is a "Notice of Default" under the Trust Agreement; or    

    (v) the occurrence of certain events of bankruptcy or insolvency
with respect to the Property Trustee and the failure by the           
Corporation to appoint a successor Property Trustee within 60 days    
thereof.                                                              

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 the Capital Securities and the
Administrators, unless such Event of Default shall have been cured or waived.   
The Corporation, as Depositor, and the Administrators 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 the
Trust Agreement.                                                                

     If a Debenture Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities upon termination  
of the Issuer as described above. See ";LIQUIDATION DISTRIBUTION UPON           
TERMINATION". The existence of an Event of Default does not entitle the holders 
of Capital Securities to accelerate the maturity thereof.                       

REMOVAL OF ISSUER TRUSTEES                                                  

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 Capital          
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 Trust Agreement. 

CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE                                   

  Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal standards of the Trust      
Indenture Act or of any jurisdiction in which any part of the assets of the     
Issuer may at the time be located, the Property Trustee 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 assets, 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 Trust Agreement.                               

MERGER OR CONSOLIDATION OF ISSUER TRUSTEES                                  

    Any entity into which the Property Trustee or the Delaware Trustee that is
not a natural person may be merged or converted or with which it may be         
consolidated, or any entity resulting from any merger, conversion or            
consolidation to which such Trustee shall be a party, or any entity succeeding  
to all or substantially all the corporate trust business of such Trustee, shall 
be the successor of such Trustee under the Trust Agreement, provided such entity
shall be otherwise qualified and eligible.                                      

MERGER, CONSOLIDATION, AMALGAMATION OR REPLACEMENT OF ISSUER                

The Issuer 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 entity, except as described below or as     
otherwise indicated in the                                                      

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Trust Agreement. The Issuer may, at the request of the holder of the Common     
Securities (I.E, the Corporation) and with the consent of a majority (based on  
the Liquidation Amount) of the Capital Securities, merge with or into,          
consolidate, amalgamate, or be replaced by or convey, transfer or lease its     
properties and assets 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 the Issuer with respect to the      
Capital Securities, or (b) substitutes for the Capital Securities other         
securities having substantially the same terms as the Capital Securities (the   
"Successor Securities") so long as the Successor Securities rank the same as the
Capital Securities rank in priority with respect to Distributions and payments  
upon liquidation, redemption and otherwise, (ii) the Property Trustee expressly 
appoints a trustee of such successor entity possessing the same powers and      
duties as the Property Trustee as the holder of the Subordinated Debentures,    
(iii) the Successor Securities are listed, or any Successor Securities will be  
listed upon notification of issuance, on any national securities exchange or    
other organization on which the Capital Securities are then listed, if any, (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or  
lease does not cause the Capital Securities (including any Successor Securities)
to be downgraded by any nationally recognized statistical rating organization,  
(v) such merger, consolidation, amalgamation, replacement, conveyance, transfer 
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any   
material respect, (vi) such successor entity has a purpose substantially        
identical to that of the Issuer, (vii) prior to such merger, consolidation,     
amalgamation, replacement, conveyance, transfer or lease, the Issuer has        
received an opinion from independent counsel to the Issuer experienced in such  
matters to the effect that (a) such merger, consolidation, amalgamation,        
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Capital Securities (including  
any Successor Securities) in any material respect, and (b) following such       
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither the Issuer 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, the Issuer shall not, except with the consent of holders of 100      
percent in Liquidation Amount of the Capital Securities, consolidate,           
amalgamate, merge with or into, or be replaced by or convey, transfer or lease  
its properties and assets substantially as an entirety to any other entity or   
permit any other entity to consolidate, amalgamate, merge with or into, or      
replace it if such consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease would cause the Issuer or the successor entity to be          
classified as an association taxable as a corporation or as other than a grantor
trust for United States federal income tax purposes.                            

VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT                                 

     Except as provided below and under " -- Description of Guarantee; AMENDMENT
AND ASSIGNMENT" and as otherwise required by law and the Trust Agreement, the   
holders of the Capital Securities will have no voting rights.                   

   The Trust Agreement may be amended from time to time by the holder of the
Common Securities (I.E., the Corporation) and the Property Trustee without the  
consent of the holders of the Capital Securities (i) to cure any ambiguity,     
correct or supplement any provisions in the Trust Agreement that may be         
inconsistent with any other provision, or to make any other provisions with     
respect to matters or questions arising under the Trust Agreement, which shall  
not be inconsistent with the other provisions of the Trust Agreement, or (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such extent
as shall be necessary to ensure that the Issuer will be classified for United   
States federal income tax purposes as a grantor trust or as other than an       
association taxable as a Corporation at all times that any Trust Securities are 
outstanding or to ensure that the Issuer 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 any holder of Trust Securities, and any       
amendments of such Trust Agreement shall become effective when notice thereof is
given to the holders of Trust Securities. The Trust Agreement may be amended by 
the holder of the Common Securities (I.E., the Corporation) and the Property    
Trustee with (i) the consent of holders representing not less than a majority   
(based on Liquidation Amounts) of the outstanding Trust Securities, and (ii)    
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 cause the Issuer to be classified as an 
association taxable as a corporation or affect the Issuer's status as a grantor 
trust for United States federal income tax purposes or the Issuer's exemption   
from status as an "investment company" under the Investment Company Act;        
provided that without the consent of each holder of Trust Securities, the Trust 
Agreement may not be amended to (i) change the amount or timing of any          
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution 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.   

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  So long as any 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 
executing any trust or power conferred on the Property Trustee with respect to  
such Subordinated Debentures, (ii) waive any past default that is waiveable     
under Section 513 of the Indenture, (iii) exercise any right to rescind or annul
a declaration that the principal of all the Subordinated Debentures shall be due
and payable, or (iv) consent to any amendment, modification or termination of   
the Indenture or such 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 Capital           
Securities; provided, however, that where a consent under the Indenture would   
require the consent of each holder of Subordinated Debentures affected thereby, 
no such consent shall be given by the Property Trustee without the prior consent
of each holder of the Capital Securities. The Issuer Trustees shall not revoke  
any action previously authorized or approved by a vote of the holders of the    
Capital Securities except by subsequent vote of the holders of the Capital      
Securities. The Property Trustee shall notify each holder of Capital Securities 
of any notice of default with respect to the Subordinated Debentures. In        
addition to obtaining the foregoing approvals of the holders of the Capital     
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 Issuer 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 Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant  
to written consent. The Property Trustee will cause a notice of any meeting at  
which holders of Capital 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 Capital Securities in the manner set forth in the Trust
Agreement.                                                                      

  No vote or consent of the holders of Capital Securities will be required
for the Issuer to redeem and cancel the Capital Securities in accordance with   
the Trust Agreement.                                                            

    Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital      
Securities that are owned by the Corporation, the Issuer Trustees or any        
affiliate of the Corporation or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.                    

FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER                      

     The Capital Securities will be in blocks having a Liquidation Amount of not
less than $100,000 (100 Capital Securities) and may be transferred or exchanged 
in such blocks in the manner and at the offices described below.                

     New Capital Securities initially will be represented by one or more Capital
Securities in registered, global form (collectively, the "Global Capital        
Securities"). The Global Capital Securities will be deposited on issuance with  
the Property Trustee as custodian for DTC, in New York, New York, and registered
in the name of DTC or its nominee, in each case for credit to an account of a   
direct or indirect participant in DTC as described below.                       

Except as set forth below, the Global Capital Securities may be       
transferred, in whole and not in part, only to another nominee of DTC or to a   
successor of DTC or its nominee. Beneficial interests in the Global Capital     
Securities may not be exchanged for Capital Securities in certificated form     
except in the limited circumstances described below. See "; EXCHANGE OF         
BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL SECURITIES".             

    DEPOSITARY PROCEDURES. DTC has advised the Issuer and the Corporation that
DTC is a limited-purpose trust company created to hold securities for its       
participating organizations (collectively, the "Participants") and to facilitate
the clearance and settlement of transactions in those securities between        
Participants through electronic book-entry changes in accounts of its           
Participants. The Participants include securities brokers and dealers (including
the Initial Purchasers), banks, trust companies, clearing corporations and      
certain other organizations. Access to DTC's system is also available to other  
entities such as banks, brokers, dealers and trust companies that clear through 
or maintain a custodial relationship with a Participant, either directly or     
indirectly (collectively, the "Indirect Participants"). Persons who are not     
Participants may beneficially own securities held by or on behalf of DTC only   
through the Participants or the Indirect Participants. The ownership interest   
and transfer of ownership interest of each actual purchaser of each security    
held by or on behalf of DTC are recorded on the records of the Participants and 
Indirect Participants.                                                          

DTC has also advised the Issuer and the Corporation that, pursuant to 
procedures established by it, (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants designated by the Initial          
Purchasers with portions of the Liquidation Amount of the Global Capital        
Securities and (ii) ownership of such interests in the Global Capital Securities
will be shown on, and the transfer of ownership thereof will be effected only   
through, records maintained by DTC (with                                        

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respect to the Participants) or by the Participants and the Indirect            
Participants (with respect to other owners of beneficial interests in the Global
Capital Securities).                                                            

     Investors in the Global Capital Securities may hold their interests therein
directly through DTC if they are Participants in such system, or indirectly     
through organizations (including the Euroclear System ("Euroclear") and Cedel,  
S.A. ("CEDEL") which are Participants in such system. All interests in a Global 
Capital Security, including those held through Euroclear or CEDEL, may be       
subject to the procedures and requirements of DTC. Those interests held through 
Euroclear or CEDEL may also be subject to the procedures and requirements of    
such system. The laws of some states require that certain persons take physical 
delivery in certificated form of securities that they own. Consequently, the    
ability to transfer beneficial interests in a Global Capital Security to such   
persons will be limited to that extent. Because DTC can act only on behalf of   
Participants, which in turn act on behalf of Indirect Participants and certain  
banks, the ability of a person having beneficial interests in a Global Capital  
Security to pledge such interests to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of such interests, may  
be affected by the lack of a physical certificate evidencing such interests. For
certain other restrictions on the transferability of the Capital Securities, see
"; EXCHANGE OF BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL           
SECURITIES".                                                                    

Except as described below, owners of interests in the Global Capital  
Securities will not have Capital Securities registered in their names, will not 
receive physical delivery of Capital Securities in certificated form and will   
not be considered the registered owners or holders thereof under the Trust      
Agreement for any purpose.                                                      

   Payments in respect of the Global Capital Security registered in the name
of DTC or its nominee will be payable by the Property Trustee to DTC in its     
capacity as the registered holder under the Trust Agreement. Under the terms of 
the Trust Agreement, the Property Trustee will treat the persons in whose names 
the Capital Securities, including the Global Capital Securities, are registered 
as the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Property Trustee nor   
any agent thereof has or will have any responsibility or liability for (i) any  
aspect of DTC's records or any Participant's or Indirect Participant's records  
relating to or payments made on account of beneficial ownership interests in the
Global Capital Securities, or for maintaining, supervising or reviewing any of  
DTC's records or any Participant's or Indirect Participant's records relating to
the beneficial ownership interests in the Global Capital Securities or (ii) any 
other matter relating to the actions and practices of DTC or any of its         
Participants or Indirect Participants. DTC has advised the Issuer and the       
Corporation that its current practice, upon receipt of any payment in respect of
securities such as the Capital Securities, is to credit the accounts of the     
relevant Participants with the payment on the payment date, in amounts          
proportionate to their respective holdings in Liquidation Amount of beneficial  
interests in the relevant security as shown on the records of DTC unless DTC has
reason to believe it will not receive payment on such payment date. Payments by 
the Participants and the Indirect Participants to the beneficial owners of the  
Capital Securities will be governed by standing instructions and customary      
practices and will be the responsibility of the Participants or the Indirect    
Participants and will not be the responsibility of DTC, the Property Trustee,   
the Issuer or the Corporation. Neither the Issuer nor the Corporation nor the   
Property Trustee will be liable for any delay by DTC or any of its Participants 
in identifying the beneficial owners of the Capital Securities, and the Issuer, 
the Corporation and the Property Trustee may conclusively rely on and will be   
protected in relying on instructions from DTC or its nominee for all purposes.  

Except for trades involving only Euroclear and CEDEL participants,    
interests in the Global Capital Securities will trade in DTC's Same-Day Funds   
Settlement System and secondary market trading activity in such interests will  
therefore settle in immediately available funds, subject in all cases to the    
rules and procedures of DTC and its Participants.                               

   Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between      
participants in Euroclear and CEDEL will be effected in the ordinary way in     
accordance with their respective rules and operating procedures.                

Subject to compliance with the transfer restrictions applicable to the
Capital Securities described herein, cross-market transfers between the         
Participants in DTC, on the one hand, and Euroclear or CEDEL participants, on   
the other hand, will be effected through DTC in accordance with DTC's rules on  
behalf of Euroclear or CEDEL, as the case may be, by its respective depositary; 
however, such cross-market transactions will require delivery of instructions to
Euroclear or CEDEL, as the case may be, by the counterparty in such system in   
accordance with the rules and procedures and within the established deadlines   
(Brussels time) of such system. Euroclear or CEDEL, as the case may be, will, if
the transaction meets its settlement requirements, deliver instructions to its  
respective depositary or take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Capital Securities in  
DTC, and making or receiving payment in accordance with normal procedures for   
same-day funds settlement applicable to DTC. Euroclear participants and CEDEL   
participants may not deliver instructions directly to the depositaries for      
Euroclear or CEDEL.                                                             

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     Because of the time zone differences, the securities account of a Euroclear
or CEDEL participant purchasing an interest in a Global Capital Security from a 
Participant in DTC will be credited, and any such crediting will be reported to 
the relevant Euroclear or CEDEL participant, during the securities settlement   
processing day (which must be a business day for Euroclear and CEDEL)           
immediately following the settlement date of DTC. Cash received in Euroclear or 
CEDEL as a result of sales of interest in a Global Capital Security by or       
through a Euroclear or CEDEL participant to a Participant in DTC will be        
received with value on the settlement date of DTC but will be available in the  
relevant Euroclear or CEDEL cash account only as of the business day for        
Euroclear or CEDEL following DTC's settlement date.                             

     DTC has advised the Issuer and the Corporation that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction of
one or more Participants to whose account with DTC interests in the Global      
Capital Securities are credited and only in respect to such portion of the      
Liquidation Amount of the Capital Securities as to which such Participant or    
Participants has or have given such direction. However, if there is an Event of 
Default under the Trust Agreement, DTC reserves the right to exchange the Global
Capital Securities for Capital Securities in certificated form and to distribute
such Capital Securities to its Participants.                                    

 The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that the Issuer and the 
Corporation believe to be reliable, but neither the Issuer nor the Corporation  
takes responsibility for the accuracy thereof.                                  

   Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures
to facilitate transfers of interest in the Global Capital Securities among      
participants in DTC, Euroclear and CEDEL, they are under no obligation to       
perform or to continue to perform such procedures, and such procedures may be   
discontinued at any time. Neither the Issuer or the Corporation nor the Property
Trustee will have any responsibility for the performance by DTC, Euroclear or   
CEDEL or their respective participants or indirect participants of their        
respective obligations under the rules and procedures governing their           
operations.                                                                     

EXCHANGE OF BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL    
SECURITIES. A Global Capital Security is exchangeable for Capital Securities in 
registered certificated form if (i) DTC (x) notifies the Issuer that it is      
unwilling or unable to continue as Depositary for the Global Capital Security   
(the "Depositary") and the Issuer thereupon fails to appoint a successor        
Depositary within 90 days or (y) has ceased to be a clearing agency registered  
under the Exchange Act, (ii) the Corporation in its sole discretion elects to   
cause the issuance of the Capital Securities in certificated form or (iii) there
shall have occurred and be continuing an Event of Default or any event which    
after notice or lapse of time or both would be an Event of Default under the    
Trust Agreement.                                                                

PAYMENT AND PAYING AGENCY                                                   

    Payments in respect of the Capital Securities held in global form shall be
made to the Depositary, which shall credit the relevant accounts at the         
Depositary on the applicable Distribution Dates. Payments in respect of Capital 
Securities that are not held by the Depositary shall be made by check mailed to 
the address of the holder entitled thereto as such address shall appear on the  
register maintained by the Securities Registrar appointed under the Trust       
Agreement. 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 Administrators. The Paying Agent shall be permitted to resign as Paying     
Agent upon 30 days' written notice to the Property Trustee and the              
Administrators. In the event that the Property Trustee shall no longer be the   
Paying Agent, the Property Trustee shall appoint a successor (which shall be a  
bank or trust company acceptable to the Administrators) to act as Paying Agent. 

REGISTRAR AND TRANSFER AGENT                                                

The Property Trustee will act as registrar and transfer agent for the 
Capital Securities. Registration of transfers of Capital Securities will be     
effected without charge by or on behalf of the Issuer, but upon payment of any  
tax or other governmental charges that may be imposed in connection with any    
transfer or exchange. The Issuer will not be required to register or cause to be
registered the transfer of any Capital Securities after such Capital Securities 
have been called for redemption.                                                

INFORMATION CONCERNING 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 the Trust Agreement 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
Trust Agreement at the                                                          

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request of any holder of Capital 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 under the Trust  
Agreement and the Property Trustee is required to decide between alternative    
causes of action, construe ambiguous provisions in the Trust Agreement or is    
unsure of the application of any provision of the Trust Agreement, and the      
matter is not one on which holders of Capital Securities are entitled under the 
Trust Agreement 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.                                                                     

MISCELLANEOUS                                                               

    The Administrators and the Property Trustee are authorized and directed to
conduct the affairs of and to operate the Issuer in such a way that the Issuer  
will not be deemed to be an "investment company" required to be registered under
the Investment Company Act and will not be classified as an association taxable 
as a corporation or as other than a grantor trust for United States federal     
income tax purposes and so that the Subordinated Debentures will be treated as  
indebtedness of the Corporation for United States federal income tax purposes.  
In this connection, the Property Trustee and the holder of the Common Securities
(I.E., the Corporation) are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of the Issuer or the Trust Agreement,  
that the Property Trustee and the holder of the Common Securities (I.E., the    
Corporation) determine in their sole 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 Capital Securities.                             

 Holders of the Capital Securities have no preemptive or similar rights.

    The Issuer may not borrow money or issue debt or mortgage or pledge any of
its assets.                                                                     

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DESCRIPTION OF SUBORDINATED DEBENTURES                                          

The Old Subordinated Debentures were issued, and the New Subordinated 
Debentures will be issued, as a separate series under the Indenture. The        
Indenture has been qualified under the Trust Indenture Act. This summary of     
certain terms and provisions of the Subordinated Debentures and the Indenture   
describes the material terms thereof but does not purport to be complete, and   
where reference is made to particular provisions of the Indenture, such         
provisions, including the definitions of certain terms, some of which are not   
otherwise defined herein, are qualified in their entirety by reference to all of
the provisions of the Indenture and those terms made a part of the Indenture by 
the Trust Indenture Act.                                                        

GENERAL                                                                     

  Concurrently with the issuance of the Old Capital Securities, the Issuer
invested the proceeds thereof, together with the consideration paid by the      
Corporation for the Common Securities, in the Old Subordinated Debentures issued
by the Corporation.                                                             

Pursuant to the Exchange Offer, the Corporation will exchange the Old 
Subordinated Debentures for the New Subordinated Debentures as soon as          
practicable after the date hereof. No Old Subordinated Debentures will remain   
outstanding after such exchange. The Subordinated Debentures are unsecured and  
subordinate and junior in right of payment to the extent and in the manner set  
forth in the Indenture to all Senior Debt of the Corporation. See               
";SUBORDINATION". The Corporation is a 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 payment by the Corporation's bank     
subsidiaries, in particular, are subject to restrictions under federal (and, in 
the case of state-chartered banks, state) law. 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 Subordinated Debentures will be effectively   
subordinated to all existing and future liabilities of the Corporation's        
subsidiaries, and holders of Subordinated Debentures should look only to the    
assets of the Corporation for payments on the Subordinated Debentures. The      
Indenture does not limit the incurrence or issuance of other secured or         
unsecured debt of the Corporation, including the Senior Debt, whether under the 
Indenture, any other indenture that the Corporation may enter into in the future
or otherwise. See ";SUBORDINATION". The Subordinated Debentures bear interest   
payable, at the annual rate of 8.04% of the principal amount thereof,           
semi-annually in arrears on June 1 and December 1 of each year (each, an        
"Interest Payment Date"), commencing June 1, 1997, to the person in whose name  
each Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment Date.
It is anticipated that, until the liquidation, if any, of the Issuer, each      
Subordinated Debenture will be held in the name of the Property Trustee in trust
for the benefit of the holders of the Capital 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. In the event that any date on which interest is payable on the   
Subordinated Debentures is not a Business Day, then payment of the interest     
payable on such date will be made on the next succeeding Business Day (and      
without any interest or other payment in respect of any such delay), except     
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case 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 8.04% thereof, compounded            
semi-annually. The term "interest" as used herein shall include quarterly       
interest payments, interest on quarterly interest payments not paid on the      
applicable Interest Payment Date and Additional Sums, as applicable. The        
Subordinated Debentures will mature on December 1, 2026.                        

OPTION TO EXTEND INTEREST PAYMENT PERIOD                                    

  So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture at any time during the term of
the 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. At the end of such Extension Period, the Corporation
must pay all interest then accrued and unpaid (together with interest thereon at
the annual rate of 8.04%, compounded semi-annually, to the extent permitted by  
applicable law). During an Extension Period, interest will continue to accrue   
and holders of Subordinated Debentures (or holders of Capital Securities while  
such series is outstanding) will be required to accrue interest income for      
United States federal income tax purposes. See "Certain Federal Income Tax      
Consequences -- Interest Income and Original Issue Discount".                   

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During any such Extension Period, the Corporation may not, and may not
permit any subsidiary of the Corporation to, (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, or (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 interest to the Subordinated Debentures or 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 interest to the Subordinated Debentures (other than (a) dividends or         
distributions in common stock of the Corporation, (b) any declaration of a      
dividend in connection with the implementation of the Corporation's             
stockholders' rights plan or any successor to such plan, or the issuance of     
rights, stock or other property under any such plan, or the redemption or       
repurchase of any such rights pursuant thereto, (c) payments under the          
Guarantee, and (d) 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, related to the issuance of common stock under a dividend 
reinvestment and stock purchase plan or related to the issuance of common stock 
(or securities convertible into or exchangeable for common stock) as            
consideration in an acquisition transaction entered into prior to such Extension
Period). Prior to the termination of any such Extension Period, the Corporation 
may further defer the payment of interest, provided that no Extension Period may
exceed 10 consecutive semi-annual periods or extend beyond the Stated Maturity  
of the Subordinated Debentures. 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 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 and   
the Debenture Trustee notice of its election of such Extension Period at least  
one Business Day prior to the earlier of (i) the date the Distributions on the  
Capital Securities would have been payable except for the election to begin such
Extension Period or, (ii) the date the Property Trustee is required to give     
notice to the holders of such Capital Securities of the record date or the date 
such Distributions are payable, but in any event not less than one Business Day 
prior to such record date. The Debenture Trustee shall give notice of the       
Corporation's election to begin 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.                             

ADDITIONAL SUMS                                                             

If the Issuer 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 Subordinated Debentures such amounts as shall be      
required so that the Distributions payable by the Issuer shall not be reduced as
a result of any such additional taxes, duties or other governmental charges.    

REGISTRATION, DENOMINATION AND TRANSFER                                     

   The Subordinated Debentures will be registered in the name of the Issuer.
In the event that the Subordinated Debentures are distributed to holders of     
Capital Securities, it is anticipated that the depositary arrangements for the  
Subordinated Debentures will be substantially identical to those in effect for  
the Capital Securities. See " -- Description of Capital Securities; FORM,       
DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER".                              

The Subordinated Debentures will be issuable only in registered form  
without coupons in minimum denominations of $100,000 and integral multiplies of 
$1,000 in excess thereof. Subordinated Debentures will be exchangeable for other
Subordinated Debentures, of any authorized denominations, of a like aggregate   
principal amount.                                                               

   Payments on Subordinated Debentures represented by a global security will
be made to DTC, as the Depositary for the Subordinated Debentures. In the event 
Subordinated Debentures are issued in definitive form, principal and interest   
will be payable, the transfer of the Subordinated Debentures will be            
registrable, and Subordinated Debentures will be exchangeable for Subordinated  
Debentures of other denominations of a like aggregate principal amount, at the  
corporate trust office of the Debenture Trustee in New York, New York, or at the
offices of any paying agent or transfer agent appointed by the Corporation,     
provided that payment of interest may be made at the option of the Corporation  
by check mailed to the address of the persons entitled thereto or by wire       
transfer. In addition, if the Subordinated Debentures are issued in certificated
form, the record dates for payments of interest will be the 15th day of the     
month preceding the Interest Payment Dates.                                     

   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    
Subordinated Debentures during a period beginning at the opening of business 15 
days before the day of selection for redemption of Subordinated Debentures and  
ending at the close of business on the day of mailing of the relevant notice of 
redemption, or (ii) transfer or exchange any Subordinated Debentures so selected
for redemption, except, in the case of any Subordinated Debentures being        
redeemed in part, any portion thereof not to be redeemed.                       

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 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 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 Subordinated Debenture shall          
thereafter look, as a general unsecured creditor, only to the Corporation for   
payment thereof.                                                                

REDEMPTION                                                                  

   The Corporation may, at its option, redeem the Subordinated Debentures on
or after December 1, 2006, in whole or in part from time to time. The           
Corporation has committed, however, to the Federal Reserve Bank of Richmond that
it will not exercise this redemption option without having received the prior   
approval of the Federal Reserve Board to do so, if then so required under       
applicable capital guidelines or policies of the Federal Reserve Board. The     
Redemption Price for any Subordinated Debenture so redeemed shall equal the     
following prices, expressed in percentages of the principal amount together with
any accrued and unpaid interest thereon to the Redemption Date, if redeemed     
during the 12-month period beginning December 1 of the years indicated below:   

                                                        [Enlarge/Download Table]

YEAR                                                                                       PERCENTAGE
                                                                                                     
2006......................................................................................   104.020%
2007......................................................................................   103.618 
2008......................................................................................   103.216 
2009......................................................................................   102.814 
2010......................................................................................   102.412 
2011......................................................................................   102.010 
2012......................................................................................   101.608 
2013......................................................................................   101.206 
2014......................................................................................   100.804 
2015......................................................................................   100.402 
2016 and thereafter.......................................................................   100.000%

     Subordinated Debentures in denominations larger than $1,000 may be redeemed
in part but only in integral multiples of $1,000. The Corporation may not redeem
the Subordinated Debentures in part unless all accrued and unpaid interest has  
been paid in full on all outstanding Subordinated Debentures for all interest   
periods terminating on or prior to the Redemption Date.                         

    In addition, if a Tax Event or Regulatory Capital Event shall occur and be
continuing, the Corporation may, at its option, redeem Subordinated Debentures  
in whole (but not in part) at any time within 90 days of the occurrence of such 
Tax Event or Regulatory Capital Event, at a redemption price (the "Special Event
Redemption Price") equal to the greater of (i) 100% of the principal amount of  
the 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
Redemption Price with respect to an optional redemption of such Subordinated    
Debentures on December 1, 2006, together with scheduled payments of interest    
from the prepayment date to December 1, 2006 (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 each case, accrued interest thereon to the date of prepayment. The     
Corporation has committed to the Federal Reserve Bank of Richmond that it will  
not exercise this redemption option without having received the prior approval  
of the Federal Reserve Board to do so, if then so required under applicable     
capital guidelines or policies of the Federal Reserve Board.                    

  "Adjusted Treasury Rate" means, with respect to any redemption 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) 1.25% if such prepayment date  
occurs on or prior to December 1, 1997 and (ii) .50% 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) Morgan Stanley & Co. Incorporated and its successors;        
provided, however, that if the foregoing shall cease to be a primary U.S.       
Government securities dealer in New York City (a "Primary                       

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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.   

    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 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 Subordinated Debentures or portions thereof called for 
redemption.                                                                     

The Subordinated Debentures will not be subject to any sinking fund.  

RESTRICTIONS ON CERTAIN PAYMENTS                                            

 The Corporation has agreed (and in connection with the New Subordinated
Debentures will agree) that it will not, and will not permit any subsidiary of  
the Corporation to, (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, or (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 interest to the Subordinated 
Debentures or 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 interest to the Subordinated       
Debentures (other than (a) dividends or distributions in common stock of the    
Corporation, (b) any declaration of a dividend in connection with the           
implementation of the Corporation's stockholders' rights plan or any successor  
to such plan, or the issuance of rights, stock or other property under any such 
plan, or the redemption or repurchase of any such rights pursuant thereto, (c)  
payments under the Guarantee, and (d) 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, related to the issuance of common     
stock under a dividend reinvestment and stock purchase plan or related to the   
issuance of common stock (or securities convertible into or exchangeable for    
common stock) as consideration in an acquisition transaction theretofore entered
into), if at such time (i) there shall have occurred any event of which the     
Corporation has actual knowledge that (a) with the giving of notice or the lapse
of time, or both, would constitute a Debenture Event of Default with respect to 
the Subordinated Debentures and (b) in respect of which the Corporation shall   
not have taken reasonable steps to cure, (ii) if the Subordinated Debentures are
held by the Issuer, the Corporation shall be in default with respect to its     
payment of any obligations under the Guarantee, or (iii) the Corporation shall  
have given notice of its selection of an Extension Period as provided in the    
Indenture with respect to the Subordinated Debentures and shall not have        
rescinded such notice, or such Extension Period, or any extension thereof, shall
be continuing.                                                                  

MODIFICATION OF INDENTURE                                                   

  From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of the 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 Subordinated
Debentures or the holders of the Capital Securities so long as they remain      
outstanding) 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 Subordinated Debentures affected, to
modify the Indenture in a manner affecting the rights of the holders of the     
Subordinated Debentures; provided that no such modification may, without the    
consent of the holder of each outstanding                                       

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Subordinated Debenture so affected, (i) change the Stated Maturity of           
Subordinated Debentures, except as otherwise specified herein, 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          
Subordinated Debentures, the holders of which are required to consent to any    
such modification of the Indenture, provided that so long as any of the Capital 
Securities remain outstanding, no such modification may be made that adversely  
affects the holders of such Capital Securities in any material respect, and no  
termination of the Indenture may occur, and no waiver of any Debenture Event of 
Default or compliance with any covenant under the Indenture may be effective,   
without the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of such Capital Securities unless and until the principal of 
the Subordinated Debentures and all accrued and unpaid interest thereon have    
been paid in full and certain other conditions are satisfied.                   

     In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of Subordinated Debentures, any supplemental indenture
to the 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 that has occurred and is continuing constitutes a Debenture Event of     
Default:                                                                        

   (i) failure for 30 days to pay any interest on the 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 any
Subordinated Debentures when due, whether at maturity, upon redemption
by declaration or otherwise; or                                       

(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 the   
holders of at least 25 percent in aggregate outstanding principal     
amount of outstanding Subordinated Debentures; or                     

   (iv) certain events of bankruptcy, insolvency or reorganization
of the Corporation.                                                   

The holders of a majority in aggregate outstanding principal amount of
Subordinated Debentures 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 percent in aggregate       
outstanding principal amount of Subordinated Debentures may declare the         
principal due and payable immediately upon a Debenture Event of Default, and    
should the Debenture Trustee or such holders of Subordinated Debentures fail to 
make such declaration, the holders of at least 25 percent in aggregate          
Liquidation Amount of the Capital Securities shall have such right. The holders 
of a majority in aggregate outstanding principal amount of Subordinated         
Debentures may annul such declaration and waive the default if the default      
(other than the non-payment of the principal of 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. Should the holders  
of the Subordinated Debentures fail to annul such declaration and waive such    
default, the holders of a majority in aggregate Liquidation Amount of the       
Capital Securities shall have such right.                                       

    The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debentures affected thereby may, on behalf of the holders of all   
the 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    
Subordinated Debenture. Should the holders of Subordinated Debentures fail to   
annul such declaration and waive such default, the holders of a majority in     
aggregate Liquidation Amount of the Capital Securities shall have such right.   
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, the
Property Trustee will have the right to declare the principal of and the        
interest on the 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 the Subordinated Debentures.                           

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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES              

     If (i) a Debenture Event of Default has occurred and is continuing and (ii)
such event is attributable to the failure of the Corporation to pay interest or 
principal on the Subordinated Debentures on the date such interest or principal 
is otherwise payable, then a holder of Capital Securities may institute a Direct
Action against the Corporation for enforcement of payment to such holder of the 
principal of or interest on the Subordinated Debentures having a principal      
amount equal to the aggregate Liquidation Amount of the Capital Securities of   
such holder. 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 the Capital Securities. If the right to bring a Direct Action is removed,
the Issuer may become subject to the reporting obligations under the Exchange   
Act. The Corporation has the right under the Indenture to set-off any payment   
made to such holder of Capital Securities by the Corporation in connection with 
a Direct Action.                                                                

The holders of the Capital Securities would not be able to exercise   
directly any remedies other than those set forth in the preceding paragraph     
available to the holders of the Subordinated Debentures unless there shall have 
been an Event of Default under the Trust Agreement. See " -- Description of     
Capital Securities; EVENTS OF DEFAULT; NOTICE".                                 

CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS                

  The Indenture provides that the Corporation will 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 will           
consolidate with or merge into the Corporation or convey, transfer or lease its 
properties and assets 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 Washington, D.C., and such successor Person expressly    
assumes the Corporation's obligations on the 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 happened and be           
continuing; (iii) such transaction is permitted under the Trust Agreement and   
the Guarantee and does not give rise to any breach or violation of the Trust    
Agreement or the Guarantee; and (iv) certain other conditions as prescribed in  
the Indenture are met.                                                          

The general provisions of the Indenture do not afford holders of the  
Subordinated Debentures protection in the event of a highly leveraged or other  
transaction involving the Corporation that may adversely affect holders of the  
Subordinated Debentures.                                                        

SATISFACTION AND DISCHARGE                                                  

The Indenture provides that when, among other things, all 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 within one year, 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 Subordinated Debentures are   
payable sufficient to pay and discharge the entire indebtedness on the          
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, 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.                  

DISTRIBUTION OF SUBORDINATED DEBENTURES                                     

   As described under " -- Description of Capital Securities; LIQUIDATION OF
ISSUER AND DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS", under certain   
circumstances involving the termination of the Issuer, Subordinated Debentures  
may be distributed to the holders of the Capital Securities in liquidation of   
the Issuer, after satisfaction of liabilities to creditors of the Issuer in     
accordance with applicable law and the Expense Agreement. It is anticipated that
the depositary arrangements for the Subordinated Debentures would be            
substantially identical to those in effect for the Capital Securities. If the   
Subordinated Debentures are distributed to the holders of Capital Securities    
upon the liquidation of the Issuer, the Corporation will use its reasonable best
efforts to list the Subordinated Debentures on the New York Stock Exchange or   
such other stock exchanges, if any, on which the Capital Securities are then    
listed. There can be no assurance as to the market price of any Subordinated    
Debentures that may be distributed to the holders of Capital Securities.        

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SUBORDINATION                                                               

     The Indenture provides that the Subordinated Debentures will be subordinate
and junior in right of payment to all Senior Debt to the extent provided in the 
Indenture. Upon any payment or distribution of assets to creditors 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 Debt will first 
be entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of Subordinated        
Debentures or the Property Trustee on behalf of the holders will be entitled to 
receive or retain any payment in respect of the principal of (and premium, if   
any) or interest, if any, on the Subordinated Debentures.                       

In the event of the acceleration of the maturity of the Subordinated  
Debentures, the holders of all Senior Debt outstanding at the time of such      
acceleration will first be entitled to receive payment in full of all amounts   
due thereon (including any amounts due upon acceleration) before the holders of 
Subordinated Debentures will be entitled to receive or retain any payment in    
respect of the principal of (or premium, if any) or interest, if any, on the    
Subordinated Debentures.                                                        

  No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Subordinated Debentures may be made if there shall have  
occurred and be continuing a default in any payment with respect to Senior Debt 
or an event of default with respect to any Senior Debt resulting in the         
acceleration of the maturity thereof, or if any judicial proceeding shall be    
pending with respect to any such default.                                       

   "Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every   
obligation of such Person for money borrowed; (ii) every obligation of such     
Person evidenced by bonds, debentures, notes or other similar instruments,      
including obligations incurred in connection with the acquisition of property,  
assets or businesses; (iii) every reimbursement obligation of such Person with  
respect to letters of credit, bankers' acceptances or similar facilities issued 
for the account of such Person; (iv) every obligation of such Person issued or  
assumed as the deferred purchase price of property or services (but excluding   
trade accounts payable or accrued liabilities arising in the ordinary course of 
business); (v) every capital lease obligation of such Person; (vi) all Other    
Financial Obligations (as hereinafter defined) of such Person; and (vii) every  
obligation of the type referred to in clauses (i) through (vi) of another Person
and all dividends of another Person the payment of which, in either case, such  
Person has guaranteed or is responsible or liable, directly or indirectly, as   
obligor or otherwise.                                                           

"Other Financial Obligations" means, with respect to any Person, all  
obligations to make payment pursuant to the terms of financial instruments, such
as (i) securities contracts and foreign currency exchange contracts, (ii)       
derivative instruments, such as swap agreements (including interest rate and    
foreign exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange rate agreements, options,
commodity futures contracts, commodity option contracts, and (iii) in the case  
of both (i) and (ii) above, similar financial instruments.                      

     "Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in      
bankruptcy or for reorganization relating to the Corporation whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,       
whether incurred on or prior to the date of the Indenture or thereafter         
incurred, unless, in the instrument creating or evidencing the same or pursuant 
to which the same is outstanding, it is provided that such obligations are not  
superior in right of payment to the Subordinated Debentures or to other Debt    
which is PARI PASSU with, or subordinated to, the Subordinated Debentures;      
provided, however, that Senior Debt shall not be deemed to include (i) any Debt 
of the Corporation which when incurred and without respect to any election under
Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was   
without recourse to the Corporation, (ii) any Debt of the Corporation to any of 
its subsidiaries, (iii) Debt to any employee of the Corporation, and (iv) any   
other debt securities issued pursuant to the Indenture. Senior Debt includes,   
without limitation, Debt issued (i) under the indenture, dated as of April 1,   
1983, and amended thereafter, between the Corporation and Chemical Bank, as     
trustee, and (ii) except to the extent otherwise provided with respect to any   
series of debt securities issued after the date hereof, under the indenture,    
dated as of March 15, 1986, and amended thereafter, between the Corporation and 
Harris Trust and Savings Bank, as trustee.                                      

    The Indenture places no limitation on the amount of additional Senior Debt
that may be incurred by the Corporation. The Corporation expects from time to   
time to incur additional indebtedness constituting Senior Debt.                 

RESTRICTIONS ON TRANSFER                                                    

     The Subordinated Debentures will be issued, and may be transferred only, in
minimum denominations of not less than $100,000 and multiples of $1,000 in      
excess thereof. Any transfer, sale or other disposition of Subordinated         
Debentures in a                                                                 

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denomination of less than $100,000 shall be deemed to be void and of no legal   
effect whatsoever. Any such transferee shall be deemed not to be the holder of  
such Subordinated Debentures for any purpose, including but not limited to the  
receipt of payments on such Subordinated Debentures, and such transferee shall  
be deemed to have no interest whatsoever in such Subordinated Debentures.       

GOVERNING LAW                                                               

     The Indenture and the Subordinated Debentures are governed by and construed
in accordance with the laws of the State of New York.                           

INFORMATION CONCERNING 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 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.                             

CERTAIN COVENANTS RELATING TO ISSUER                                        

   The Corporation will covenant (i) to maintain directly or indirectly 100%
ownership of the Common Securities of the Issuer, provided that certain         
successors which are permitted pursuant to the Indenture may succeed to the     
Corporation's ownership of the Common Securities, and (ii) to use its reasonable
efforts, consistent with the terms and provisions of the Trust Agreement, to    
cause the Issuer to remain classified as a grantor trust and not as an          
association taxable as a corporation for United States federal income tax       
purposes.                                                                       

DESCRIPTION OF GUARANTEE                                                        

     The Old Guarantee was entered into by the Corporation concurrently with the
issuance by the Issuer of the Old Capital Securities for the benefit of the     
holders from time to time of the Old Capital Securities. As soon as practicable 
after the date hereof, the Old Guarantee will be exchanged by the Corporation   
for the New Guarantee. The New Guarantee has been qualified under the Trust     
Indenture Act. This summary of certain provisions of the Guarantee describes the
material terms of the Guarantee but 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 Agreement, including the definitions therein of certain terms, 
and the Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for  
the benefit of the holders of the Capital Securities.                           

GENERAL                                                                     

  The Corporation has irrevocably agreed (and under the New Guarantee will
irrevocably agree) to pay in full on a subordinated basis, to the extent set    
forth herein, the Guarantee Payments (as defined herein) to the holders of the  
Capital Securities, as and when due, regardless of any defense, right of set-off
or counterclaim that the Issuer 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 Issuer (the "Guarantee Payments"), will  
be subject to the Guarantee: (i) any accumulated and unpaid Distributions       
required to be paid on the Capital Securities, to the extent that the Issuer has
funds on hand available therefor at the time; (ii) the Redemption Price with    
respect to any Capital Securities called for redemption, to the extent that the 
Issuer has funds on hand available therefor at the time; or (iii) upon a        
voluntary or involuntary termination, winding-up or liquidation of the Issuer   
(unless the 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 Issuer remaining available for distribution to holders of      
Capital Securities on liquidation of the Issuer. 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 Issuer to pay the amounts to the holders.                           

   The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Issuer's obligations under the Capital Securities, but will apply only to   
the extent that the Issuer has funds sufficient to make the payments, and is not
a guarantee of collection.                                                      

If the Corporation does not make interest payments on the Subordinated
Debentures held by the Issuer, the Issuer will not be able to pay Distributions 
on the Capital Securities and will not have funds legally available therefor.   
The Guarantee                                                                   

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will rank subordinate and junior in right of payment to all Senior Debt of the  
Corporation. See ";STATUS OF GUARANTEE". 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 Guarantee 
will be effectively subordinated and junior in right of payment 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 "The    
Corporation". The Guarantee does not limit the incurrence or issuance of other  
secured or unsecured debt of the Corporation, including Senior Debt, whether    
under the Indenture, any other indenture that the Corporation may enter into in 
the future or otherwise.                                                        

The Corporation has, through the Guarantee, the Trust Agreement, the  
Subordinated Debentures, the Indenture and the Expense Agreement, taken         
together, fully, irrevocably and unconditionally guaranteed all of the Issuer's 
obligations under the Capital Securities. No single document standing alone or  
operating in conjunction with fewer than all of the other documents constitutes 
such a guarantee. It is only the combined operation of these documents that has 
the effect of providing a full, irrevocable and unconditional guarantee of the  
Issuer's obligations with respect to the Capital Securities. See "Relationship  
Among Capital Securities, Subordinated Debentures and Guarantee".               

STATUS OF GUARANTEE                                                         

  The Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior Debt of  
the Corporation in the same manner as the Subordinated Debentures.              

    The Guarantee will rank PARI PASSU with any other similar guarantee issued
by the Corporation. The 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). The Guarantee will be held for the benefit of the holders of the       
Capital Securities. The Guarantee will not be discharged except by payment of   
the Guarantee Payments in full to the extent not paid by the Issuer or upon     
distribution to the holders of the Capital Securities of the Subordinated       
Debentures. The Guarantee does not place a limitation on the amount of          
additional Senior Debt that may be incurred by the Corporation. The Corporation 
expects from time to time to incur additional indebtedness constituting Senior  
Debt.                                                                           

AMENDMENT AND ASSIGNMENT                                                    

     Except with respect to any changes which do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be  
required), the Guarantee may not be amended without the prior approval of the   
holders of not less than a majority of the aggregate Liquidation Amount of      
outstanding Capital Securities. The manner of obtaining any such approval will  
be as set forth under " -- Description of Capital Securities; VOTING RIGHTS;    
AMENDMENT OF TRUST AGREEMENT". All guarantees and agreements contained in the   
Guarantee shall bind the successors, assigns, receivers, trustees and           
representatives of the Corporation and shall inure to the benefit of the holders
of the Capital Securities then outstanding.                                     

EVENTS OF DEFAULT                                                           

    An event of default under the 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      
Capital 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 the Guarantee or to direct the exercise of any trust or 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 Issuer, 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.                                                                      

INFORMATION CONCERNING GUARANTEE TRUSTEE                                    

    The Guarantee Trustee, other than during the occurrence and continuance of
an event of default under the Guarantee, undertakes to perform only such duties 
as are specifically set forth in the Guarantee and, after an event of default   
under such Guarantee, must exercise the same degree of care and skill as a      
prudent person would exercise or use in the conduct of its                      

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own affairs. Subject to this provision, the Guarantee Trustee is under no       
obligation to exercise any of the powers vested in it by the Guarantee at the   
request of any holder of the Capital Securities unless it is offered reasonable 
indemnity against the costs, expenses and liabilities that might be incurred    
thereby.                                                                        

TERMINATION OF GUARANTEE                                                    

 The Guarantee will terminate and be of no further force and effect upon
full payment of the applicable Redemption Price of the Capital Securities, upon 
full payment of the amounts payable upon liquidation of the Issuer or upon      
distribution of Subordinated Debentures to the holders of the Capital           
Securities. The Guarantee will continue to be effective or will be reinstated,  
as the case may be, if at any time any holder of the Capital Securities must    
restore payment of any sums paid under the Capital Securities or the Guarantee. 

GOVERNING LAW                                                               

     The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.                                                       

EXPENSE AGREEMENT                                                           

 Pursuant to the Expense Agent, the Corporation, as holder of the Common
Securities, has irrevocably and unconditionally guaranteed to each person or    
entity to whom the Issuer becomes indebted or liable, the full payment of any   
costs, expenses or liabilities of the Issuer, other than obligations of the     
Issuer to pay to the holders of Capital Securities or other similar interests in
the Issuer of the amounts due such holders pursuant to the terms of the Capital 
Securities or such other similar interests, as the case may be.                 

DESCRIPTION OF OLD SECURITIES 

  The terms of the Old Securities are identical in all material respect to
the New Securities, except that (i) the Old Securities have not been registered 
under the Securities Act, are subject to certain restrictions on transfer and   
are entitled to certain rights under the Registration Rights Agreement (which   
rights will terminate upon consummation of the Exchange Offer, except under     
limited circumstances); (ii) the New Capital Securities will not provide for any
increase in the Distribution rate thereon; and (iii) the New Subordinated       
Debentures will not provide for any increase in the interest rate thereon. The  
Old Securities provide that, in the event that the Exchange Offer is not        
consummated on or prior to June 26, 1997, or, in certain limited circumstances, 
in the event a shelf registration statement (the "Shelf Registration Statement")
with respect to the resale of the Old Capital Securities is not declared        
effective on or prior to May 26, 1997, then interest will accrue (in addition to
the interest rate on the Subordinated Debentures) at the rate of 0.25% per annum
on the principal amount of the Subordinated Debentures and Distributions will   
accrue (in addition to the stated Distribution rate on the Capital Securities)  
at the rate of 0.25% per annum on the Liquidation Amount of the Capital         
Securities, for the period from the occurrence of such event until such time as 
the Exchange Offer is consummated or any required Shelf Registration Statement  
is effective. The New Securities are not, and upon consummation of the Exchange 
Offer the Old Securities will not be, entitled to any such additional interest  
or Distributions. Accordingly, holders of Old Capital Securities should review  
the information set forth under "Risk Factors -- Certain Consequences of a      
Failure to Exchange Old Capital Securities" and "Description of New Securities".

RELATIONSHIP AMONG CAPITAL SECURITIES,
SUBORDINATED DEBENTURES AND GUARANTEE 

FULL AND UNCONDITIONAL GUARANTEE                                                

   Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Issuer 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 New Securities -- Description of         
Guarantee". Taken together, the Corporation's obligations under the Subordinated
Debentures, the Indenture, the Trust Agreement, the Expense Agreement, and the  
Guarantee provide, in the aggregate, a full, irrevocable and unconditional      
guarantee of payments of distributions and other amounts due on the Capital     
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 Issuer's obligations under the   
Capital Securities. If and to the extent that the Corporation does not make     
payments on the Subordinated Debentures, the Issuer will not pay Distributions  
or other amounts due on the Capital Securities. The Guarantee does not cover    
payment of Distributions when the Issuer does not have sufficient funds to      

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pay such Distributions. In such event, the remedy of a holder of Capital        
Securities is to institute a legal proceeding directly against the Corporation  
for enforcement of payment of such Distributions to such holder. The obligations
of the Corporation under the Guarantee are subordinate and junior in right of   
payment to all Senior Debt of the Corporation.                                  

SUFFICIENCY OF PAYMENTS                                                         

     As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover Distributions
and other payments due on the Capital Securities, primarily because (i) the     
aggregate principal amount of the Subordinated Debentures will be equal to the  
sum of the aggregate Liquidation Amount of the Capital Securities and Common    
Securities; (ii) the interest rate and interest and other payment dates on the  
Subordinated Debentures will match the Distribution rate and Distribution and   
other payment dates for the Capital Securities; (iii) the Corporation shall pay 
for all and any costs, expenses and liabilities of the Issuer except the        
Issuer's obligations to holders of the Capital Securities under such Capital    
Securities; and (iv) the Trust Agreement further provides that the Issuer will  
not engage in any activity that is not consistent with the limited purposes of  
the Issuer.                                                                     

    Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Corporation has theretofore made, or is concurrently 
on the date of such payment making, a payment under the Guarantee.              

ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES                             

    A holder of any Capital Security may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without first 
instituting a legal proceeding against the Guarantee Trustee, the Issuer or any 
other person or entity.                                                         

A default or event of default under any Senior Debt of the Corporation
would not constitute a Debenture Event of Default (and, therefore, would not    
constitue an Event of Default with respect to the Capital Securities). However, 
in the event of payment defaults under, or acceleration of, Senior Debt of the  
Corporation, the subordination provisions of the Indenture provide that no      
payments may be made in respect of the Subordinated Debentures until such Senior
Debt has been paid in full or any payment default thereunder has been cured or  
waived. Failure to make required payments on the Subordinated Debentures would  
constitute a Debenture Event of Default (and an Event of Default with respect to
the Capital Securities).                                                        

LIMITED PURPOSE OF ISSUER                                                       

The Capital Securities evidence undivided beneficial interests in the 
assets of the Issuer, and the Issuer exists for the sole purpose of issuing its 
Capital Securities and Common Securities and investing the proceeds thereof in  
the Subordinated Debentures. A principal difference between the rights of a     
holder of a Capital Security and a holder of a Subordinated Debenture is that a 
holder of a Subordinated Debenture is entitled to receive from the Corporation  
the principal amount of and interest accrued on the Subordinated Debentures     
held, while a holder of Capital Securities is entitled to receive Distributions 
from the Issuer (or from the Corporation under the Guarantee) if and to the     
extent the Issuer has funds available for the payment of such Distributions.    

RIGHTS UPON TERMINATION                                                         

     Upon any voluntary or involuntary termination, winding-up or liquidation of
the Issuer involving the liquidation of the Subordinated Debentures, after      
satisfaction of liabilities to creditors of the Issuer in accordance with       
applicable law and the Expense Agreement, the holders of the Capital Securities 
will be entitled to receive, out of assets held by Issuer, the Liquidation      
Distribution in cash. See "Description of New Securities -- Description of      
Capital Securities; LIQUIDATION DISTRIBUTION UPON TERMINATION". Upon any        
voluntary or involuntary liquidation or bankruptcy of the Corporation, the      
Property Trustee, as holder of the Subordinated Debentures, would be a          
subordinated creditor of the Corporation, subordinated in right of payment to   
all Senior Debt of the Corporation as set forth in the Indenture, but entitled  
to receive payment in full of principal and interest, before any stockholders of
the Corporation receive payments or distributions. Since the Corporation is the 
guarantor under the Guarantee and has agreed to pay for all costs, expenses and 
liabilities of the Issuer (other than the Issuer's obligations to the holders of
Capital Securities), the positions of a holder of Capital Securities and a      
holder of such 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.                          

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CERTAIN FEDERAL INCOME TAX CONSEQUENCES 

  The following is a summary of the principal United States federal income
tax consequences of the purchase, ownership and disposition of Capital          
Securities. This summary only addresses the tax consequences to a person that   
acquires Capital Securities on their original issue at their original offering  
price and that is (i) an individual citizen or resident of the United States,   
(ii) a corporation or partnership organized in or under the laws of the United  
States or any state thereof or Washington, D.C., or (iii) an estate or trust the
income of which is subject to United States federal income tax regardless of    
source (a "United States Person"). This summary does not address all tax        
consequences that may be applicable to a United States Person that is a         
beneficial owner of Capital Securities, nor does it address the tax consequences
to (i) persons that are not United States Persons, (ii) persons that may be     
subject to special treatment under United States federal income tax law, such as
banks, insurance companies, thrift institutions, regulated investment companies,
real estate investment trusts, tax-exempt organizations and dealers in          
securities or currencies, (iii) persons that will hold Capital Securities as    
part of a position in a "straddle" or as part of a "hedging", "conversion" or   
other integrated investment transaction for federal income tax purposes, (iv)   
persons whose functional currency is not the United States dollar, or (v)       
persons that do not hold Capital Securities as capital assets.                  

The statements of law or legal conclusion set forth in this summary   
constitute the opinion of Sullivan & Cromwell, special tax counsel to the       
Corporation and the Issuer. This summary is based upon the Code, Treasury       
Regulations, Internal Revenue Service rulings and pronouncements and judicial   
decisions now in effect, all of which are subject to change at any time. Such   
changes may be applied retroactively in a manner that could cause the tax       
consequences to vary substantially from the consequences described below,       
possibly adversely affecting a beneficial owner of Capital Securities. In       
particular, legislation has been proposed that could adversely affect the       
Corporation's ability to deduct interest on the Subordinated Debentures, which  
may in turn permit the Corporation to cause a redemption of the Capital         
Securities. See " -- Possible Tax Law Changes". The authorities on which this   
summary is based are subject to various interpretations, and it is therefore    
possible that the federal income tax treatment of the purchase, ownership and   
disposition of Capital Securities may differ from the treatment described below.

     PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES  
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF CAPITAL SECURITIES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.                                 

CLASSIFICATION OF ISSUER                                                        

   In connection with the issuance of the Old Capital Securities, Sullivan &
Cromwell have rendered their opinion to the effect that, under then current law 
and assuming compliance with the terms of the Trust Agreement and certain other 
factual matters, the Issuer will not be classified as an association taxable as 
a corporation for United States federal income tax purposes. As a result, each  
beneficial owner of Capital Securities (a "Securityholder") will be required to 
include in its gross income its PRO RATA share of the interest income, including
premium or original issue discount, paid or accrued with respect to the         
Subordinated Debentures whether or not cash is actually distributed to such     
Securityholder. See  -- "Interest Income and Original Issue Discount".          

INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT                                     

   Under recently issued Treasury Regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a contingency that      
stated interest will not be timely paid that is "remote" because of the terms of
the relevant debt instrument will be ignored in determining whether a debt      
instrument is issued with original issue discount ("OID"). As a result of the   
terms and conditions of the Subordinated Debentures that prohibit certain       
payments with respect to the Corporation's capital stock and indebtedness if the
Corporation elects to extend interest payment periods, the Corporation believes 
that the likelihood of its exercising its option to defer payments is remote.   
Based on the foregoing, the Corporation believes that the Subordinated          
Debentures will not be considered to be issued with OID at the time of their    
original issuance, and accordingly, a Securityholder should include in gross    
income such holder's allocable share of interest on the Subordinated Debentures.

     Under the Regulations, if the Corporation exercised its option to defer any
payment of interest, the Subordinated Debentures would at that time be treated  
as issued with OID, and all stated interest on the Subordinated Debentures would
thereafter be treated as OID as long as the Subordinated Debentures remained    
outstanding. In such event, all of a Securityholder's taxable interest income   
with respect to the Subordinated Debentures would be accounted for as OID on an 
economic accrual                                                                

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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 Securityholder would be required to include in gross income OID 
even though the Corporation would not make any actual cash payments during an   
Extension Period.                                                               

The Regulations have not been addressed in any rulings or other       
interpretations by the Internal Revenue Service and it is possible that the     
Internal Revenue Service could take a position contrary to the interpretation   
herein.                                                                         

   Because income on the Capital Securities will constitute interest or OID,
corporate Securityholders will not be entitled to a dividends-received deduction
with respect to any income recognized with respect to the Capital Securities.   

DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS OF CAPITAL SECURITIES        

Under current law, a distribution by the Issuer of the Subordinated   
Debentures as described herein under "Description of New                        
Securities -- Description of Capital Securities; LIQUIDATION OF ISSUER AND      
DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS" will be non-taxable and will
result in the Securityholder receiving directly his PRO RATA share of the       
Subordinated Debentures previously held indirectly through the Issuer, with a   
holding period and aggregate tax basis equal to the holding period and aggregate
tax basis such Securityholder had in its Capital Securities before such         
distribution. If, however, the liquidation of the Issuer were to occur because  
the Issuer is subject to United States federal income tax with respect to income
accrued or received on the Subordinated Debentures, the distribution of         
Subordinated Debentures to Securityholders by the Issuer would be a taxable     
event to the Issuer and each Securityholder, and each Securityholder would      
recognize gain or loss as if the Securityholder had exchanged its Capital       
Securities for the Subordinated Debentures it received upon the liquidation of  
the Issuer. A Securityholder will accrue interest in respect of Subordinated    
Debentures received from the Issuer in the manner described above under         
" -- Interest Income and Original Issue Discount".                              

SALES OR REDEMPTION OF CAPITAL SECURITIES                                       

A Securityholder that sells (including a redemption for cash) Capital 
Securities 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. Assuming that the Corporation does not exercise its 
option to defer payment of interest on the Subordinated Debentures, and the     
Subordinated Debentures are not considered issued with OID, a Securityholder's  
adjusted tax basis in the Capital Securities generally will be its initial      
purchase price. If the Subordinated Debentures are deemed to be issued with OID 
as a result of the Corporation's deferral of any interest payment, a            
Securityholder's adjusted tax basis in the Capital Securities generally will be 
its initial purchase price, increased by OID previously includible in such      
holder's gross income to the date of disposition and decreased by distributions 
or other payments received on the Capital Securities since and including the    
date of the first Extension Period. Such gain or loss generally will be a       
capital gain or loss (except to the extent any amount realized is treated as a  
payment of accrued interest with respect to such Securityholder's PRO RATA share
of the Subordinated Debentures required to be included in income) and generally 
will be a long-term capital gain or loss if the Capital Securities have been    
held for more than one year.                                                    

     Should the Corporation exercise its option to defer any payment of interest
on the Subordinated Debentures, 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 Subordinated Debentures. In the event of such a       
deferral, a Securityholder who disposes of its Capital Securities between record
dates for payments of distributions thereon will be required to include in      
income as ordinary income accrued but unpaid interest on the Subordinated       
Debentures to the date of disposition and to add such amount to its adjusted tax
basis in its PRO RATA share of the underlying Subordinated Debentures deemed    
disposed of. To the extent the selling price is less than the Securityholder's  
adjusted tax basis, such 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.                           

Although the matter is not free from doubt, an exchange of Old Capital
Securities for New Capital Securities should not be taxable to Securityholders. 

BACKUP WITHHOLDING TAX AND INFORMATION REPORTING                                

The amount of interest income paid and OID accrued on the Capital     
Securities held of record by United States Persons (other than corporations and 
other exempt Securityholders) will be reported to the Internal Revenue Service. 
"Backup" withholding at a rate of 31 percent will apply to payments of interest 
to non-exempt United States Persons unless the Securityholder furnishes its     
taxpayer identification number in the manner prescribed in applicable Treasury  
Regulations, certifies that such number is correct, certifies as to no loss of  
exemption from backup withholding and meets certain other conditions.           

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  Payment of the proceeds from the disposition of Capital Securities to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the holder or beneficial owner establishes an     
exemption from information reporting and backup withholding.                    

 Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's     
United States federal income tax liability, provided the required information is
furnished to the Internal Revenue Service.                                      

     It is anticipated that income on the Capital Securities will be reported to
holders on Form 1099 and mailed to holders of the Capital Securities by January 
31 following each calendar year.                                                

POSSIBLE TAX LAW CHANGES                                                        

As discussed above, the Revenue Reconciliation Bill would, among other
things, generally have denied interest deductions for interest on an instrument 
issued by a corporation that has a maximum weighted average maturity of more    
than 40 years. The Revenue Reconciliation Bill also would generally have denied 
interest deductions for interest on an instrument issued by a corporation that  
has a maximum term of more than 20 years and that is not shown as indebtedness  
on the separate balance sheet of the issuer or, where the instrument is issued  
to a related party (other than a corporation), where the holder or some other   
related party issues a related instrument that is not shown as indebtedness on  
the issuer's consolidated balance sheet. For purposes of determining the        
weighted average maturity or the term of an instrument, any right to extend     
would be treated as exercised. The above-described provisions of the Bill were  
proposed to be effective generally for instruments issued on or after December  
7, 1995. If either provision were to have applied to the Subordinated           
Debentures, the Corporation would have been unable to deduct interest on the    
Subordinated Debentures. However, on March 29, 1996, the Chairmen of the Senate 
Finance and House Ways and Means Committees issued a joint statement to the     
effect that it was their intention that the effective date of the President's   
legislative proposals, presumably including the Revenue Reconciliation Bill, if 
adopted, would be no earlier than the date of appropriate Congressional action. 
Under current law, the Corporation will be able to deduct interest on the       
Subordinated Debentures. Although the 104th Congress adjourned without enacting 
the above-described provisions of the Revenue Reconciliation Bill, there can be 
no assurance that current or future legislative proposals or final legislation  
will not adversely affect the ability of the Corporation to deduct interest on  
the Subordinated Debentures. Accordingly, there can be no assurance that a Tax  
Event will not occur. See "Description of Capital Securities; Redemption;       
SPECIAL EVENT REDEMPTION" and "; DISTRIBUTION OF SUBORDINATED DEBENTURES TO     
HOLDERS OF CAPITAL SECURITIES".                                                 

CERTAIN ERISA CONSIDERATIONS

  Each fiduciary of a Plan subject to ERISA, should consider the fiduciary
standards of ERISA in the context of the Plan's particular circumstances before 
authorizing an investment in the Capital Securities. Accordingly, among other   
factors, the fiduciary should consider whether the investment would satisfy the 
prudence and diversification requirements of ERISA and would be consistent with 
the documents and instruments governing the Plan.                               

   Section 408 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan      
assets" with persons who are "parties in interest" under ERISA or "disqualified 
persons" under the Code ("Parties in Interest") with respect to such Plan. A    
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons, 
unless exemptive relief is available under an applicable statutory or           
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section 
3(33) of ERISA) and foreign plans (as described in Section 4(b)(6) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code.           

Under a regulation (the "Plan Assets Regulation") issued by the U.S.  
Department of Labor (the "DOL"), the assets of the Issuer would be deemed to be 
"plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code if   
"plan assets" of the Plan were used to acquire an equity interest in the Issuer 
and no exception were applicable under the Plan Assets Regulation. An "equity   
interest" is defined under the Plan Assets Regulation as any interest in an     
entity other than an instrument which is treated as indebtedness under          
applicable local law and which has no substantial equity features and           
specifically includes a beneficial interest in a trust.                         

Pursuant to an exception contained in the Plan Assets Regulation, the 
assets of the Issuer would not be deemed to be "plan assets" of investing Plans 
if, immediately after the most recent acquisition of any equity interest in the 
Issuer, less than 25 percent of the value of each class of equity interests in  
the Issuer were held by Plans, other employee benefit plans not                 

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subject to ERISA or Section 4975 of the Code (such as governmental, church and  
foreign plans), and entities holding assets deemed to be "plan assets" of any   
Plan (collectively, "Benefit Plan Investors"). No assurance can be given that   
the value of the Capital Securities held by Benefit Plan Investors will be less 
than 25 percent of the total value of such Capital Securities, and no monitoring
or other measures will be taken with respect to the satisfaction of the         
conditions to this exception. All of the Common Securities were purchased and   
held by the Corporation.                                                        

 Certain transactions involving the Issuer could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the  
Code with respect to a Plan if the Capital Securities were acquired with "plan  
assets" of Plan and assets of the Issuer were deemed to be "plan assets" of     
Plans investing in the Issuer. For example, if the Corporation is a Party in    
Interest with respect to an investing Plan (either directly or by reason of its 
ownership of a bank or other subsidiaries), extensions of credit between the    
Corporation and the Issuer (as represented by the Subordinated Debentures and   
the Guarantee) would likely be prohibited by Section 406(a)(1)(B) of ERISA and  
Section 4975(c)(1)(B) of the Code, unless exemptive relief were available under 
an applicable administrative exemption (see below).                             

    The DOL has issued five PTCEs that may provide exemptive relief for direct
or indirect prohibited transactions resulting from the purchase or holding of   
the Capital Securities, assuming that assets of the Issuer were deemed to be    
"plan assets" of Plans investing in the Issuer (see above). Those class         
exemptions are PTCE 96-23 (for certain transactions determined by in-house asset
management), PTCE 95-60 (for certain transactions involving insurance company   
general accounts), PTCE 91-38 (for certain transactions involving bank          
collective investment funds), PTCE 90-1 (for certain transactions involving     
insurance company separate accounts), and PTCE 84-14 (for certain transactions  
determined by independent qualified asset managers).                            

    Because the Capital Securities may be deemed to be equity interests in the
Issuer for purposes of applying ERISA and Section 4975 of the Code, the Capital 
Securities may not be purchased or held by any Plan, any Plan Asset Entity or   
any person investing "plan assets" of any Plan, unless such purchaser or holder 
is eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38,  
90-1 or 84-14. Any purchaser or holder of the Capital Securities or any interest
therein will be deemed to have represented by its purchase and holding thereof  
that it either (a) is not a Plan or a Plan Asset Entity and is not purchasing   
such securities on behalf of or with "plan assets" of any Plan or (b) is        
eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1
or 84-14 with respect to such purchase or holding.                              

    Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly 
important that fiduciaries or other persons investing in the Capital Securities 
on behalf of or with "plan assets" of any Plan consult with their counsel       
regarding the potential consequences if the assets of the Issuer were deemed to 
be "plan assets" and the availability of exemptive relief under PTCE 96-23,     
95-60, 91-38, 90-1 or 84-14.                                                    

PLAN OF DISTRIBUTION

     Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a   
prospectus in connection with any resale of such New Capital Securities. This   
Prospectus, as it may be amended or supplemented from time to time, may be used 
by Participating Broker-Dealers during the period referred to below in          
connection with resales of New Capital Securities received in exchange for Old  
Capital Securities if such Old Capital Securities were acquired by such         
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Issuer has agreed that this         
Prospectus, as it may be amended or supplemented from time to time, may be used 
by a Participating Broker-Dealer in connection with resales of such New Capital 
Securities for a period ending 180 days after the Expiration Date (subject to   
extension under certain limited circumstances described herein) or, if earlier, 
when all such New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "The Exchange Offer -- Resales of New Capital Securities".   
The Issuer will not receive any proceeds from the issuance of the New Capital   
Securities offered hereby. New Capital Securities received by broker-dealers for
their own accounts in the over-the-counter market, in negotiated transactions,  
through the writing of options on the New Capital Securities or a combination of
such methods of resale, at market prices prevailing at the time of resale at    
prices related to such prevailing market prices or at negotiated prices. Any    
such resale may be made directly to purchasers or to or through brokers or      
dealers who may receive compensation in the form of commissions or concessions  
from any such broker-dealer and/or the purchasers of any such New Capital       
Securities. Any broker-dealer that resells New Capital Securities that were     
received by it for its own account in connection with the Exchange Offer and any
broker or dealer that participates in a distribution of such New Capital        
Securities may be deemed to be an "underwriter" within the meaning of the       
Securities Act, and any profit on any such resale of New Capital Securities and 
any commissions or concessions received by any such persons may be deemed to be 
underwriting compensation under the Securities Act. The Letter of Transmittal   
states that by acknowledging that it will                                       

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deliver and by delivering a prospectus, a broker-dealer will not be deemed to   
admit that it is an "underwriter" within the meaning of the Securities Act.     

This Prospectus may be used by First Union Capital Markets Corp., an  
affiliate of the Corporation, in connection with offers and sales related to    
market-making transactions in New Securities effected from time to time after   
the commencement of the offering to which this Prospectus relates. First Union  
Capital Markets Corp. may act as principal or agent in such transactions,       
including as agent for the counterparty when acting as principal or as agent for
both counterparties, and may receive compensation in the form of discounts and  
commissions, including from both counterparties when it acts as agent for both. 
Such sales will be made at prevailing market prices at the time of sale, at     
prices related thereto or at negotiated prices.                                 

First Union Capital Markets Corp. is a wholly owned subsidiary of the 
Corporation and an affiliate of the Issuer.                                     

     The Corporation has been advised by First Union Capital Markets Corp. that,
subject to applicable laws and regulations, First Union Capital Markets Corp.   
may make a market in New Securities. However, they are not obligated to do so   
and any market-making may be discounted at any time without notice. In addition,
such market-making activity is subject to the limits imposed by the Securities  
Act, the Exchange Act and federal banking laws and regulations. There can be no 
assurance that an active trading market will be sustained.                      

  The Corporation may agree to indemnify First Union Capital Markets Corp.
with respect to certain liabilities in connection with this Prospectus,         
including liabilities under the Securities Act.                                 

VALIDITY OF NEW CAPITAL SECURITIES

     Certain matters of Delaware law relating to the validity of the New Capital
Securities, the enforceability of the Trust Agreement and the creation of the   
Issuer will be passed upon by Richards, Layton & Finger, special Delaware       
counsel to the Corporation and the Issuer. The validity of the New Securities   
will be passed upon for the Corporation by Sullivan & Cromwell, New York, New   
York. Sullivan & Cromwell will rely upon the opinion of Marion A. Cowell, Jr.,  
Executive Vice President, Secretary and General Counsel of the Corporation, as  
to matters of North Carolina law and upon the opinion of Richards, Layton &     
Finger LLP, Wilmington, Delaware, as to matters of Delaware law. Mr. Cowell is a
stockholder of the Corporation and holds options to purchase additional shares  
of the Corporation's Common Stock. Sullivan & Cromwell regularly perform legal  
services for the Corporation and its subsidiaries. Members of Sullivan &        
Cromwell performing these legal services own shares of capital stock of the     
Corporation.                                                                    

EXPERTS 

   The Corporation's consolidated balance sheets as of December 31, 1995 and
1994, and the related consolidated statements of income, changes in             
stockholders' equity and cash flows for each of the years in the three-year     
period ended December 31, 1995, included in the Corporation's 1995 Supplemental 
Annual Report to Stockholders, which is incorporated by reference in the        
Corporation's 1995 Annual Report on Form 10-K and incorporated by reference     
herein, have been incorporated by reference herein in reliance upon the report  
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in          
accounting and auditing. The aforementioned report of KPMG Peat Marwick LLP     
covering the Corporation's consolidated financial statements refers to a change 
in the method of accounting for investments.                                    

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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS 

ITEM 22. INDEMNIFICATION OF DIRECTORS AND OFFICERS.                             

     Sections 55-8-50 through 55-8-58 of the North Carolina Business Corporation
Act ("NCBCA") contain specific provisions relating to indemnification of        
directors and officers of North Carolina corporations. In general, the statute  
provides that (i) a corporation must indemnify a director or officer who is     
wholly successful in defense of a proceeding to which he or she is a party      
because of their status as such, unless limited by the articles of              
incorporation, and (ii) a corporation may indemnify a director or officer if he 
or she is not wholly successful in such defense, if it is determined as provided
in the statute that the director or officer meets a certain standard of conduct,
provided when a director or officer is liable to the corporation, the           
corporation may not so indemnify. The statute also permits a director or officer
of a corporation who is a party to a proceeding to apply to the courts for      
indemnification, unless the articles of incorporation provide otherwise, and the
court may order indemnification under certain circumstances set forth in the    
statute. The statute further provides that a corporation may in its articles of 
incorporation or bylaws or by contract or resolution provide indemnification in 
addition to that provided by the statute, subject to certain conditions set     
forth in the statute.                                                           

   The Corporation's Bylaws provide for indemnification of the Corporation's
directors and executive officers by the Corporation against liabilities arising 
out of their status as such, excluding any liability relating to activities     
which were at the time taken, known or believed by such person to be clearly in 
conflict with the best interests of the Corporation. The Corporation's Articles 
provide for the elimination of the personal liability of each director of the   
Corporation to the fullest extent permitted by the provisions of the NCBCA, as  
the same may from time to time be in effect.                                    

     The Corporation maintains directors and officers liability insurance, which
provides coverage of up to $80,000,000, subject to certain deductible amounts.  
In general, the policy insures (i) the Corporation's directors and officers     
against loss by reason of any of their wrongful acts, and/or (ii) the           
Corporation against loss arising from claims against the directors and officers 
by reason of their wrongful acts, all subject to the terms and conditions       
contained in the policy.                                                        

    Under the Amended and Restated Trust Agreement, the Corporation has agreed
to indemnify each of the Issuer Trustees and Administrators, and to hold such   
Issuer Trustees and Administrators harmless, against any loss, damage, claims,  
liability or expense incurred without negligence or bad faith on their part,    
arising out of or in connection with the acceptance of administration of such   
Trust Agreement, including the costs and expenses of defense against any claim  
or liability in connection with the exercise or performance of any of their     
powers or duties under the Trust Agreement or the Amended and Restated Trust    
Agreement each of which is filed as an exhibit to this Registration Statement.  

     Insofar as indemnification for liabilities arising under the Section Act of
1933 may be permitted to directors, officers and controlling persons of each    
Registrant pursuant to the provisions described under Item 15 above, or         
otherwise (other than insurance), each Registrant has been advised that in the  
opinion of the Securities and Exchange Commission such indemnification is       
against public policy as expressed in the Act and is, therefore, unenforceable. 
In the event that a claim for indemnification against such liabilities (other   
than insurance or the payment by each Registrant of expenses incurred or paid by
a director, officer or controlling person of each 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, each  
Registrant will, unless in the opinion of its counsel the matter has been       
settled by controlling precedent, submit to a court of appropriate jurisdiction 
the question whether such indemnification by it is against public policy as     
expressed in the Act and will be governed by the final adjudication of such     
issue.                                                                          

ITEM 21. EXHIBITS.                                                              

                                                        [Enlarge/Download Table]

EXHIBIT NO.                                            DESCRIPTION OF EXHIBIT                                          
                                                                                                                       
       4(a)  Indenture, dated as of November 27, 1996, between the Corporation and Wilmington Trust Company, as        
             Debenture Trustee                                                                                         
       4(b)  Certificate of Trust of First Union Institutional Capital I*                                              
       4(c)  Amended and Restated Trust Agreement of First Union Institutional Capital I (including the related Form of
             Expense Agreement)                                                                                        
       4(d)  Form of Capital Security Certificate for First Union Institutional Capital I (included as Exhibit D of    
             Exhibit 4(c))                                                                                             
       4(e)  Guarantee Agreement                                                                                       
       4(f)  Registration Rights Agreement, dated as of November 27, 1996, among                                       
             the Corporation, the Issuer and Morgan Stanley & Co. Incorporated,                                        
             CS First Boston Corporation, Goldman, Sachs & Co. and J.P. Morgan                                         
             Securities Inc.                                                                                           
       4(g)  All instruments defining the rights of holders of long-term debt of the Corporation and its subsidiaries  
             (Not filed pursuant to clause 4 (iii) of Item 601(b) of Regulation S-K; to be furnished upon request of   
             the Commission)                                                                                           

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EXHIBIT NO.                                            DESCRIPTION OF EXHIBIT                                         
                                                                                                                      
       5(a)  Opinion of Marion A. Cowell, Jr., Esq., as to validity of the New Subordinated Debentures and the New    
             Guarantee to be issued by the Corporation*                                                               
       5(b)  Opinion of Richards, Layton & Finger as to validity of the New Capital Securities*                       
       5(c)  Opinion of Sullivan & Cromwell as to validity of the New Subordinated Debentures and the New Guarantee to
             be issued by the Corporation*                                                                            
       8     Opinion of Sullivan & Cromwell as to certain federal income tax matters*                                 
      12(a)  Computations of Consolidated Ratios of Earnings to Fixed Charges (Incorporated by reference to Exhibit   
             (12)(a) to the Corporation's 1996 Third Quarter Report on Form 10-Q                                      
      12(b)  Computations of Consolidated Ratios of Earnings to Fixed Charges and Preferred Stock Dividends           
             (Incorporated by reference to Exhibit (12)(b) to the Corporation's 1996 Third Quarter Report on          
             Form 10-Q                                                                                                
      23(a)  Consent of KPMG Peat Marwick LLP                                                                         
      23(b)  Consent of Marion A. Cowell, Jr., Esq. (Included in Exhibit 5(a))*                                       
      23(c)  Consent of Richards, Layton & Finger (Included in Exhibit 5(b))*                                         
      23(d)  Consent of Sullivan & Cromwell (Included in Exhibit 5(c))*                                               
      23(e)  Consent of Sullivan & Cromwell (Included in Exhibit 8)*                                                  
      24     Powers of Attorney                                                                                       
      25(a)  Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Indenture*     
      25(b)  Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Amended and    
             Restated Trust Agreement*                                                                                
      25(c)  Form T-1 Statement of Eligibility of Wilmington Trust Company under the Guarantee for the benefit of the 
             holders of Capital Securities*                                                                           
      27     The Corporation's Financial Data Schedule (Incorporated by reference to Exhibit (27) to the Corporation's
             1996 Third Quarter Report on Form 10-Q                                                                   
      99(a)  Form of Letter of Transmittal and instructions thereto*                                                  
      99(b)  Form of Letter of Brokers, Dealers, Commercial Banks, Issuer Companies and Other Nominees*               
      99(c)  Form of Letter from Brokers, Dealers, Commercial Banks, Issuer Companies and Other Nominees to their     
             clients.*                                                                                                
      99(d)  Form of Notice of Guaranteed Delivery*                                                                   

* To be filed by amendment.                                                     

ITEM 22. UNDERTAKINGS.                                                          

     Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each    
filing of a 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 this Registration Statement shall be deemed to be a new registration         
statement relating to the securities offered herein, and the offering of such   
securities at that time shall be deemed to be the initial bona fide offering    
thereof.                                                                        

Each of the undersigned Registrants hereby also undertakes:           

   (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 this Registration Statement (or the most recent 
    post-effective amendment thereto) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this   
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 percent change in the maximum aggregate
    offering price set forth in the "Calculation of Registration Fee" table in
effective registration statement; and                                 

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         (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 this Registration Statement;   

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the       
information required to be included in a post-effective amendment by those      
paragraphs is contained in periodic reports filed by a Registrant pursuant to   
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are     
incorporated by reference in this 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.                                                                       

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of a    
registrant pursuant to the foregoing provisions, or otherwise each of the       
undersigned registrants has been advised that in the opinion of the Securities  
and Exchange Commission such indemnification is against public policy as        
expressed in the 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 by a director, officer or controlling person of 
a 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, each of the undersigned registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit a court of appropriate jurisdiction the question whether such            
indemnification by it is against public policy as expressed in the Act and will 
be governed by the final adjudication of such issue.                            

Each of the undersigned registrants hereby undertakes to respond to   
requests for information that is incorporated by reference into the prospectus  
pursuant to Items 4, 10(b), 11 or 13 of this Form within one business day of    
receipt of such request, and to send the incorporated documents by first class  
mail or other equally prompt means. This includes information contained in      
documents filed subsequent to the effective date of the registration statement  
through the date of responding to the request.                                  

    Each of the undersigned registrants hereby undertake to supply by means of
a post-effective amendment all information concerning a transaction, and the    
company being acquired involved therein, that was not the subject of and        
included in the registration statement when it became effective.                

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SIGNATURES

 Pursuant to the requirements of the Securities Act of 1933, as amended,
First Union Corporation and has duly caused this Registration Statement on Form 
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Charlotte, State of North Carolina, as of the 30th day of December, 
1996.                                                                           

                         FIRST UNION CORPORATION

                                  By:        MARION A. COWELL, JR.
                                           MARION A. COWELL, JR.
                                           EXECUTIVE VICE PRESIDENT,
                                           GENERAL COUNSEL & SECRETARY

 Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in   
the capacities indicated below and as of the date indicated above.              

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      SIGNATURE                                CAPACITY                    

                                                                           
      *EDWARD E. CRUTCHFIELD  Chairman and Chief Executive Officer and     
EDWARD E. CRUTCHFIELD           Director                                   

          *ROBERT T. ATWOOD   Executive Vice President and Chief           
   ROBERT T. ATWOOD             Financial Officer                          

            *JAMES H. HATCH   Senior Vice President and Corporate          
    JAMES H. HATCH              Controller (Principal Accounting Officer)  

            *EDWARD E. BARR   Director                                     
    EDWARD E. BARR                                                         

                              Director                                     
  G. ALEX BERNHARDT                                                        

          *W. WALDO BRADLEY   Director                                     
   W. WALDO BRADLEY                                                        

           *ROBERT J. BROWN   Director                                     
   ROBERT J. BROWN                                                         

           *ROBERT T. DAVIS   Director                                     
   ROBERT T. DAVIS                                                         

          *R. STUART DICKSON  Director                                     
  R. STUART DICKSON                                                        

               *B. F. DOLAN   Director                                     
     B. F. DOLAN                                                           

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       SIGNATURE                          CAPACITY  

                                                    
           *RODDEY DOWD, SR.    Director            
    RODDEY DOWD, SR.                                

           *JOHN R. GEORGIUS    Director            
    JOHN R. GEORGIUS                                

                                Director            
   ARTHUR M. GOLDBERG                               

         *WILLIAM N. GOODWIN    Director            
   WILLIAM N. GOODWIN                               

          *BRENTON S. HALSEY    Director            
   BRENTON S. HALSEY                                

          *HOWARD H. HAWORTH    Director            
   HOWARD H. HAWORTH                                

                                Director            
     FRANK M. HENRY                                 

                                Director            
   LEONARD G. HERRING                               

      *JUAN RODRIGUEZ INCIARTE  Director            
JUAN RODRIGUEZ INCIARTE                             

                                Director            
    JACK A. LAUGHERY                                

                *MAX LENNON     Director            
       MAX LENNON                                   

          *RADFORD D. LOVETT    Director            
   RADFORD D. LOVETT                                

            *JOSEPH NEUBAUER    Director            
    JOSEPH NEUBAUER                                 

         *HENRY D. PERRY, JR.   Director            
  HENRY D. PERRY, JR.                               

        *RANDOLPH N. REYNOLDS   Director            
  RANDOLPH N. REYNOLDS                              

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                SIGNATURE                            CAPACITY  

                                                               
                                           Director            
               RUTH G. SHAW                                    

               *CHARLES M. SHELTON, SR.    Director            
         CHARLES M. SHELTON, SR.                               

                      *LANTY L. SMITH      Director            
              LANTY L. SMITH                                   

               *ANTHONY P. TERRACCIANO     Director            
          ANTHONY P. TERRACCIANO                               

                                           Director            
             DEWEY L. TROGDON                                  

                                           Director            
              JOHN D. UIBLE                                    

                        *B. J. WALKER      Director            
               B. J. WALKER                                    

* Marion A. Cowell, Jr., Attorney-in-Fact                      

                 MARION A. COWELL, JR.                         
          MARION A. COWELL, JR.                                

Date: December 30, 1996                                                         

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 Pursuant to the requirements of the Securities Act of 1933, as amended,
First Union Institutional Capital I has duly caused this Registration Statement 
on Form S-4 to be signed on its behalf by the undersigned, thereunto duly       
authorized, in the City of Charlotte, State of North Carolina, as of the 30th   
day of December, 1996.                                                          

                                     FIRST UNION INSTITUTIONAL CAPITAL I

                                 By: First Union Corporation, as
                   Depositor

                                  By:         KENNETH R. STANCLIFF
                                          KENNETH R. STANCLIFF
                                           SENIOR VICE PRESIDENT

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EXHIBIT INDEX 

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EXHIBIT                                   DESCRIPTION                                                LOCATION                
                                                                                                                             
     4(a) Indenture, dated as of November 27, 1996, between the Corporation and                   Filed herewith             
          Wilmington Trust Company, as Debenture Trustee                                                                     

     4(b) Certificate of Trust of First Union Institutional Capital I                                    *                   

     4(c) Amended and Restated Trust Agreement of First Union Institutional Capital               Filed herewith             
          I (including the related Form of Expense Agreement)                                                                

     4(d) Form of Capital Security Certificate for First Union Institutional Capital              Filed herewith             
          I (included as Exhibit D of Exhibit 4(c))                                                                          

     4(e) Guarantee Agreement                                                                     Filed herewith             

     4(f) Registration Rights Agreement, dated as of November 27, 1996, among                     Filed herewith             
          the Corporation, the Issuer and Morgan Stanley & Co. Incorporated,                                                 
          CS First Boston Corporation, Goldman, Sachs & Co. and J.P. Morgan                                                  
          Securities Inc.                                                                                                    

     4(g) All instruments defining the rights of holders of long-term debt of the     Not filed pursuant to clause 4(iii) of 
          Corporation and its subsidiaries                                            Item 601(b) of Regulation S-K; to be   
                                                                                      furnished upon request of the          
                                                                                      Commission                             

     5(a) Opinion of Marion A. Cowell, Jr., Esq., as to validity of the New                              *                   
          Subordinated Debentures and the New Guarantee to be issued by the                                                  
          Corporation                                                                                                        

     5(b) Opinion of Richards, Layton & Finger as to validity of the New Capital                         *                   
          Securities                                                                                                         

     5(c) Opinion of Sullivan & Cromwell as to validity of the New Subordinated                          *                   
          Debentures and the New Guarantee to be issued by the Corporation                                                   

     8    Opinion of Sullivan & Cromwell as to certain federal income tax matters                        *                   

    12(a) Computations of Consolidated Ratios of Earnings to Fixed Charges            Incorporated by reference to Exhibit   
                                                                                      (12)(a) to the Corporation's 1996 Third
                                                                                      Quarter Report on Form 10-Q            

    12(b) Computations of Consolidated Ratios of Earnings to Fixed Charges and        Incorporated by reference to Exhibit   
          Preferred Stock Dividends                                                   (12)(b) to the Corporation's 1996 Third
                                                                                      Quarter Report on Form 10-Q            

    23(a) Consent of KPMG Peat Marwick LLP                                                        Filed herewith             

    23(b) Consent of Marion A. Cowell, Jr., Esq. (Included in Exhibit 5(a))                              *                   

    23(c) Consent of Richards, Layton & Finger (Included in Exhibit 5(b))                                *                   

    23(d) Consent of Sullivan & Cromwell (Included in Exhibit 5(c))                                      *                   

    23(e) Consent of Sullivan & Cromwell (Included in Exhibit 8)                                         *                   

    24    Powers of Attorney                                                                      Filed herewith             

    25(a) Form T-1 Statement of Eligibility of Wilmington Trust Company to act as                        *                   
          trustee under the Indenture                                                                                        

    25(b) Form T-1 Statement of Eligibility of Wilmington Trust Company to act as                        *                   
          trustee under the Amended and Restated Trust Agreement                                                             

    25(c) Form T-1 Statement of Eligibility of Wilmington Trust Company under the                        *                   
          Guarantee for the benefit of the holders of Capital Securities                                                     

    27    The Corporation's Financial Data Schedule                                   Incorporated by reference to Exhibit   
                                                                                      (27) to the Corporation's 1996 Third   
                                                                                      Quarter Report on Form 10-Q            

    99(a) Form of Letter of Transmittal and instructions thereto                                         *                   

    99(b) Form of Letter of Brokers, Dealers, Commercial Banks, Issuer Companies and                     *                   
          Other Nominees.                                                                                                    

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EXHIBIT                                   DESCRIPTION                               LOCATION
                                                                                            
    99(c) Form of Letter from Brokers, Dealers, Commercial Banks, Issuer Companies      *   
          and Other Nominees to their clients                                               

    99(d) Form of Notice of Guaranteed Delivery                                         *   

* To be filed by amendment.                                                     

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-4’ Filing		Date		First		Last			Other Filings
		12/1/26		4		45
		12/1/06		5		47			424B5,  8-A12B,  8-K
		12/31/99		22					10-K
		12/1/97		47					15-12G,  POS AM
		6/27/97		26
		6/26/97		26		54
		6/1/97		4		45
		5/31/97		22
		5/26/97		54
Corrected on:		1/15/97
Filed on:		12/30/96		1		66			S-3/A
		11/27/96		3		68
		11/21/96		18					15-12G
		11/15/96		24
		10/21/96		23
		10/16/96		9					8-K
		9/30/96		9		24			10-Q
		8/13/96		56
		6/30/96		9					10-Q
		3/31/96		9					10-Q
		3/29/96		17		58
		3/19/96		17
		1/1/96		22					8-K
		12/31/95		9		60			10-K
		12/7/95		17		58
		12/31/94		60					10-K
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