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UNITED STATES OMB Number: 3235-0145
SECURITIES AND EXCHANGE COMMISSION Expires: October 31, 1997
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hours per form............14.90
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ______________)*
Central Fidelity Banks, Inc.
(Name of Issuer)
Central Fidelity Banks, Inc. Common Stock
(Title of Class of Securities)
153469 10
(CUSIP Number)
Kenneth W. McAllister
Executive Vice President and General Counsel
P.O. Box 3099
Winston-Salem, North Carolina 27150
(910) 770-5000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 24, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box /_/.
Check the following box if a fee is being paid with the statement /_/. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1746(12-91)
<PAGE>
SCHEDULE 13D
CUSIP NO. 153469 10 PAGE 2 OF 17 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wachovia Corporation
IRS #56-1473727
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) /_/
(B) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC*
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
North Carolina
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 11,406,562*
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0
WITH
9 SOLE DISPOSITIVE POWER
11,406,562*
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
11,406,562*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES* /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6%
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
*BENEFICIAL OWNERSHIP OF 11,280,000 SHARES OF COMMON STOCK
REPORTED HEREUNDER IS SO BEING REPORTED SOLELY AS A RESULT OF THE
STOCK OPTION AGREEMENT DESCRIBED IN ITEM 4 HEREOF. THE OPTION
GRANTED PURSUANT TO SUCH STOCK OPTION AGREEMENT HAS NOT YET BECOME
EXERCISABLE. WACHOVIA CORPORATION EXPRESSLY DISCLAIMS BENEFICIAL
OWNERSHIP OF SUCH SHARES.
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, par value $5.00
per share ("Common Stock"), of Central Fidelity Banks, Inc., a Virginia
corporation (the "Company"), the principal executive offices of which are
located at 1021 East Cary Street, Richmond, Virginia 23219.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f) This statement is being filed by Wachovia
Corporation, a North Carolina corporation registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended ("Wachovia"). The
principal business offices of Wachovia are located at 100 North Main Street,
Winston-Salem, North Carolina 27101 and at 191 Peachtree Street, NE, Atlanta,
Georgia 30303. Wachovia has one principal banking subsidiary, Wachovia Bank,
National Association, the assets of which currently constitute substantially all
of the assets of Wachovia. Wachovia also has bank-related subsidiaries engaged
in large corporate and institutional relationship management and business
development, corporate leasing, remittance processing and discount brokerage
services. The names of the directors and executive officers of Wachovia and
their respective business addresses, citizenship and present principal
occupations or employment, as well as the names, principal businesses and
addresses of any corporations and other organizations in which such employment
is conducted, are set forth on Schedule I hereto, which Schedule is incorporated
herein by reference.
(d)-(e) Neither Wachovia, nor, to the best of its knowledge,
any of the persons listed in Schedule I hereto has during the last five years
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). Neither Wachovia nor, to the best of its knowledge, any of the
persons listed in Schedule I hereto has during the last five years been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 4, the Company has granted to
Wachovia an option pursuant to which Wachovia has the right, upon the occurrence
of certain events (none of which has occurred), to purchase up to 11,280,000
shares of Common Stock (subject to adjustment in certain circumstances) at a
price per share equal to $32.19 (the "Option"). Certain terms of the Option are
summarized in Item 4.
If the Option were exercisable and Wachovia were to exercise the Option
on the date hereof, the funds required to purchase the shares of Common Stock
issuable upon such exercise would be $363,103,200. It is currently anticipated
that such funds would be derived from working capital.
Subject to market conditions and developments with respect to
the Merger (as defined below) Wachovia may purchase shares of Common Stock in
the open market or in privately negotiated transactions. It is currently
anticipated that any funds used to make such purchases would be derived from
working capital.
ITEM 4. PURPOSE OF THE TRANSACTION.
(a)-(j) Wachovia is seeking to acquire the entire equity
interest in the Company pursuant to the Merger (as defined below). The
transactions reported hereunder are intended to assist in the achievement of
that purpose.
The Merger Agreement. The Company and Wachovia have entered
into an Agreement and Plan of Merger, dated as of June 23, 1997 (the "Merger
Agreement"), pursuant to which the Company will be merged with and into Wachovia
(the "Merger"), with Wachovia being the surviving corporation (the "Surviving
Company"). At the effective time of the Merger (the "Effective Time"), each
outstanding share of Central Common Stock will be converted into the right to
receive 0.63 of a share of common stock of Wachovia ("Wachovia Common
Stock")(the "Exchange Ratio").
In the event Wachovia changes (or establishes a record date
for changing) the number of shares of Wachovia Common Stock issued and
outstanding prior to the Effective Date as a result of a stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding Wachovia Common Stock and the record date therefor shall be prior to
the Effective Date, the Exchange
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<PAGE>
Ratio shall be proportionately adjusted. As of the Effective Time, each share of
Common Stock held directly or indirectly by the Company, other than shares held
in a fiduciary capacity or in satisfaction of a debt previously contracted, will
be canceled, and no exchange or payment will be made with respect thereto.
As a result of the Merger, the Company will cease to exist as
a separate legal entity.
The Merger is subject to various regulatory approvals, the
approval of the stockholders of the Company and the satisfaction of other terms
and conditions set forth in the Merger Agreement.
As a result of the Merger, Common Stock will be eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In addition, Central
Common Stock will be eligible for delisting from the NASDAQ Stock Market's
National Market System, where it has been traded under the symbol "CFBS".
Wachovia has agreed to cause three members of the Company's Board on the date of
the Merger Agreement (selected by Wachovia after consultation with the Company),
who are still members of the Company's Board immediately prior to the Effective
Time and willing and eligible to serve, to be elected or appointed as directors
of the Surviving Company at, or as promptly as practicable after, the Effective
Time.
The Option Agreement. In connection with the Merger Agreement,
Wachovia and the Company entered into a Stock Option Agreement, dated as of June
24, 1997 (the "Option Agreement"). The Option Agreement is designed to enhance
the likelihood that the Merger will be successfully consummated in accordance
with the terms contemplated by the Merger Agreement. Pursuant to the Option
Agreement, the Company granted Wachovia an Option to purchase, subject to
adjustments in certain circumstances, up to 11,280,000 fully paid and
non-assessable shares of Common Stock (the "Option Shares") at a price per share
equal to $32.19.
Subject to applicable law and regulatory restrictions,
Wachovia may exercise the Option, in whole or in part, if, but only if, both an
Initial Triggering Event (as defined below) and a Subsequent Triggering Event
(as defined below) have occurred prior to the occurrence of an Exercise
Termination Event (as defined below), provided that written notice of such
exercise as required by the Option
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<PAGE>
Agreement is provided within six months following such Subsequent Triggering
Event (or such later period as provided in the Option Agreement).
As defined in the Option Agreement, "Initial Triggering Event"
means any of the following events or transactions occurring on or after the date
of signing the Option Agreement:
(i) The Company or its Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) (the "Company Subsidiary"), without having
received Wachovia's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of the Option
Agreement having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations thereunder) other than Wachovia or
any of its Subsidiaries (each, a "Wachovia Subsidiary") or the Board of
Directors of the Company (the "Company Board") shall have recommended
that the shareholders of the Company approve or accept any Acquisition
Transaction other than as contemplated by the Merger Agreement. For
purposes of the Merger Agreement, (a) "Acquisition Transaction" shall
mean (x) a merger or consolidation, or any similar transaction,
involving the Company or the Company Subsidiary (other than mergers,
consolidations or similar transactions involving solely the Company
and/or one or more wholly-owned Subsidiaries of the Company, provided,
that any such transaction is not entered into in violation of the terms
of the Merger Agreement), (y) a purchase, lease or other acquisition of
all or any substantial part of the assets or deposits of the Company or
the Company Subsidiary, or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power
of the Company or the Company Subsidiary and (b) "Subsidiary" shall
have the meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than Wachovia or any Wachovia Subsidiary
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of
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<PAGE>
the Merger Agreement having the meaning assigned
thereto in Section 13(d) of the 1934 Act, and the rules
and regulations thereunder);
(iii) The shareholders of the Company shall have voted and
failed to approve the Merger Agreement and the Merger at a meeting
which has been held for that purpose or any adjournment or postponement
thereof, or such meeting shall not have been held in violation of the
Merger Agreement or shall have been canceled prior to termination of
the Merger Agreement if, prior to such meeting (or if such meeting
shall not have been held or shall have been canceled, prior to such
termination), it shall have been publicly announced that any person
(other than Wachovia or any of its Subsidiaries) shall have made, or
disclosed an intention to make, a proposal to engage in an Acquisition
Transaction;
(iv) The Company Board shall have withdrawn or modified (or
publicly announced its intention to withdraw or modify) in any manner
adverse in any respect to Wachovia its recommendation that the
shareholders of the Company approve the transactions contemplated by
the Merger Agreement, or the Company or the Company Subsidiary shall
have authorized, recommended, proposed (or publicly announced its
intention to authorize, recommend or propose) an agreement to engage in
an Acquisition Transaction with any person other than Wachovia or a
Wachovia Subsidiary;
(v) Any person other than Wachovia or any Wachovia Subsidiary
shall have made a proposal to the Company or its shareholders to engage
in an Acquisition Transaction and such proposal shall have been
publicly announced;
(vi) Any person other than Wachovia or any Wachovia Subsidiary
shall have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that
would constitute an Acquisition Transaction (or filed a preliminary
proxy statement with the SEC with respect to a potential vote by its
shareholders to approve the issuance of shares to be offered in such an
exchange offer);
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<PAGE>
(vii) The Company shall have willfully breached any covenant
or obligation contained in the Merger Agreement in anticipation of
engaging in an Acquisition Transaction, and following such breach
Wachovia would be entitled to terminate the Merger Agreement (whether
immediately or after the giving of notice or passage of time or both);
or
(viii) Any person other than Wachovia or any Wachovia
Subsidiary shall have filed an application or notice with the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board")
or other federal or state bank regulatory or antitrust authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
As defined in the Option Agreement, "Subsequent Triggering
Event" means any of the following events or transactions occurring after the
date of signing the Option Agreement:
(i) The acquisition by any person (other than
Wachovia or any Wachovia Subsidiary) of beneficial
ownership of 20% or more of the then outstanding Common
Stock; or
(ii) The occurrence of the Initial Triggering Event described
above, except that the percentage referred to in clause (z) of the
second sentence thereof shall be 20%.
As defined in the Option Agreement, "Exercise Termination
Event" means each of the following: (i) the Effective Time of the Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Wachovia pursuant to Section 8.01(b) (breach of Merger
Agreement by either party entitles other party to terminate Merger Agreement) or
Section 8.01(e) (Wachovia may terminate Merger Agreement if the Company's board
of directors fails to recommend the Merger Agreement to the Company's
stockholders, or withdraws such recommendation, or modifies or changes such
recommendation in a manner adverse in any respect to the interests of Wachovia)
of the Merger Agreement or by Wachovia or the Company pursuant to Section
8.01(d)(ii)(the Company's stockholders fail to approve the Merger Agreement) of
the Merger Agreement (each, a "Listed Termination"); or
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<PAGE>
(iii) the passage of eighteen (18) months (or such longer period as provided in
the Option Agreement) after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a Listed
Termination.
As provided in the Option Agreement, in the event that
Wachovia is entitled to and wishes to exercise the Option, it is obligated to
send to the Company a written notice (the "Option Notice" and the date of which
being hereinafter referred to as the "Notice Date") specifying (i) the total
number of shares of Common Stock it will purchase pursuant to such exercise and
(ii) a place and date not earlier than three business days nor later than 60
business days from the Notice Date for the closing of such purchase (the
"Closing Date"); provided, that if prior notification to or approval of the
Federal Reserve Board or any other regulatory or antitrust agency is required in
connection with such purchase, Wachovia is obligated to promptly file the
required notice or application for approval, promptly notify the Company of such
filing, and expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence will run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed. Any exercise of the Option will be deemed to occur on the Notice Date
relating thereto.
Under applicable law, Wachovia may be required to obtain the
prior approval of the Federal Reserve Board prior to acquiring 5% or more of the
issued and outstanding shares of Common Stock. Certain other regulatory
approvals may also be required before such an acquisition could be completed.
Neither of the parties to the Option Agreement may assign any
of its rights or obligations under the Merger Agreement or the Option created
thereunder to any other person, without the express written consent of the other
party, except that in the event an Initial Triggering Event shall have occurred
prior to an Exercise Termination Event, Wachovia, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
thereunder; provided, however, that until the date 15 days following the date on
which the Federal Reserve Board has approved an application by Wachovia to
acquire the shares of Common Stock subject to the Option, Wachovia may not
assign its rights under the Option except in (i) a widely dispersed
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public distribution, (ii) a private placement in which no one party acquires the
right to purchase in excess of 2% of the voting shares of the Company, (iii) an
assignment to a single party (e.g., a broker or investment banker) for the
purpose of conducting a widely dispersed public distribution on Wachovia's
behalf or (iv) any other manner approved by the Federal Reserve Board.
In addition, any shares of Central Common Stock purchased upon
the exercise of the Option may be resold by Wachovia pursuant to registration
rights under the Option Agreement.
In the event of any change in, or distributions in respect of,
the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise of the Option will be appropriately adjusted and proper provision will
be made so that, in the event that any additional shares of Common Stock are to
be issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding. Whenever the number of shares of Common Stock
purchasable upon exercise of the Option is adjusted as provided in the Stock
Option Agreement, the Option Price shall be adjusted by multiplying the Option
Price by a fraction, the numerator of which shall be equal to the number of
shares of Common Stock purchasable prior to the adjustment and the denominator
of which shall be equal to the number of shares of Common Stock purchasable
after the adjustment.
At any time after the occurrence of a Repurchase Event (as
defined below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10 of the Option
Agreement), the Company (or any successor thereto) must repurchase the Option
from the Holder at a price (the "Option Repurchase Price") equal to the amount
by which (A) the market/offer price (as defined below) exceeds (B) the Option
Price, multiplied by the number of shares for which the Option may then be
exercised and (ii) at the
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request of the owner of Option Shares from time to time (the "Owner"), delivered
prior to an Exercise Termination Event (or such later period as provided in
Section 10 of the Option Agreement), the Company (or any successor thereto) must
repurchase such number of the Option Shares from the Owner as the Owner
designates at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated.
A "Repurchase Event" will be deemed to have occurred upon the
occurrence of any of the following events or transactions after the date hereof:
(i) the acquisition by any person (other than Wachovia or any
Wachovia Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described
in subparagraph (i) under the definition of Initial Triggering Event,
except that the percentage referred to in clause (z) shall be 50%.
In the event that prior to an Exercise Termination Event, the
Company enters into an agreement (i) to consolidate with or merge into any
person, other than Wachovia or a Wachovia Subsidiary, or engage in a plan of
exchange with any person, other than Wachovia or a Wachovia Subsidiary, and the
Company is not the continuing or surviving corporation of such consolidation or
merger or the acquirer in such plan of exchange, (ii) to permit any person,
other than Wachovia or a Wachovia Subsidiary, to merge into the Company or be
acquired by the Company in a plan of exchange and the Company is the continuing
or surviving or acquiring corporation, but, in connection with such merger or
plan of exchange, the then outstanding shares of Common Stock are changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock after such merger
or plan of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or the Company Subsidiary's assets or
deposits to any person, other than Wachovia or a Wachovia Subsidiary, then, and
in each such case, the agreement governing such transaction must make proper
provision so that the Option will, upon the consummation of any such transaction
and upon the terms and conditions set forth in the Option Agreement, be
converted
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into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as defined in the Option
Agreement) or (y) any person that controls the Acquiring Corporation.
Wachovia may, at any time following a Repurchase Event and
prior to the occurrence of an Exercise Termination Event (or such later period
as provided in the Option Agreement), relinquish the Option (together with any
Option Shares issued to and then owned by Wachovia) to the Company in exchange
for a cash fee equal to the Surrender Price; provided, however, that Wachovia
may not exercise such right if the Company has repurchased the Option (or any
portion thereof) or any Option Shares as described above. The "Surrender Price"
will be equal to $50.0 million (i) plus, if applicable, Wachovia's purchase
price with respect to any Option Shares and (ii) minus, if applicable, the
excess of (A) the net cash amounts, if any, received by Wachovia pursuant to the
arms' length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any unaffiliated party, over (B)
Wachovia's purchase price of such Option Shares.
Copies of the Option Agreement and the Merger Agreement are
filed as exhibits to this Schedule 13D and are incorporated herein by reference.
The foregoing summary is not intended to be complete and is qualified in its
entirety by reference to such exhibits.
Purchase of Common Stock. Subject to market conditions and
developments with respect to the Merger, Wachovia may purchase shares of Common
Stock in the open market or in privately negotiated transactions.
ITEM 5. INTEREST IN SECURITIES OF THE COMPANY.
(a) Wachovia may be deemed to be the beneficial owner of the
Option Shares. As provided in the Option Agreement, Wachovia may exercise the
Option only upon the happening of one or more events, none of which has
occurred. See Item 4 hereof. If the Option were exercised in full, the Option
Shares would represent approximately 16.6% of the currently outstanding Common
Stock (after giving effect to the issuance of such Option Shares). Wachovia has
no right to vote or dispose of the shares of Common Stock subject to the Option
unless and until such time as the Option is exercised. To the best knowledge of
Wachovia, none of the persons listed in Schedule I hereto beneficially owns any
shares of Common Stock.
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(b) If Wachovia were to exercise the Option, it would have
sole power to vote and, subject to the terms of the Option Agreement, sole power
to direct the disposition of the shares of Common Stock covered thereby.
(c) Wachovia acquired the Option in connection
with the Merger Agreement. See Item 4 hereof.
To the best knowledge of Wachovia, none of the persons listed
in Schedule I hereto has effected any transactions in Common Stock during the
past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE
COMPANY.
Except as described in Item 4 and Item 5 hereof, neither
Wachovia nor, to the best of its knowledge, any of the persons listed on
Schedule I hereto, has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including
the transfer or voting of any of the securities, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division of
profits or losses, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
2 Agreement and Plan of Merger, dated as of June 23,
1997, by and among Wachovia Corporation and
Central Fidelity Banks, Inc.
99 Stock Option Agreement, dated as of June 24, 1997,
between Wachovia Corporation and Central Fidelity
Banks, Inc.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I hereby certify that the information set forth in this statement is
true, complete and correct.
Dated: July 3, 1997
WACHOVIA CORPORATION
By: /s/ Kenneth W. McAllister
Name: Kenneth W. McAllister
Title: Executive Vice President
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
WACHOVIA CORPORATION
The names, business addresses and present principal
occupations of the directors and executive officers of Wachovia Corporation are
set forth below. If no business address is given, the director's or officer's
business address is Post Office Box 3099, Winston-Salem, North Carolina, 27150.
The business address of each of the directors of Wachovia Corporation is also
the business address of such director's employer, if any. Directors of Wachovia
Corporation are identified by an asterisk. Unless otherwise indicated, all
directors and officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
Name Present Principal Occupation or Employment and Address
<S> <C>
*John L. Clendenin Chairman of the Board of BellSouth Corporation, a
telecommunications holding company. 1155 Peachtree
Street, N.E., Suite 2000, Atlanta,
Georgia, 30309- 3610.
*George W. Henderson, III President, Chief Executive Officer and a Director of
Burlington Industries, Inc., which manufactures
textiles and home furnishings. 3330 West Friendly
Avenue, Greensboro, North Carolina, 27410.
*Robert A. Ingram President and Chief Executive Officer of Glaxo
Wellcome Inc., a pharmaceutical company. Five Moore
Drive, Post Office Box 13398, Research Triangle Park,
North Carolina, 27709.
*John G. Medlin, Jr. Chairman of the Board of Wachovia.
*L. M. Baker, Jr. President and Chief Executive Officer of Wachovia.
*Lawrence M. Gressette, Jr. Chairman of the Executive Committee of SCANA
Corporation. 1400 Lady Street, Mail Code I-25,
Columbia, South Carolina, 29201.
*Thomas K. Hearn, Jr. President of Wake Forest University. 1834 Reynolds
Road, Room 211, Reynolds Hall, Winston-Salem, North
Carolina, 27106.
*Herman J. Russell Chairman of H.J. Russell & Company, a management
services company. 504 Fair Street, SW, Atlanta,
Georgia, 30313.
*John C. Whitaker, Jr. Chairman of the Board and Chief Executive Officer of
Inmar Enterprises, Inc., an information services and
transaction processing company. 2601 Pilgrim Court,
Winston-Salem, North Carolina, 27106.
*Hayne Hipp President and Chief Executive Officer of The Liberty
Corporation, an insurance and broadcasting holding
company. Post Office Box 789, Greenville, South
Carolina, 29602.
</TABLE>
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<TABLE>
<S> <C>
*Robert M. Holder, Jr. Chairman of the Board of RMH Group, LLC. 3333
Cumberland Circle, Suite 400, Atlanta, Georgia, 30339.
*James W. Johnston President and Chief Executive Officer of Stonemarker
Enterprises, Inc., a consulting and investment
company. 380 Knollwood, Suite 570, Winston-Salem,
North Carolina, 27103.
*Wyndham Robertson Writer and Retired Vice President Communications,
University of N.C. 520 Hooper Lane, Chapel Hill,
North Carolina, 27514-3836.
*Sherwood H. Smith, Jr. Chairman of the Board of Carolina Power & Light
Company, a public utility. Post Office Box 1551,
Raleigh, North Carolina, 27602.
Mickey W. Dry Executive Vice President and Chief Credit Officer of
Wachovia.
Hugh M. Durden Executive Vice President of Wachovia.
Walter E. Leonard, Jr. Executive Vice President of Wachovia.
Kenneth W. McAllister Executive Vice President and General Counsel of
Wachovia.
Robert S. McCoy, Jr. Executive Vice President and Chief Financial Officer
of Wachovia.
G. Joseph Pendergrast Executive Vice President of Wachovia.
Richard B. Roberts Executive Vice President and Treasurer of Wachovia.
Donald K. Truslow Comptroller of Wachovia.
</TABLE>
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<PAGE>
Exhibit Index
2 Agreement and Plan of Merger, dated as of June 23, 1997, by
and between Wachovia Corporation and Central Fidelity Banks,
Inc.
99 Stock Option Agreement, dated as of June 24, 1997, between
Wachovia Corporation and Central Fidelity Banks, Inc.
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CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
dated as of June 23, 1997
by and between
Wachovia Corporation
and
Central Fidelity Banks, Inc.
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PAGE
RECITALS..........................................................................................................1
ARTICLE I
Certain Definitions...............................................1
1.01 Certain Definitions.................................................................................1
ARTICLE II
The Merger....................................................6
2.01 The Merger..........................................................................................6
2.02 Effective Date and Effective Time...................................................................7
2.03 Plan of Merger......................................................................................7
ARTICLE III
Consideration; Exchange Procedures........................................8
3.01 Merger Consideration................................................................................8
3.02 Rights as Stockholders; Stock Transfers.............................................................8
3.03 Fractional Shares...................................................................................8
3.04 Exchange Procedures.................................................................................8
3.05 Anti-Dilution Provisions...........................................................................10
3.06 Options............................................................................................10
ARTICLE IV
Actions Pending Acquisition..........................................10
4.01 Forebearances of Central...........................................................................10
4.02 Forebearances of Wachovia..........................................................................13
ARTICLE V
Representations and Warranties.........................................13
5.01 Disclosure Schedules...............................................................................14
5.02 Standard...........................................................................................14
5.03 Representations and Warranties of Central .........................................................14
5.04 Representations and Warranties of Wachovia.........................................................24
</TABLE>
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<TABLE>
<S> <C>
PAGE
ARTICLE VI
Covenants..............................................28
6.01 Reasonable Best Efforts...................................................................28
6.02 Stockholder Approvals.....................................................................28
6.03 Registration Statement....................................................................28
6.04 Press Releases............................................................................29
6.05 Access; Information.......................................................................29
6.06 Acquisition Proposals.....................................................................30
6.07 Affiliate Agreements......................................................................30
6.08 Takeover Laws.............................................................................31
6.09 Certain Policies..........................................................................31
6.10 NYSE Listing..............................................................................31
6.11 Regulatory Applications...................................................................31
6.12 Indemnification...........................................................................32
6.13 Benefit Plans.............................................................................33
6.14 Accountants' Letters......................................................................34
6.15 Notification of Certain Matters...........................................................34
6.16 Directors.................................................................................34
6.17 Dividend Coordination.....................................................................34
ARTICLE VII
Conditions to Consummation of the Merger...............................34
7.01 Conditions to Each Party's Obligation to Effect the Merger................................34
7.02 Conditions to Obligation of Central.......................................................35
7.03 Conditions to Obligation of Wachovia......................................................36
ARTICLE VIII
Termination.............................................37
8.01 Termination...............................................................................37
8.02 Effect of Termination and Abandonment.....................................................38
</TABLE>
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<TABLE>
<S> <C>
PAGE
ARTICLE IX
Miscellaneous............................................38
9.01 Survival..................................................................................38
9.02 Waiver; Amendment.........................................................................38
9.03 Counterparts..............................................................................38
9.04 Governing Law.............................................................................39
9.05 Expenses..................................................................................39
9.06 Notices...................................................................................39
9.07 Entire Understanding; No Third Party Beneficiaries........................................41
9.08 Interpretation; Effect....................................................................41
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Rights Agreement Amendment
EXHIBIT C Form of Central Affiliate Agreement
EXHIBIT D Form of Wachovia Affiliate Agreement
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of June 23, 1997 (this
"Agreement"), by and between Central Fidelity Banks, Inc. ("Central") and
Wachovia Corporation ("Wachovia").
RECITALS
A. Central Fidelity Banks, Inc.. Central Fidelity Banks, Inc. is a
Virginia corporation, having its principal place of business in Richmond,
Virginia.
B. Wachovia Corporation. Wachovia Corporation is a North Carolina
corporation, having its principal place of business in both Winston-Salem, North
Carolina and Atlanta, Georgia..
C. Stock Option Agreement. As an inducement to the willingness of
Wachovia to continue to pursue the transactions contemplated by this Agreement ,
Central expects (but is not obligated) to grant to Wachovia an option pursuant
to a stock option agreement, in substantially the form of Exhibit A.
D. Intentions of the Parties. It is the intention of the parties to
this Agreement that the business combination contemplated hereby be accounted
for under the "pooling-of-interests" accounting method and be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 as
amended (the "Code").
E. Board Action. The respective Boards of Directors of each of Wachovia
and Central have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer, proposal for
a merger, consolidation or other business combination involving Central or
any of its Subsidiaries or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets or
deposits of, Central or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Central" has the meaning set forth in the preamble to this Agreement.
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"Central Affiliate" has the meaning set forth in Section 6.07(a).
"Central Board" means the Board of Directors of Central.
"Central By-Laws" means the By-laws of Central.
"Central Certificate" means the Amended and Restated Articles of
Incorporation of Central.
"Central Common Stock" means the common stock, par value $5.00 per
share, of Central.
"Central Meeting" has the meaning set forth in Section 6.02.
"Central Rights" means the preferred share purchase rights issued under
the Central Rights Agreement.
"Central Rights Agreement" means the Amended and Restated Rights
Agreement, dated as of November 9, 1994, between Central and Central
Fidelity National Bank.
"Central 1983 Preferred Stock" means the 1983 Preferred Stock, par
value $25.00 per share, of Central.
"Central Preferred Stock" means the preferred stock, par value $100.00
per share, of Central.
"Central Stock" means, collectively, Central Common Stock, Central 1983
Preferred Stock and Central Preferred Stock.
"Central Stock Plans" means, the 1995 Stock Incentive Plan, 1986
Incentive Stock Option Plan, 1988 Incentive Stock Option Plan, 1991
Incentive Stock Option Plan, 1993 Incentive Stock Option Plan and the 1982
Stock Option Plan.
"Code" has the meaning set forth in the recitals.
"Compensation and Benefit Plans" has the meaning set forth in Section
5.03(m).
"Corporation Commission" has the meaning set forth in Section 2.01(b).
"Costs" has the meaning set forth in Section 6.12(a).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Merger, as provided
for in Section 2.02.
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"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water
Act, the Federal Clean Air Act, and the Occupational Safety and Health Act,
each as amended, regulations promulgated thereunder, and state
counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
"Exchange Ratio" has the meaning set forth in Section 3.01.
"FDIC" means the Federal Deposit Insurance Corporation.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Insurance Amount" has the meaning set forth in Section 6.12(b).
"Insurance Policy" has the meaning set forth in Section 5.03(t).
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to Wachovia or Central,
any effect that (i) is material and adverse to the financial position,
results of operations or business of Wachovia and its Subsidiaries taken as
a whole or Central and its Subsidiaries taken as a whole, respectively, or
(ii) would materially impair the ability of either Wachovia or Central to
perform its obligations under this Agreement or otherwise materially
threaten or materially impede the consummation of the Merger and the other
transactions contemplated by this Agreement; provided, however, that
Material Adverse Effect shall not be deemed to include the impact of (a)
changes in banking and similar laws of general applicability or
interpretations thereof by
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courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to
banks and their holding companies generallyand (c) any modifications or
changes to valuation policies and practices in connection with the Merger
or restructuring charges taken in connection with the Merger, in each case
in accordance with generally accepted accounting principles.
"Merger" has the meaning set forth in Section 2.01.
"Merger Consideration" has the meaning set forth in Section 2.01.
"Multiemployer Plans" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"NCBCA" means the North Carolina Business Corporation Act.
"New Certificate" has the meaning set forth in Section 3.04.
"North Carolina Secretary" means the North Carolina Secretary of State.
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificate" has the meaning set forth in Section 3.04.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Plans" has the meaning set forth in Section 5.03(m).
"Previously Disclosed" by a party shall mean information set forth in
its Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authority" has the meaning set forth in Section 5.03(i).
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"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market price
or value of, shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 5.03(g).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Stock Option Agreement" has the meaning set forth in Recital C.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.03 (o).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Effective Date.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of Central Stock held by Central or
any of its Subsidiaries or by Wachovia or any of its Subsidiaries, in each
case other than in a fiduciary (including custodial or agency) capacity or
as a result of debts previously contracted in good faith.
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"VSCA" means the Virginia Stock Corporation Act.
"Wachovia" has the meaning set forth in the preamble to this Agreement.
"Wachovia Board" means the Board of Directors of Wachovia.
"Wachovia Common Stock" means the common stock, par value $5.00 per
share, of Wachovia.
"Wachovia Meeting" has the meaning set forth in Section 6.02.
"Wachovia Preferred Stock" means the preferred stock, par value $5.00
per share, of Wachovia.
"Wachovia Stock" means, collectively, Wachovia Common Stock and
Wachovia Preferred Stock.
ARTICLE II
THE MERGER
2.01 The Merger. (a) At the Effective Time, Central shall merge with
and into Wachovia (the "Merger"), the separate corporate existence of Central
shall cease and Wachovia shall survive and continue to exist as a North Carolina
corporation (Wachovia, as the surviving corporation in the Merger, sometimes
being referred to herein as the "Surviving Corporation"). Wachovia may at any
time prior to the Effective Time change the method of effecting the combination
with Central (including, without limitation, the provisions of this Article II)
if and to the extent it deems such change to be necessary, appropriate or
desirable; provided, however, that no such change shall (i) alter or change the
amount or kind of consideration to be issued to holders of Central Stock as
provided for in this Agreement (the "Merger Consideration"), (ii) adversely
affect the tax treatment of Central's stockholders as a result of receiving the
Merger Consideration or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
(b) Subject to the satisfaction or waiver of the conditions set forth
in Article VII, the Merger shall become effective upon the occurrence of the
filing in the office of the Virginia State Corporation Commission (the
"Corporation Commission") of articles of merger in accordance with Section
13.1-720 of the VSCA and the filing in the Office of the Secretary of State of
the State of North Carolina (the "North Carolina Secretary") of articles of
merger in accordance with Section 55- 11-05 of the NCBCA or such later date and
time as may be set forth in such articles and the issuance of certificates of
merger by the Corporation Commission and the North Carolina Secretary under the
VSCA and the NCBCA, respectively. The Merger shall have the effects prescribed
in the NCBCA and the VSCA.
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(c) Articles of Incorporation and By-Laws. The articles of
incorporation and by-laws of Wachovia immediately after the Merger shall be
those of Wachovia as in effect immediately prior to the Effective Time.
(d) Directors and Officers of the Surviving Corporation. The directors
and officers of Wachovia immediately after the Merger shall be the directors and
officers of Wachovia (except as provided in Section 6.16) immediately prior to
the Effective Time, until such time as their successors shall be duly elected
and qualified.
2.02 Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Merger (the "Effective Date") to occur on (i) the fifth
business day to occur after the last of the conditions set forth in Article VII
shall have been satisfied or waived in accordance with the terms of this
Agreement (or, at the election of Wachovia, on the last business day of the
month in which such day occurs or, if such last business day occurs on one of
the last five business days of such month, on the last business day of the
succeeding month) or (ii) such other date to which the parties may agree in
writing. The time on the Effective Date when the Merger shall become effective
is referred to as the "Effective Time."
2.03 Plan of Merger. At the request of Wachovia, Wachovia and Central
shall enter into a separate plan of merger reflecting the terms hereof for
purposes of any filing requirement of the VSCA or NCBCA.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Merger Consideration. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Merger and without any
action on the part of any Person:
(a) Outstanding Central Common Stock and Central Rights. Each share,
excluding Treasury Stock, of Central Common Stock issued and outstanding
immediately prior to the Effective Time, together with each associated
Central Right, shall become and be converted into 0.63 of a share of
Wachovia Common Stock (the "Exchange Ratio"). The Exchange Ratio shall be
subject to adjustment as set forth in Section 3.05.
(b) Outstanding Wachovia Stock. Each share of Wachovia Stock
issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding and unaffected by the Merger.
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(c) Treasury Shares. Each share of Central Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in
exchange therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Central Stock shall cease to be, and shall have no rights as,
stockholders of Central, other than to receive any dividend or other
distribution with respect to such Central Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock transfer
books of Central or the Surviving Corporation of shares of Central Stock.
3.03 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Wachovia Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Wachovia shall pay to each holder of Central Common Stock who would
otherwise be entitled to a fractional share of Wachovia Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash (without interest) determined by multiplying such fraction by the average
of the last sale prices of Wachovia Common Stock, as reported by the NYSE
Composite Transactions Reporting System (as reported in The Wall Street Journal
or, if not reported therein, in another authoritative source), for the five NYSE
trading days immediately preceding the Effective Date.
3.04 Exchange Procedures. (a) At or prior to the Effective Time,
Wachovia shall deposit, or shall cause to be deposited, with Wachovia Bank, N.A.
(in such capacity, the "Exchange Agent"), for the benefit of the holders of
certificates formerly representing shares of Central Common Stock and the
associated Central Rights ("Old Certificates"), for exchange in accordance with
this Article III, certificates representing the shares of Wachovia Common Stock
("New Certificates") and an estimated amount of cash (such cash and New
Certificates, together with any dividends or distributions with a record date
occurring after the Effective Date with respect thereto (without any interest on
any such cash, dividends or distributions), being hereinafter referred to as the
"Exchange Fund") to be paid pursuant to this Article III in exchange for
outstanding shares of Central Common Stock.
(b) As promptly as practicable after the Effective Date, Wachovia shall
send or cause to be sent to each former holder of record of shares of Central
Common Stock immediately prior to the Effective Time transmittal materials for
use in exchanging such stockholder's Old Certificates for the consideration set
forth in this Article III. Wachovia shall cause the New Certificates into which
shares of a stockholder's Central Common Stock are converted on the Effective
Date and/or any check in respect of any fractional share interests or dividends
or distributions which such person shall be entitled to receive to be delivered
to such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Central Common Stock (or indemnity reasonably
satisfactory to Wachovia and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such stockholder. No interest will be paid
on any such cash to be paid in lieu
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of fractional share interests or in respect of dividends or distributions which
any such person shall be entitled to receive pursuant to this Article III upon
such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of Central Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) At the election of Wachovia, no dividends or other distributions
with respect to Wachovia Common Stock with a record date occurring after the
Effective Time shall be paid to the holder of any unsurrendered Old Certificate
representing shares of Central Common Stock converted in the Merger into the
right to receive shares of such Wachovia Common Stock until the holder thereof
shall be entitled to receive New Certificates in exchange therefor in accordance
with the procedures set forth in this Section 3.04, and no such shares of
Central Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.04. After becoming so entitled in
accordance with this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Wachovia Common Stock such holder had the right to receive upon surrender of the
Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Central for six months after the Effective Time shall be paid to
Wachovia. Any stockholders of Central who have not theretofore complied with
this Article III shall thereafter look only to Wachovia for payment of the
shares of Wachovia Common Stock, cash in lieu of any fractional shares and
unpaid dividends and distributions on Wachovia Common Stock deliverable in
respect of each share of Central Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon.
3.05 Anti-Dilution Provisions. In the event Wachovia changes (or
establishes a record date for changing) the number of shares of Wachovia Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Wachovia Common Stock and the record date therefor shall be
prior to the Effective Date, the Exchange Ratio shall be proportionately
adjusted.
3.06 Options. At the Effective Time, each outstanding option to
purchase shares of Central Common Stock under the Central Stock Plans (each, a
"Central Stock Option"), whether vested or unvested, shall be converted into an
option to acquire, on the same terms and conditions as were applicable under
such Central Stock Option, the number of shares of Wachovia Common Stock equal
to (a) the number of shares of Central Common Stock subject to the Central Stock
Option, multiplied by (b) the Exchange Ratio (such product rounded down to the
nearest whole number) (a "Replacement Option"), at an exercise price per share
(rounded up to the nearest whole cent) equal to (y) the aggregate exercise price
for the shares of Central Common Stock which were purchasable pursuant to such
Central Stock Option divided by (z) the number of full shares of Wachovia
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Common Stock subject to such Replacement Option in accordance with the
foregoing. Notwithstanding the foregoing, each Central Stock Option which is
intended to be an "incentive stock option" (as defined in Section 422 of the
Code) shall be adjusted in accordance with the requirements of Section 424 of
the Code. At or prior to the Effective Time, Central shall take all action, if
any, necessary with respect to the Central Stock Plans to permit the replacement
of the outstanding Central Stock Options by Wachovia pursuant to this Section.
At the Effective Time, Wachovia shall assume the Central Stock Plans; provided,
that such assumption shall be only in respect of the Replacement Options and
that Wachovia shall have no obligation with respect to any awards under the
Central Stock Plans other than the Replacement Options and shall have no
obligation to make any additional grants or awards under such assumed Central
Stock Plans.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 Forebearances of Central. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Wachovia, Central will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Central and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action
reasonably likely to have an adverse affect upon Central's ability to
perform any of its material obligations under this Agreement.
(b) Capital Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Central Stock or any Rights, (ii) enter into any agreement with respect to
the foregoing, or (iii) permit any additional shares of Central Stock to
become subject to new grants of employee or director stock options, other
Rights or similar stock-based employee rights.
(c) Dividends, Etc. (a) Make, declare, pay or set aside for payment any
dividend (other than (A) quarterly cash dividends on Central Stock in an
amount not to exceed $0.24 per share with record and payment dates
consistent with past practice and (B) dividends from wholly owned
Subsidiaries to Central or another wholly owned Subsidiary of Central) on
or in respect of, or declare or make any distribution on any shares of
Central Stock or (b) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director,
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officer or employee of Central or its Subsidiaries, or grant any salary or
wage increase or increase any employee benefit (including incentive or
bonus payments), except (i) for normal individual increases in compensation
to employees in the ordinary course of business consistent with past
practice, (ii) for other changes that are required by applicable law, (iii)
to satisfy Previously Disclosed contractual obligations existing as of the
date hereof, or (iv) for grants of awards to newly hired employees
consistent with past practice.
(e) Benefit Plans. Enter into, establish, adopt or amend (except (i) as
may be required by applicable law or (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
(or similar arrangement) related thereto, in respect of any director,
officer or employee of Central or its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock
or other compensation or benefits payable thereunder.
(f) Dispositions. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business and in a transaction that is not material to it and its
Subsidiaries taken as a whole.
(g) Acquisitions. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith,
in each case in the ordinary and usual course of business consistent with
past practice) all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business
and in a transaction that is not material to it and its Subsidiaries taken
as a whole.
(h) Governing Documents. Amend the Central Certificate, Central
By-laws or the certificate of incorporation or by-laws (or similar
governing documents) of any of Central's Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be
required by generally accepted accounting principles.
(j) Contracts. Amend, or take any action adverse to Wachovia with
respect to, the Central Rights Agreement or, except in the ordinary course
of business consistent with past practice, enter into or terminate any
material contract (as defined in Section 5.03(k)) or amend or modify in any
material respect any of its existing material contracts.
(k) Claims. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely
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money damages in an amount, individually or in the aggregate for all such
settlements, that is not material to Central and its Subsidiaries, taken as
a whole.
(l) Adverse Actions. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
(m) Risk Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure
to interest rate risk.
(n) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(o) Commitments. Agree or commit to do any of the foregoing.
4.02 Forebearances of Wachovia. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of Central, Wachovia will not, and will cause each of its
Subsidiaries not to:
(a) Extraordinary Dividends. Make, declare, pay or set aside for
payment any extraordinary dividend.
(b) Adverse Actions. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation; provided, however, that nothing contained
herein shall limit the ability of Wachovia to exercise its rights under the
Stock Option Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, Wachovia has
delivered to Central a schedule and Central has delivered to Wachovia a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section 5.03
or 5.04 or to one or more of its covenants contained in Article IV; provided,
that (a) no such item is required to be set forth in a Disclosure Schedule as an
exception to a representation or warranty if its absence would not be reasonably
likely to result in the related representation or warranty being deemed untrue
or incorrect under the standard established by Section 5.02, and (b) the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect.
5.02 Standard. No representation or warranty of Central or Wachovia
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had or is reasonably likely to have a
Material Adverse Effect on the party making such representation or warranty.
5.03 Representations and Warranties of Central. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, Central
hereby represents and warrants to Wachovia:
(a) Organization, Standing and Authority. Central is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Central is duly qualified to do business and is
in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) Central Stock. As of the date hereof, the authorized capital stock
of Central consists solely of (i) 100,000,000 shares of Central Common
Stock, of which no more than 56,800,000 shares were outstanding as of the
date hereof, (ii) 200,000 shares of Central Preferred Stock, of which no
shares are outstanding and (iii) 4,000,000 shares of Central 1983 Preferred
Stock, of which no shares are outstanding as of the date hereof. As of the
date hereof, no shares of Central Common Stock and no shares of Central
Preferred Stock were held in treasury by Central or otherwise owned by
Central or its Subsidiaries. The outstanding shares of Central Stock have
been duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and
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subject to no preemptive rights (and were not issued in violation of any
preemptive rights). As of the date hereof, except as Previously Disclosed
in its Disclosure Schedule, there are no shares of Central Stock authorized
and reserved for issuance, Central does not have any Rights issued or
outstanding with respect to Central Stock, and Central does not have any
commitment to authorize, issue or sell any Central Stock or Rights, except
pursuant to this Agreement and the Stock Option Agreement. The number of
shares of Central Common Stock which are issuable and reserved for issuance
upon exercise of Central Stock Options as of the date hereof are Previously
Disclosed in Central's Disclosure Schedule.
(c) Subsidiaries. (i)(A) Central has Previously Disclosed in its
Disclosure Schedule a list of all of its Subsidiaries together with the
jurisdiction of organization of each such Subsidiary, (B) except as
Previously Disclosed, it owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Subsidiaries, (C) no equity
securities of any of its Subsidiaries are or may become required to be
issued (other than to it or its wholly-owned Subsidiaries) by reason of any
Right or otherwise, (D) there are no contracts, commitments, understandings
or arrangements by which any of such Subsidiaries is or may be bound to
sell or otherwise transfer any equity securities of any such Subsidiaries
(other than to it or its wholly-owned Subsidiaries), (E) there are no
contracts, commitments, understandings, or arrangements relating to its
rights to vote or to dispose of such securities and (F) all the equity
securities of each Subsidiary held by Central or its Subsidiaries are fully
paid and nonassessable (except pursuant to 12 U.S.C. ss.55) and are owned
by Central or its Subsidiaries free and clear of any Liens.
(ii) Central does not own beneficially, directly or indirectly, any
equity securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of Central's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified.
(d) Corporate Power. Central and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Central has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) Corporate Authority. Subject in the case of this Agreement to
receipt of the requisite approval of the agreement of merger set forth in
this Agreement by the holders of more than two-thirds of the outstanding
shares of Central Common Stock entitled to vote thereon (which is the only
shareholder vote required thereon), this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate
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action of Central and the Central Board on or prior to the date hereof.
This Agreement is a valid and legally binding obligation of Central,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to
or affecting creditors' rights or by general equity principles). The
Central Board of Directors has received the written opinion of Keefe,
Bruyette & Woods, Inc. to the effect that as of the date hereof the
consideration to be received by the holders of Central Common Stock in the
Merger is fair to the holders of Central Common Stock from a financial
point of view.
(f) Regulatory Approvals; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by Central or any of its
Subsidiaries in connection with the execution, delivery or performance by
Central of this Agreement or the Stock Option Agreement or to consummate
the Merger except for (A) filings of applications or notices with federal
and Virginia banking authorities, (B) filings with the SEC and state
securities authorities and the approval of this Agreement by the
stockholders of Central, and (C) the filing of articles of merger with the
Corporation Commission pursuant to the VSCA and the North Carolina
Secretary pursuant to the NCBA and the issuance of related certificates of
merger. As of the date hereof, Central is not aware of any reason why the
approvals set forth in Section 7.01(b) will not be received without the
imposition of a condition, restriction or requirement of the type described
in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the Stock Option Agreement
and the consummation of the transactions contemplated hereby and thereby do
not and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any right
of termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of Central or of any of its Subsidiaries or to which Central or
any of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the Central Certificate or the
Central By-Laws, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) Financial Reports and SEC Documents. (i) Central's Annual Reports
on Form 10-K for the fiscal years ended December 31, 1994, 1995 and 1996,
and all other reports, registration statements, definitive proxy statements
or information statements filed or to be filed by it or any of its
Subsidiaries subsequent to December 31, 1994 under the Securities Act, or
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form
filed or to be filed (collectively, Central's "SEC Documents") with the
SEC, as of the date filed, (A) complied or will comply in all material
respects as to form with the applicable requirements under the Securities
Act or the Exchange Act, as the case may be, and (B) did not and will not
contain any untrue statement of
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a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of Central and its
Subsidiaries as of its date, and each of the statements of income and
changes in stockholders' equity and cash flows or equivalent statements in
such SEC Documents (including any related notes and schedules thereto)
fairly presents, or will fairly present, the results of operations, changes
in stockholders' equity and changes in cash flows, as the case may be, of
Central and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements.
(ii) Except as Previously Disclosed in its Disclosure Schedule, since
December 31, 1996, Central and its Subsidiaries have not incurred any
liability other than in the ordinary course of business consistent with
past practice.
(iii) Since December 31, 1996, (A) Central and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no
event has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in any
paragraph of Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to Central.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against Central or any of its
Subsidiaries and, to Central's knowledge, no such litigation, claim or other
proceeding has been threatened.
(i) Regulatory Matters. (i) Neither Central nor any of its Subsidiaries
or properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any federal
or state governmental agency or authority charged with the supervision or
regulation of financial institutions or issuers of securities or engaged in the
insurance of deposits (including, without limitation, the Office of the
Comptroller of the Currency, the Federal Reserve Board and the FDIC) or the
supervision or regulation of it or any of its Subsidiaries (collectively, the
"Regulatory Authorities").
(ii) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(j) Compliance with Laws. Central and each of its Subsidiaries:
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(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses
as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
Central's knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that
Central or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit,
or governmental authorization (nor, to Central's knowledge, do any
grounds for any of the foregoing exist).
(k) Material Contracts; Defaults. Except for those agreements and other
documents filed as exhibits to its SEC Documents, neither it nor any of its
Subsidiaries is a party to, bound by or subject to any agreement, contract,
arrangement, commitment or understanding (whether written or oral) (i) that
is a "material contract" within the meaning of Item 601(b)(10) of the SEC's
Regulation S-K or (ii) that materially restricts the conduct of business by
it or any of its Subsidiaries. Neither it nor any of its Subsidiaries is in
default under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or
under which it or its respective assets, business, or operations receives
benefits, and there has not occurred any event that, with the lapse of time
or the giving of notice or both, would constitute such a default.
(l) No Brokers. No action has been taken by Central that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a Previously
Disclosed fee to be paid to Keefe, Bruyette & Woods, Inc.
(m) Employee Benefit Plans. (i) Section 5.03(m)(i) of Central's
Disclosure Schedule contains a complete and accurate list of all existing
bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option, severance, welfare and
fringe benefit plans, employment or severance agreements and all similar
practices, policies and arrangements in which any employee or former
employee (the "Employees"), consultant or former consultant (the
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"Consultants") or director or former director (the "Directors") of Central
or any of its Subsidiaries participates or to which any such Employees,
Consultants or Directors are a party (the "Compensation and Benefit
Plans"). Neither Central nor any of its Subsidiaries has any commitment to
create any additional Compensation and Benefit Plan or to modify or change
any existing Compensation and Benefit Plan.
(ii) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and with
applicable law, including, but not limited to, ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act,
or any regulations or rules promulgated thereunder, and all filings,
disclosures and notices required by ERISA, the Code, the Securities Act,
the Exchange Act, the Age Discrimination in Employment Act and any other
applicable law have been timely made. Each Compensation and Benefit Plan
which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA (a "Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination
letter (including a determination that the related trust under such
Compensation and Benefit Plan is exempt from tax under Section 501(a) of
the Code) from the Internal Revenue Service ("IRS") for "TRA" (as defined
in Rev. Proc. 93-39), or will file for such determination letter prior to
the expiration of the remedial amendment period for such Compensation and
Benefit Plan, and Central is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. There is
no material pending or, to the knowledge of Central, threatened legal
action, suit or claim relating to the Compensation and Benefit Plans.
Neither Central nor any of its Subsidiaries has engaged in a transaction,
or omitted to take any action, with respect to any Compensation and Benefit
Plan that would reasonably be expected to subject Central or any of its
Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code
or Section 502 of ERISA, assuming for purposes of Section 4975 of the Code
that the taxable period of any such transaction expired as of the date
hereof.
(iii) No liability (other than for payment of premiums to the PBGC
which have been made or will be made on a timely basis) under Title IV of
ERISA has been or is expected to be incurred by Central or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or any single-employer
plan of any entity (an "ERISA Affiliate") which is considered one employer
with Central under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of
the Code (an "ERISA Affiliate Plan"). None of Central, any of its
Subsidiaries or any ERISA Affiliate has contributed, or has been obligated
to contribute, to a multiemployer plan under Subtitle E of Title IV of
ERISA at any time since September 26, 1980. No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed
for any Compensation and Benefit Plan or by any ERISA Affiliate Plan within
the 12-month period ending on the date hereof, and no such notice will be
required to be filed as a result of the transactions contemplated by this
Agreement. The PBGC has not instituted proceedings to terminate any Pension
Plan or ERISA Affiliate Plan and, to Central's knowledge, no condition
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exists that presents a material risk that such proceedings will be
instituted. To the knowledge of Central, there is no pending investigation
or enforcement action by the PBGC, the Department of Labor (the "DOL") or
IRS or any other governmental agency with respect to any Compensation and
Benefit Plan. Under each Pension Plan and ERISA Affiliate Plan, as of the
date of the most recent actuarial valuation performed prior to the date of
this Agreement, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate Plan), did not
exceed the then current value of the assets of such Pension Plan or ERISA
Affiliate Plan and since such date there has been neither an adverse change
in the financial condition of such Pension Plan or ERISA Affiliate Plan nor
any amendment or other change to such Pension Plan or ERISA Affiliate Plan
that would increase the amount of benefits thereunder which in either case
reasonably could be expected to change such result.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements under any collective bargaining agreement to which
Central or any of its Subsidiaries is a party have been timely made or have
been reflected on Central's financial statements to the extent required by
generally accepted accounting principles. Neither any Pension Plan nor any
ERISA Affiliate Plan has an "accumulated funding deficiency" (whether or
not waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA and all required payments to the PBGC with respect to each Pension
Plan or ERISA Affiliate Plan have been made on or before their due dates.
None of Central, any of its Subsidiaries or any ERISA Affiliate (x) has
provided, or would reasonably be expected to be required to provide,
security to any Pension Plan or to any ERISA Affiliate Plan pursuant to
Section 401(a)(29) of the Code, and (y) has taken any action, or omitted to
take any action, that has resulted, or would reasonably be expected to
result, in the imposition of a lien under Section 412(n) of the Code or
pursuant to ERISA.
(v) Neither Central nor any of its Subsidiaries has any obligations to
provide retiree health and life insurance or other retiree death benefits
under any Compensation and Benefit Plan, other than benefits mandated by
Section 4980B of the Code, and each such Compensation and Benefit Plan may
be amended or terminated without incurring liability thereunder. There has
been no communication to Employees by Central or any of its Subsidiaries
that would reasonably be expected to promise or guarantee such Employees
retiree health or life insurance or other retiree death benefits on a
permanent basis.
(vi) Central and its Subsidiaries do not maintain any Compensation and
Benefit Plans covering foreign Employees.
(vii) With respect to each Compensation and Benefit Plan, if
applicable, Central has provided or made available to Wachovia, true and
complete copies of its existing (A) Compensation and Benefit Plan documents
and amendments thereto and (B) trust instruments and insurance contracts.
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(viii) The consummation of the transactions contemplated by this
Agreement would not, directly or indirectly (including, without limitation,
as a result of any termination of employment prior to or following the
Effective Time) reasonably be expected to (A) entitle any Employee,
Consultant or Director to any payment (including severance pay or similar
compensation) or any increase in compensation, (B) result in the vesting or
acceleration of any benefits under any Compensation and Benefit Plan or (C)
result in any material increase in benefits payable under any Compensation
and Benefit Plan.
(ix) Neither Central nor any of its Subsidiaries maintains any
compensation plans, programs or arrangements the payments under which would
not reasonably be expected to be deductible as a result of the limitations
under Section 162(m) of the Code and the regulations issued thereunder.
(x) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result
of any termination of employment prior to or following the Effective Time),
none of Wachovia, Central or the Surviving Corporation, or any of their
respective Subsidiaries will be obligated to make a payment that would be
characterized as an "excess parachute payment" to an individual who is a
"disqualified individual" (as such terms are defined in Section 280G of the
Code), without regard to whether such payment is reasonable compensation
for personal services performed or to be performed in the future.
(n) Labor Matters. Neither Central nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization,
nor is Central or any of its Subsidiaries the subject of a proceeding
asserting that it or any such Subsidiary has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or
seeking to compel Central or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving it or any of its Subsidiaries
pending or, to Central's knowledge, threatened, nor is Central aware of any
activity involving its or any of its Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in other organizational
activity.
(o) Takeover Laws; Dissenters Rights. Central has taken all action
required to be taken by it in order to exempt this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby from,
and this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby (the "Covered Transactions") are exempt
from, the requirements of any "moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or other antitakeover laws
and regulations of any state (collectively, "Takeover Laws"), including,
without limitation, the Commonwealth of Virginia, and including, without
limitation, Sections 13.1-725 through 13.1-728 of the VSCA (because a
majority of Central's disinterested directors approved such transactions
for such purposes prior to any "determination date" with respect to
Wachovia) and Sections 13.1-728.1 through 13.1-728.9 of the VSCA. The
provisions of Article VIII of the Central Certificate do not apply to the
Covered
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Transactions as they have been approved by a majority of the Disinterested
Directors (as defined in Article VIII). Holders of Central Common Stock do
not have dissenters rights in connection with the Merger.
(p) Environmental Matters. Neither the conduct nor operation of Central
or its Subsidiaries nor any condition of any property presently or
previously owned, leased or operated by any of them (including, without
limitation, in a fiduciary or agency capacity), or on which any of them
holds a Lien, violates or violated Environmental Laws and no condition has
existed or event has occurred with respect to any of them or any such
property that, with notice or the passage of time, or both, is reasonably
likely to result in liability under Environmental Laws. Neither Central nor
any of its Subsidiaries has received any notice from any person or entity
that Central or its Subsidiaries or the operation or condition of any
property ever owned, leased, operated, or held as collateral or in a
fiduciary capacity by any of them are or were in violation of or otherwise
are alleged to have liability under any Environmental Law, including, but
not limited to, responsibility (or potential responsibility) for the
cleanup or other remediation of any pollutants, contaminants, or hazardous
or toxic wastes, substances or materials at, on, beneath, or originating
from any such property.
(q) Tax Matters. (i) (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or
with respect to Central and its Subsidiaries have been duly filed, (B) all
Taxes shown to be due on the Tax Returns referred to in clause (A) have
been paid in full, (C) the 1994 federal income Tax Returns referred to in
clause (A) have been examined by the Internal Revenue Service or the period
for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired, (D) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full,
(E) no issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in
clause (A) are currently pending, and (F) no waivers of statutes of
limitation have been given by or requested with respect to any Taxes of
Central or its Subsidiaries. Central has made available to Wachovia true
and correct copies of the United States federal income Tax Returns filed by
Central and its Subsidiaries for each of the three most recent fiscal years
ended on or before December 31, 1996. Neither Central nor any of its
Subsidiaries has any liability with respect to income, franchise or similar
Taxes that accrued on or before the end of the most recent period covered
by Central's SEC Documents filed prior to the date hereof in excess of the
amounts accrued with respect thereto that are reflected in the financial
statements included in Central's SEC Documents filed on or prior to the
date hereof. As of the date hereof, neither Central nor any of its
Subsidiaries has any reason to believe that any conditions exist that might
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer contemplated by this Agreement.
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(r) Risk Management Instruments. All interest rate swaps, caps, floors,
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for Central's own account, or
for the account of one or more of Central's Subsidiaries or their customers
(all of which are listed on Central's Disclosure Schedule), were entered
into (i) in accordance with prudent business practices and all applicable
laws, rules, regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the time; and each
of them constitutes the valid and legally binding obligation of Central or
one of its Subsidiaries, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and are in full force and effect. Neither Central nor
its Subsidiaries, nor to Central's knowledge, any other party thereto, is
in breach of any of its obligations under any such agreement or
arrangement.
(s) Books and Records. The books and records of Central and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
financial position of Central and its Subsidiaries.
(t) Insurance. Central's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by Central or its
Subsidiaries ("Insurance Policies"). Central and its Subsidiaries are
insured with reputable insurers against such risks and in such amounts as
the management of Central reasonably has determined to be prudent in
accordance with industry practices. All the Insurance Policies are in full
force and effect; Central and its Subsidiaries are not in material default
thereunder; and all claims thereunder have been filed in due and timely
fashion.
(u) Accounting Treatment. As of the date hereof, it is aware of no
reason why the Merger will fail to qualify for "pooling of interests"
accounting treatment.
(v) Rights Agreement. Central has duly adopted an amendment to the
Central Rights Agreement in the form of Exhibit B, as a result of which
neither Wachovia nor any affiliate or associate will become an "Acquiring
Person" and no "Distribution Date" (as such terms are defined in the
Central Rights Agreement) will occur, and the rights issued under the
Rights Agreement will not become separable, distributable, unredeemable or
exercisable as a result of the approval, execution or delivery of this
Agreement or the Stock Option Agreement or the consummation of the
transactions contemplated hereby or thereby.
(w) Disclosure. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
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5.04 Representations and Warranties of Wachovia. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, Wachovia
hereby represents and warrants to Central as follows:
(a) Organization, Standing and Authority. Wachovia is duly organized,
validly existing and in good standing under the laws of the State of North
Carolina. Wachovia is duly qualified to do business and is in good standing
in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified. Wachovia has in effect all federal, state,
local, and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as it is now
conducted.
(b) Wachovia Stock. (i) As of the date hereof, the authorized capital
stock of Wachovia consists solely of 500,000,000 shares of Wachovia Common
Stock, of which no more than 162,000,000 shares were outstanding as of the
date hereof and 50,000,000 shares of Wachovia Preferred Stock, of which no
shares were outstanding as of the date hereof. As of the date hereof,
except as set forth in its Disclosure Schedule, Wachovia does not have any
Rights issued or outstanding with respect to Wachovia Stock and Wachovia
does not have any commitment to authorize, issue or sell any Wachovia Stock
or Rights, except pursuant to this Agreement.
(ii) The shares of Wachovia Common Stock to be issued in exchange for
shares of Central Common Stock in the Merger, when issued in accordance
with the terms of this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable.
(c) Subsidiaries. Each of Wachovia's Significant Subsidiaries has been
duly organized and is validly existing in good standing under the laws of
the jurisdiction of its organization, and is duly qualified to do business
and in good standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified and
it owns, directly or indirectly, all the issued and outstanding equity
securities of each of its Significant Subsidiaries.
(d) Corporate Power. Wachovia and each of its Significant Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and Wachovia has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) Corporate Authority. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action
of Wachovia and its Board of Directors. This Agreement is a valid and
legally binding agreement of Wachovia enforceable in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles).
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(f) Regulatory Approvals; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any court, administrative agency or
commission or other governmental authority or instrumentality or with any
third party are required to be made or obtained by Wachovia or any of its
Subsidiaries in connection with the execution, delivery or performance by
Wachovia of this Agreement or to consummate the Merger except for (A) the
filing of applications and notices, as applicable, with the federal and
state banking authorities; (B) approval of the listing on the NYSE of
Wachovia Common Stock to be issued in the Merger and, if required to
consummate the Merger, the adoption and approval by the shareholders of
Wachovia of this Agreement; (C) the filing and declaration of effectiveness
of the Registration Statement; (D) the filing of articles of merger with
the Corporation Commission pursuant to the VSCA and the North Carolina
Secretary pursuant to the NCBCA and the issuance of related certificates of
merger; (E) such filings as are required to be made or approvals as are
required to be obtained under the securities or "Blue Sky" laws of various
states in connection with the issuance of Wachovia Stock in the Merger; and
(F) receipt of the approvals set forth in Section 7.01(b). As of the date
hereof, Wachovia is not aware of any reason why the approvals set forth in
Section 7.01(b) will not be received without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of Wachovia or of any of its
Subsidiaries or to which Wachovia or any of its Subsidiaries or properties
is subject or bound, (B) constitute a breach or violation of, or a default
under, the certificate of incorporation or by-laws (or similar governing
documents) of Wachovia or any of its Subsidiaries, or (C) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, agreement, indenture or instrument.
(g) Financial Reports and SEC Documents; Material Adverse Effect. (i)
Wachovia's SEC Documents, as of the date filed, (A) complied or will comply
in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (B) did not
and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such SEC Document (including the related
notes and schedules thereto) fairly presents, or will fairly present, the
financial position of Wachovia and its Subsidiaries as of its date, and
each of the statements of income and changes in stockholders' equity and
cash flows or equivalent statements in such SEC Documents (including any
related notes and schedules thereto) fairly presents, or will fairly
present, the results of operations, changes in stockholders' equity and
changes in cash flows, as the case may
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be, of Wachovia and its Subsidiaries for the periods to which they relate,
in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements.
(ii) Since December 31, 1996, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it.
(h) Litigation; Regulatory Action. (i) Other than as set forth in its
SEC Documents filed on or before the date hereof, no litigation, claim or
other proceeding before any Governmental Authority is pending against
Wachovia or any of its Subsidiaries and, to the best of Wachovia's
knowledge, no such litigation, claim or other proceeding has been
threatened.
(ii) Neither Wachovia nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has Wachovia or any of its Subsidiaries been
advised by a Regulatory Authority that such agency is contemplating issuing
or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(i) Compliance with Laws. Wachovia and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices; and
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best of its
knowledge, no suspension or cancellation of any of them is threatened.
(j) No Brokers. No action has been taken by Wachovia that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a fee to be paid to
Credit Suisse First Boston Corporation.
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(k) Tax Matters. (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or
with respect to Wachovia and its Subsidiaries have been duly filed, (B) all
Taxes shown to be due on the Tax Returns referred to in clause (A) have
been paid in full, (C) the federal income Tax Returns referred to in clause
(A) have beenexamined by the Internal Revenue Service or the period for
assessment of the Taxes in respect of which such Tax Returns were required
to be filed has expired, (D) all deficiencies asserted or assessments made
as a result of such examinations have been paid in full, (E) no issues that
have been raised by the relevant taxing authority in connection with the
examination of any of the Tax Returns referred to in clause (A) are
currently pending, and (F) no waivers of statutes of limitation have been
given by or requested with respect to any Taxes of Wachovia or its
Subsidiaries. Neither Wachovia nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes that accrued
on or before the end of the most recent period covered by Wachovia's SEC
Documents filed prior to the date hereof in excess of the amounts accrued
with respect thereto that are reflected in the financial statements
included in Wachovia's SEC Documents filed on or prior to the date hereof.
As of the date hereof, neither Wachovia nor any of its Subsidiaries has any
reason to believe that any conditions exist that might prevent or impede
the Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code.
(l) Accounting Treatment. As of the date hereof, it is aware of no
reason why the Merger will fail to qualify for "pooling of interests"
accounting treatment.
(m) Disclosure. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of Central and Wachovia agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end.
6.02 Stockholder Approvals. Wachovia, to the extent required to
consummate the Merger, and Central agree to take, in accordance with applicable
law or NYSE or NASDAQ rules and their respective articles of incorporation and
by-laws, all action necessary to convene an appropriate meeting of their
respective stockholders to consider and vote upon, (i) in the case of Wachovia,
the
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approval and adoption of this Agreement and any other matter required to be
approved by Wachovia's stockholders for consummation of the Merger (including
any adjournment or postponement, the "Wachovia Meeting") and, (ii) in the case
of Central, the approval and adoption of this Agreement and any other matters
required to be approved by Central's stockholders for consummation of the Merger
(including any adjournment or postponement, the "Central Meeting"), in each case
as promptly as practicable after the Registration Statement is declared
effective. The Wachovia Board, to the extent required to consummate the Merger,
and the Central Board shall each recommend such approval, and Wachovia, to the
extent required to consummate the Merger, and Central shall each take all
reasonable, lawful action to solicit such approval by their respective
stockholders.
6.03 Registration Statement. (a) Wachovia agrees to prepare a
registration statement on Form S-4 or other applicable form (the "Registration
Statement") to be filed by Wachovia with the SEC in connection with the issuance
of Wachovia Common Stock in the Merger (including the proxy statement and
prospectus and other proxy solicitation materials of Wachovia and Central
constituting a part thereof (the "Proxy Statement") and all related documents).
Central agrees to cooperate, and to cause its Subsidiaries to cooperate, with
Wachovia, its counsel and its accountants, in preparation of the Registration
Statement and the Proxy Statement; and provided that Central and its
Subsidiaries have cooperated as required above, Wachovia agrees to file the
Proxy Statement in preliminary form with the SEC as promptly as reasonably
practicable, and to file the Registration Statement with the SEC as soon as
reasonably practicable after any SEC comments with respect to the preliminary
Proxy Statement are resolved. Each of Central and Wachovia agrees to use all
reasonable efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as reasonably practicable after filing
thereof. Wachovia also agrees to use all reasonable efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement. Central agrees to
furnish to Wachovia all information concerning Central, its Subsidiaries,
officers, directors and stockholders as may be reasonably requested in
connection with the foregoing.
(b) Each of Central and Wachovia agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to stockholders and at the time of the Wachovia Meeting or the Central
Meeting, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or any statement which, in the light
of the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or which will omit to state any
material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier statement in the
Proxy Statement or any amendment or supplement thereto. Each of Central and
Wachovia further agrees that if it shall
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become aware prior to the Effective Date of any information furnished by it that
would cause any of the statements in the Proxy Statement to be false or
misleading with respect to any material fact, or to omit to state any material
fact necessary to make the statements therein not false or misleading,to
promptly inform the other party thereof and to take the necessary steps to
correct the Proxy Statement.
(c) Wachovia agrees to advise Central, promptly after Wachovia receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of Wachovia Stock for offering or sale in
any jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
6.04 Press Releases. Each of Central and Wachovia agrees that it will
not, without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NYSE or NASDAQ rules.
6.05 Access; Information. (a) Each of Central and Wachovia agrees that
upon reasonable notice and subject to applicable laws relating to the exchange
of information, it shall afford the other party and the other party's officers,
employees, counsel, accountants and other authorized representatives, such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as any party may reasonably request and, during such period, it
shall furnish promptly to such other party (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of federal
or state securities or banking laws, and (ii) all other information concerning
the business, properties and personnel of it as the other may reasonably
request.
(b) Each agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement. Subject to the requirements
of law, each party will keep confidential, and will cause its representatives to
keep confidential, all information and documents obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the date hereof
in connection with the entering into of this Agreement) unless such information
(i) was already known to such party, (ii) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the party to
which such information pertains or (iv) is or becomes readily ascertainable from
published information or trade sources. In the event that this Agreement is
terminated or the transactions contemplated by this Agreement shall otherwise
fail to be consummated, each party shall promptly cause all copies of documents
or extracts thereof containing information and data as to another party hereto
to be returned to the party which furnished
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the same. No investigation by either party of the business and affairs of the
other shall affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement, or the conditions to either party's
obligation to consummate the transactions contemplated by this Agreement.
6.06 Acquisition Proposals. Central agrees that it shall not, and shall
cause its Subsidiaries and its Subsidiaries' officers, directors, agents,
advisors and affiliates not to, solicit or encourage inquiries or proposals with
respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any person relating
to, any Acquisition Proposal. It shall immediately cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than Wachovia with respect to any
of the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal.
Central shall promptly (within 24 hours) advise Wachovia following the receipt
by Central of any Acquisition Proposal and the substance thereof (including the
identity of the person making such Acquisition Proposal), and advise Wachovia of
any developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
6.07. Affiliate Agreements. (a) Not later than the 15th day prior to
the mailing of the Proxy Statement, (i) Wachovia shall deliver to Central a
schedule of each person that, to the best of its knowledge, is or is reasonably
likely to be, as of the date of the Wachovia Meeting or if there is no Wachovia
Meeting, the Central Meeting, deemed to be an "affiliate" of Wachovia (each, a
"Wachovia Affiliate") as that term is used in SEC Accounting Series Releases 130
and 135; and (ii) Central shall deliver to Wachovia a schedule of each person
that, to the best of its knowledge, is or is reasonably likely to be, as of the
date of the Central Meeting, deemed to be an "affiliate" of Central (each, a
"Central Affiliate") as that term is used in Rule 145 under the Securities Act
or SEC Accounting Series Releases 130 and 135.
(b) Each of Central and Wachovia shall use its respective reasonable
best efforts to cause each person who may be deemed to be a Central Affiliate or
a Wachovia Affiliate, as the case may be, to execute and deliver to Central and
Wachovia on or before the date of mailing of the Proxy Statement an agreement in
the form attached hereto as Exhibit C or Exhibit D, respectively.
6.08 Takeover Laws. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement or the Stock Option
Agreement to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 Certain Policies. Prior to the Effective Date, Central shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it and Wachovia, modify and change its loan, litigation and real
estate valuation policies and practices (including loan
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classifications and levels of reserves) so as to be applied on a basis that is
consistent with that of Wachovia; provided, however, that Central shall not be
obligated to take any such action pursuant to this Section 6.09 unless and until
Wachovia acknowledges that all conditions to its obligation to consummate the
Merger have been satisfied.
6.10 NYSE Listing. Wachovia agrees to use its reasonable best efforts
to list, prior to the Effective Date, on the NYSE, subject to official notice of
issuance, the shares of Wachovia Common Stock to be issued to the holders of
Central Common Stock in the Merger.
6.11 Regulatory Applications. (a) Wachovia and Central and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Each of Wachovia and Central shall have the right to review
in advance, and to the extent practicable each will consult with the other, in
each case subject to applicable laws relating to the exchange of information,
with respect to all material written information submitted to any third party or
any Governmental Authority in connection with the transactions contemplated by
this Agreement. In exercising the foregoing right, each of the parties hereto
agrees to act reasonably and as promptly as practicable. Each party hereto
agrees that it will consult with the other party hereto with respect to the
obtaining of all material permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep the
other party appraised of the status of material matters relating to completion
of the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with
all information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 Indemnification. (a) Following the Effective Date and for a period
of six years thereafter, Wachovia shall indemnify, defend and hold harmless the
present directors and officers of Central and its Subsidiaries (each, an
"Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement) to the fullest extent that Central is permitted to indemnify
(and advance expenses to) its directors and officers under the laws of the
Commonwealth of Virginia, the Central Certificate and the Central By-Laws as in
effect on the date hereof; provided that any determination required to be made
with respect to whether an officer's or director's conduct complies with the
standards set forth under Virginia law, the Central Certificate and the Central
By-Laws shall be made by independent counsel (which shall not be counsel that
provides material
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services to Wachovia) selected by Wachovia and reasonably acceptable to such
officer or director; and provided, further, that in the absence of applicable
Virginia judicial precedent to the contrary, such counsel, in making such
determination, shall presume such officer's or director's conduct complied with
such standard and Wachovia shall have the burden to demonstrate that such
officer's or director's conduct failed to comply with such standard.
(b) For a period of five years from the Effective Time, Wachovia shall
use its reasonable best efforts to provide that portion of director's and
officer's liability insurance that serves to reimburse the present and former
officers and directors of Central or any of its Subsidiaries (determined as of
the Effective Time) (as opposed to Central) with respect to claims against such
directors and officers arising from facts or events which occurred before the
Effective Time, which insurance shall contain at least the same coverage and
amounts, and contain terms and conditions no less advantageous, as that coverage
currently provided by Central; provided, however, that in no event shall
Wachovia be required to expend more than 200 percent of the current amount
expended by Central (the "Insurance Amount") to maintain or procure such
directors and officers insurance coverage; provided, further, that if Wachovia
is unable to maintain or obtain the insurance called for by this Section
6.12(b), Wachovia shall use its reasonable best efforts to obtain as much
comparable insurance as is available for the Insurance Amount; provided,
further, that officers and directors of Central or any Subsidiary may be
required to make application and provide customary representations and
warranties to Wachovia's insurance carrier for the purpose of obtaining such
insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Wachovia thereof; provided
that the failure so to notify shall not affect the obligations of Wachovia under
Section 6.12(a) unless and to the extent that Wachovia is actually prejudiced as
a result of such failure.
(d) If Wachovia or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any other entity, then and in each case, proper provision
shall be made so that the successors and assigns of Wachovia shall assume the
obligations set forth in this Section 6.12.
6.13 Benefit Plans. Wachovia shall, from and after the Effective Time,
(a) except as provided in clause (h), honor the Compensation and Benefit Plans
in accordance with their terms, (b) except as provided in clauses (e) and (h)
below, provide former employees of Central who remain as employees of Wachovia
with employee benefit plans no less favorable in the aggregate than those
provided to similarly situated employees of Wachovia, (c) provide employees of
Central who remain as employees of Wachovia credit for years of service with
Central or any of its subsidiaries prior to the Effective Time for the purpose
of eligibility and vesting, (d) cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under comparable Compensation and Benefit Plans) and eligibility
waiting periods under group health
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plans of Wachovia to be waived with respect to former employees of Central who
remain as employees of Wachovia (and their eligible dependents) and who become
participants in such group health plans, (e) provide, to any employee of the
Surviving Corporation who participated in the Central Executive Supplemental
Retirement Plan immediately prior to the Effective Time, benefits under such
plan, or, if more favorable to such employee, pursuant to (f) below, (f) offer
any employee of the Surviving Corporation who is a member of the Central
Management Committee and who is covered by an employment agreement, a
replacement agreement in the form afforded to similarly situated executives of
Wachovia; provided, however, that such executives agree to terminate their
existing employment agreement and waive any rights they have thereunder;
provided, further, that such executives who execute the replacement employment
agreements with Wachovia will be provided with an Executive Retirement
Agreement, Supplemental Retirement Agreement or participation under the Wachovia
Retirement Income Benefit Enhancement Plan, as determined by the Chief Executive
Officers of Wachovia and Central, in replacement of, but no less favorable than,
their benefits under the Central Executive Supplemental Retirement Plan, (g)
Wachovia shall make the contribution contemplated by Section 10(b) of the
Central Executive Supplemental Retirement Plan to either the Wachovia Grantor
Trust or the Central Grantor Trust in accordance with such Section 10(b) and (h)
honor the Central Special Severance Policy, as amended effective June 23, 1997,
as reflected on Schedule 4.01(d), the Central Special Executive Severance
Policy, as amended effective June 23, 1997, as reflected on Schedule 4.01(d),
and any other Central severance or change of control agreements, plans or
policies as Previously Disclosed in accordance with their terms.
6.14 Accountants' Letters. Each of Central and Wachovia shall use its
reasonable best efforts to cause to be delivered to the other party, and to
Wachovia's directors and officers who sign the Registration Statement, a letter
of KPMG Peat Marwick LLP and Ernst & Young, LLP, respectively, independent
auditors, dated (i) the date on which the Registration Statement shall become
effective and (ii) a date shortly prior to the Effective Date, and addressed to
such other party, and such directors and officers, in form and substance
customary for "comfort" letters delivered by independent accountants in
accordance with Statement of Accounting Standards No. 72.
6.15 Notification of Certain Matters. Each of Central and Wachovia
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.16 Directors. Wachovia agrees to cause three members of the Central
Board on the date hereof (selected by Wachovia after consultation with Central)
who are still members of the Central Board immediately prior to the Effective
Time and willing and eligible to serve to be elected or appointed as a director
of Wachovia at, or as promptly as practicable after, the Effective Time.
6.17 Dividend Coordination. The Board of Directors of Central shall
cause its regular quarterly dividend record dates and payment dates for Central
Common Stock to be the same as Wachovia's regular quarterly dividend record
dates and payment dates for Wachovia Common Stock
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(e.g., Central shall move its next dividend record and payment dates from
September and October to August and September, respectively), and Central shall
not thereafter change its regular dividend payment dates and record dates.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of Wachovia and Central to consummate the Merger
is subject to the fulfillment or written waiver by Wachovia and Central prior to
the Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall have
been duly adopted by the requisite vote of the stockholders of Central and
duly adopted by the requisite vote, if any, of the stockholders of
Wachovia.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby, shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
in respect thereof shall have expired and no such approvals shall contain
any conditions, restrictions or requirements which the Wachovia Board
reasonably determines would (i) following the Effective Time, have a
Material Adverse Effect on the Surviving Corporation and its Subsidiaries
taken as a whole or (ii) reduce the benefits of the transactions
contemplated hereby to such a degree that Wachovia would not have entered
into this Agreement had such conditions, restrictions or requirements been
known at the date hereof.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) Blue Sky Approvals. All permits and other authorizations under
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of Wachovia Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
(f) Listing. The shares of Wachovia Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
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7.02 Conditions to Obligation of Central. The obligation of Central to
consummate the Merger is also subject to the fulfillment or written waiver by
Central prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Wachovia set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Effective Date as though made on and
as of the Effective Date (except that representations and warranties that
by their terms speak as of the date of this Agreement or some other date
shall be true and correct as of such date), and Central shall have received
a certificate, dated the Effective Date, signed on behalf of Wachovia by
the Chief Executive Officer and the Chief Financial Officer of Wachovia to
such effect.
(b) Performance of Obligations of Wachovia. Wachovia shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and Central
shall have received a certificate, dated the Effective Date, signed on
behalf of Wachovia by the Chief Executive Officer and the Chief Financial
Officer of Wachovia to such effect.
(c) Opinion of Central's Counsel. Central shall have received an
opinion of Wachtell, Lipton, Rosen & Katz, special counsel to Central,
dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, (i) the Merger
constitutes a "reorganization" within the meaning of Section 368 of the
Code and (ii) no gain or loss will be recognized by stockholders of Central
who receive shares of Wachovia Common Stock in exchange for shares of
Central Common Stock, except with respect to cash received in lieu of
fractional share interests. In rendering its opinion, Wachtell, Lipton,
Rosen & Katz, may require and rely upon representations contained in
letters from Central, Wachovia and stockholders of Central.
(d) Accountants' Letters. Central shall have received the letters
referred to in Section 6.14 from Ernst & Young, LLP, Wachovia's independent
auditors.
(e) Accounting Treatment. Central shall have received from KPMG Peat
Marwick LLP, Central's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
7.03 Conditions to Obligation of Wachovia. The obligation of Wachovia
to consummate the Merger is also subject to the fulfillment or written waiver by
Wachovia prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Central set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Effective Date as though made on and
as of the Effective Date (except that representations and
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warranties that by their terms speak as of the date of this Agreement or
some other date shall be true and correct as of such date) and Wachovia
shall have received a certificate, dated the Effective Date, signed on
behalf of Central by the Chief Executive Officer and the Chief Financial
Officer of Central to such effect.
(b) Performance of Obligations of Central. Central shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Effective Time, and Wachovia shall
have received a certificate, dated the Effective Date, signed on behalf of
Central by the Chief Executive Officer and the Chief Financial Officer of
Central to such effect.
(c) Opinion of Wachovia's Counsel. Wachovia shall have received an
opinion of Sullivan & Cromwell, special counsel to Wachovia, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
Sullivan & Cromwell may require and rely upon representations contained in
letters from Central, Wachovia and stockholders of Central.
(d) Accountants' Letters. Wachovia and its directors and officers who
sign the Registration Statement shall have received the letters referred to
in Section 6.14 from KPMG Peat Marwick LLP, Central's independent auditors.
(e) Accounting Treatment. Wachovia shall have received from Ernst &
Young, LLP, Wachovia's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
(f) Central Rights. No person shall have become an "Acquiring Person"
and no "Distribution Date" (as such terms are defined in the Central Rights
Agreement) shall have occurred, and the Central Rights shall not have
become separable, distributable, redeemable or exercisable.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Acquisition
may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Wachovia and Central, if the Board of Directors of each
so determines by vote of a majority of the members of its entire Board.
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(b) Breach. At any time prior to the Effective Time, by Wachovia or
Central, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (i) a breach by
the other party of any representation or warranty contained herein (subject
to the standard set forth in Section 5.02), which breach cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under
(i) or (ii)) would be reasonably likely, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect.
(c) Delay. At any time prior to the Effective Time, by Wachovia or
Central, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event that the Acquisition is not
consummated by June 30, 1998, except to the extent that the failure of the
Acquisition then to be consummated arises out of or results from the
knowing action or inaction of the party seeking to terminate pursuant to
this Section 8.01(c).
(d) No Approval. By Central or Wachovia, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in
the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or (ii) any stockholder approval required by Section
7.01(a) herein is not obtained at the Central Meeting or the Wachovia
Meeting.
(e) Failure to Recommend, Etc. At any time prior to the Central
Meeting, by Wachovia if the Central Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of Wachovia; or at any time prior to the Wachovia
Meeting, by Central, if the Wachovia Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of Central.
(f) Failure to Execute and Deliver Stock Option Agreement. At any time
prior to June 26, 1997, by Wachovia if Central shall not have executed and
delivered the Stock Option Agreement to Wachovia.
8.02 Effect of Termination and Abandonment. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article
VIII, no party to this Agreement shall have any liability or further obligation
to any other party hereunder except (i) as set forth in Section 9.01 and (ii)
that termination will not relieve a breaching party from liability for any
willful breach of this Agreement giving rise to such termination.
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ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than Section
6.12 and this Article IX which shall survive the Effective Time) or the
termination of this Agreement if this Agreement is terminated prior to the
Effective Time (other than Sections 6.03(b), 6.05, 6.16, 8.02, and this Article
IX which shall survive such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefitted by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that (A)
after the Central Meeting, this Agreement may not be amended if it would violate
the VSCA or reduce the consideration to be received by Central stockholders in
the Merger and (B) after the Wachovia Meeting, this Agreement may not be amended
if it would violate the NCBCA.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of North Carolina
applicable to contracts made and to be performed entirely within such State
(except to the extent that mandatory provisions of Federal law or of the NCBCA
or VSCA are applicable).
9.05 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby,
except that printing expenses and SEC fees shall be shared equally between
Central and Wachovia.
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Central, to:
Central Fidelity Banks, Inc.
1021 East Cary Street
Richmond, Virginia 23219
Attention: Chairman of the Board
Facsimile: (804) 697-7345
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With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Edward D. Herlihy, Esq.
Facsimile: (212) 403-2000
With a copy to:
William H. Schwarzchild, III
Williams, Mullen, Christian & Dobbins
1021 East Cary Street, 16th Floor
Richmond, Virginia 23219
Facsimile: (804) 783-6507
If to Wachovia, to:
Wachovia Corporation
100 North Main Street
Winston-Salem, North Carolina 27150
Attention: Chairman of the Board
Facsimile: (910) 770-5959
With a copy to:
Wachovia Corporation
100 North Main Street
Winston-Salem, North Carolina 27150
Attention: Kenneth W. McAllister
Facsimile: (910) 770-5959
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004-2498
Attention: H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
Facsimile: (212) 558-3588
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
and any Stock Option Agreement entered into represent the entire understanding
of the parties hereto with reference
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to the transactions contemplated hereby and thereby and this Agreement
supersedes any and all other oral or written agreements heretofore made (other
than any such Stock Option Agreement). Except for Section 6.12 and as set forth
in Central's Disclosure Schedule, nothing in this Agreement expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require Central, Wachovia or any of their respective
Subsidiaries, affiliates or directors to take any action which would violate
applicable law (whether statutory or common law), rule or regulation.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
CENTRAL FIDELITY BANKS, INC.
By: /s/Lewis N. Miller, Jr.
Name: Lewis N. Miller, Jr.
Title: President and
Chief Executive Officer
WACHOVIA CORPORATION
By: /s/L.M. Baker, Jr.
Name: L. M. Baker, Jr.
Title: President and
Chief Executive Officer
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CONFORMED COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 24, 1997, between Wachovia
Corporation, a North Carolina corporation ("Grantee"), and Central Fidelity
Banks, Inc., a Virginia corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement");
WHEREAS, as an inducement to the willingness of Grantee to continue to
pursue the transactions contemplated by the Merger Agreement, Issuer has agreed
to grant Grantee the Option (as hereinafter defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement prior to the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 11,280,000 fully paid and nonassessable shares of the common stock,
par value $5.00 per share, of Issuer ("Common Stock") at a price per share equal
to the average of last reported sale prices per share of Common Stock as
reported on the NASDAQ National Market System on June 20 and 23, 1997; provided,
however, that in the event Issuer issues or agrees to issue any shares of Common
Stock (other than shares of Common Stock issued pursuant to stock options
granted pursuant to any employee benefit plan prior to the date hereof) at a
price less than such average price per share (as adjusted pursuant to subsection
(b) of Section 5), such price shall be equal to such lesser price (such price,
as adjusted if applicable, the "Option Price"); provided, further, that in no
event shall the number of shares for which this Option is exercisable exceed
19.9% of the issued and outstanding shares of Common Stock. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach of any provision of the Merger Agreement.
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2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.01(b) or Section 8.01(e) of the
Merger Agreement or by Grantee or Issuer pursuant to Section 8.01(d)(ii) of the
Merger Agreement (each, a "Listed Termination"); or (iii) the passage of
eighteen (18) months (or such longer period as provided in Section 10) after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a Listed Termination. The term "Holder"
shall mean the holder or holders of the Option. Notwithstanding anything to the
contrary contained herein, (i) the Option may not be exercised at any time when
Grantee shall be in material breach of any of its covenants or agreements
contained in the Merger Agreement such that Issuer shall be entitled to
terminate the Merger Agreement pursuant to Section 8.01(b) thereof and (ii) this
Agreement shall automatically terminate upon the proper termination of the
Merger Agreement by Issuer pursuant to Section 8.01(b) thereof as a result of
the material breach by Grantee of its covenants or agreements contained in the
Merger Agreement.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or its Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC")) (the "Issuer Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the term
"person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer (the "Issuer Board")
shall have recommended that the shareholders of Issuer approve or accept
any Acquisition Transaction other than as contemplated by the Merger
Agreement. For purposes of this Agreement, (a) "Acquisition Transaction"
shall mean (x) a merger or consolidation, or any similar transaction,
involving Issuer or the Issuer Subsidiary (other than mergers,
consolidations or similar transactions involving solely Issuer and/or one
or more wholly-owned Subsidiaries of the Issuer, provided, any such
transaction is not entered
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into in violation of the terms of the Merger Agreement), (y) a purchase,
lease or other acquisition of all or any substantial part of the assets or
deposits of Issuer or the Issuer Subsidiary, or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of
Issuer or the Issuer Subsidiary and (b) "Subsidiary" shall have the
meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been
held for that purpose or any adjournment or postponement thereof, or such
meeting shall not have been held in violation of the Merger Agreement or
shall have been cancelled prior to termination of the Merger Agreement if,
prior to such meeting (or if such meeting shall not have been held or
shall have been cancelled, prior to such termination), it shall have been
publicly announced that any person (other than Grantee or any of its
Subsidiaries) shall have made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse in
any respect to Grantee its recommendation that the shareholders of Issuer
approve the transactions contemplated by the Merger Agreement, or Issuer
or the Issuer Subsidiary shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have made a proposal to Issuer or its shareholders to engage in an
Acquisition Transaction and such proposal shall have been publicly
announced;
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute
an Acquisition Transaction (or filed a preliminary proxy statement with
the SEC with respect to a potential vote by its shareholders to approve
the issuance of shares to be offered in such an exchange offer);
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(vii) Issuer shall have willfully breached any covenant or
obligation contained in the Merger Agreement in anticipation of engaging
in an Acquisition Transaction, and following such breach Grantee would be
entitled to terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or
(viii)Any person other than Grantee or any Grantee Subsidiary shall
have filed an application or notice with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") or other federal or
state bank regulatory or antitrust authority, which application or notice
has been accepted for processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 20% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant
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to the exercise of the Option in immediately available funds by wire transfer to
a bank account designated by Issuer and (ii) present and surrender this
Agreement to Issuer at its principal executive offices, provided that the
failure or refusal of the Issuer to designate such a bank account or accept
surrender of this Agreement shall not preclude the Holder from exercising the
Option .
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of _________,
199__, between the registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer and will be
provided to the holder hereof without charge upon receipt by Issuer of a
written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of Counsel to the Holder;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges
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that may be payable in connection with the preparation, issue and delivery of
stock certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number
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of shares of Common Stock purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as provided in
this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep current
a registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of
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Common Stock, and if in the good faith judgment of the managing underwriter or
managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering the offer and sale of the Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25% of the total number
of shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then Issuer shall file a
registration statement for the balance as promptly as practicable thereafter as
to which no reduction pursuant to this Section 6 shall be permitted or occur and
the Holder shall thereafter be entitled to one additional registration and the
twelve (12) month period referred to in the first sentence of this section shall
be increased to twenty-four (24) months. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements for
Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be entitled
to registration rights under this Section 6, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall the number of registrations that Issuer is obligated to effect
be increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the
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<PAGE>
Owner gives notice of the required repurchase of Option Shares, as the case may
be, or (iv) in the event of a sale of all or any substantial part of Issuer's
assets or deposits, the sum of the net price paid in such sale for such assets
or deposits and the current market value of the remaining net assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to Issuer,
divided by the number of shares of Common Stock of Issuer outstanding at the
time of such sale. In determining the market/offer price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number
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of shares of Common Stock obtained by multiplying the number of shares of Common
Stock for which the surrendered Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, and/or
(B) to the Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing. If an Exercise Termination Event shall have occurred prior to
the date of the notice by Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Holder shall
nonetheless have the right to exercise the Option until the expiration of such
30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed
to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 50%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or a substantial part of its or the Issuer Subsidiary's assets or deposits to
any person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of the Holder, of either
(x) the Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
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(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) the Issuer in a merger or plan of exchange in which
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute
Option.
iii) "Assigned Value" shall mean the market/offer price, as
defined in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by the person merging into
Issuer or by any company which controls or is controlled by such person,
as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect for
such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock
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outstanding prior to exercise of the Substitute Option. In the event that the
Substitute Option would be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise but for this clause (e),
the issuer of the Substitute Option (the "Substitute Option Issuer") shall make
a cash payment to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (e) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by the Holder.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute
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Share Repurchase Price therefor or the portion thereof which the Substitute
Option Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the
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Holder, Owner, Substitute Option Holder or Substitute Share Owner, as the case
may be, is using commercially reasonable efforts to obtain such regulatory
approvals), and for the expiration of all statutory waiting periods; and (ii) to
the extent necessary to avoid liability under Section 16(b) of the 1934 Act by
reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board prior to the date hereof and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; provided, however,
that until the date 15 days following the date on which the Federal Reserve
Board has approved an application by Grantee to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of Issuer, (iii) an assignment to a single party (e.g., a broker
or investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve Board.
13. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA for approval to acquire
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the shares issuable hereunder, but Grantee shall not be obligated to apply to
state banking authorities for approval to acquire the shares of Common Stock
issuable hereunder until such time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price; provided, however, that Grantee may not exercise its
rights pursuant to this Section 14 if Issuer has repurchased the Option (or any
portion thereof) or any Option Shares pursuant to Section 7. The "Surrender
Price" shall be equal to $50.0 million (i) plus, if applicable, Grantee's
purchase price with respect to any Option Shares and (ii) minus, if applicable,
the excess of (B) the net cash amounts, if any, received by Grantee pursuant to
the arms' length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any unaffiliated party, over (B)
Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the
Exercise Termination Date shall be extended to a date six months from the date
on which the Exercise Termination Date would have occurred if not for the
provisions
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of this Section 14(c) (during which period Grantee may exercise any of its
rights hereunder, including any and all rights pursuant to this Section 14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law or of the VSCA are applicable).
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and
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permitted assignees. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors except as assignees, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
CENTRAL FIDELITY BANKS, INC.
By: /s/Lewis N. Miller, Jr.
Name: Lewis N. Miller, Jr.
Title: President and
Chief Executive Officer
WACHOVIA CORPORATION
By: /s/L.M. Baker, Jr.
Name: L.M. Baker, Jr.
Title: President and
Chief Executive Officer
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