<PAGE> 1
As Filed With the Securities And Exchange Commission on February 16, 1996;
Registration No. 33-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
WACHOVIA CORPORATION
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(Exact name of registrant as specified in its charter)
North Carolina 6060 56-1473727
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(State of other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classi- Identification No.)
incorporation) fication Code No.)
100 North Main Street 191 Peachtree Street, N.E.
P. O. Box 3099 Atlanta, Georgia 30303
Winston-Salem, North Carolina 27150 (404) 332-5000
(910) 770-5000
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(Address, including ZIP Code, and telephone number, including
area code, of registrant's principal executive offices)
Kenneth W. McAllister
Executive Vice President
and General Counsel
P. O. Box 3099
Winston-Salem, North Carolina 27150
(910) 770-5000
-------------------------------------------------
(Name, address, including ZIP Code, and telephone
number, including area code, of agent for service)
Copies to:
Kathryn L. Knudson
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Approximate date of commencement of the proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G check the following box. [ ]
<PAGE> 2
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of each class maximum maximum Amount of
of securities Amount to be offering aggregate Registration
to be registered registered price per unit offering price Fee
------------------- ------------ -------------- -------------- ------------
<S> <C> <C> <C> <C>
Common stock 218,870 shares $ (1) $ (1) $2,039(1)
</TABLE>
(1) In accordance with Rule 457(f)(2), the registration fee is based upon the
book value ($5,911,183) at January 31, 1996 of the shares of common stock of
The First National Bankshares of Henry County, Inc. to be received by the
Registrant in connection with the merger.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 3
WACHOVIA CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM
NUMBER CAPTION IN FORM S-4 CAPTION IN PROSPECTUS
------ ------------------- ---------------------
<S> <C> <C>
1 Forepart of Registration Statement and Facing Page of Registration Statement; Proxy
Outside Front Cover Page of Prospectus Statement/Prospectus Cover Page
2 Inside Front and Outside Back Cover Proxy Statement/Prospectus Cover Page;
Pages of Prospectus . . . . . . . . . Available Information
3 Risk Factors, Ratio of Earnings to Summary
Fixed Charges and Other Information .
4 Terms of the Transaction . . . . . . Summary; The Merger; Certain Differences in
the Rights of Wachovia and First National
Shareholders; Appendices A and B
5 Pro Forma Financial Information . . . Summary; The Merger -- No Pro Forma
Financial Statements
6 Material Contracts with the Company Summary; The Merger
Being Acquired . . . . . . . . . . .
7 Additional Information Required for Not Applicable
Reoffering by Persons and Parties
Deemed to be Underwriters . . . . . .
8 Interests of Named Experts and Counsel Not Applicable
9 Disclosure of Commission Position on Part II of Registration Statement --
Indemnification for Securities Act Undertakings
Liabilities . . . . . . . . . . . . .
10 Information with Respect to S-3 Available Information; Incorporation of
Registrants . . . . . . . . . . . . . Certain Information by Reference; Summary;
Business of Wachovia; Supervision and
Regulation
11 Incorporation of Certain Information Incorporation of Certain Information by
by Reference . . . . . . . . . . . . Reference
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
ITEM
NUMBER CAPTION IN FORM S-4 CAPTION IN PROSPECTUS
------ ------------------- ---------------------
<S> <C> <C>
12 Information with Respect to S-2 or S-3 Not Applicable
Registrants . . . . . . . . . . . . .
13 Incorporation of Certain Information Not Applicable
by Reference . . . . . . . . . . . .
14 Information with Respect to Not Applicable
Registrants Other Than S-2 or S-3
Registrants . . . . . . . . . . . . .
15 Information with Respect to S-3 Not Applicable
Companies . . . . . . . . . . . . . .
16 Information with Respect to S-2 or S-3 Available Information; Incorporation of
Companies . . . . . . . . . . . . . . Certain Information by Reference; Summary;
Business of First National; Voting
Securities and Principal Shareholders of
First National; Supervision and Regulation
17 Information with Respect to Companies Not Applicable
Other Than S-2 or S-3 Companies . . .
18 Information if Proxies, Consents or Incorporation of Certain Information by
Authorizations Are to be Solicited . Reference; Summary; General Information; The
Merger; Appendix C
----------
19 Information if Proxies, Consents or Not Applicable
Authorizations Are Not to be Solicited
in an Exchange Offer
</TABLE>
<PAGE> 5
THE FIRST NATIONAL BANKSHARES OF HENRY COUNTY, INC.
5490 NORTH HENRY BOULEVARD
P.O. BOX 190
STOCKBRIDGE, GEORGIA 30281
(770) 389-1776
February __, 1996
To the Shareholders of The First National Bankshares of Henry County, Inc.:
You are cordially invited to attend the Special Meeting of
Shareholders (the "Special Meeting") of The First National Bankshares of Henry
County, Inc. ("First National"), to be held at First National's main office at
5490 North Henry Boulevard, Stockbridge, Georgia at 6:00 p.m. on Tuesday, March
26, 1996.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve the Agreement and Plan of Merger (the "Merger Agreement")
between First National and Wachovia Corporation ("Wachovia") which provides for
the merger (the "Merger") of First National with and into Wachovia, with
Wachovia surviving the Merger. The First National Bank of Henry County will be
consolidated with Wachovia Bank of Georgia, N.A. ("Wachovia Bank of Georgia")
and will become a branch of Wachovia Bank of Georgia. If the Merger is
consummated, each outstanding share of First National common stock (excluding
shares held by First National, Wachovia or their subsidiaries or by
shareholders who perfect their dissenters' rights) shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
0.4024 shares of Wachovia common stock. The affirmative vote of the holders of
a majority of the shares of First National common stock entitled to vote at the
Special Meeting is required for approval of the Merger Agreement.
Enclosed are a Notice of Special Meeting, Proxy Statement/Prospectus
and Form of Proxy for the Special Meeting. The Proxy Statement/Prospectus
describes in more detail the Merger Agreement and the proposed Merger,
including a description of the consideration to be paid to First National
shareholders in the Merger, material conditions to consummation of the Merger
and the effects of the Merger on the rights of First National shareholders.
Please give this information your careful attention.
THE BOARD OF DIRECTORS OF FIRST NATIONAL HAS UNANIMOUSLY APPROVED AND
ADOPTED THE MERGER AGREEMENT AND HAS APPROVED THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THE AGREEMENT, AND UNANIMOUSLY RECOMMENDS THAT YOU
VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THE AGREEMENT.
The Board's reasons for approving the Merger Agreement include the
following: (a) that the value of the Wachovia common stock to be received by
First National shareholders for each of their shares of First National common
stock ($_____ at February __, 1996) represents a significant premium to the
trading price of First National common stock since January 1, 1995 of $11.00
per share, (b) that Wachovia common stock is actively traded which will provide
significantly greater liquidity to First National shareholders than they now
have since First National common stock trades infrequently and (c) that
Wachovia currently pays quarterly dividends on its common stock while
<PAGE> 6
February __, 1996
Page 2
First National has not paid any dividends on its common stock. See "The
Merger--Background of the Merger" and "--Reasons for the Merger" on pages _____
and _____ of the enclosed Proxy Statement/Prospectus.
In view of the importance of the action to be taken, we urge you to
complete, sign and date the enclosed form of proxy and return it promptly in
the enclosed envelope, whether or not you plan to attend the Special Meeting.
If you attend the Special Meeting, you may vote in person, even if you
previously returned your proxy.
We look forward to seeing you at the Special Meeting.
Sincerely,
J. Randall Dixon
President
<PAGE> 7
THE FIRST NATIONAL BANKSHARES OF HENRY COUNTY, INC.
5490 NORTH HENRY BOULEVARD
P.O. BOX 190
STOCKBRIDGE, GEORGIA 30281
(770) 389-1776
NOTICE OF SPECIAL MEETING TO
BE HELD MARCH 26, 1996
To the Shareholders of The First National Bankshares of Henry County, Inc.:
Notice is hereby given that a special meeting of shareholders (the
"Special Meeting") of The First National Bankshares of Henry County, Inc.
("First National") will be held at First National's main office, located at
5490 North Henry Boulevard, Stockbridge, Georgia at 6:00 p.m., on Tuesday,
March 26, 1996, for the following purposes:
PROPOSAL 1: THE MERGER. To consider and vote upon a proposal to
approve the Agreement and Plan of Merger, dated November 22, 1995 (the "Merger
Agreement") between First National and Wachovia Corporation ("Wachovia"),
pursuant to which, among other matters, First National will merge with and into
Wachovia (the "Merger") and the shares of First National Common Stock
outstanding on the effective date of the Merger (excluding shares held by First
National, Wachovia or their subsidiaries or by shareholders who perfect their
dissenters' rights) will be converted into the right to receive 0.4024 shares
of Wachovia common stock. A copy of the Merger Agreement is set forth in
Appendix A to the accompanying Proxy Statement/Prospectus and is incorporated
by reference therein.
PROPOSAL 2: OTHER BUSINESS. To transact such other business as may
properly come before the Special Meeting or any adjournment or postponement of
the Special Meeting.
Only shareholders of record at the close of business on February 15,
1996 are entitled to receive notice of and to vote at the Special Meeting or
any adjournments or postponements thereof. Approval of the Merger Agreement
and the consummation of the transactions contemplated thereby requires the
affirmative vote of the holders of a majority of the shares of First National
common stock entitled to vote at the Special Meeting.
Shareholders of First National who perfect their dissenters' rights of
appraisal prior to the proposed Merger and comply with applicable law will be
entitled to receive the fair value of their First National shares in cash, as
provided by applicable law.
THE BOARD OF DIRECTORS OF FIRST NATIONAL UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED THEREBY.
---------------------------------------
By Order of the Board of Directors,
J. Randall Dixon, President
<PAGE> 8
PROXY STATEMENT OF PROSPECTUS OF
THE FIRST NATIONAL BANKSHARES WACHOVIA CORPORATION
OF HENRY COUNTY, INC. COMMON STOCK
---------------
This Proxy Statement/Prospectus is being furnished to holders of
common stock, $1.00 par value ("First National Common Stock"), of The First
National Bankshares of Henry County, Inc., a Georgia corporation ("First
National"), in connection with the solicitation of proxies by the First
National Board of Directors for use at a Special Meeting of Shareholders to be
held at 6:00 p.m., on Tuesday, March 26, 1996, at First National's main office,
located at 5490 North Henry Boulevard, Stockbridge, Georgia, and at any
adjournment or adjournments thereof (the "Special Meeting").
The purpose of the Special Meeting is to consider and vote upon a
proposal to approve an Agreement and Plan of Merger, dated as of November 22,
1995 (the "Merger Agreement"), by and between First National and Wachovia
Corporation, a North Carolina corporation ("Wachovia"), which provides for,
among other things, the merger of First National with and into Wachovia (the
"Merger"). See "SUMMARY," "THE MERGER" and Appendix A to this Proxy
Statement/Prospectus.
Upon consummation of the Merger, each outstanding share of First
National Common Stock (excluding shares held by First National, Wachovia or
their subsidiaries or by shareholders who perfect their dissenters' rights)
shall cease to be outstanding and shall be converted into and exchanged for the
right to receive 0.4024 shares of Wachovia common stock ("Wachovia Common
Stock").
This Proxy Statement also constitutes a prospectus of Wachovia in
respect of up to 218,870 shares of Wachovia Common Stock to be issued to
shareholders of First National in connection with the Merger. The shares of
Wachovia Common Stock to be issued in connection with the Merger and to which
this Proxy Statement/Prospectus relates are based upon the conversion of each
outstanding share of First National Common Stock into 0.4024 shares of Wachovia
Common Stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF WACHOVIA COMMON STOCK OFFERED HEREBY ARE NOT
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR
SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
The date of this Proxy Statement/Prospectus is ___________, 1996, and
it is being mailed or otherwise delivered to First National shareholders on or
about such date.
<PAGE> 9
AVAILABLE INFORMATION
Wachovia and First National are each subject to the reporting and
informational requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the "Exchange Act"), and, in
accordance therewith, file reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
filed by Wachovia and First National with the Commission may be inspected and
copied at the principal office of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and may be inspected at the
Commission's Regional Offices at 7 World Trade Center, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, Wachovia Common
Stock is traded on the New York Stock Exchange. Reports, proxy statements, and
other information concerning Wachovia may be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
This Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement on Form S-4, of which this
Proxy Statement/Prospectus is a part, and exhibits thereto (together with any
amendments thereto, the "Registration Statement"), which has been filed by
Wachovia with the Commission under the Securities Act of 1933, as amended, and
the rules and regulations thereunder (the "Securities Act"), certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission and to which portions reference is hereby made for further
information. Statements contained in this Proxy Statement/Prospectus
concerning the provisions of certain documents filed as exhibits to the
Registration Statement are necessarily brief descriptions thereof, and are not
necessarily complete, and each such statement is qualified in its entirety by
reference to the full text of such document.
All information contained herein with respect to Wachovia and its
subsidiaries has been supplied by Wachovia, and all information with respect to
First National and The First National Bank of Henry County has been supplied by
First National.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY WACHOVIA OR FIRST NATIONAL. NEITHER THE
DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE
SECURITIES TO WHICH THIS PROXY STATEMENT/PROSPECTUS RELATES SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF WACHOVIA, FIRST NATIONAL, OR ANY OF THEIR RESPECTIVE SUBSIDIARIES
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO PURCHASE THE SECURITIES OFFERED BY THIS PROXY
STATEMENT/PROSPECTUS IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION
IS NOT LAWFUL.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by Wachovia and First National,
respectively, with the Commission (Wachovia File No. 1-9021; First National
File No. 0-19204) under Section 13(a) or 15(d) of the Exchange Act are hereby
incorporated by reference in this Proxy Statement/Prospectus.
2
<PAGE> 10
Wachovia documents:
(i) Wachovia's Annual Report on Form 10-K as of and for
the year ended December 31, 1994;
(ii) Wachovia's Quarterly Reports on Form 10-Q as of and
for the three months ended March 31, 1995, the six months ended June
30, 1995, and the nine months ended September 30, 1995;
(iii) the description of Wachovia Common Stock set forth in
Wachovia's Registration Statement on Form 8-B filed pursuant to
Section 12 of the Exchange Act, and any amendment or report filed for
the purpose of updating any such description; and
(iv) Wachovia's Current Reports on Form 8-K, dated June 1,
1995 and October 3, 1995.
First National documents :
(i) First National's Annual Report on Form 10-KSB for the
year ended December 31, 1994;
(ii) First National's Quarterly Reports on Form 10-QSB for
the three months ended March 31, 1995, the six months ended June 30,
1995, and the nine months ended September 30, 1995; and
(iii) First National's Current Report on Form 8-K, dated
September 25, 1995.
All documents filed by Wachovia and First National pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Proxy Statement/Prospectus and prior to the date of the Special Meeting
are hereby incorporated by reference in this Proxy Statement/Prospectus and
shall be deemed a part hereof from the date of filing of such document.
Any statement contained herein, in any supplement hereto or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Proxy Statement/Prospectus to the extent that a statement contained
herein, in any supplement hereto or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement, this Proxy Statement/Prospectus, or any supplement
hereto.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE CERTAIN
DOCUMENTS THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS
ARE AVAILABLE WITHOUT CHARGE UPON REQUEST FROM: WACHOVIA CORPORATION, P.O. BOX
3099, WINSTON-SALEM, NORTH CAROLINA 27150 (910) 770-5000 OR 191 PEACHTREE
STREET, N.E., ATLANTA, GEORGIA 30303, (404) 332-5000, ATTENTION: SECRETARY, AS
TO WACHOVIA DOCUMENTS; AND FROM THE FIRST NATIONAL BANKSHARES OF HENRY COUNTY,
INC., 5490 NORTH HENRY BOULEVARD, STOCKBRIDGE, GEORGIA 30281, ATTENTION: J.
RANDALL DIXON, PRESIDENT, (770) 389-1776, AS TO FIRST NATIONAL DOCUMENTS. IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUESTS SHOULD BE MADE
BY MARCH __, 1996.
3
<PAGE> 11
TABLE OF CONTENTS
<TABLE>
PAGE
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Parties to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Special Meeting; Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Market for Common Stock and Related Shareholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Comparison of Certain Unaudited Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Record Date, Solicitation and Revocability of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Recommendation of First National's Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Stock Options and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Distribution of Wachovia Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Management and Operations After the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Post Acquisition Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Conditions to Consummation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Amendment, Waiver and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
No Pro Forma Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Resales of Wachovia Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
4
<PAGE> 12
<TABLE>
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CERTAIN DIFFERENCES IN THE RIGHTS OF WACHOVIA
AND FIRST NATIONAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Antitakeover Provisions Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Amendment of Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Special Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Number of Directors, Classified Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Advance Notice of Director Nominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Restrictions on Business Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Control Share Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Competing Rights of Holders of Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Limitation on Director Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
COMPARATIVE MARKET PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
BUSINESS OF FIRST NATIONAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
VOTING SECURITIES AND PRINCIPAL
SHAREHOLDERS OF FIRST NATIONAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
BUSINESS OF WACHOVIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Federal Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Payment of Dividends and Other Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Support of Subsidiary Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
CRA and Fair Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Future Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
APPENDICES:
Appendix A -- Agreement and Plan of Merger, dated as of November 22,
1995, by and between Wachovia and First National
Appendix B -- Title 14, Chapter 2, Article 13 of the Georgia Business
Corporation Code Relating to Rights of Dissenting
Shareholders
5
<PAGE> 13
SUMMARY
The following is a summary of certain information contained elsewhere
in this Proxy Statement/Prospectus. This summary is not intended to be a
complete description of the matters covered in this Proxy Statement/Prospectus
and is subject to and qualified in its entirety by reference to the more
detailed information contained elsewhere in this Proxy Statement/Prospectus,
including the Appendices hereto, and in the documents incorporated by reference
in this Proxy Statement/Prospectus. A copy of the Merger Agreement is set
forth in Appendix A to this Proxy Statement/Prospectus and reference is made
thereto for a complete description of the terms of the Merger. Shareholders
are urged to read carefully the entire Proxy Statement/Prospectus, including
the Appendices. As used in this Proxy Statement/Prospectus, the terms
"Wachovia" and "First National" refer to such corporations, respectively, and
where the context requires, such corporations and their respective
subsidiaries.
PARTIES TO THE MERGER
Wachovia. Wachovia is a North Carolina corporation, a bank holding
company registered under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"), and a savings and loan holding company registered under the Home
Owners' Loan Act of 1933, as amended by the Financial Institutions Reform,
Recovery and Enforcement Act of 1989. Wachovia was formed in 1985 as First
Wachovia Corporation, with two bank holding company subsidiaries. Today,
Wachovia's principal banking subsidiaries are Wachovia Bank of North Carolina,
N.A. ("Wachovia Bank of North Carolina"), Wachovia Bank of Georgia, N.A.
("Wachovia Bank of Georgia") and Wachovia Bank of South Carolina, N.A.
("Wachovia Bank of South Carolina"). Wachovia Bank of North Carolina was
formed in 1866 and is a national banking association organized and existing
under the laws of the United States; it has 219 offices in 95 cities and
communities. Wachovia Bank of Georgia was formed in 1865 and is a national
banking association organized and existing under the laws of the United States;
it has 127 offices in 47 cities and communities. Wachovia Bank of South
Carolina was organized in 1834 and has been a national bank since 1872; it has
146 offices in 64 cities and communities. In addition to these banking
subsidiaries, Wachovia is parent to over 35 subsidiaries which offer financial
services, investment services, insurance, mortgage banking and leasing --
including The First National Bank of Atlanta in Wilmington, Delaware, which
provides credit card services for its affiliated banks. Wachovia's
subsidiaries also have offices in Chicago, New York City, London, Hong Kong,
Tokyo and the Cayman Islands. As measured by assets at December 31, 1995,
Wachovia was the 21st largest bank holding company in the nation.
Wachovia reported net income per fully diluted share of $.85 for the
fourth quarter of 1995, an increase of 2.7 percent from $.82 a year earlier.
Net income for the final three months was $146.2 million compared with $142.1
million in the same period of 1994, a gain of 2.9 percent, and represented
annualized returns of 16.4 percent on shareholders' equity and 1.35 percent on
assets. For all of 1995, net income per fully diluted share was $3.49, up 11.7
percent from $3.12 in 1994. Net income totaled $602.5 million, higher by 11.8
percent from $539.1 million, and represented returns of 17.7 percent on
shareholders' equity and 1.45 percent on assets.
The provision for loan losses was $30.2 million for the fourth quarter
of 1995 and $103.8 million for all of 1995, higher by $10.6 million and $32
million, respectively, from the same periods in 1994. Net loan losses totaled
$30 million or .42 percent of average loans for the fourth period and $101.1
million or .37 percent for the year compared with $19.4 million or .31 percent
and $70.4 million or .29 percent, respectively, a year earlier. At December
31, 1995, nonperforming assets were $69 million or .24 percent of loans and
foreclosed property. The allowance for loan losses was $409 million,
representing 1.40 percent of period-end loans and 763 percent of nonperforming
loans. Equity capital to assets was 8.39 percent, while the
6
<PAGE> 14
approximate Tier I and total capital to risk-adjusted assets ratios were 9.6
percent and 13.8 percent, respectively.
Wachovia's principal executive offices are located at 100 North Main
Street, Winston-Salem, North Carolina 27150 (telephone: (910) 770-5000) and at
191 Peachtree Street, N.E., Atlanta, Georgia 30303 (telephone: (404) 332-5000).
For additional information regarding Wachovia and its business, see "AVAILABLE
INFORMATION," "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE," "SUMMARY --
Selected Financial Data of Wachovia (Historical)," "BUSINESS OF WACHOVIA" and
"SUPERVISION AND REGULATION."
First National. First National is a Georgia corporation organized in
1989 and a bank holding company registered under the BHC Act. Through its bank
subsidiary, The First National Bank of Henry County ("First National Bank"),
First National operates a full-service banking office in Henry County, Georgia,
its primary service area. First National Bank offers a full range of
commercial banking services to individuals, professional and business customers
in its primary service area. These services include personal and business
checking accounts and savings and other types of certificates of deposit.
First National Bank also offers a range of short- and medium-term commercial,
consumer and construction loans.
For the year ended December 31, 1995, First National reported net
income of approximately $356,000. At December 31, 1995, First National had
total consolidated assets of approximately $34.9 million and consolidated
shareholders' equity of approximately $5.9 million.
First National's principal executive offices are located at 5490 North
Henry Boulevard, Stockbridge, Georgia 30281 (telephone: (770) 389-1776). For
additional information regarding First National and its business, see
"AVAILABLE INFORMATION," "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE,"
"SUMMARY -- Selected Financial Data of First National (Historical)," "BUSINESS
OF FIRST NATIONAL" and "SUPERVISION AND REGULATION."
SPECIAL MEETING; RECORD DATE
The Special Meeting will be held at 6:00 p.m. on Tuesday, March 26,
1996, at First National's main office at 5490 North Henry Boulevard,
Stockbridge, Georgia. At the Special Meeting, First National's shareholders
will consider and vote upon approval of the Merger Agreement and the
consummation of the transactions contemplated therein. First National's Board
of Directors has fixed the close of business on February 15, 1996, as the
record date for determining the First National shareholders entitled to receive
notice of and to vote at the Special Meeting (the "Record Date"). As of the
Record Date, there were 517,413 shares of First National Common Stock issued
and outstanding and entitled to be voted at the Special Meeting. For
additional information with respect to the Special Meeting, including the
Record Date and votes required for approval, see "GENERAL INFORMATION."
THE MERGER
General. The Merger Agreement provides that First National will merge
with and into Wachovia, which will be the surviving corporation of the Merger
and will be governed by the laws of the State of North Carolina. If the Merger
Agreement is approved at the Special Meeting, all required governmental and
other consents and approvals are obtained and all of the other conditions to
the obligations of the parties to consummate the Merger are either satisfied or
waived (as permitted), the Merger will be consummated. A copy of the Merger
Agreement is set forth in Appendix A to this Proxy Statement/Prospectus. See
"THE MERGER."
7
<PAGE> 15
Exchange Ratio. At the time of the Merger, each outstanding share of
First National Common Stock (excluding shares held by First National, Wachovia
or their subsidiaries and by shareholders who perfect their dissenters' rights)
will cease to be outstanding and will be converted into and exchanged for the
right to receive 0.4024 shares of Wachovia Common Stock (the "Exchange Ratio").
No fractional shares of Wachovia Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any First National shareholder would be entitled upon consummation of the
Merger, based on the average of the high and low sales price of the Wachovia
Common Stock on the New York Stock Exchange (as reported by The Wall Street
Journal or, if not reported thereby, any other authoritative source) on the
trading date immediately preceding the effective time of the Merger.
Vote Required. Approval of the Merger Agreement and consummation of
the transactions contemplated therein require the affirmative vote of the
holders of a majority of the outstanding shares of the First National Common
Stock entitled to vote at the Special Meeting. As of the Record Date, the
directors and executive officers of First National and their affiliates held
197,707 shares (or approximately 38.2% of the outstanding shares) of First
National Common Stock (excluding shares subject to warrants). Each member of
the Board of Directors of First National has agreed to vote his First National
Common Stock in favor of the Merger. As of the Record Date, no shares of First
National Common Stock were owned by the directors and executive officers of
Wachovia and their affiliates. As of the Record Date, neither First National
nor Wachovia held any shares of First National Common Stock in a fiduciary
capacity for others. See "GENERAL INFORMATION -- Vote Required" and "THE
MERGER -- Interests of Certain Persons in the Merger."
Recommendation of the First National Board of Directors. The Board of
Directors of First National believes that the Merger is in the best interests
of First National and its shareholders and has unanimously approved the Merger
Agreement and the consummation of the transactions contemplated therein. THE
FIRST NATIONAL BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE MERGER AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREIN. In deciding to approve the Merger Agreement and the
consummation of the transactions contemplated therein, First National's Board
of Directors considered a number of factors, including the financial condition,
results of operations, and future prospects of First National and Wachovia.
See "THE MERGER -- Background of the Merger;" " --
Reasons for the Merger" and " -- Interests of Certain Persons in the Merger."
Effective Time. If the Merger is approved by the requisite vote of the
First National shareholders, all required governmental and other consents and
approvals are obtained and the other conditions to the obligations of the
parties to consummate the Merger are either satisfied or waived (as permitted),
the Merger will be consummated and will become effective on the date and at the
time that Articles of Merger reflecting the Merger are filed with the Secretary
of State of Georgia and the Secretary of State of North Carolina (the
"Effective Time"). Assuming satisfaction of all conditions to consummation,
the Merger is expected to be made effective at the end of the first quarter of
1996, or as soon thereafter as practicable. Wachovia and First National each
has the right, acting unilaterally, to terminate the Merger Agreement should
the Merger not be consummated by June 30, 1996. See "THE MERGER -- Effective
Time" and " -- Amendment, Waiver and Termination."
Delivery of Wachovia Certificates. Promptly after the Effective Time,
each record holder of shares of First National Common Stock outstanding at the
Effective Time will be mailed a transmittal letter (with instructions) to use
in effecting the surrender and cancellation of those certificates in exchange
for shares of Wachovia Common Stock. Wachovia shall not be obligated to
deliver the consideration to which any former holder of First National Common
Stock is entitled until such holder surrenders such holder's certificate or
certificates representing such holder's shares for exchange. The certificate
or certificates so surrendered shall be duly endorsed as Wachovia may require.
See "THE MERGER -- Distribution of Wachovia Certificates."
8
<PAGE> 16
Certain Federal Income Tax Consequences. The Merger is intended to be
a tax-free reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). Generally, no gain or loss
should be recognized for federal income tax purposes by First National
shareholders as a result of the Merger except with respect to any cash received
in lieu of fractional share interests or upon perfection of shareholder
dissenters' rights. A condition to consummation of the Merger is the receipt
by each of Wachovia and First National of an opinion from Powell, Goldstein,
Frazer & Murphy, counsel to First National, as to the qualification of the
Merger as a tax-free reorganization and certain other federal income tax
consequences of the Merger. See "THE MERGER -- Certain Federal Income Tax
Consequences."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON
THE PARTICULAR CIRCUMSTANCES OF EACH SHAREHOLDER AND OTHER FACTORS, EACH HOLDER
OF FIRST NATIONAL COMMON STOCK IS URGED TO CONSULT SUCH HOLDER'S OWN TAX
ADVISER TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE
MERGER (INCLUDING THE APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND
OTHER TAX LAWS).
Interests of Certain Persons in the Merger. Certain members of First
National's management and Board of Directors have interests in the Merger in
addition to their interests as shareholders of First National generally. Those
interests relate to, among other things, provisions in the Merger Agreement
regarding indemnification and eligibility for certain Wachovia employee
benefits, and treatment of outstanding options and warrants with respect to
First National Common Stock. See "THE MERGER -- Indemnification," " -- Post
Acquisition Compensation and Benefits," " - - Stock Options and Warrants" and "
- -- Interests of Certain Persons in the Merger."
Conditions to Consummation. Consummation of the Merger is subject to
various conditions, including among other matters: (a) approval of the Merger
Agreement by the First National shareholders; (b) receipt of all governmental
and other consents and approvals necessary to permit consummation of the
Merger; and (c) satisfaction of certain other usual conditions, including the
receipt of the tax opinion discussed above. The foregoing are the material
conditions to the consummation of the Merger. See "THE MERGER -- Conditions to
Consummation" and "-- Amendment, Waiver and Termination."
Regulatory Approvals. The Merger is subject to the prior approval of
the Board of Governors of the Federal Reserve System (the "Federal Reserve"),
the Office of the Comptroller of the Currency (the "OCC") and the Department of
Banking and Finance of the State of Georgia (the "DBF"), and applications for
approval of the Merger have been filed with such agencies. There can be no
assurance that the approval of the Federal Reserve, the OCC or the DBF will be
obtained or as to the timing or conditions of such approval. See "THE MERGER
- -- Regulatory Approvals."
Termination. The Merger Agreement may be terminated, and the Merger
abandoned, at any time prior to the Effective Time by mutual action of the
Board of Directors of both First National and Wachovia, or by action of the
Board of Directors of either company under certain circumstances, including if
the Merger is not consummated by June 30, 1996, unless the failure to
consummate by such time is due to a breach of the Merger Agreement by the party
seeking to terminate. If for any reason the Merger is not consummated, First
National will continue to operate as a bank holding company under its present
management. See "THE MERGER -- Amendment, Waiver and Termination."
Accounting Treatment. It is anticipated that the Merger will be
accounted for as a "purchase" for financial reporting purposes. See "THE
MERGER -- Accounting Treatment."
Resale of Wachovia Common Stock. The Wachovia Common Stock issuable
in connection with the Merger will be freely transferable by the holders of
such shares, except for those holders who may be deemed
9
<PAGE> 17
to be "affiliates" (generally including directors, certain executive officers,
and 10% or more shareholders) of First National or Wachovia under applicable
federal securities laws. See "THE MERGER -- Resales of Wachovia Common Stock."
Dissenters' Rights. A holder of First National common stock who
dissents from the Merger is entitled to the rights and remedies of dissenting
shareholders set forth in Article 13 of the Georgia Code, subject to compliance
with the procedures set forth therein. Among other things, a dissenting
shareholder is entitled to receive cash in an amount equal to the "fair value"
of such holder's shares. A copy of Article 13 of the Georgia Code is set forth
in Appendix B to this Proxy Statement/Prospectus and a summary thereof is
included under "THE MERGER -- Dissenters' Rights."
TO PERFECT DISSENTERS' RIGHTS, A SHAREHOLDER MUST COMPLY WITH ARTICLE
13 OF THE GEORGIA CODE, WHICH REQUIRES, AMONG OTHER THINGS, THAT THE
SHAREHOLDER GIVE FIRST NATIONAL NOTICE OF SUCH HOLDER'S INTENTION TO DISSENT
FROM APPROVAL OF THE MERGER AGREEMENT PRIOR TO THE VOTE OF THE FIRST NATIONAL
SHAREHOLDERS AT THE SPECIAL MEETING AND THAT SUCH SHAREHOLDER NOT VOTE HIS OR
HER SHARES IN FAVOR OF THE MERGER AGREEMENT. ANY FIRST NATIONAL SHAREHOLDER
WHO RETURNS A SIGNED PROXY BUT FAILS TO PROVIDE INSTRUCTIONS AS TO THE MANNER
IN WHICH SUCH HOLDER'S SHARES ARE TO BE VOTED WILL BE DEEMED TO HAVE VOTED IN
FAVOR OF THE MERGER AGREEMENT AND THUS WILL NOT BE ENTITLED TO ASSERT
DISSENTERS' RIGHTS.
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Wachovia Common Stock is listed on the New York Stock Exchange. There
is no established public trading market for First National Common Stock. First
National Common Stock has traded at prices between $10 and $11 per share since
January 1, 1994. These prices reflect only information which has come to First
National management's attention, and do not include retail mark-ups, mark downs
or commissions and may not represent actual transactions. No trades of First
National Common Stock have been effected since the announcement of the Merger.
The following table sets forth the last sale price of Wachovia Common
Stock, the last sale price of First National Common Stock, and the equivalent
price per share (as explained below) of First National Common Stock at the
close of business on September 21, 1995, the last trading day immediately
preceding public announcement of the Merger, and ________________, 1996, the
last practicable date prior to the mailing of this Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
Equivalent
Per Share
Price of
Wachovia First National First National
Market Price Per Share Common Stock Common Stock Common Stock
- ---------------------- ------------ -------------- --------------
<S> <C> <C> <C>
September 21, 1995 $43.60 $11.00 $17.30
February __, 1996 $_____ $_____ $_____
</TABLE>
The equivalent per share price of First National Common Stock at the specified
dates represents the last sale price of a share of Wachovia Common Stock on
such date multiplied by the Exchange Ratio of 0.4024. Shareholders are advised
to obtain current market quotations for Wachovia Common Stock. No assurance
can be given as to the market price of Wachovia Common Stock at or after the
Effective Time. See "COMPARATIVE MARKET PRICES AND DIVIDENDS."
10
<PAGE> 18
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following summary presents selected comparative unaudited per share
data for Wachovia and First National on a historical basis and on a pro forma
combined basis assuming the Merger had been effective during the periods
presented. The Merger is reflected under the purchase method of accounting and
pro forma data is derived accordingly. The information shown below should be
read in conjunction with the historical financial statements of Wachovia and
First National, including the respective notes thereto. See "AVAILABLE
INFORMATION," "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE," " --
Selected Financial Data of Wachovia (Historical)," " -- Selected Financial Data
of First National (Historical)" and "THE MERGER -- Accounting Treatment" and "
- -- No Pro Forma Financial Statements."
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
WACHOVIA COMMON STOCK
Net income per common share:
Historical, primary $ 2.65 $ 3.13
Pro forma combined $ 2.65 $ 3.12
Net income per common share:
Historical, fully diluted $ 2.64 $ 3.12
Pro forma combined $ 2.64 $ 3.11
Dividends per common share:
Historical $ 1.02 $ 1.23
Book value per common share:
Historical $ 21.24 $ 19.23
Pro forma combined $ 21.27 $ 19.26
FIRST NATIONAL COMMON STOCK
Net income per common share:
Historical, primary $ .48 $ .51(1)
Equivalent pro forma combined (2) $ 1.07 $ 1.26
Net income per common share:
Historical, fully diluted $ .48 $ .51(1)
Equivalent, pro forma combined (2) $ 1.06 $ 1.25
Dividends per common share:
Historical $ .00 $ .00
Equivalent pro forma combined (2) $ .41 $ .49
Book value per common share:
Historical $ 11.15 $ 10.59
Equivalent pro forma combined (2) $ 8.56 $ 7.75
</TABLE>
(1) Per share amounts for the year ended December 31, 1994 have been restated
to reflect the correct number of shares subject to outstanding warrants
as being 188,750 instead of 162,250 as reported in First National's
consolidated financial statements.
(2) First National pro forma equivalent amounts represent the unaudited pro
forma combined net income per common share (primary and fully diluted),
dividends per share and book value per common share on the basis of the
1 to .4024 Exchange Ratio.
11
<PAGE> 19
SELECTED FINANCIAL DATA OF WACHOVIA (HISTORICAL)
The following table sets forth selected historical financial data of
Wachovia and has been derived from its financial statements. Such selected
historical financial data should be read in conjunction with Wachovia's audited
consolidated financial statements at December 31, 1994 and 1993 and for each of
the three years in the period ended December 31, 1994, including the respective
notes thereto. The interim financial information has been derived from
unaudited financial statements of Wachovia, which, in the opinion of
management, includes all adjustments, consisting only of normal recurring
adjustments, necessary for fair statement of the results for the unaudited
interim periods. See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
September 30 For the Years Ended Decmber 31
----------------- -------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest Income $ 2,228,367 $ 1,711,090 $ 2,362,294 $ 2,122,837 $ 2,222,078 $ 2,637,015 $ 2,748,644
Interest Expense 1,154,483 732,824 1,038,388 839,012 967,028 1,467,849 1,684,114
Other Income 546,789 450,935 607,752 627,603 566,225 501,269 465,070
Other Expense 888,531 815,888 1,098,413 1,131,236 1,095,652 1,096,517 952,284
Net Income 456,345 396,932 539,058 492,095 433,225 229,540 345,677
PER SHARE AMOUNTS
Net Income, Primary $2.65 $2.30 $3.13 $2.83 $2.51 $1.34 $2.05
Net Income, Fully
Diluted 2.64 2.30 3.12 2.81 2.48 1.32 2.02
Weighted Avg Shares
Outstanding, Primary 171,993 172,462 172,339 173,941 172,641 171,481 168,888
Weighted Avg Shares
Outstanding, Fully
Diluted 172,882 173,086 172,951 175,198 175,512 175,218 172,722
Dividends 1.02 0.90 1.23 1.11 1.00 0.92(1) 0.82(1)
STATEMENT OF CONDITION
(PERIOD END)
Total Assets $44,101,105 $38,134,285 $39,187,958 $36,525,772 $33,366,519 $33,158,320 $33,314,693
Interest Earning
Assets 39,482,772 33,579,711 34,711,988 32,348,507 29,136,317 29,281,225 28,429,382
Loans 29,012,252 24,967,716 25,890,804 22,977,488 21,085,653 20,617,558 21,206,779
Deposits 25,283,015 22,555,695 23,069,258 23,352,398 23,375,461 23,006,290 23,235,225
Shareholders' Equity 3,617,642 3,214,881 3,286,507 3,017,947 2,774,767 2,484,414 2,370,928
RATIOS
Return on average
assets 1.49% 1.44% 1.46% 1.46% 1.36% 0.72% 1.13%
Return on average
equity 18.14% 17.26% 17.41% 17.13% 16.69% 9.33% 15.45%
Dividend payout ratio 38.1% 38.8% 39.1% 38.9% 39.4% 63.8%(2) 37.8%(2)
Average equity to
average assets ratio 8.22% 8.37% 8.36% 8.54% 8.16% 7.68% 7.34%
</TABLE>
(1) Represents dividends of Wachovia Corporation only; excludes equivalent
per share dividends of South Carolina National Corporation; Wachovia and
South Carolina National Corporation effected a business combination
accounted for as a pooling-of-interests on December 6, 1991.
(2) Payout ratio has been computed including South Carolina National
Corporation dividends prior to the business combination described in
(1) above.
12
<PAGE> 20
SELECTED FINANCIAL DATA OF FIRST NATIONAL (HISTORICAL)
The following table sets forth selected historical financial data of
First National and has been derived from its financial statements. Such
selected historical financial data should be read in conjunction with First
National's audited consolidated financial statements at December 31, 1994 and
1993 and for each of the three years in the period ended December 31, 1994,
including the respective notes thereto. The interim financial information has
been derived from unaudited financial statements of First National, which, in
the opinion of management, includes all adjustments, consisting only of normal
recurring adjustments, necessary for fair statement of the results for the
unaudited interim periods. See "INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE."
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
September 30 For the Years Ended Decmber 31
----------------- -------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest Income $ 1,950 $ 1,652 $ 2,244 $ 1,844 $ 1,439 $ 851 $ 357
Interest Expense 731 602 803 655 561 328 49
Other Income 173 185 249 247 177 76 --
Other Expense 983 914 1,213 1,076 915 781 222
Net Income 247 183 291 267 82 (239) 80
PER SHARE AMOUNTS
Net Income, Primary $ .48 $ .35 $ .51(1) $ .48 $ .16 $ (.46) $ .15
Net Income, Fully
Diluted $ .48 $ .35 $ .51(1) $ .48 $ 16 $ (.46) $ .15
Weighted Avg Shares
Outstanding, Primary 517,413 517,413 517,413 517,413 517,413 517,413 517,413
Weighted Avg Shares
Outstanding, Fully
Diluted
Dividends $ .00 $ .00 $ .00 $ .00 $ .00 $ .00 $ .00
STATEMENT OF CONDITION
(PERIOD END)
Total Assets $ 34,003 $ 32,193 $ 30,800 $ 29,322 $ 22,077 $ 16,129 $ 6,433
Interest Earning
Assets 29,920 28,035 26,240 25,747 18,895 13,129 5,099
Loans 19,652 15,522 17,432 15,323 10,933 7,495 1,039
Deposits 28,035 26,655 25,209 24,007 17,080 11,174 1,295
Shareholders' Equity 5,769 5,390 5,478 5,228 4,961 4,879 5,118
RATIOS
Return on average
assets 1.04%* .77%* .93% 1.03% .43% (2.04%) --
Return on average equity 5.85%* 4.58%* 5.44% 5.26% 1.69% (4.92%) --
Dividend payout ratio -- -- -- -- -- -- --
Average equity to
average assets
ratio 17.78% 16.88% 17.09% 19.55% 25.48% 41.45% --
</TABLE>
(1) Per share amounts for the year ended December 31, 1994 have been restated
to reflect the correct number of shares subject to outstanding warrants
as being 188,750 instead of 162,250 as reported in First National's
consolidated financial statements.
* Annualized
13
<PAGE> 21
GENERAL INFORMATION
SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to the shareholders
of First National in connection with the solicitation of proxies by the Board
of Directors of First National for use at the Special Meeting of shareholders.
The Special Meeting will be held at First National's main office, located at
5490 North Henry Boulevard, Stockbridge, Georgia, at 6:00 p.m., on Tuesday,
March 26, 1996, and at any adjournments and postponements thereof, to consider
and vote upon a proposal to approve the Merger Agreement.
This Proxy Statement/Prospectus is also being furnished by Wachovia to
First National shareholders as a prospectus in connection with the issuance by
Wachovia of shares of Wachovia Common Stock upon consummation of the Merger.
RECORD DATE, SOLICITATION AND REVOCABILITY OF PROXIES
The First National Board of Directors has fixed the close of business
on February 15, 1996, as the record date for determining the First National
shareholders entitled to receive notice of and to vote at the Special Meeting
(the "Record Date"). Only holders of record of First National Common Stock as
of the Record Date are entitled to notice of and to vote at the Special
Meeting. As of the Record Date, 517,413 shares of First National Common Stock
were issued and outstanding and held by [575] record holders. Holders of First
National Common Stock are entitled to one vote on each matter considered and
voted on at the Special Meeting for each share of First National Common Stock
held of record at the close of business on the Record Date. The presence, in
person or by properly executed proxy, of the holders of a majority of the
outstanding shares of First National Common Stock entitled to vote at the
Special Meeting is necessary to constitute a quorum at the Special Meeting.
For purposes of determining the presence of a quorum, abstentions will be
counted as shares present but shares to be voted by brokers with discretionary
authority for which the broker fails to exercise such discretionary authority
("broker non-votes") will not be counted as shares present for purposes of
determining the presence of a quorum. Neither abstentions nor broker non-votes
will be counted as votes cast for purposes of determining whether a proposal
has received sufficient votes for approval.
Proxies in the form accompanying this Proxy Statement/Prospectus are
solicited by First National's Board of Directors. Shares of First National
Common Stock represented by properly executed proxies, if such proxies are
received in time and are not revoked, will be voted in accordance with the
instructions indicated on the proxies. IF NO INSTRUCTIONS ARE INDICATED, SUCH
PROXIES WILL BE VOTED "FOR" APPROVAL OF THE MERGER AGREEMENT AND CONSUMMATION
OF THE TRANSACTIONS CONTEMPLATED THEREIN, AND AS DETERMINED BY A MAJORITY OF
THE MEMBERS OF THE FIRST NATIONAL BOARD OF DIRECTORS AS TO ANY OTHER MATTER
THAT MAY COME BEFORE THE SPECIAL MEETING. ANY HOLDER OF FIRST NATIONAL COMMON
STOCK WHO RETURNS A SIGNED PROXY BUT FAILS TO PROVIDE INSTRUCTIONS AS TO THE
MANNER IN WHICH SUCH HOLDER'S SHARES ARE TO BE VOTED WILL BE DEEMED TO HAVE
VOTED IN FAVOR OF APPROVAL OF THE MERGER AGREEMENT AND CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED THEREIN, AND WILL NOT BE ENTITLED TO ASSERT
DISSENTERS' RIGHTS.
A First National shareholder who has given a proxy may revoke it at
any time prior to its exercise at the Special Meeting, by (a) giving written
notice of revocation to the Secretary of First National,
14
<PAGE> 22
(b) properly submitting to First National a duly executed proxy bearing a later
date, or (c) voting in person at the Special Meeting. All written notices of
revocation and other communications with respect to revocation of proxies
should be addressed to First National as follows: The First National
Bankshares of Henry County, Inc., 5490 North Henry Boulevard, Stockbridge,
Georgia 30114, Attention: J. Randall Dixon, President. A proxy appointment
will not be revoked by death or supervening incapacity of the shareholder
executing the proxy unless, before the shares are voted, notice of such death
or incapacity is filed with First National's Secretary or other person
responsible for tabulating votes on behalf of First National.
The expense of soliciting proxies for the Special Meeting will be paid
for by First National, although pursuant to the Merger Agreement, Wachovia
agreed to pay all of the filing fees and printing costs payable in connection
with the Registration Statement and the Proxy Statement. In addition to the
solicitation of shareholders of record by mail, telephone or personal contact,
First National will be contacting brokers, dealers, banks and voting trustees
or their nominees who can be identified as record holders of First National
Common Stock; such holders, after inquiry by First National, will provide
information concerning quantity of proxy and other materials needed to supply
such materials to beneficial owners, and First National will reimburse them for
the expense of mailing the proxy materials to such persons.
VOTE REQUIRED
Approval of the Merger Agreement and consummation of the transactions
contemplated therein requires the affirmative vote of the holders of a majority
of the outstanding shares of First National Common Stock entitled to vote
thereon at the Special Meeting. The Merger Agreement and the consummation of
the transactions contemplated therein do not require the approval of the
holders of Wachovia Common Stock.
As of the Record Date, First National's directors and executive
officers and their affiliates held (excluding shares subject to warrants)
approximately 38.2% of the outstanding shares of First National Common Stock
entitled to vote at the Special Meeting. As of the Record Date, neither
Wachovia nor its directors and executive officers or their affiliates held any
shares of First National Common Stock. See "THE MERGER -- Interests of Certain
Persons in the Merger."
RECOMMENDATION OF FIRST NATIONAL'S BOARD OF DIRECTORS
For the reasons described in the section of this Proxy
Statement/Prospectus entitled "THE MERGER -- Reasons for the Merger", the Board
of Directors of First National has adopted the Merger Agreement, believes the
Merger is in the best interests of First National and its shareholders and
recommends that shareholders of First National vote "FOR" approval of the
Merger Agreement and the consummation of the transactions contemplated therein.
See "THE MERGER -- Background of the Merger," " -- Reasons for the Merger" and
" -- Interests of Certain Persons in the Merger."
15
<PAGE> 23
THE MERGER
The following information describes certain information pertaining to
the Merger. This description does not purport to be complete and is qualified
in its entirety by reference to the Appendices hereto, including the Merger
Agreement, which is attached as Appendix A and is incorporated herein by
reference. All shareholders are urged to read the Appendices in their
entirety.
GENERAL
The Merger Agreement provides for a transaction in which First
National will merge with and into Wachovia. Wachovia will be the surviving
corporation of the Merger. The First National Bank of Henry County ("First
National Bank") will be consolidated with Wachovia Bank of Georgia, N.A.
("Wachovia Bank of Georgia") and will become a branch of Wachovia Bank of
Georgia. At the Effective Time, each share of issued and outstanding First
National Common Stock (other than shares held by First National, Wachovia or
their subsidiaries or by shareholders perfecting their dissenters' rights) will
cease to be outstanding and will be converted into and exchanged for the right
to receive 0.4024 shares of Wachovia Common Stock.
BACKGROUND OF THE MERGER
During the last several years, there have been significant
developments in the banking and financial services industry. These
developments have included an increased emphasis and dependence on automation,
specialization of products and services, increased competition from other
financial institutions, and a trend toward consolidation and geographic
expansion.
With this as background, in the spring of 1995, certain members of
First National's Board of Directors felt that First National should explore
strategic alternatives in its marketplace including the possible sale of First
National. In addition, First National had received indications of possible
interest from several financial institutions operating in Georgia. The
Executive Committee of the Board of Directors of First National was directed to
coordinate First National's analysis and response to these preliminary
overtures. The Executive Committee met several times during 1995, and its
activities were reviewed by the full Board of Directors.
On June 22, 1995, the Executive Committee interviewed R. Charles
Stevens of Stevens & Company ("Stevens"), LaGrange, Georgia, and, thereafter,
voted to recommend that the First National Board of Directors retain Stevens to
assist First National in identifying and evaluating possible merger partners.
On July 17, 1995, the Board of Directors met with and voted to retain Stevens.
During this meeting, Stevens identified certain advantages and disadvantages a
potential acquirer might consider with respect to the price it would offer for
First National.
On August 8, 1995, First National's Board of Directors met with
Stevens and discussed the marketing process and a list of potential merger
partners.
16
<PAGE> 24
On September 12, 1995, the Executive Committee and several members of
the Board of Directors met with Stevens to review the proposals received from
potential merger partners. Information about and available market statistics
on each potential merger partner were discussed. The Executive Committee
considered each of the bids and the merits of each and gave particular
consideration to the relative values of the consideration to be received by
First National shareholders. Following the discussion, the Executive Committee
voted unanimously to recommend that First National's Board of Directors accept
Wachovia's proposal.
On September 14, 1995, First National's Board of Directors met with
Stevens and with counsel to First National to review the proposals received
from potential merger partners. Counsel to First National discussed with the
directors their fiduciary responsibilities to shareholders when considering the
proposals. Stevens described for the Board the seven bids received which were
submitted by six potential acquirors because one potential acquiror submitted
two bids. The terms of each bid were reviewed and the two highest bids were
discussed in detail. Following this discussion, the Board unanimously voted to
accept the proposal from Wachovia. First National did not request and Stevens
did not prepare a fairness opinion with respect to the consideration to be
received by shareholders in the Merger. Following this meeting, a press
release announcing the proposed merger was issued on September 22, 1995.
From September 15 through November 9, 1995, representatives of First
National and Wachovia conducted various due diligence activities and negotiated
the terms and conditions to be included in a definitive merger agreement. On
November 9, 1995, First National's Board of Directors met with counsel to First
National who led a discussion concerning the major points of the definitive
merger agreement. After discussion concerning the specific terms of the
agreement, the Board of Directors unanimously approved the acquisition of First
National by Wachovia on terms and conditions substantially as set forth in the
proposed agreement. The Board also authorized First National to execute and
deliver the agreement with such changes as the Executive Committee approved.
On November 22, 1995, after further negotiation, First National and
Wachovia signed the definitive merger agreement. Thereafter, on December 19,
1995, a letter was sent to the First National shareholders announcing execution
of the definitive merger agreement.
REASONS FOR THE MERGER
First National. The First National Board of Directors, after
consideration of relevant business, financial, legal and market factors,
unanimously approved the Merger Agreement. First National's Board did not
assign any relative or specific weight to the factors considered. The factors
considered included:
(i) The alternatives to the Merger, including remaining
as an independent financial institution in light of current economic
conditions in First National Bank's primary market and the competition
presented by larger financial institutions operating in that market.
(ii) The value of the consideration to be received by
First National's shareholders relative to the trading price, book
value and earnings per share of the First National Common Stock.
17
<PAGE> 25
(iii) Certain information concerning the financial
condition, results of operations and business prospects of Wachovia.
(iv) The competitive and regulatory environment for
financial institutions generally.
(v) The financial terms of recent business combinations
in the financial services industry and a comparison of the multiples
of selected combinations with the terms of the proposed transaction
with Wachovia.
(vi) The marketability of First National's Common Stock.
(vii) The fact that the Merger will enable First National
shareholders to exchange their First National Common Stock, in a
tax-free transaction, for shares of Wachovia Common Stock which is
widely held and actively traded.
(viii) The fact that Wachovia currently pays quarterly
dividends to its shareholders while First National has not paid any
dividends to its shareholders.
The terms of the Merger were the result of arms-length negotiations
between representatives of First National and Wachovia. Based upon the
foregoing factors, the Board of Directors of First National unanimously
approved the Merger as being in the best interests of First National and its
shareholders. Each member of the Board of Directors of First National has
agreed to vote his shares in favor of the Merger.
THE BOARD OF DIRECTORS OF FIRST NATIONAL UNANIMOUSLY RECOMMENDS THAT
YOU VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
Wachovia. In the opinion of the Wachovia Board of Directors, the
Merger will enable Wachovia to expand into the Henry County area currently
served by First National. Other factors considered (but not accorded any
relative or specific weight) by the Board included:
(i) The financial terms of the Merger. The Board was of
the view that the consideration to be issued to First National
shareholders in the Merger represented fair payment for the business
and assets of First National.
(ii) Information concerning the business, operations and
financial condition of First National.
(iii) The impact generally of the Merger on the various
constituencies served by Wachovia.
(iv) The overall strategic focus and long-term strategic
plan of Wachovia.
18
<PAGE> 26
(v) The likelihood of the Merger being approved by the
appropriate regulatory authorities.
STOCK OPTIONS AND WARRANTS
The Merger Agreement provides that, at the Effective Time of the
Merger, each stock option or stock warrant with respect to First National
Common Stock granted by First National, which is outstanding at the Effective
Time of the Merger, whether or not exercisable, will be converted into an
option to purchase Wachovia Common Stock with the exercise price and shares
purchasable thereunder being adjusted to reflect the Exchange Ratio. Each
officer of First National who has an option to purchase First National Common
Stock pursuant to an employment agreement will execute an Option Agreement with
Wachovia evidencing the exchange of options to purchase First National Common
Stock for options to purchase Wachovia Common Stock. Each director (and the
estate of a former director) of First National who holds a warrant to purchase
shares of First National Common Stock will execute an Option Agreement with
Wachovia evidencing the exchange of the warrant into an option to purchase
Wachovia Common Stock.
FRACTIONAL SHARES
Pursuant to the terms of the Merger Agreement, each holder of shares
of First National Common Stock exchanged pursuant to the Merger, who would
otherwise have been entitled to receive a fraction of a share of Wachovia
Common Stock, shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional share of Wachovia Common Stock multiplied by
the market value per share of Wachovia Common Stock at the Effective Time. No
such holder will be entitled to dividends, voting rights, or any other rights
as a shareholder in respect of any fractional shares.
EFFECTIVE TIME
If the Merger Agreement is approved by the requisite vote of First
National shareholders, all other required governmental and other consents and
approvals are received and the other conditions to the parties' obligations to
consummate the Merger are satisfied or waived (as permitted), the Merger will
be consummated and effected on the date and at the time Articles of Merger
reflecting the Merger are filed with the Secretary of State of Georgia and the
Secretary of State of North Carolina (the "Effective Time"). Unless otherwise
mutually agreed upon in writing by the chief executive officers of each of
Wachovia and First National, Wachovia and First National have agreed to use
their reasonable efforts to cause the Effective Time to occur on the last
business day of the month in which occurs the last to occur of (a) the
effective date (including expiration of any applicable waiting period) of the
last required consent of any regulatory authority having authority over and
approving or exempting the Merger, and (b) the date on which the shareholders
of First National approve the Merger Agreement to the extent such approval is
required by applicable law; or such later date as may be mutually agreed upon
in writing by the chief executive officers of Wachovia and First National.
Assuming satisfaction of all conditions to consummation of the Merger, the
Merger is expected to be made effective at the end of the first quarter of
1996, or as soon thereafter as practicable. Either Wachovia or First National
may terminate the Merger
19
<PAGE> 27
Agreement if the Merger has not been consummated by June 30, 1996. See " --
Conditions to Consummation" and " -- Amendment, Waiver and Termination."
DISTRIBUTION OF WACHOVIA CERTIFICATES
Promptly after the Effective Time, Wachovia will mail appropriate
transmittal materials to each record holder of First National Common Stock for
use in effecting the surrender and cancellation of those certificates in
exchange for the Wachovia Common Stock to which such shareholder is entitled as
a result of the Merger. The transmittal materials will specify that delivery
shall be effected, and risk of loss and title to the certificates theretofore
representing shares of First National Common Stock shall pass, only upon proper
delivery of such certificates to Wachovia by the former shareholders of First
National. FIRST NATIONAL SHAREHOLDERS SHOULD NOT SURRENDER THEIR CERTIFICATES
FOR EXCHANGE UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL AND INSTRUCTIONS.
After the Effective Time, each holder of shares of First National Common Stock
issued and outstanding at the Effective Time (other than shares as to which
dissenters' rights have been perfected) shall surrender the certificate or
certificates representing such shares to Wachovia, and the certificates thus
surrendered will be canceled. Certificates representing shares of Wachovia
Common Stock issued to First National shareholders in connection with the
Merger will be issued and delivered to the tendering First National shareholder
at the address on record with the First National Common Stock transfer agent.
Wachovia will not be obligated to deliver the consideration to which any former
holder of First National Common Stock is entitled until such holder surrenders
such holder's certificate or certificates representing such holder's shares for
exchange. The certificate or certificates so surrendered will be duly endorsed
as Wachovia may require. No party will be liable to a holder of First National
Common Stock for any property delivered in good faith to a public official
pursuant to any applicable abandoned property law.
After the Effective Time, to the extent permitted by law, First
National shareholders of record as of the Effective Time will be entitled to
vote at any meeting of holders of Wachovia Common Stock the number of whole
shares of Wachovia Common Stock into which their First National Common Stock
has been converted, regardless of whether such shareholders have surrendered
their First National Common Stock certificates. No dividend or other
distribution payable after the Effective Time with respect to Wachovia Common
Stock, however, will be paid to the holder of any unsurrendered First National
certificate until the holder duly surrenders such certificate. Upon such
surrender, all undelivered dividends and other distributions and, if
applicable, a check for the amount to be paid in lieu of any fractional share
interest will be delivered to such shareholder, in each case without interest.
After the Effective Time, there will be no transfers of shares of
First National Common Stock on First National's stock transfer books. If
certificates representing shares of First National Common Stock are presented
for transfer after the Effective Time, they will be canceled and exchanged for
the shares of Wachovia Common Stock and a check for the amount due in lieu of
fractional shares, if any, deliverable in respect thereof.
20
<PAGE> 28
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences of the Merger. This discussion is based on the provisions of the
Code, the United States Department of the Treasury Regulations thereunder and
rulings and court decisions as of the date hereof, all of which are subject to
change, possibly retroactively. The discussion is included for general
information purposes only, applies only to First National shareholders, if any,
who hold their stock as a capital asset, and may not apply to First National
shareholders, if any, who received their stock upon the exercise of employee
stock options or otherwise as compensation. Wachovia and First National have
not requested a ruling from the Internal Revenue Service (the "Service"). A
condition to consummation of the Merger is the receipt by Wachovia and First
National of an opinion of Powell, Goldstein, Frazer & Murphy, counsel to First
National, as to the qualification of the Merger as a tax-free reorganization
and certain other federal income tax consequences of the Merger.
The Merger is intended to be a tax-free reorganization within the
meaning of Section 368(a) of the Code. Among other things, the following
discussion is based on First National shareholders maintaining sufficient
equity ownership interest in Wachovia after the Merger. The Service takes the
position for purposes of issuing an advance ruling on reorganizations, that the
shareholders of an acquired corporation (i.e., First National) must maintain a
continuing equity ownership interest in the acquiring corporation (i.e.,
Wachovia) equal, in terms of value, to at least 50% of their interest in such
acquired corporation. For this purpose, shares of First National Common Stock
exchanged for cash in lieu of fractional shares of Wachovia Common Stock will
be treated as outstanding shares of First National Common Stock at the
Effective Time. Moreover, shares of First National Common Stock and Wachovia
Common Stock held by First National shareholders and otherwise sold, redeemed
or disposed of prior to or shortly after or the Effective Time are taken into
account. In addition, management of Wachovia has represented that it has no
plan or intention to cause Wachovia to redeem or otherwise reacquire the shares
of Wachovia Common Stock issued in the Merger. In addition to the foregoing
requirements, certain additional matters must be true with respect to the
Merger. Wachovia believes that these additional factual matters will be
satisfied.
Assuming the Merger is treated as a reorganization as defined in
Section 368(a) of the Code, the following summarizes the federal income tax
consequences to the First National shareholders:
(i) No gain or loss will be recognized for federal
income tax purposes by First National shareholders upon the exchange
of their shares of First National Common Stock for Wachovia Common
Stock.
(ii) The basis of the shares of Wachovia Common Stock to
be received by First National shareholders will be the same as the
basis of the First National Common Stock surrendered in exchange
therefor.
(iii) The holding period of the Wachovia Common Stock to
be received by First National shareholders will include the period
during which the shares of First National Common
21
<PAGE> 29
Stock surrendered in exchange therefor had been held, provided such
shares were held by such shareholders as a capital asset at the
Effective Time.
(iv) The payment of cash in lieu of fractional shares of
Wachovia Common Stock will be treated as if the fractional shares were
issued as part of the exchange and then redeemed by Wachovia. Whether
these cash payments will be treated as having been received as
distributions in full payment in exchange for the fractional shares of
Wachovia Common Stock redeemed or a dividend generally is determined
under Section 302 of the Code. Generally, any gain or loss recognized
will be capital gain or loss, provided the fractional share
constitutes a capital asset in the hands of the exchanging shareholder
and the requirements of Section 302(b)(1) are met. First National
shareholders receiving cash in lieu of fractional shares should
consult their own tax advisers as to the applicable tax treatment.
(v) First National shareholders who dissent from the
Merger will be treated as having received such payment as a
distribution in redemption of their shares of First National Common
Stock. Generally, any gain or loss recognized will be capital gain or
loss, provided the First National Common Stock constitutes a capital
asset in the hands of the exchanging shareholder and the requirements
of Section 302(b)(1), (2) or (3) are met. First National shareholders
electing to exercise dissenters' rights should consult their own tax
advisers as to the tax treatment in their particular circumstances.
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON
THE PARTICULAR CIRCUMSTANCES OF EACH SHAREHOLDER AND OTHER FACTORS, EACH HOLDER
OF FIRST NATIONAL COMMON STOCK IS URGED TO CONSULT SUCH HOLDER'S OWN TAX
ADVISER TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE
MERGER (INCLUDING THE APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND
OTHER TAX LAWS).
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Wachovia will be the surviving corporation resulting from the Merger
and will continue to be governed by the laws of the State of North Carolina and
will operate in accordance with its Articles of Incorporation and Bylaws as in
effect immediately prior to the Effective Time until otherwise amended or
repealed after the Effective Time. The directors and officers of Wachovia in
office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, will serve as the directors and officers
of Wachovia from and after the Effective Time in accordance with Wachovia's
Bylaws.
INDEMNIFICATION
The Merger Agreement provides that, for a period of six years after
the Effective Time, Wachovia will indemnify each person entitled to
indemnification from First National or any of its subsidiaries to the full
extent permitted under the laws of the State of Georgia and by First National's
Articles of
22
<PAGE> 30
Incorporation and Bylaws, as in effect on the date of the Merger Agreement,
with respect to matters occurring at or prior to the Effective Time.
POST ACQUISITION COMPENSATION AND BENEFITS
The Merger Agreement provides that, after the Effective Time, Wachovia
will provide generally to officers and employees of First National and First
National Bank, employee benefits under employee benefit plans (including the
Retirement Income Plan and Retirement Savings and Profit-Sharing Plan but
excluding any stock option or other plan involving the potential issuance of
Wachovia Common Stock), on terms and conditions that, when taken as a whole,
are substantially similar to those currently provided by Wachovia and its
subsidiaries to their similarly situated officers and employees. For purposes
of participation and vesting under such employee benefit plans, service with
First National or its subsidiaries prior to the Effective Time will generally
be treated as service with Wachovia or any subsidiary participating in such
plans. The Merger Agreement also provides that Wachovia will honor all
provisions for vested amounts earned or accrued through the Effective Time
under First National's benefit plans. Wachovia will also honor all employment,
severance, consulting and other compensation agreements, in accordance with
their terms, between First National, First National Bank and any current or
former director, officer or employee.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Other than as described under the headings "THE MERGER -- Stock
Options and Warrants," " -- Indemnification" and " -- Post Acquisition
Compensation and Benefits," no director or executive officer of Wachovia or
First National, and no associate of any such person, has any substantial
interest, direct or indirect, in the Merger, other than an interest arising
from the ownership of First National Common Stock, in which case the director
or officer receives no benefit not shared on a pro rata basis by all other
holders of First National Common Stock.
CONDITIONS TO CONSUMMATION
The obligations of First National and Wachovia to consummate the
Merger are subject to the satisfaction or waiver (to the extent permitted) of
the following conditions: (a) the Merger, the Merger Agreement and all other
documents and instruments to be delivered in connection therewith shall have
been approved by the shareholders of First National; (b) the required
regulatory approvals described under "Regulatory Approvals" shall have been
received, generally without any conditions or requirements which would, in the
reasonable judgment of the Board of Directors of either Wachovia or First
National, materially adversely affect the economic or business benefits of the
transactions contemplated by the Merger Agreement so as to render inadvisable
the consummation of the Merger; (c) each party shall have received any required
consents of third parties; (d) no court or regulatory authority shall have
taken any action prohibiting, restricting or making illegal the consummation of
the transactions contemplated by the Merger Agreement; (e) the Registration
Statement of which this Proxy Statement/Prospectus is a part shall have been
declared effective by the Commission and shall not be subject to a stop order
or any threatened stop order, and the shares of Wachovia Common Stock issuable
in connection with the Merger shall have been qualified, registered or
otherwise approved for exchange under the securities laws of the various
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states in which such qualification, registration or approval is required; (f)
the shares of Wachovia Common Stock issuable pursuant to the Merger shall have
been approved for listing on the New York Stock Exchange; (g) Wachovia and
First National shall have received an opinion of Powell, Goldstein, Frazer &
Murphy as to certain tax matters; (h) Wachovia and each of the holders of the
First National Stock Options and the First National Stock Warrants shall have
executed an Officer's Option Agreement or a Director's Option Agreement, as
applicable; (i) the other party's representations and warranties shall remain
accurate, and the other party shall have performed all of the agreements,
covenants, acts and undertakings to be performed by it pursuant to the Merger
Agreement, and shall have delivered certificates confirming satisfaction of the
foregoing requirements; (j) each party shall have received an opinion of the
other party's counsel, dated the closing date, as to certain matters; (k)
Wachovia shall have received a letter from Mauldin & Jenkins with respect to
certain financial information regarding First National; and (l) Wachovia shall
have received a letter from each affiliate of First National relating to
securities law compliance.
No assurances can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the appropriate
party. As of the date of this Proxy Statement/Prospectus, the parties know of
no reason to believe that any of the conditions set forth above will not be
satisfied.
The conditions to consummation of the Merger may be waived, in whole
or in part, to the extent permissible under applicable law, by the party for
whose benefit the condition has been imposed, without the approval of the First
National shareholders. See " -- Amendment, Waiver and Termination."
REGULATORY APPROVALS
The Merger is subject to the prior approval of the Federal Reserve
under the BHC Act and the DBF under the Financial Institutions Code of Georgia.
Wachovia has filed all applications required to be filed with the Federal
Reserve, the OCC and the DBF in connection with the Merger. The Merger may not
be consummated until the thirtieth day after approval of the Merger by the
Federal Reserve, during which time the United States Department of Justice, the
Federal Trade Commission and other interested parties have the opportunity to
file suit seeking to enjoin consummation of the Merger on antitrust grounds.
The 30-day period referred to above may be reduced to 15 days if the Federal
Reserve receives no adverse comments from the United States Department of
Justice regarding the competitive factors of the Merger. There can be no
assurance that the approval of the Federal Reserve, the OCC or the DBF will be
obtained (or as to the timing or conditions thereof).
AMENDMENT, WAIVER AND TERMINATION
To the extent permitted by law, First National and Wachovia, with the
approval of their respective Boards of Directors, may amend the Merger
Agreement by written agreement at any time without the approval of the
shareholders of First National, provided that after the approval of the Merger
by First National's shareholders, no amendment may decrease the consideration
to be received by First National shareholders without the requisite approval of
First National shareholders.
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Prior to or at the Effective Time, either First National or Wachovia,
acting through its respective Board of Directors, chief executive officer or
other authorized officer, may waive any default in the performance of any term
of the Merger Agreement by the other party, may waive or extend the time for
the fulfillment by the other party of any of its obligations under the Merger
Agreement, and may waive any of the conditions precedent to the obligations of
such party under the Merger Agreement, except any condition that, if not
satisfied, would result in the violation of an applicable law or governmental
regulation.
The Merger Agreement may be terminated, and the Merger abandoned, at
any time prior to the Effective Time by mutual consent of the Boards of
Directors of First National and Wachovia. In addition, the Merger Agreement
may be terminated, and the Merger abandoned, prior to the Effective Time by
either Wachovia or First National if: (a) the other party breaches and does not
timely cure any breach of a representation, warranty, covenant or other
agreement contained in the Merger Agreement and (other than representations and
warranties relating to the capital stock of each of Wachovia and First
National) such breach, individually or in the aggregate, has a Material Adverse
Effect (as defined in the Merger Agreement) on the non-breaching party; (b) any
consent or approval of certain regulatory authorities is denied by final
nonappealable action of such authority; (c) the First National shareholders
fail to approve the Merger Agreement; (d) any of the conditions precedent to
the obligations of the terminating party to consummate the Merger cannot be
satisfied or fulfilled by June 30, 1996; or (e) the Merger has not been
consummated by June 30, 1996.
CONDUCT OF BUSINESS PENDING THE MERGER
First National has agreed in the Merger Agreement, unless the prior
consent of Wachovia is obtained, and except as otherwise contemplated by the
Merger Agreement, to operate its business only in the ordinary course, to
preserve its business organization and assets, to use its reasonable efforts to
cause its representations and warranties to be correct at all times and to
maintain its rights and franchises and to take no action that would adversely
affect either the ability of either party to perform its covenants and
agreements under the Merger Agreement or the ability of either party to obtain
any consents or approvals pursuant to any contract, law, order or permit that
are required for the transactions contemplated by the Merger Agreement. In
addition, the Merger Agreement contains certain other restrictions applicable
to the conduct of the business of First National prior to consummation of the
Merger, as described below.
First National has agreed in the Merger Agreement not to take (or
cause First National Bank to take) certain actions relating to the operation of
its business until the earlier of the consummation of the Merger or the
termination of the Merger Agreement without the prior approval of Wachovia.
Those actions generally include, without limitation: (a) amending the Articles
of Incorporation, Bylaws or other governing instruments of First National or
First National Bank; (b) becoming responsible for any obligation for borrowed
money in excess of an aggregate of $100,000, except in the ordinary course of
the business consistent with past practices; (c) acquiring or exchanging any
shares of its capital stock or paying any dividend or other distribution in
respect of its capital stock, provided that First National may (to the extent
legally and contractually permitted to do so, but shall not be obligated to)
declare and pay a cash dividend of $0.145 per share of First National Common
Stock issued and outstanding on May 9,
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1996 if the Closing Date occurs on or after May 9, 1996; (d) issuing, selling
or pledging additional shares of any First National capital stock, any rights
to acquire any such stock or any security convertible into such stock, except
pursuant to the exercise of outstanding stock options; (e) adjusting or
reclassifying any of its capital stock; (f) acquiring control over any other
entity; (g) granting any increase in compensation or benefits to its employees
or officers (except as previously disclosed to Wachovia or as required by law),
paying any bonus (except as previously disclosed to Wachovia or in accordance
with any existing program or plan), entering into or amending any severance
agreements with its officers; (h) granting any increase in compensation or
other benefits to any of its directors (except as previously disclosed to
Wachovia); (i) entering into or amending any employment contract that it does
not have the unconditional right to terminate without certain liability, except
for any amendment required by law; (j) adopting any new employee benefit plan
or program or materially changing any existing plan or program; (k) making any
significant changes in accounting methods, except for any change required by
law; (l) commencing any litigation other than in accordance with past practice
or settling any litigation for money damages; or (m) materially amending or
terminating any material contracts.
In addition, First National has agreed not to solicit, directly or
indirectly, any acquisition proposal from any other person or entity. First
National also has agreed not to negotiate with respect to any such proposal, to
provide information to any party making such a proposal or to enter into any
agreement with respect to any such proposal except in compliance with its legal
obligations or the fiduciary obligations of its Board of Directors. First
National is also to use reasonable efforts to cause its advisors and other
representatives not to engage in any of the foregoing activities.
Pursuant to the Merger Agreement, Wachovia has agreed that, prior to
the Effective Time, it will continue to conduct its business and the business
of its subsidiaries in a manner designed in its reasonable judgment to enhance
the long-term value of the Wachovia Common Stock and the business prospects of
Wachovia.
EXPENSES AND FEES
The Merger Agreement provides that each party shall be responsible for
its own costs and expenses incurred in connection with the negotiation and
consummation of the transactions contemplated by the Merger Agreement, except
that Wachovia shall pay all of the filing fees payable in connection with the
Registration Statement, the Proxy Statement and the printing costs incurred in
connection with the Registration Statement and this Proxy Statement/Prospectus.
ACCOUNTING TREATMENT
The Merger is anticipated to be accounted for as a "purchase," as that
term is used pursuant to GAAP, for accounting and financial reporting purposes.
Under purchase accounting, the assets and liabilities of First National as of
the Effective Time will be recorded at their respective fair values and added
to those of Wachovia. Financial statements of Wachovia issued after the
Effective Time would reflect such values and would not be restated
retroactively to reflect the historical financial position or results of
operations of First National.
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NO PRO FORMA FINANCIAL STATEMENTS
No pro forma financial statements are included in this Proxy
Statement/Prospectus because the pro forma effects of the Merger are not
material to Wachovia's consolidated financial statements. Accordingly, such
information is also immaterial to an understanding of the proposed Merger by
the shareholders of First National.
RESALES OF WACHOVIA COMMON STOCK
The shares of Wachovia Common Stock issued in connection with the
Merger will be freely transferable under the Securities Act, except for shares
issued to any shareholder who may be deemed to be an "affiliate" (generally
including, without limitation, directors, certain executive officers, and
beneficial owners of 10% or more of any class of capital stock) of First
National for purposes of Rule 145 under the Securities Act as of the date of
the Special Meeting. Such affiliates may not sell their shares of Wachovia
Common Stock acquired in connection with the Merger except pursuant to an
effective registration statement under the Securities Act or other applicable
exemption from the registration requirements of the Securities Act. Wachovia
may place restrictive legends on certificates representing Wachovia Common
Stock issued to all persons who are deemed to be "affiliates" of First National
under Rule 145. In addition, as a condition to consummation of the Merger,
each person or entity that is an "affiliate" of First National must enter into
a written agreement in substantially the form attached to the Merger Agreement
relating to such restrictions on sale or other transfer. This Proxy
Statement/Prospectus does not cover resales of Wachovia Common Stock received
by any person who may be deemed to be an affiliate of First National.
DISSENTERS' RIGHTS
Pursuant to the provisions of Article 13 of the Georgia Code, if the
Merger is consummated, any holder of record of First National Common Stock who
(a) gives to First National, prior to the vote at the Special Meeting with
respect to the approval of the Merger Agreement, written notice of such
holder's intent to demand payment for such holder's shares and (b) does not
vote in favor thereof, shall be entitled to receive, upon compliance with the
statutory requirements summarized below, the fair value of such holder's shares
as of the Effective Time.
A record shareholder may assert dissenters' rights as to fewer than
all of the shares registered in such holder's name only if such holder dissents
with respect to all shares beneficially owned by any one beneficial shareholder
and such holder notifies First National in writing of the name and address of
each person on whose behalf such holder asserts dissenters' rights. The rights
of such a partial dissenter are determined as if the shares as to which such
holder dissents and such holder's other shares were registered in the names of
different shareholders.
The written objection requirement referred to above will not be
satisfied under the Georgia Code by merely voting against approval of the
Merger Agreement by proxy or in person at the Special Meeting. Any holder of
First National Common Stock who votes in favor of the Merger will not be
entitled to assert dissenters' rights of appraisal. Any holder of First
National Common Stock who returns a signed
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proxy but fails to provide instructions as to the manner in which such shares
are to be voted will be deemed to have voted in favor of the Merger and will
not be entitled to assert dissenters' rights of appraisal. In addition to not
voting in favor of the Merger Agreement, a shareholder wishing to preserve the
right to dissent and seek appraisal must give a separate written notice of such
holder's intent to demand payment for such holder's shares if the Merger is
effected, as hereinabove provided.
Any written objection to the Merger Agreement satisfying the
requirements discussed above should be addressed as follows: The First
National Bankshares of Henry County, Inc., 5490 North Henry Boulevard, P.O. Box
190, Stockbridge, Georgia 30281, Attention: J. Randall Dixon.
If the Merger is authorized at the Meeting, First National must
deliver a written dissenters' notice (the "Dissenters' Notice") to all holders
of First National Common Stock who satisfied the foregoing requirements. The
Dissenters' Notice must be sent within ten days after the Effective Time and
must (a) state where the demand for payment must be sent and where and when
certificates for shares of First National Common Stock must be deposited, (b)
inform holders of uncertificated shares to what extent transfer of these shares
will be restricted after the demand for payment is received, (c) set a date by
which First National must receive the demand for payment (which date may not be
fewer than 30 nor more than 60 days after the Dissenters' Notice is delivered),
and (d) be accompanied by a copy of Article 13 of the Georgia Code.
A record shareholder who receives the Dissenters' Notice must demand
payment and deposit such holder's certificates in accordance with the
Dissenters' Notice. Such shareholder will retain all other rights of a
shareholder until those rights are canceled or modified by the consummation of
the Merger. A record shareholder who does not demand payment or deposit such
holder's share certificates where required, each by the date set in the
Dissenters' Notice, is not entitled to payment for such holder's shares under
Article 13 of the Georgia Code.
Except as described below, the surviving corporation resulting from
the Merger (the "Surviving Corporation") must, within ten days of the later of
the Effective Time or receipt of a payment demand, offer to pay to each
dissenting shareholder who complied with the payment demand and deposit
requirements described above the amount the Surviving Corporation estimates to
be the fair value of such holder's shares, plus accrued interest from the
Effective Time. Such offer of payment must be accompanied by (a) certain
recent First National financial statements, (b) the Surviving Corporation's
estimate of the fair value of the shares, (c) an explanation of how the
interest was calculated, (d) a statement of the dissenter's right to demand
payment under Section 14-2-1327 of the Georgia Code, and (e) a copy of Article
13 of the Georgia Code. If the shareholder accepts the Surviving Corporation's
offer by written notice to the Surviving Corporation within 30 days after the
Surviving Corporation's offer, payment must be made within 60 days after the
later of the making of the offer or the Effective Time.
If the Merger is not effected within 60 days after the date set forth
for demanding payment and depositing share certificates, First National must
return the deposited certificates and release the transfer restrictions imposed
on uncertificated shares. If, after such return and release, the Merger is
effected, the Surviving Corporation must send a new Dissenters' Notice and
repeat the payment demand procedure described above.
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Section 14-2-1327 of the Georgia Code provides that a dissenting
shareholder may notify the Surviving Corporation in writing of such holder's
own estimate of the fair value of such holder's shares and the interest due,
and may demand payment of such holder's estimate, if (a) such holder believes
that the amount offered by the Surviving Corporation is less than the fair
value of such holder's shares or that the interest due has been calculated
incorrectly, or (b) First National, having failed to effect the Merger, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment. A dissenting shareholder waives such holder's right to
demand payment under Section 14-2-1327 unless such holder notifies the
Surviving Corporation of such holder's demand in writing within 30 days after
the Surviving Corporation makes or offers payment for such holder's shares. If
the Surviving Corporation does not offer payment within ten days of the later
of the Effective Time or receipt of a payment demand, then (a) the shareholder
may demand the financial statements and other information required to accompany
the Surviving Corporation's payment offer, and the Surviving Corporation must
provide such information within ten days after receipt of the written demand,
and (b) the shareholder may notify the Surviving Corporation of such holder's
own estimate of the fair value of such holder's shares and the amount of
interest due, and may demand payment of that estimate.
If a demand for payment under Section 14-2-1327 remains unsettled, the
Surviving Corporation must commence a nonjury equity valuation proceeding in
the Superior Court of Henry County, Georgia, within 60 days after receiving the
payment demand and must petition the court to determine the fair value of the
shares and accrued interest. If the Surviving Corporation does not commence
the proceeding within those 60 days, it is required to pay each dissenting
shareholder whose demand remains unsettled the amount demanded. The Surviving
Corporation is required to make all dissenting shareholders whose demands
remain unsettled parties to the proceeding and to serve a copy of the petition
upon each dissenting shareholder. The court may appoint appraisers to receive
evidence and to recommend a decision on fair value. Each dissenting
shareholder made a party to the proceeding is entitled to judgment for the fair
value of such holder's shares plus interest to the date of judgment.
The court in an appraisal proceeding commenced under the foregoing
provision must determine the costs of the proceeding, excluding fees and
expenses of attorneys and experts for the respective parties, and must assess
those costs against the Surviving Corporation, except that the court may assess
the costs against all or some of the dissenting shareholders to the extent the
court finds they acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Section 14-2-1327. The court also may assess the fees
and expenses of attorneys and experts for the respective parties against the
Surviving Corporation if the court finds the Surviving Corporation did not
substantially comply with the requirements of specified provisions of Article
13 of the Georgia Code, or against either the Surviving Corporation or a
dissenting shareholder if the court finds that such party acted arbitrarily,
vexatiously, or not in good faith with respect to the rights provided by
Article 13 of the Georgia Code.
If the court finds that the services of attorneys for any dissenting
shareholder were of substantial benefit to other dissenting shareholders
similarly situated, and that the fees for those services should be not assessed
against the Surviving Corporation, the court may award those attorneys
reasonable fees out of the amounts awarded the dissenting shareholders who were
benefited. No action by any dissenting shareholder to enforce dissenters'
rights may be brought more than three years after the Effective Time,
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regardless of whether notice of the Merger and of the right to dissent was
given by First National or the Surviving Corporation in compliance with the
Dissenters' Notice and payment offer requirements.
The foregoing is a summary of the material rights of a dissenting
shareholder of First National, but is qualified in its entirety by reference to
Article 13 of the Georgia Code, included in Appendix B to this Prospectus/Proxy
Statement. Any First National shareholder who intends to dissent from approval
of the Merger Agreement should carefully review the text of such provisions and
should also consult with such holder's attorney. No further notice of the
events giving rise to dissenters' rights or any steps associated therewith will
be furnished to First National shareholders, except as indicated above or
otherwise required by law.
Any dissenting First National shareholder who perfects such holder's
right to be paid the value of such holder's shares will recognize taxable gain
or loss upon receipt of cash for such shares for federal income tax purposes.
See " -- Certain Federal Income Tax Consequences."
CERTAIN DIFFERENCES IN THE RIGHTS OF WACHOVIA
AND FIRST NATIONAL SHAREHOLDERS
At the Effective Time, First National shareholders who do not perfect
their dissenters' rights automatically will become shareholders of Wachovia,
and their rights as shareholders will be determined by Wachovia's Articles of
Incorporation (the "Articles") and Bylaws. The following is a summary of the
material differences in the rights of shareholders of Wachovia and First
National. Other than as set forth below, there are no material differences
between the rights of a Wachovia shareholder and a First National shareholder.
First National is a Georgia corporation governed by the Georgia Code and
Wachovia is a North Carolina corporation governed by the North Carolina General
Statutes. This summary is necessarily general and does not purport to be a
complete discussion of, and is qualified in its entirety by reference to, the
Georgia Code, the North Carolina General Statutes and the Articles and Bylaws
of each corporation.
ANTITAKEOVER PROVISIONS GENERALLY
The provisions of Wachovia's Articles and Bylaws described under the
headings "Amendment of Articles of Incorporation and Bylaws," "Authorized
Capital Stock," "Special Meetings of Shareholders," "Number of Directors,"
"Classified Board of Directors," "Removal of Directors," "Restrictions on
Business Combinations," "Limitation on Director Liability" and
"Indemnification" are referred to herein as the "Protective Provisions." In
general, one purpose of the Protective Provisions is to assist Wachovia's Board
of Directors in playing a role in connection with attempts to acquire control
of Wachovia, so that the Board of Directors of Wachovia can further and protect
the interests of Wachovia and its shareholders as appropriate under the
circumstances, including, if the Board of Directors determines that a sale of
control is in the best interest of Wachovia and Wachovia's shareholders, by
enhancing the Board's ability to maximize the value to be received by the
shareholders upon such sale.
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Although Wachovia's management believes the Protective Provisions are,
therefore, beneficial to Wachovia's shareholders, the Protective Provisions
also may tend to discourage some takeover bids. As a result, Wachovia's
shareholders may be deprived of opportunities to sell some or all of their
shares at prices that represent a premium over prevailing market prices. On
the other hand, defeating undesirable acquisition offers can be a very
expensive and time-consuming process. To the extent that the Protective
Provisions discourage undesirable proposals, Wachovia may be able to avoid
those expenditures of time and money.
The Protective Provisions also may discourage open market purchases by
a potential acquirer. Such purchases may increase the market price of Wachovia
Common Stock temporarily, enabling shareholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the Protective
Provisions may decrease the market price of Wachovia Common Stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The Protective Provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Wachovia through replacing the Board of Directors and
management. Furthermore, the Protective Provisions may make it more difficult
for Wachovia shareholders to replace the Board of Directors or management,
even if a majority of the shareholders believes such replacement is in the best
interests of Wachovia. As a result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management.
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
Wachovia. Wachovia's Articles provide that the affirmative vote of at
least 66 2/3% of shares, including a majority of the shares held by a person
other than a shareholder who beneficially owns, directly or indirectly,
together with affiliates, 10 percent or more of Wachovia Common Stock (an
"Interested Shareholder"), is required to repeal certain provisions of the
Articles relating to the duration of the corporation, the authorized capital
stock, election of Board of Directors, preemptive rights of shareholders,
business combinations and amendment of the Articles. Amendment of such
provisions may be approved by a majority of the shares of Wachovia Common
Stock, if 66 2/3% of the directors who are not Interested Shareholders approve
such amendment or, if there are no Interested Shareholders, then if a majority
of the Board of Directors can approve the amendment of such provisions.
Wachovia's Bylaws provide that the Board of Directors has the power to
adopt, amend or repeal the Bylaws by a vote of a majority of the directors then
in office, subject to the right of the shareholders to adopt, amend or repeal
the Bylaws.
First National. The Georgia Code generally provides that a Georgia
corporation's articles of incorporation may be amended by the affirmative vote
of a majority of shares entitled to vote thereon, unless the articles of
incorporation provide for a higher or lower voting requirement. First
National's Articles provide that two-thirds of the directors then in office or
two-thirds of the issued and outstanding shares entitled to vote are required
to approve the amendment of certain provisions of the Articles and Bylaws
relating to election of directors, amendment of the Bylaws regarding number of
directors, removal of directors, liability of directors and business
combinations.
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AUTHORIZED CAPITAL STOCK
Wachovia. Wachovia is authorized to issue 500,000,000 shares of
Wachovia Common Stock, $5.00 par value, of which 170,358,504 shares were
issued and outstanding at December 31, 1995, and 50,000,000 shares of Wachovia
preferred stock, $5.00 par value, none of which was issued and outstanding at
December 31, 1995.
First National. First National is authorized to issue 10,000,000
shares of First National Common Stock, $1.00 par value, of which 517,413 shares
were issued and outstanding at December 31, 1995.
SPECIAL MEETINGS OF SHAREHOLDERS
Wachovia. Wachovia's Bylaws state that special meetings of the
shareholders may be called at any time by its chief executive officer or by a
majority of its Board of Directors.
First National. Under First National's Bylaws, special meetings of
the shareholders may be called at any time by the Chairman of the Board or the
Board of Directors. The Bylaws also allow three or more shareholders, owning
an aggregate of not less than 25% of the outstanding First National Common
Stock, to call a special meeting by delivering a written demand to First
National stating the purpose of the meeting.
NUMBER OF DIRECTORS, CLASSIFIED BOARD OF DIRECTORS
Wachovia. Wachovia's Bylaws state that the number of directors shall
not be less than 9, with the exact number of directors to be fixed by
resolution of the Board. The Board has fixed the number at 16 directors.
Wachovia's Bylaws state that the Board of Directors shall be divided into three
classes to serve staggered three-year terms.
The effect of Wachovia's having a classified Board of Directors is
that only approximately one-third of the members of the Board are elected each
year; consequently, two annual meetings are effectively required for Wachovia's
shareholders to change a majority of the members of the Board.
First National. First National's Bylaws state that the Board of
Directors will be composed of 15 directors. Like Wachovia, First National's
Articles provide that the Board of Directors shall be divided into three
classes to serve staggered three-year terms.
REMOVAL OF DIRECTORS
Wachovia. Wachovia's Bylaws state that a director of Wachovia may be
removed only for cause and only by the affirmative vote of the holders of 66
2/3% of the outstanding voting shares including a majority of the voting shares
not held by an Interested Shareholder.
First National. First National's Articles of Incorporation state that
a director may be removed without cause only by the affirmative vote of at
least 80% of the issued and outstanding shares entitled
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to vote on an election of directors. A director may be removed for cause by
the affirmative vote of the holders of a majority of the outstanding shares of
First National Common Stock at a meeting with respect to which notice of such
purpose has been given.
ADVANCE NOTICE OF DIRECTOR NOMINATIONS
Wachovia. Wachovia's Bylaws provide that director nominations must be
made in writing and delivered or mailed to the chief executive officer of
Wachovia not less than 14 days nor more than 50 days prior to any meeting of
shareholders at which directors are to be elected, except that if less than 21
days' notice of the meeting is given to shareholders, such notification of the
nomination must be mailed or delivered to the chief executive officer of
Wachovia not later than the close of business on the seventh day following the
day on which the notice of meeting was mailed.
First National. First National's Bylaws do not contain such a
provision.
RESTRICTIONS ON BUSINESS COMBINATIONS
Wachovia. Wachovia's Articles have special restrictions (the "Fair
Price Provisions") which are designed to discourage attempts to acquire control
of Wachovia in non-negotiated transactions through the use of two-tier pricing
tactics. The Fair Price Provisions limit the ability of an Interested
Shareholder to effect certain transactions involving Wachovia. Such
transactions, which are referred to below as "Business Combinations," include
any merger with or consolidation into an Interested Shareholder or an affiliate
thereof, any recapitalization or reclassification of Wachovia securities or
similar transaction increasing the percentage of outstanding shares owned by an
Interested Shareholder, or any proposal for liquidation or dissolution of
Wachovia. Under the Fair Price Provisions, a Business Combination which does
not satisfy certain price requirements designed to ensure fair treatment of all
shareholders of Wachovia must be approved by (a) the holders of at least 66
2/3% of the outstanding voting securities of Wachovia and the holders of at
least a majority of the outstanding shares of Wachovia Common Stock not owned
by the Interested Shareholder or (b) by 66 2/3% of the "Continuing Directors,"
which consist of directors elected by shareholders of Wachovia prior to the
Interested Shareholder's acquisition of 10% of the voting securities and any
directors recommended to join the Wachovia Board by a majority of directors so
elected. Certain other provisions of Wachovia's Bylaws further restrict the
ability of an Interested Shareholder to effect a change in control of Wachovia.
The Fair Price Provisions may discourage attempts to obtain control of Wachovia
and, as a result, holders of Wachovia Common Stock may be deprived of an
opportunity to sell their shares at a premium above the market price.
According to Wachovia's Bylaws, a director of Wachovia may be removed only for
cause and only by the affirmative vote of the holders of 66 2/3% of the
outstanding voting shares including a majority of the voting shares not held by
Interested Shareholders. Accordingly, shareholders of Wachovia may be more
restricted in their ability to effect a change in the Board of Directors.
First National. First National's Articles require the affirmative
vote of the holders of at least two-thirds of the issued and outstanding shares
of First National Common Stock entitled to vote on the matter to approve (a)
any merger of First National with or into any other entity; or (b) any sale,
lease, exchange or disposition of all or substantially all of the assets of
First National, if the person or entity which is a
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party to such transaction is the beneficial owner, directly or indirectly, of
5% or more of the issued and outstanding shares entitled to vote in an election
of directors.
CONTROL SHARE ACQUISITIONS
Wachovia. The North Carolina General Statutes contain provisions
relating to Control Share Acquisitions (the "Control Share Act"). The Control
Share Act contains provisions that, under certain circumstances, would preclude
an acquiror of the shares of a North Carolina corporation, who crosses one of
three voting thresholds (20%, 33 1/3% or 50%) from obtaining voting control
with respect to such shares unless a majority in interest of the disinterested
shareholders of the corporation votes to accord voting power to such shares.
The Control Share Act provides that, in the event control shares are
accorded voting rights and, as a consequence, the holders of the control shares
have a majority of all voting power for the election of directors, the
corporation's shareholders, other than holders of control shares, may cause the
corporation to redeem their shares. The right of redemption is subject to
limitations on corporate distributions to shareholders and any contrary
provision in the corporation's articles of incorporation or bylaws adopted by
the shareholders prior to the occurrence of a control share acquisition.
Wachovia's Articles and Bylaws do not limit the ability of shareholders to
cause Wachovia to redeem their shares under the circumstances described above.
First National. The Georgia Code does not contain provisions
specifically relating to Control Share Acquisitions.
COMPETING RIGHTS OF HOLDERS OF PREFERRED STOCK
Wachovia. Wachovia's Articles authorize the issuance of 50,000,000
shares of preferred stock. No shares of preferred stock have been issued or
are expected to be issued prior to the Effective Time of the Merger. The
holders of preferred stock issued in the future, if any shares are issued, may
have a preference over holders of Wachovia Common Stock in the payment of
dividends and in the liquidation of Wachovia and may be given voting rights
that would dilute the voting power of the holders of Wachovia Common Stock. In
addition, the authority of the Board of Directors to issue preferred stock with
such rights and privileges as it may deem appropriate may enable the Board to
prevent a change in control through the acquisition of shares of Wachovia
Common Stock.
First National. First National's Articles do not authorize the
issuance of a class of preferred stock.
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LIMITATION ON DIRECTOR LIABILITY
Wachovia. Wachovia's Articles provide that, to the full extent
permitted by law, a director of Wachovia will have no personal liability to
Wachovia or its shareholders for monetary damages for breach of his or her duty
as a director, whether such action is brought by or in the right of Wachovia or
otherwise.
Although this provision does not affect the availability of injunctive
or other equitable relief as a remedy for a breach of duty by a director, it
does limit the remedies available to a shareholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the
likelihood of shareholder derivative litigation against directors and may
discourage or deter shareholders or management from bringing a lawsuit against
directors for breach of their duties, even though such action, if successful,
might have benefitted Wachovia and its shareholders. The Commission has taken
the position that similar provisions added to other corporations' certificates
of incorporation would not protect those corporations' directors from liability
for violations of the federal securities laws.
First National. First National's Articles provide that a director of
First National will have no personal liability to First National or its
shareholders for monetary damages for breach of fiduciary duty as a director
except for (a) any appropriation, in violation of his or her duties, of any
business opportunity of First National; (b) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (c) the
types of liability set forth in Section 14-2-154 of the Georgia Code dealing
with illegal or unauthorized (1) distributions of corporate assets, whether as
dividends or in liquidation of First National, or otherwise, (2) repurchases of
stock or (3) commencement of business; or (d) any transaction from which the
director derived an improper material tangible personal benefit.
INDEMNIFICATION
Wachovia. Wachovia's Bylaws provide for indemnification of any
liability of directors, officers, employees or agents of Wachovia or any
wholly-owned subsidiary of Wachovia. Indemnification payments for liabilities
and litigation expenses may be made only following a determination that the
activities of the person to be indemnified (the "Claimant") were at the time
taken not known or believed by the Claimant to be clearly in conflict with the
best interest of Wachovia. Such determination will be made (a) by a majority
of disinterested directors (if there are at least two such directors), or (b)
if there are not two such directors or if a majority of the disinterested
directors so directs, by independent legal counsel in a written opinion, or (c)
by a majority of the shareholders, or (d) in accordance with any reasonable
procedures prescribed by the Board of Directors prior to the assertion of the
claim for which indemnification is sought. If the Claimant is an officer or an
employee of Wachovia, the determination may be made by the chief executive
officer or a designee of the chief executive officer.
First National. First National's Bylaws provide for indemnification
of any liability of directors, officers, employees or agents of First National
in the event that such person acted in a manner he or she reasonably believed
to be in or not opposed to the best interests of First National or had no
reasonable cause to believe his or her conduct was unlawful. The determination
of whether indemnification is proper
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is made by (a) the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to the action, suit or proceeding, or (b) by
the firm of independent legal counsel then employed by First National, or (c)
by the affirmative vote of a majority of the shares entitled to vote.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Wachovia Common Stock is listed on the New York Stock Exchange under
the symbol "WB." The following table sets forth, for the indicated periods,
the high and low closing sale prices for Wachovia Common Stock as reported by
the New York Stock Exchange, and the cash dividends declared per share of
Wachovia Common Stock for the indicated periods.
WACHOVIA
<TABLE>
<CAPTION>
PRICE RANGE CASH DIVIDENDS
----------- DECLARED
HIGH LOW PER SHARE
---- --- ---------
<S> <C> <C> <C>
1994
First Quarter 35 1/8 30 1/8 .30
Second Quarter 35 3/8 30 3/4 .30
Third Quarter 35 1/4 31 3/8 .30
Fourth Quarter 34 1/2 31 1/2 .33
1995
First Quarter 36 1/2 32 .33
Second Quarter 37 7/8 34 1/4 .33
Third Quarter 45 35 3/8 .36
Fourth Quarter 48 1/4 43 1/8 .36
1996
First Quarter (through ________)
</TABLE>
There is no established public trading market for First National
Common Stock. First National Common Stock has traded at prices between $10 and
$11 per share since January 1, 1994. These prices reflect only information
which has come to First National management's attention, and do not include
retail mark-ups, markdowns or commissions and may not represent actual
transactions. No trades of First National Common Stock have been effected
since the announcement of the Merger.
The holders of Wachovia Common Stock are entitled to receive dividends
when and if declared by the Board of Directors out of funds legally available
therefor. Although Wachovia currently intends
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<PAGE> 44
to continue paying quarterly cash dividends on the Wachovia Common Stock, there
can be no assurance that Wachovia's dividend policy will remain unchanged after
completion of the Merger. The declaration and payment of dividends thereafter
will depend upon business conditions, operating results, capital and reserve
requirements, and the Board of Directors' consideration of other relevant
factors.
Wachovia is a legal entity separate and distinct from its subsidiaries
and its revenues depend in significant part on the payment of dividends from
its subsidiary financial institutions. Wachovia's subsidiary depository
institutions are subject to certain legal restrictions on the amount of
dividends they are permitted to pay. See "Supervision and Regulation --
Payment of Dividends and Other Restrictions."
First National has not paid any dividends since its inception.
BUSINESS OF FIRST NATIONAL
First National was incorporated as a Georgia business corporation on
June 7, 1989, and became a bank holding company by acquiring all of the common
stock of First National Bank. First National Bank is presently the sole
operating subsidiary of First National.
First National Bank commenced its business on December 11, 1990 as a
full-service commercial bank, without trust powers. First National Bank offers
personal and business checking accounts, interest-bearing checking accounts,
savings accounts, and various types of certificates of deposits. Additionally,
First National Bank offers consumer/installment loans, construction loans,
commercial loans, and home equity lines of credit.
First National's principal executive offices are located at 5490 North
Henry Boulevard, Stockbridge, Georgia 30281 and its telephone number is (770)
389-1776.
Additional information with respect to First National and First
National Bank is included in documents incorporated by reference in this Proxy
Statement/Prospectus. Copies of such documents including First National's
Annual Report on 10-KSB for the fiscal year ended December 31, 1994, the First
National Annual Report to Shareholders, First National's Quarterly Reports on
Form 10-QSB for the quarters ended March 31, 1995, June 30, 1995 and September
30, 1995, and First National's Current Report on Form 8-K, dated September 25,
1995, accompany this Proxy Statement/Prospectus.
VOTING SECURITIES AND PRINCIPAL
SHAREHOLDERS OF FIRST NATIONAL
The following table sets forth the number of shares of First National
Common Stock beneficially owned by those persons known by management of First
National to own 5% or more of the outstanding shares of First National Common
Stock. Such information is given as of January 15, 1996. Unless otherwise
indicated, each person is the record owner of and has sole voting and
investment power over his shares.
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<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership(1) Of Class
------------------- ----------------------- --------
<S> <C> <C>
Estate of Lloyd L. Hester, Jr. 48,540 (2) 8.96
Joe S. Chafin 30,000 (3) 5.63
William D. Coker 32,000 (4) 6.00
Harold C. Johnson, Sr. 30,000 (5) 5.63
James R. Kendall 30,000 (6) 5.63
Roddy H. Oglesby, Jr. 51,380 (7) 9.47
W. Norman Strawn 30,000 (8) 5.63
</TABLE>
___________________________
(1) The information shown above is based upon information furnished to
First National by the named persons. Information relating to
beneficial ownership of First National Common Stock is based upon
"beneficial ownership" concepts set forth in rules promulgated under
the Securities Exchange Act of 1934, as amended. Under such rules, a
person is deemed to be a "beneficial owner" of a security if that
person has or shares "voting power," which includes the power to
dispose or to direct the voting of such security or "investment
power," which includes the power to dispose or direct the disposition
of such security. A person is also deemed to be a beneficial owner of
any security as to which that person has the right to acquire
beneficial ownership within 60 days (for each person named in the
table, the number of shares beneficially owned and the percent of the
class owned have been calculated to include all warrants exercisable
by that person within 60 days of January 15, 1996). Under the rules,
more than one person may be deemed to be a beneficial owner of the
same securities and a person may be deemed to be a beneficial owner of
securities as to which he had no beneficial interest.
(2) Consists of 27,090 shares which were held by Mr. Hester, 7,200 shares
held by Hester Drywall, Inc., a corporation whose capital stock was
wholly owned by Mr. Hester and 13,250 shares subject to presently
exercisable warrants. The executor of the Estate is A.J. Welch, Jr.,
41 Keys Ferry Street, McDonough, Georgia 30253.
(3) Consists of 5,000 shares held by Dr. Chafin, 10,000 shares jointly
held by Dr. Chafin and his spouse and 15,000 shares subject to
presently exercisable warrants. Dr. Chafin's address is 110 Jasper
Drive, Stockbridge, Georgia 30281.
(4) Includes 16,000 shares subject to presently exercisable warrants. Mr.
Coker's address is 102 Atlanta Street, McDonough, Georgia 30253.
(5) Includes 15,000 shares subject to presently exercisable warrants. Mr.
Johnson's address is 215 Hawick, McDonough, Georgia 30253.
(6) Includes 15,000 shares subject to presently exercisable warrants. Mr.
Kendall's address is 637 Stagecoach Road, Stockbridge, Georgia 30281.
(7) Consists of 15,000 shares jointly held by Mr. Oglesby and his spouse,
10,094 shares held by Mr. Oglesby in a Keogh account, 1,286 shares
held by Mr. Oglesby and 25,000 shares subject to presently exercisable
warrants. Mr. Oglesby's address is 80 Cedar Hill Drive, Stockbridge,
Georgia 30281.
(8) Includes 15,000 shares subject to presently exercisable warrants. Mr.
Strawn's address is 214 Darwish Drive, McDonough, Georgia 30253.
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BUSINESS OF WACHOVIA
Wachovia is a bank holding company incorporated under the laws of the
State of North Carolina. Wachovia is the 21st largest bank holding company in
the United States, based on total assets at December 31, 1995. At December 31,
1995, Wachovia had consolidated assets of $45.0 billion, consolidated loans net
of unearned income of $29.3 billion, consolidated deposits of $26.4 billion and
consolidated shareholders' equity of $3.8 billion. Wachovia's principal assets
consist of all the outstanding common stock of Wachovia Bank of North Carolina,
N.A., a national banking association organized under the laws of the United
States, Wachovia Bank of Georgia, N.A., a national banking association
organized under the laws of the United States, and Wachovia Bank of South
Carolina, N.A., a national banking association organized under the laws of the
United States.
Wachovia Bank of North Carolina, N.A. provides personal, commercial,
trust and institutional banking services through 219 full-service banking
offices in 95 North Carolina cities and communities. In addition, it has a
foreign branch in Grand Cayman and an Edge Act subsidiary -- Wachovia
International Banking Corporation, with branch offices in Georgia, New York,
North Carolina and South Carolina. At December 31, 1995, Wachovia Bank of
North Carolina, N.A. had total assets of $26.8 billion and total deposits of
$12.4 billion.
Wachovia Bank of Georgia, N.A. provides personal, commercial, trust
and institutional banking services with a network of 127 offices in 47 cities
and communities in Georgia, and a foreign branch in Grand Cayman. At December
31, 1995, Wachovia Bank of Georgia, N.A. had total assets of $17.4 billion
and total deposits of $9.6 billion.
Wachovia Bank of South Carolina, N.A. provides personal, commercial,
trust and institutional banking with a network of 146 offices in 64 South
Carolina cities and communities and a foreign branch in the Cayman Islands. At
December 31, 1995, Wachovia Bank of South Carolina, N.A. had total assets of
$7.1 billion and total deposits of $5.3 billion.
In addition to the above-described banking subsidiaries, Wachovia is
parent to over 35 subsidiaries engaged in, among other things, mortgage
banking, discount brokerage and credit-related insurance.
Wachovia has dual executive offices located at 100 North Main Street,
Winston-Salem, North Carolina 27150 and 191 Peachtree Street, N.E., Atlanta,
Georgia 30303, and its telephone numbers are (910) 770-5000 and (404)
332-5000, respectively.
Additional information with respect to Wachovia is included in
documents incorporated by reference in this Proxy Statement/Prospectus. See
"INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."
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<PAGE> 47
SUPERVISION AND REGULATION
As bank holding companies, Wachovia and First National are subject to
regulation under the BHC Act and its examination and reporting requirements.
The following discussion sets forth certain of the material elements of the
regulatory framework applicable to bank holding companies and provides certain
specific information relevant to Wachovia.
GENERAL
As a bank and savings and loan holding company, Wachovia is subject to
the regulation and supervision of the Federal Reserve and the Office of Thrift
Supervision ("OTS"). In addition, state banking commissions have limited
supervisory and regulatory authority with respect to bank and savings and loan
holding company activities. Wachovia's subsidiary banks, as national banking
associations, are subject to supervision and examination by the OCC and the
Federal Deposit Insurance Corporation (the "FDIC"). In addition, Wachovia's
subsidiary savings and loan association is subject to OTS regulations,
supervision and reporting requirements. The subsidiary banks and savings and
loan association (the "Subsidiary Institutions") are also subject to various
requirements and restrictions, including requirements to maintain reserves
against deposits, restrictions on the types and amounts of loans that may be
granted and the interest that may be charged thereon, and limitations on the
types of investments that may be made and the types of services that may be
offered. Various consumer laws and regulations also affect the operations of
the Subsidiary Institutions. In addition to the impact of regulation,
commercial banks and savings banks are affected significantly by the actions of
the Federal Reserve as it attempts to control the money supply and credit
availability in order to influence the economy.
The federal banking agencies have broad enforcement powers over
depository institutions, including the power to terminate deposit insurance, to
impose substantial fines and other civil and criminal penalties, and to appoint
a conservator or receiver if any of a number of conditions are met. The
federal banking agencies also have broad enforcement powers over bank holding
companies, including the power to impose substantial fines and other civil and
criminal penalties.
Almost every aspect of the operations and financial condition of the
Subsidiary Institutions is subject to extensive regulation and supervision and
to various requirements and restrictions under federal and, in some cases,
state law, including requirements governing capital adequacy, liquidity,
earnings, dividends, reserves against deposits, management practices,
branching, loans, investments and the provision of services. The activities
and operations of Wachovia also are subject to extensive federal supervision
and regulation which, among other things, limit non-banking activities, impose
minimum capital requirements and require approval to acquire 5% of any class of
voting shares of substantially all of the assets of a bank or other company.
In addition to the impact of regulation, depository institutions and their
holding companies may be significantly affected by legislation, which can
change statutes affecting financial institutions in substantial and
unpredictable ways, and by the actions of the Federal Reserve as it attempts to
control the money supply and credit availability in order to influence the
economy.
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FEDERAL SECURITIES LAWS
Wachovia is subject to various federal securities laws, including the
Securities Act of 1933 (the "1933 Act") and the Securities Exchange Act of 1934
(the "1934 Act"). The 1933 Act regulates the distribution or public offering
of securities, while the 1934 Act regulates trading in securities that are
already issued and outstanding. Both Acts provide civil and criminal penalties
for misrepresentations and omissions in connection with the sale of securities,
and the 1934 Act also prohibits market manipulation and insider trading.
Pursuant to the 1934 Act, Wachovia files annual, quarterly and current
reports with the Securities and Exchange Commission. In addition, Wachovia and
its directors, executive officers and 5% shareholders are subject to certain
additional reporting requirements, including requirements governing the
submission of proxy statements and reports of beneficial ownership of
Wachovia's securities.
PAYMENT OF DIVIDENDS AND OTHER RESTRICTIONS
Wachovia is a legal entity separate and distinct from its
subsidiaries, including the Subsidiary Institutions. There are various legal
and regulatory limitations on the extent to which Wachovia's subsidiaries,
including its bank subsidiaries and savings and loan subsidiary, can finance or
otherwise supply funds to Wachovia.
The principal source of Wachovia's cash revenues is dividends from
its subsidiaries and there are certain legal restrictions under federal and
state law on the payment of dividends by such subsidiaries. The approval of
the OCC is required if the total of all dividends declared by a national bank
in any calendar year exceeds the bank's net profits, as defined, for that year
combined with its retained net profits for the preceding two calendar years.
Under this formula, in 1996 Wachovia's banking subsidiaries cannot distribute as
dividends to Wachovia, without the approval of the OCC, more than $532,099,000
plus an additional amount equal to the banks' retained net profits for 1996 up
to the date of any dividend declaration.
In addition, the Subsidiary Institutions and their subsidiaries are
subject to limitations under Section 23A of the Federal Reserve Act with
respect to extensions of credit to, investments in, and certain other
transactions with, Wachovia and its other subsidiaries. Furthermore, loans and
extensions of credit are also subject to various collateral requirements.
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<PAGE> 49
CAPITAL ADEQUACY
The federal bank regulatory agencies have adopted minimum risk-based
and leverage capital guidelines for United States banking organizations. The
minimum required risk-based capital ratio of qualifying total capital to risk-
weighted assets (including certain off-balance-sheet items, such as standby
letters of credit) is 8%, of which 4% must consist of Tier 1 capital. As of
December 31, 1995, Wachovia's total risk-based capital ratio was 13.64%,
including 9.43% of Tier 1 capital. The minimum required leverage capital ratio
(Tier 1 capital to average total assets) is 3% for banking organizations that
meet certain specified criteria, including that they have the highest
regulatory rating. A higher leverage ratio may apply under certain
circumstances. As of December 31, 1995, Wachovia's leverage capital ratio was
8.36%. All Wachovia depositary institutions are rated "well capitalized."
Failure to meet capital guidelines can subject a banking organization
to a variety of enforcement remedies, including additional substantial
restrictions on its operations and activities, termination of deposit insurance
by the FDIC, and under certain conditions the appointment of a receiver or
conservator.
Federal banking statutes establish five capital categories for
depository institutions ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized"), and impose significant restrictions on the operations of an
institution that is not at least adequately capitalized. Under certain
circumstances, an institution may be downgraded to a category lower than that
warranted by its capital levels and subjected to the supervisory restrictions
applicable to institutions in the lower capital category. A depository
institution is generally prohibited from making capital distributions
(including paying dividends) or paying management fees to a holding company if
the institution would thereafter be undercapitalized. Adequately capitalized
institutions may accept brokered deposits only with a waiver from the FDIC,
while undercapitalized institutions may not accept, renew, or roll over
brokered deposits.
An undercapitalized depository institution is also subject to
restrictions in a number of areas, including asset growth, acquisitions,
branching, new lines of business, and borrowing from the Federal Reserve
System. In addition, an undercapitalized depository institution is required to
submit a capital restoration plan. A depository institution's holding company
must guarantee the capital plan up to an amount equal to the lesser of 5% of
the depository institution's assets at the time it becomes undercapitalized or
the amount needed to restore the capital of the institution to the levels
required for the institution to be classified as adequately capitalized at the
time the institution fails to comply with the plan and any such guarantee would
be entitled to a priority of payment in bankruptcy. A depository institution
is treated as if it is significantly undercapitalized if it fails to submit a
capital plan that is based on realistic assumptions and is likely to succeed in
restoring the depository institution's capital.
Significantly undercapitalized depository institutions may be subject
to a number of additional significant requirements and restrictions, including
requirements to sell sufficient voting stock to become adequately capitalized,
to replace or improve management, to reduce total assets, to restrict senior
executive compensation and to limit transactions with affiliates. Critically
undercapitalized depository institutions are further subject to restrictions on
paying principal or interest on subordinated debt, making investments,
expanding, acquiring or selling assets, extending credit for highly-leveraged
transactions, paying excessive compensation, amending their charters or bylaws
and making any material changes in
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accounting methods. In general, a receiver or conservator must be appointed
for a depository institution within 90 days after the institution is deemed to
be critically undercapitalized.
SUPPORT OF SUBSIDIARY BANKS
Under Federal Reserve policy, Wachovia is expected to act as a source
of financial strength to, and to commit resources to support, each of its
subsidiary banks. This support may be required at times when, absent such
Federal Reserve policy, Wachovia may not be inclined to provide it. In the
event of a bank holding company's bankruptcy, any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital of
a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment.
A depository institution insured by the FDIC can be held liable for
any loss incurred by, or reasonably expected to be incurred by, the FDIC in
connection with the default of a commonly controlled FDIC-insured depository
institution or any assistance provided by the FDIC to any commonly controlled
FDIC-insured depository institution "in danger of default." "Default" is
defined generally as the appointment of a conservator or receiver and "in
danger of default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance. Liability for the losses of commonly-controlled depository
institutions can lead to the failure of some or all depository institutions in
a holding company structure, if the remaining institutions are unable to pay
the liability assessed by the FDIC. Any obligation or liability owed by a
subsidiary bank to its parent company is subordinate to the subsidiary bank's
cross-guarantee liability for losses of commonly-controlled depository
institutions.
CRA AND FAIR LENDING
On April 19, 1995, the federal bank regulatory agencies adopted
revisions to the regulations promulgated pursuant to the Community Reinvestment
Act (the "CRA"), which are intended to set distinct assessment standards for
financial institutions. The revised regulation contains three evaluation
tests: (a) a lending test which will compare the institution's market share of
loans in low- and moderate-income areas to its market share of loans in its
entire service area and the percentage of a bank's outstanding loans to low and
moderate-income areas or individuals, (b) a services test which will evaluate
the provision of services that promote the availability of credit to low and
moderate-income areas, and (c) an investment test, which will evaluate an
institution's record of investments in organizations designed to foster
community development, small and minority-owned businesses and affordable
housing lending, including state and local government housing or revenue bonds.
The regulation is designed to reduce the paperwork requirements of the current
regulations and provide regulators, institutions and community groups with a
more objective and predictable manner with which to evaluate the CRA
performance of financial institutions. The rule became effective on January 1,
1996. All Wachovia depository institutions have received "outstanding" CRA
ratings.
Congress and various federal agencies (including, in addition to the
bank regulatory agencies, the Department of Housing and Urban Development, the
Federal Trade Commission and the Department of Justice) (collectively the
"Federal Agencies") responsible for implementing the nation's fair lending laws
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have been increasingly concerned that prospective home buyers and other
borrowers are experiencing discrimination in their efforts to obtain loans. In
recent years, the Department of Justice has filed suit against financial
institutions which it determined had discriminated, seeking fines and
restitution for borrowers who allegedly suffered from discriminatory practices.
Most, if not all, of these suits have been settled (some for substantial sums)
without a full adjudication on the merits.
On March 8, 1994, the Federal Agencies, in an effort to clarify what
constitutes lending discrimination and to specify the factors the agencies will
consider in determining if lending discrimination exists, announced a joint
policy statement detailing specific discriminatory practices prohibited under
the Equal Credit Opportunity Act and the Fair Housing Act. In the policy
statement, three methods of proving lending discrimination were identified:
(a) overt evidence of discrimination, when a lender blatantly discriminates on
a prohibited basis, (b) evidence of disparate treatment, when a lender treats
applicants differently based on a prohibited factor even where there is no
showing that the treatment was motivated by prejudice or a conscious intention
to discriminate against a person, and (c) evidence of disparate impact, when a
lender applies a practice uniformly to all applicants, but the practice has a
discriminatory effect, even where such practices are neutral on their face and
are applied equally, unless the practice can be justified on the basis of
business necessity.
FDIC INSURANCE ASSESSMENTS
The Subsidiary Institutions are subject to FDIC deposit insurance
assessments. The FDIC applies a risk-based assessment system that will place
each financial institution in one of nine risk categories with premium rates,
based on capital levels and supervisory criteria. Effective in January, 1996,
the highest-rated commercial banks pay the statutory annual minimum of $2,000
for FDIC insurance. Rates for all other commercial banks have been reduced by
four cents per $100, leaving a premium range of 3 cents to 27 cents per $100 of
deposits. The FDIC has the authority to raise or lower assessment rates on
insured deposits in order to achieve certain designated reserve ratios in the
deposit insurance funds and to impose special additional assessments.
FUTURE REQUIREMENTS
Statutes and regulations are regularly proposed which contain
wide-ranging proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions. It cannot be predicted
whether or in what form any proposed statute or regulation will be adopted or
the extent to which the business of Wachovia and its subsidiaries may be
affected by such statute or regulation.
EXPERTS
The consolidated financial statements of First National as of December
31, 1994 and 1993, and for each of the years in the three-year period ended
December 31, 1994, incorporated by referenced herein and in the Registration
Statement by reference to First National's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1994, have been incorporated by reference herein
in reliance upon the report of Mauldin & Jenkins, independent certified public
accountants, incorporated by reference herein,
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and upon the authority of said firm as experts in accounting and auditing. The
report of Mauldin & Jenkins covering the December 31, 1994 consolidated
financial statements refers to (a) changes in the accounting for investment
securities effective January 1, 1994 to adopt the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," and (b) a change in the accounting
for income taxes as of January 1, 1993 to adopt the provisions of SFAS No. 109,
"Accounting for Income Taxes."
The consolidated financial statements of Wachovia incorporated by
reference in Wachovia's Annual Report (Form 10-K) for the year ended December
31, 1994, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon incorporated by reference therein and
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
OPINIONS
The legality of the shares of Wachovia Common Stock being offered
hereby is being passed upon for Wachovia by Kenneth W. McAllister, Executive
Vice President and General Counsel.
Powell, Goldstein, Frazer & Murphy, Atlanta, Georgia, counsel for
First National, will opine as to certain federal income tax consequences of the
Merger. See "THE MERGER -- Certain Federal Income Tax Consequences."
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, First National's
Board of Directors knows of no matters that will be presented for consideration
at the Special Meeting other than as described in this Proxy
Statement/Prospectus. However, if any other matter shall come before the
Special Meeting or any adjournments or postponements thereof and shall be voted
upon, the proposed proxy will be deemed to confer authority to the individuals
named as authorized therein to vote the shares represented by such proxy as to
any such matters that fall within the purposes set forth in the Notice of
Special Meeting as determined by a majority of the Board of Directors.
SHAREHOLDER PROPOSALS
Wachovia expects to hold its next annual meeting of shareholders
during April 1996. Under Commission rules, proposals of Wachovia shareholders
intended to be presented at that meeting must have been received by Wachovia at
its principal executive offices no later than November 8, 1995, for
consideration by Wachovia for possible inclusion in such proxy materials.
Proposals with respect to Wachovia's 1997 annual meeting of shareholders may be
submitted until November 13, 1996.
45
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
WACHOVIA CORPORATION
AND
THE FIRST NATIONAL BANKSHARES
OF
HENRY COUNTY, INC.
DATED AS OF NOVEMBER 22, 1995
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TABLE OF CONTENTS
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Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
1.4 Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
ARTICLE 2 TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
2.1 Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
ARTICLE 3 MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
3.2 Shares Held by First National or Wachovia . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9
3.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9
3.4 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9
3.5 Dissenting Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
ARTICLE 4 EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
4.1 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
4.2 Rights of Former First National Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11
</TABLE>
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF FIRST NATIONAL . . . . . . . . . . . . . . . . . . . . . . . . . A-11
5.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11
5.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11
5.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12
5.4 First National Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
5.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
5.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14
5.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14
5.9 Allowance for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
5.10 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
5.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
5.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
5.13 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17
5.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17
5.15 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18
5.16 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
5.17 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
5.18 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
5.19 Accounting, Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
5.20 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF WACHOVIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
6.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
6.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
6.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21
6.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21
6.5 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
6.6 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
6.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
6.8 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
6.9 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
6.10 Accounting, Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
7.1 Affirmative Covenants of First National . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
7.2 Negative Covenants of First National . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
7.3 Covenants of Wachovia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25
7.4 Adverse Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26
7.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26
</TABLE>
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ARTICLE 8 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26
8.1 Registration Statement; Proxy Statement; Shareholder Approval . . . . . . . . . . . . . . . . . . A-26
8.2 Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
8.3 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
8.4 Filings with State Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
8.5 Agreement as to Efforts to Consummate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
8.6 Investigation and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
8.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
8.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
8.9 Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
8.10 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
8.11 Agreement of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
8.12 Employee Benefits and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
8.13 Conversion of Operational Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
8.14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE . . . . . . . . . . . . . . . . . . . . . . . . A-30
9.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-30
9.2 Conditions to Obligations of Wachovia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
9.3 Conditions to Obligations of First National . . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
ARTICLE 10 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-33
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-33
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
10.3 Non-Survival of Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
11.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40
11.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40
11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
11.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
11.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
</TABLE>
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11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
11.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
11.12 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
</TABLE>
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
1. Plan of Consolidation (Section 1.4)
2. Form of Option Agreement (Officers) (Section 3.1(c))
3. Form of Option Agreement (Directors) (Section 3.1(c))
4. Form of Agreement of Affiliates of First National (Section 8.11)
5. Matters as to which Counsel for First National will opine (Section 9.2(d))
6. Matters as to which Counsel for Wachovia will opine (Section 9.3(d))
</TABLE>
"PREVIOUSLY DISCLOSED" REFERENCES
<TABLE>
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SECTION NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
5.3 Capital Stock (First National)
5.5 Financial Statements (First National)
5.6 Liabilities of First National
5.10 Assets (First National)
5.11(a) Noncompliance with Environmental Laws
5.11(b)(c) Litigation with respect to noncompliance with Environmental Laws
5.12(a) Defaults of First National
5.14 Employee Benefit Plans (First National)
5.15 Material Contracts (First National)
7.2(c)(g) Negative Covenants of First National
8.11 Agreement of Affiliates (First National)
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of November 22, 1995 by and between WACHOVIA CORPORATION
("Wachovia"), a corporation organized and existing under the laws of the State
of North Carolina, with its principal office located in Winston-Salem, North
Carolina and THE FIRST NATIONAL BANKSHARES OF HENRY COUNTY, INC. ("First
National"), a corporation organized and existing under the laws of the State of
Georgia, with its principal office located in Stockbridge, Georgia.
PREAMBLE
The Boards of Directors of First National and Wachovia are of the
opinion that the transactions described herein are in the best interests of the
Parties and their respective shareholders. This Agreement provides for the
combination of First National with Wachovia pursuant to the Merger of First
National with and into Wachovia, and the consolidation of First National's
wholly-owned subsidiary, The First National Bank of Henry County ("FNB"),
Wachovia Interim National Bank and Wachovia Bank of Georgia, National
Association (the "Consolidation"). At the Effective Time of such Merger, the
outstanding shares of the capital stock of First National shall be converted
into the right to receive shares of the common stock of Wachovia at the
exchange rate provided herein. The transactions described in this Agreement
are subject to the approvals of the shareholders of First National and, where
applicable, the Board of Governors of the Federal Reserve System, the Office of
the Comptroller of the Currency, the Georgia Department of Banking and Finance,
the Secretary of State of the State of Georgia, the Secretary of State of the
State of North Carolina and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the Parties to this
Agreement that the Merger and the Consolidation for federal income tax purposes
shall qualify as "reorganizations" within the meaning of Section 368(a)(1)(A)
of the Internal Revenue Code.
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, First National shall be merged with and into
Wachovia, pursuant to the provisions of, and with the effect provided in, the
Georgia Business Corporation Code ("GBCC") and the North Carolina General
Statutes ("NCGS"). Wachovia shall be the Surviving Corporation resulting from
the Merger. The Merger shall be consummated pursuant to the terms of this
Agreement, subject to the approval of the respective Boards of Directors of
First National and Wachovia and, to the extent required, the shareholders of
First National.
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1.2 TIME AND PLACE OF CLOSING. The Closing will take place at
10:00 a.m. on the date that the Effective Time occurs (or the immediately
preceding day if the Effective Time is earlier than 10:00 a. m.), or at such
other time as the Parties, acting through their Chief Executive Officers may
mutually agree. The place of Closing shall be at the offices of Powell,
Goldstein, Frazer & Murphy, Atlanta, Georgia, or such other place as may be
mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger contemplated by this Agreement
shall become effective on the latest to occur of the date and time the Articles
of Merger reflecting the Merger become effective with the Secretary of State of
the State of Georgia and the Secretary of State of the State of North Carolina
(the "Effective Time"). Subject to the terms and conditions hereof, unless
otherwise mutually agreed upon in writing by the chief executive officers of
each Party, the Parties shall use their reasonable efforts to cause the
Effective Time to occur on the last business day of the month in which occurs
the last to occur of (a) the effective date (including expiration of any
applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (b)
the date on which the shareholders of First National approve this Agreement to
the extent such approval is required by applicable Law, or such later date as
may be mutually agreed upon in writing by the chief executive officers of each
Party.
1.4 CONSOLIDATION. Subject to the terms and conditions of the
Plan of Consolidation attached hereto as Exhibit 1, FNB shall be consolidated
with Wachovia Bank of Georgia, National Association and Wachovia Interim
National Bank, pursuant to the provisions of, and with the effect provided in,
the National Bank Act, as amended. Wachovia and First National shall use their
best efforts to cause the transactions contemplated by the Plan of
Consolidation to be effective at the Effective Time.
ARTICLE 2
TERMS OF MERGER
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of
Wachovia in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until otherwise amended
or repealed.
2.2 BYLAWS. The Bylaws of Wachovia in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The Directors and Officers of
Wachovia holding those titles immediately prior to the Effective Time shall be
the Directors and Officers of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, the shares of the Parties shall be
affected as follows:
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(a) Each share of Wachovia Capital Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding immediately after the Effective Time.
(b) Each share of First National Common Stock (excluding
shares held by First National or FNB or by Wachovia or any of its Subsidiaries,
in each case other than in a fiduciary capacity, as collateral for loans or
other indebtedness or as a result of foreclosure or deed in lieu thereof)
issued and outstanding at the Effective Time shall become and be converted into
0.4024 share of Wachovia Common Stock. Shares held by dissenting shareholders
shall not be subject to conversion, but shall be subject to Section 3.5 of this
Agreement.
(c) At the Effective Time, each stock option or stock
warrant with respect to First National Common Stock ("First National Options"
and "First National Warrants") granted by First National under any First
National Stock Plans, which is outstanding at the Effective Time, whether or
not exercisable, shall be converted into an option to purchase Wachovia Common
Stock at an option price of $24.85 based upon a fixed exchange rate of 0.4024
pursuant to the Option Agreement (Officers) attached hereto as Exhibit 2 or
pursuant to the Option Agreement (Directors) attached hereto as Exhibit 3,
respectively.
(d) All restrictions or limitations on transfer with
respect to First National Common Stock awarded under any First National Stock
Plans or any other plan, program, or arrangement of any First National Company,
to the extent that such restrictions or limitations shall not have already
lapsed, and except as otherwise expressly provided in such plan, program or
arrangement, shall remain in full force and effect with respect to shares of
Wachovia Common Stock into which such restricted stock is converted pursuant to
Section 3.1 of this Agreement.
3.2 SHARES HELD BY FIRST NATIONAL OR WACHOVIA. Each of the shares
of First National Common Stock held by any First National Company or by any
Wachovia Company, in each case other than in a fiduciary capacity, as
collateral for loans or other indebtedness or as a result of foreclosure or
deed in lieu thereof, shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
3.3 FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement, each holder of shares of First National Common Stock exchanged
pursuant to the Merger, or of options to purchase shares of First National
Common Stock, who would otherwise have been entitled to receive a fraction of a
share of Wachovia Common Stock (after taking into account all certificates
delivered by such holder) shall receive in lieu thereof cash (without interest)
in an amount equal to such fractional part of a share of Wachovia Common Stock
multiplied by the market value of one share of Wachovia Common Stock at the
Effective Time. The market value of one share of Wachovia Common Stock at the
Effective Time shall be the average of the high and low sales price of such
common stock on the New York Stock Exchange (as reported by The Wall Street
Journal or, if not reported thereby, any other authoritative source) on the
trading date immediately preceding the Effective Time. No such holder will be
entitled to dividends, voting rights, or any other rights as a shareholder in
respect of any fractional shares.
3.4 ANTI-DILUTION PROVISIONS. In the event First National changes
the number of shares of First National Common Stock issued and outstanding
prior to the Effective Time as the result of a stock split, stock dividend, or
similar recapitalization with respect to such stock, the Exchange Ratio shall
be
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proportionately adjusted. In the event Wachovia changes the number of shares
of Wachovia Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or
similar recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
3.5 DISSENTING SHAREHOLDERS. To the extent provided by Georgia
Law, any holder of shares of First National Common Stock who perfects such
holder's dissenters' rights of appraisal in accordance with and as contemplated
by Section 14-2-1106 of the GBCC shall be entitled to receive the value of such
shares in cash as determined pursuant to such provisions of Law; provided, that
no such payment shall be made to any dissenting shareholder unless and until
such dissenting shareholder has complied with the applicable provisions of the
GBCC and surrendered to First National the certificate or certificates
representing the shares for which payment is being made. In the event that
after the Effective Time a dissenting shareholder of First National fails to
perfect, or effectively withdraws or loses, such holder's right to appraisal
and of payment for such holder's shares, Wachovia shall issue and deliver the
consideration to which such holder of shares of First National Common Stock is
entitled under this Article 3 (without interest) upon surrender by such holder
of the certificate or certificates representing shares of First National Common
Stock held by such holder.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Unless the Parties otherwise agree,
promptly after the Effective Time, Wachovia and First National shall cause the
exchange agent selected by Wachovia (the "Exchange Agent") to mail to the
former shareholders of First National appropriate transmittal materials which
shall specify that delivery shall be effected, and risk of loss and title to
the certificates theretofore representing shares of First National Common Stock
shall pass, only upon proper delivery of such certificates to Wachovia. After
the Effective Time, each holder of shares of First National Common Stock (other
than shares to be canceled pursuant to Section 3.2 of this Agreement) issued
and outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to Wachovia and shall promptly upon
surrender thereof receive in exchange therefor the consideration provided in
Section 3.1 of this Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 4.2 of this Agreement. To the extent required by Section 3.3 of this
Agreement, each holder of shares of First National Common Stock issued and
outstanding at the Effective Time also shall receive, upon surrender of the
certificate or certificates representing such shares, cash in lieu of any
fractional share of Wachovia Common Stock to which such holder may be otherwise
entitled (without interest). Wachovia shall not be obligated to deliver the
consideration to which any former holder of First National Common Stock is
entitled as a result of the Merger until such holder surrenders his certificate
or certificates representing the shares of First National Common Stock for
exchange as provided in this Section 4.1. The certificate or certificates of
First National Common Stock so surrendered shall be duly endorsed as Wachovia
may require. Any other provision of this Agreement notwithstanding, Wachovia
shall not be liable to a holder of First National Common Stock for any amounts
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property Law.
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4.2 RIGHTS OF FORMER FIRST NATIONAL SHAREHOLDERS. At the
Effective Time, the stock transfer books of First National shall be closed as
to holders of First National Common Stock immediately prior to the Effective
Time and no transfer of First National Common Stock by any such holder shall
thereafter be made or recognized. Until surrendered for exchange in accordance
with the provisions of Section 4.1 of this Agreement, each certificate
theretofore representing shares of First National Common Stock (other than
shares to be canceled pursuant to Section 3.3 of this Agreement) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 3.1 and 3.3 of this Agreement in
exchange therefor. To the extent permitted by Law, former shareholders of
record of First National shall be entitled to vote after the Effective Time at
any meeting of Wachovia shareholders the number of whole shares of Wachovia
Common Stock into which their respective shares of First National Common Stock
are converted, regardless of whether such holders have exchanged their
certificates representing First National Common Stock for certificates
representing Wachovia Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by Wachovia
on the Wachovia Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares issuable pursuant to this Agreement, but Wachovia, in its sole
discretion, may elect not to deliver any dividend or other distribution payable
to any holder of record of Wachovia Common Stock as of any time subsequent to
the Effective Time to the holder of any certificate representing shares of
First National Common Stock issued and outstanding at the Effective Time until
such holder surrenders such certificate for exchange as provided in Section 4.1
of this Agreement. However, upon surrender of such First National Common Stock
certificate, both the Wachovia Common Stock certificate (together with all such
undelivered dividends or other distributions without interest) and any
undelivered cash payments to be paid for fractional share interests (without
interest) shall be delivered and paid with respect to each share represented by
such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FIRST NATIONAL
First National hereby represents and warrants to Wachovia as follows:
5.1 ORGANIZATION, STANDING, AND POWER. First National is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Georgia, and has the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its
Assets. First National is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First National.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) First National has the corporate power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary
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corporate action in respect thereof on the part of First National, subject to
the approval of this Agreement by the holders of a majority of the outstanding
First National Common Stock in accordance with First National's Articles of
Incorporation and Bylaws. Subject to such requisite shareholder approval, this
Agreement represents a legal, valid and binding obligation of First National,
enforceable against First National in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement
by First National, nor the consummation by First National of the transactions
contemplated hereby, nor compliance by First National with any of the
provisions hereof will (i) conflict with or result in a breach of any provision
of First National's Articles of Incorporation or Bylaws, or (ii) constitute or
result in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any First National Company under, any
Contract or Permit of any First National Company, where such Default or Lien,
or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First National,
or (iii) subject to receipt of the requisite approvals referred to in Section
9.1 (b) of this Agreement, violate any Law or Order applicable to any First
National Company or any of their respective Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NYSE, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, and other than Consents, filings or notifications
which, if not obtained or made, are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on First National, no notice to,
filing with, or Consent of any public body or authority is necessary for the
consummation by First National of the Merger, the Consolidation and the other
transactions contemplated in this Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of First National
consists of 10,000,000 shares of First National Common Stock, of which 517,413
shares are issued and outstanding as of the date of this Agreement, and not
more than 543,913 shares of First National Common Stock will be issued and
outstanding at the Effective Time, the additional 26,500 shares being subject
to First National Warrant(s) outstanding as of the date of this Agreement. All
of the issued and outstanding shares of capital stock of First National are
duly and validly issued and outstanding and are fully paid and nonassessable
under the GBCC. None of the outstanding shares of capital stock of First
National has been issued in violation of any preemptive rights of the current
or past shareholders of First National.
(b) Except as set forth in Section 5.3(a) of this
Agreement, or as Previously Disclosed, there are no shares of capital stock or
other equity securities of First National outstanding and no outstanding
options, warrants, scrip, rights to subscribe to, calls, or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of First National or contracts,
commitments, understandings, or arrangements by which First
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National is or may be bound to issue additional shares of its capital stock or
options, warrants, or rights to purchase or acquire any additional shares of
its capital stock.
5.4 FIRST NATIONAL SUBSIDIARIES. FNB is the only subsidiary of
First National as of the date of this Agreement and will be the only subsidiary
of First National at the Effective Time. First National owns all of the issued
and outstanding shares of capital stock of FNB. No equity securities of FNB
are or may become required to be issued (other than to First National) by
reason of any options, warrants, scrip, rights to subscribe to, calls, or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of FNB, and
there are no Contracts by which FNB is bound to issue (other than to First
National) additional shares of its capital stock or options, warrants, or
rights to purchase or acquire any additional shares of its capital stock or by
which any First National Company is or may be bound to transfer any shares of
the capital stock of FNB (other than to First National). There are no
Contracts relating to the rights of any First National Company to vote or to
dispose of any shares of the capital stock of FNB. All of the shares of
capital stock of FNB held by First National are fully paid and (except pursuant
to 12 USC Section 55) nonassessable under the applicable corporation Law of the
jurisdiction in which FNB is organized and are owned by First National free and
clear of any Lien. FNB is a bank that is duly organized and validly existing
under the Laws of the jurisdiction in which it is organized. FNB has the
corporate power and authority necessary for it to own, lease and operate its
Assets and to carry on its business as now conducted, and FNB is duly qualified
or licensed to transact business as a foreign corporation in good standing in
the States of the United States and foreign jurisdictions where the character
of its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on First National. FNB is an "insured
institution" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder.
5.5 FINANCIAL STATEMENTS. First National has Previously
Disclosed, and delivered to Wachovia prior to the execution of this Agreement
copies of all First National Financial Statements for periods ended prior to
the date hereof and will deliver to Wachovia copies of all First National
Financial Statements prepared subsequent to the date hereof. The First
National Financial Statements (as of the dates thereof and for the periods
covered thereby) (a) are or, if dated after the date of this Agreement, will be
in accordance with the books and records of the First National Companies, which
are or will be, as the case may be, complete and correct and which have been or
will have been, as the case may be, maintained in accordance with good business
practices, and (b) present or will present, as the case may be, fairly the
consolidated financial position of the First National Companies as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows of the First National Companies for the periods
indicated, in accordance with GAAP (subject to any exceptions as to consistency
specified therein or as may be indicated in the notes thereto or, in the case
of interim financial statements, to normal recurring year-end adjustments that
are not material), and (c) will have been prepared in accordance with the
requirements of any regulatory agency having jurisdiction and will not be
subject to any dispute, contest or other obligation by any applicable
regulatory or administrative agency.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as Previously
Disclosed, no First National Company has any Liabilities that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
First National except Liabilities which are accrued or reserved against in the
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consolidated balance sheets of First National as of December 31, 1994 and June
30, 1995, included in the First National Financial Statements or reflected in
the notes thereto. No First National Company has incurred or paid any
Liability since June 30, 1995 except for such Liabilities incurred or paid in
the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First National.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1995,
except as disclosed in SEC Documents filed by First National prior to the date
of this Agreement, (a) there have been no events, changes or occurrences which
have had, or are reasonably like to have, individually or in the aggregate, a
Material Adverse Effect on First National, and (b) the First National Companies
have not taken any action, or failed to take any action, prior to the date of
this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a material breach or violation of any
of the covenants and agreements of First National provided in Article 7 of this
Agreement.
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf
of any of the First National Companies have been timely filed or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1994 and on or before the date of most recent
fiscal year end immediately preceding the Effective Time, except to the extent
that all such failures to file, taken together, are not reasonably likely to
have a Material Adverse Effect on First National and all returns filed are
complete and accurate to the Knowledge of First National. All Taxes shown on
filed returns and all deposits of Taxes required for Tax Returns not yet due
have been paid. As of the date of this Agreement, there is no audit
examination, deficiency, or refund Litigation with respect to any Taxes that is
reasonably likely to result in a determination that would have, individually or
in the aggregate, a Material Adverse Effect on First National, except as
reserved against in the First National Financial Statements delivered prior to
the date of this Agreement. All Taxes and other Liabilities due with respect
to completed and settled examinations or concluded Litigation have been paid.
(b) None of the First National Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due that is currently in effect, and no unpaid tax
deficiency has been asserted in writing against or with respect to any First
National Company, which deficiency is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on First National.
(c) Adequate provision for any Taxes due or to become due
for any of the First National Companies for the period or periods through and
including the date of the respective First National Financial Statements has
been made and is reflected on such First National Financial Statements.
(d) Deferred Taxes of the First National Companies have
been provided for in accordance with GAAP.
(e) Each of the First National Companies is in compliance
with, and its records contain all information and documents (including, without
limitation, properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and Tax withholding requirements under
federal, state and local Tax Laws, and such records identify with specificity
all accounts subject to backup
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withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on First
National.
(f) Effective January 1, 1993, First National adopted
Financial Accounting Standards Board Statement 109, "Accounting for Income
Taxes."
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for
possible loan or credit losses (the "Allowance") shown on the consolidated
balance sheets of First National included in the most recent First National
Financial Statements dated prior to the date of this Agreement was, and the
Allowance shown on the consolidated balance sheets of First National included
in the First National Financial Statements as of dates subsequent to the
execution of this Agreement will be, as of the dates thereof, adequate (within
the meaning of GAAP and applicable regulatory requirements or guidelines) to
provide for losses relating to or inherent in the loan and lease portfolios
(including accrued interest receivables) of the First National Companies and
other extensions of credit (including letters of credit and commitments to make
loans or extend credit) by the First National Companies as of the dates thereof
except where the failure of such Allowance to be so adequate is not reasonably
likely to have a Material Adverse Effect on First National.
5.10 ASSETS. Except as Previously Disclosed or as disclosed or
reserved against in the First National Financial Statements, the First National
Companies have good and marketable title, free and clear of all Liens, to all
of their respective Assets. All material tangible properties used in the
businesses of the First National Companies are in good condition, reasonable
wear and tear excepted, and are usable in the ordinary course of business
consistent with First National's past practices. All Assets which are material
to First National's business on a consolidated basis, held under leases or
subleases by any of the First National Companies, are held under valid
Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceedings may be brought), and each
such Contract is in full force and effect. The policies of fire, theft,
liability, and other insurance maintained with respect to the Assets or
businesses of the First National Companies provide adequate coverage under
current industry practices against loss or Liability, and the fidelity and
blanket bonds in effect as to which any of the First National Companies is a
named insured are reasonably sufficient. The Assets of the First National
Companies include all assets required to operate the business of the First
National Companies as presently conducted.
5.11 ENVIRONMENTAL MATTERS.
(a) First National and each First National Company, its
Participation Facilities and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are known
to First National and Previously Disclosed.
(b) There is no Litigation pending or, to the Knowledge
of First National, threatened before any court, governmental agency or
authority or other forum in which any First National Company or any of its
Participation Facilities has been or, with respect to threatened Litigation,
may be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into
the environment of any Hazardous Material or oil, whether or not
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occurring at, on, under or involving a site owned, leased or operated by any
First National Company or any of its Participation Facilities, except for such
Litigation which is Previously Disclosed.
(c) There is no Litigation pending or, to the Knowledge
of First National, threatened before any court, governmental agency or board or
other forum in which any of its Loan Properties (or any First National Company
in respect of such Loan Property) has been or, with respect to threatened
Litigation, may be named as a defendant or Potentially Responsible Party, as
that term is defined in the Comprehensive Environmental Response Compensation
and Liability Act, (i) for alleged noncompliance (including by any predecessor)
with any Environmental Law or (ii) relating to the release into the environment
of any Hazardous Material or oil, whether or not occurring at, on, under or
involving a Loan Property, except as Previously Disclosed.
(d) To the Knowledge of First National, there is no
reasonable basis for any Litigation of a type described in subsections (b) or
(c).
(e) During the period of (i) any First National Company's
ownership or operation of any of their respective current properties, (ii) any
First National Company's participation in the management of any Participation
Facility, or (iii) any First National Company's holding of a security interest
in a Loan Property, there have been no releases of Hazardous Material or oil
in, on, under or affecting any such property, Participation Facility, or Loan
Property. To the Knowledge of First National, prior to the period of (i) any
First National Company's ownership or operation of any of their respective
current properties, (ii) any First National Company's participation in the
management of any Participation Facility, or (iii) any First National Company's
holding of a security interest in a Loan Property, there were no releases of
Hazardous Material or oil in, on, under or affecting any such property,
Participation Facility or Loan Property.
5.12 COMPLIANCE WITH LAWS. First National is duly registered as a
bank holding company under the BHC Act. Each First National Company has in
effect all Permits necessary for it to own, lease or operate its Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First National, and there has occurred no Default
under any such Permit, other than Defaults which are Previously Disclosed. No
First National Company:
(a) is in violation of any Laws, Orders or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First National; and
(b) has received any notification, communication, or
advice from any agency or department of federal, state, or local government or
any Regulatory Authority or the staff thereof (i) asserting that any First
National Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First National, (ii) threatening to revoke any
Permits, the revocation of which is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on First National, or (iii)
requiring any First National Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
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5.13 LABOR RELATIONS. No First National Company is the subject of
any Litigation asserting that it or any other First National Company has
committed an unfair labor practice (within the meaning of the National Labor
Relations Act or comparable state law) or seeking to compel it or any other
First National Company to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving any First National Company, pending or threatened, or to its
Knowledge, is there any activity involving any First National Company's
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity, nor is there any collective bargaining agreement
in effect.
5.14 EMPLOYEE BENEFIT PLANS.
(a) First National has Previously Disclosed, and
delivered or made available to Wachovia prior to the execution of this
Agreement copies in each case of all pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership, severance pay,
vacation, bonus, or other incentive plans, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other health
plans, all life insurance plans, and all other employee benefit plans or fringe
benefit plans, including, without limitation, "employee benefit plans" as that
term is defined in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any First National
Company or Affiliate thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
and under which employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries are eligible to participate
(collectively, the "First National Benefit Plans"). Any of the First National
Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "First National
Pension Plan." No First National Pension Plan is or has been a multiemployer
plan within the meaning of Section 3(37) of ERISA.
(b) All First National Benefit Plans are in compliance
with the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First National.
No First National Company nor, to the Knowledge of First National, any other
party has engaged in a transaction with respect to any First National Benefit
Plan that, assuming the taxable period of such transaction expired as of the
date hereof would subject any First National Company to a tax or penalty
imposed by either Section 4975 of the Internal Revenue Code or Section 502(i)
of ERISA in amounts which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First National.
(c) Except as Previously Disclosed, neither First
National nor any entity which is considered one employer with First National
under Section 414 of the Internal Revenue Code (an "ERISA Affiliate of First
National") maintains or has ever maintained a First National Pension Plan.
(d) No First National Company has any obligations for
retiree health and life benefits under any of the First National Benefit Plans
and there are no restrictions on the rights of such First National Company to
amend or terminate any such Plan without incurring any Liability thereunder,
which Liability is reasonably likely to have a Material Adverse Effect on First
National.
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(e) Except as Previously Disclosed, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of any First National
Company from any First National Company under any First National Benefit Plan
or otherwise, (ii) increase any benefits otherwise payable under any First
National Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefit.
(f) The actuarial present values of all accrued deferred
compensation entitlements (including, without limitation, entitlements under
any executive compensation, supplemental retirement, or employment agreement)
of employees and former employees of any First National Company and their
respective beneficiaries have been fully reflected on the First National
Financial Statements to the extent required by and in accordance with GAAP.
(g) First National and each ERISA Affiliate of First
National has complied with the continuation of coverage requirements of Section
1001 of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
and ERISA Sections 601 through 608.
(h) Except as Previously Disclosed, neither First
National nor any ERISA Affiliate of First National is obligated, contingently
or otherwise, under any agreement to pay any amount which would be treated as a
"parachute payment," as defined in Section 280G(b) of the Internal Revenue Code
(determined without regard to Section 280G(b)(2)(A)(ii) of the Internal Revenue
Code).
(i) Other than routine claims for benefits, there are no
actions, audits, investigations, suits or claims pending, or threatened against
any First National Benefit Plan, any trust or other funding agency created
thereunder, or against any fiduciary of any First National Benefit Plan or
against the assets of any First National Benefit Plan.
5.15 MATERIAL CONTRACTS. Except as Previously Disclosed or
otherwise reflected in the First National Financial Statements, none of the
First National Companies, nor any of their respective Assets, businesses or
operations, is a party to, or is bound or affected by, or receives benefits
under, (a) any employment, severance, termination, consulting or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $10,000, excluding "at will" employment arrangements, (b) any
Contract relating to the borrowing of money by any First National Company or
the guarantee by any First National Company of any such obligation (other than
Contracts evidencing deposit liabilities, purchases of federal funds,
fully-secured repurchase agreements, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), copies of
which have been furnished to Wachovia, (c) any Contracts between or among First
National Companies, and (d) any other Contract or amendment thereto that would
be required to be filed as an exhibit to a Form 10-K filed by First National
with the SEC as of the date of this Agreement that has not been filed as an
exhibit to First National's Form 10-K filed for the fiscal year ended December
31, 1994, or in an SEC Document and identified to Wachovia (together with all
Contracts referred to in Section 5.14(a) of this Agreement, the "First National
Contracts"). None of the First National Companies is in Default under any
First National Contract, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on First
National. All of the indebtedness of any First National Company for money
borrowed is prepayable at any time by such First National Company without
penalty or premium.
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5.16 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of First National, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any First National
Company, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First National, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any First National Company, that are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on First National.
5.17 REPORTS. Since December 31, 1994, each First National Company
has timely filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file with (a)
the SEC, including, but not limited to, Forms 10-KSB, Forms 10-QSB and Forms
8-K, (b) other Regulatory Authorities, and (c) any applicable state securities
or banking authorities (except, in the case of state securities authorities,
failures to file which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on First National). As of their
respective dates, each of such reports and documents, including the financial
statements, exhibits, and schedules thereto, complied in all material respects
with all applicable Laws. As of its respective date, each such report and
document to First National's Knowledge did not, in any material respect,
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 made
therein, in light of the circumstances under which they were made, not
misleading.
5.18 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any First National
Company or any Affiliate thereof to Wachovia pursuant to this Agreement or any
other document, agreement or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the information supplied
or to be supplied by any First National Company or any Affiliate thereof for
inclusion in the Registration Statement to be filed by Wachovia with the SEC
will, when the Registration Statement becomes effective, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
to make the statements therein not misleading. None of the information
supplied or to be supplied by any First National Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to First National's
shareholders in connection with the Shareholders' Meeting, and any other
documents to be filed by a First National Company or any Affiliate thereof with
the SEC or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and
with respect to the Proxy Statement, when first mailed to the shareholders of
First National, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the Shareholders' Meeting, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
any proxy for the Shareholders' Meeting. All documents that any First National
Company or any Affiliate thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply
as to form in all material respects with the provisions of applicable Law.
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5.19 ACCOUNTING, TAX AND REGULATORY MATTERS. No First National
Company or any Affiliate thereof has taken any action or has any Knowledge of
any fact or circumstance that is reasonably likely to (a) prevent the
transactions contemplated hereby, including the Merger, from qualifying as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (b) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the second
sentence of such Section. To the Knowledge of First National, there exists no
fact, circumstance, or reason why the requisite Consents referred to in Section
9.1(b) of this Agreement cannot be received in a timely manner without the
imposition of any condition of the type described in the second sentence of
such Section 9.1(b).
5.20 CHARTER PROVISIONS. Each First National Company has taken all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and
will not result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any First National
Company or restrict or impair the ability of Wachovia to vote, or otherwise to
exercise the rights of a shareholder with respect to, shares of any First
National Company that may be acquired or controlled by it.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF WACHOVIA
Wachovia hereby represents and warrants to First National as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Wachovia is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of North Carolina, and is duly registered as a bank holding company under
the BHC Act. Wachovia has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Assets. Wachovia
is duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Wachovia.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Wachovia has the corporate power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Wachovia. This Agreement represents a legal, valid and binding
obligation of Wachovia, enforceable against Wachovia in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
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(b) Neither the execution and delivery of this Agreement
by Wachovia, nor the consummation by Wachovia of the transactions contemplated
hereby, nor compliance by Wachovia with any of the provisions hereof will (i)
conflict with or result in a breach of any provision of Wachovia's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Wachovia Company under, any Contract or Permit of any Wachovia
Company, where such Default or Lien, or any failure to obtain such Consent,
will have, individually or in the aggregate, a Material Adverse Effect on
Wachovia, or (iii) subject to receipt of the requisite approvals referred to in
Section 9.1(b) of this Agreement, violate any Law or Order applicable to any
Wachovia Company or any of their respective Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NYSE, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, and other than Consents, filings or notifications
which, if not obtained or made, will not have, individually or in the
aggregate, a Material Adverse Effect on Wachovia, no notice to, filing with, or
Consent of any public body or authority is necessary for the consummation by
Wachovia of the Merger and the other transactions contemplated in this
Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of Wachovia
consists of (i) 500,000,000 shares of Wachovia Common Stock of which
170,325,647 shares issued and outstanding as of September 30, 1995 and (ii)
50,000,000 shares of Wachovia preferred stock, $5 par value per share, none of
which is issued and outstanding as of the date of this Agreement. All of the
issued and outstanding shares of Wachovia Capital Stock are, and all of the
shares of Wachovia Common Stock to be issued in exchange for shares of First
National Common Stock upon consummation of the Merger, when issued in
accordance with the terms of this Agreement, will be, duly and validly issued
and outstanding and fully paid and nonassessable under the NCGS. None of the
outstanding shares of Wachovia Capital Stock has been, and none of the shares
of Wachovia Common Stock to be issued in exchange for shares of First National
Common Stock upon consummation of the Merger will be, issued in violation of
any preemptive rights of the current or past shareholders of Wachovia.
6.4 FINANCIAL STATEMENTS. Wachovia has Previously Disclosed and
delivered to First National prior to the execution of this Agreement copies of
all Wachovia Financial Statements for periods ended prior to the date hereof
and will deliver to First National copies of all Wachovia Financial Statements
prepared subsequent to the date hereof. The Wachovia Financial Statements (as
of the dates thereof and for the periods covered thereby) (a) are or, if dated
after the date of this Agreement, will be in accordance with the books and
records of the Wachovia Companies, which are or will be, as the case may be,
complete and correct and which have been or will have been, as the case may be,
maintained in accordance with good business practices, and (b) present or will
present, as the case may be, fairly the consolidated financial position of the
Wachovia Companies as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows of the Wachovia
Companies for the periods indicated, in accordance with GAAP (subject to
exceptions as to consistency specified therein or as may be indicated in the
notes thereto or, in the case of interim financial statements, to normal
recurring year-end adjustments that are not material).
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6.5 ABSENCE OF UNDISCLOSED LIABILITIES. No Wachovia Company has
any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Wachovia, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Wachovia as
of December 31, 1994 and June 30, 1995 included in the Wachovia Financial
Statements or reflected in the notes thereto. No Wachovia Company has incurred
or paid any Liability since June 30, 1995 except for such Liabilities incurred
or paid in the ordinary course of business consistent with past business
practice and which will not have, individually or in the aggregate, a Material
Adverse Effect on Wachovia.
6.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1995,
except as disclosed in SEC Documents filed by Wachovia prior to the date of
this Agreement, (a) there have been no events, changes or occurrences which
have had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Wachovia, and (b) the Wachovia Companies have not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of Wachovia provided in Article Seven of this
Agreement.
6.7 COMPLIANCE WITH LAWS. Wachovia is duly registered as a bank
holding company under the BHC Act. Each Wachovia Company has in effect all
Permits necessary for it to own, lease or operate its Assets and to carry on
its business as now conducted, except for those Permits the absence of which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Wachovia, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Wachovia. No
Wachovia Company:
(a) is in violation of any Laws, Orders or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Wachovia; and
(b) has received any notification or communication, or
advice from any agency or department of federal, state, or local government or
any Regulatory Authority or the staff thereof (i) asserting that any Wachovia
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Wachovia, (ii) threatening to revoke any Permits,
the revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Wachovia, or (iii) requiring any
Wachovia Company to enter into or consent to the issuance of a cease and desist
order, formal agreement, directive, commitment or memorandum of understanding,
or to adopt any Board resolution or similar undertaking, which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment of
dividends.
6.8 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Wachovia, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Wachovia Company,
or against any Asset, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Wachovia, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Wachovia
Company,
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that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Wachovia.
6.9 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any Wachovia
Company or any Affiliate thereof to First National pursuant to this Agreement
or any other document, agreement or instrument referred to herein contains or
will contain any untrue statement of material fact or will omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any Wachovia Company or any Affiliate
thereof for inclusion in the Registration Statement to be filed by Wachovia
with the SEC, will, when the Registration Statement becomes effective, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein not misleading. None of the
information supplied or to be supplied by any Wachovia Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to First National's
shareholders in connection with the Shareholders' Meeting, and any other
documents to be filed by any Wachovia Company or any Affiliate thereof with the
SEC or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and
with respect to the Proxy Statement, when first mailed to the shareholders of
First National, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the Shareholders' Meeting, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
any proxy for the Shareholders' Meeting. All documents that any Wachovia
Company or any Affiliate thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply
as to form in all material respects with the provisions of applicable Law.
6.10 ACCOUNTING, TAX AND REGULATORY MATTERS. No Wachovia Company
or any Affiliate thereof has taken any action or has any Knowledge of any fact
or circumstance that is reasonably likely to (a) prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement. To the Knowledge of Wachovia,
there exists no fact, circumstance, or reason why the requisite Consents
referred to in Section 9.1(b) of this Agreement cannot be received in a timely
manner without the imposition of any condition or restriction of the type
described in the second sentence of such Section 9.1(b).
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF FIRST NATIONAL. Unless the prior
written consent of Wachovia shall have been obtained, and except as otherwise
contemplated herein, First National shall, and shall cause FNB: (a) to operate
its business in the usual, regular and ordinary course; (b) to preserve intact
its business organization and Assets and maintain its rights and franchises;
(c) to use its reasonable efforts to cause its representations and warranties
to be correct at all times; and (d) to take no action which would
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(i) adversely affect the ability of any Party to obtain any Consents required
for the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 9.1(b) of
this Agreement or (ii) adversely affect in any material respect the ability of
either Party to perform its covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF FIRST NATIONAL. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, First National covenants and agrees that it will not do or agree or
commit to do, or permit FNB to do or agree or commit to do, any of the
following without the prior written consent of the chief executive officer of
Wachovia, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of any First National Company, or
(b) incur any additional debt obligation or other
obligation for borrowed money (other than indebtedness of a First
National Company to another First National Company) in excess of an
aggregate of $100,000 (for the First National Companies on a
consolidated basis) except in the ordinary course of the business of
First National Companies consistent with past practices (which shall
include, for FNB, creation of deposit liabilities, purchases of
federal funds, and entry into repurchase agreements fully secured by
U.S. government or agency securities), or impose, or suffer the
imposition, on any share of stock held by any First National Company
of any Lien or permit any such Lien to exist; or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any First
National Company, or declare or pay any dividend or make any other
distribution in respect of First National's capital stock; provided
that First National may (to the extent legally and contractually
permitted to do so, but shall not be obligated to) declare and pay a
cash dividend of $0.145 per share of First National Common Stock
issued and outstanding on May 9, 1996 if the Closing Date occurs on or
after May 9, 1996, the record date for Wachovia's regular quarterly
cash dividend payable during the second quarter of 1996; provided
further that nothing contained herein shall obligate Wachovia to
declare a second quarter dividend; and provided further that if
Wachovia does declare a second quarter dividend, the intent of the
Parties is that the First National shareholders will receive a second
quarter dividend either from First National or from Wachovia, but not
from both; or
(d) issue, sell, pledge, encumber, authorize the issuance
of or enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of or otherwise permit to become outstanding,
any additional shares of First National Common Stock or any other
capital stock of any First National Company, or any stock appreciation
rights, or any option, warrant, conversion, or other right to acquire
any such stock, or any security convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital
stock of any First National Company or issue or authorize the issuance
of any other securities in respect of or in substitution for shares of
First National Capital Stock or sell, lease, mortgage or otherwise
dispose of or otherwise encumber (i) any shares of capital stock of
FNB (unless any such shares of stock are sold or
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otherwise transferred to First National) or (ii) any Asset having a
book value in excess of $100,000 other than in the ordinary course of
business for reasonable and adequate consideration; or
(f) acquire direct or indirect control over any Person,
other than in connection with (i) internal reorganizations or
consolidations involving FNB, (ii) foreclosures in the ordinary course
of business, or (iii) acquisitions of control by FNB in its fiduciary
capacity; or
(g) grant any increase in compensation or benefits to the
employees or officers of any First National Company (including such
discretionary increases as may be contemplated by existing employment
agreements), except in accordance with past practice Previously
Disclosed or as required by Law; pay any bonus except in accordance
with past practice Previously Disclosed or the provisions of any
applicable program or plan adopted by its Board of Directors prior to
the date of this Agreement; enter into or amend any severance
agreements with officers of any First National Company; grant any
increase in fees or other increases in compensation or other benefits
to directors of any First National Company except in accordance with
past practice Previously Disclosed; or
(h) enter into or amend any employment Contract between
any First National Company and any Person (unless such amendment is
required by Law) that the First National Company does not have the
unconditional right to terminate without Liability (other than
Liability for services already rendered), at any time on or after the
Effective Time; or
(i) adopt any new employee benefit plan of any First
National Company or make any material change in or to any existing
employee benefit plans of any First National Company other than any
such change that is required by Law or that, in the opinion of
counsel, is necessary or advisable to maintain the tax qualified
status of any such plan; or
(j) make any significant change in any accounting methods
or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax laws or regulatory accounting
requirements or GAAP; or
(k) commence any Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of any
First National Company for money damages or restrictions upon the
operations of any First National Company; or
(l) except in the ordinary course of business, modify,
amend or terminate any material Contract or waive, release, compromise
or assign any material rights or claims.
7.3 COVENANTS OF WACHOVIA. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement,
Wachovia covenants and agrees that it shall continue to conduct its business
and the business of its Subsidiaries in a manner designed in its reasonable
judgment, to enhance the long-term value of the Wachovia Common Stock and the
business prospects of the Wachovia Companies and to the extent consistent
therewith use all reasonable efforts to preserve intact the Wachovia Companies'
core businesses and goodwill with their respective employees and the
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communities they serve, retaining the right to sell core businesses which
Wachovia deems in its sole discretion to be in the best interests of its
shareholders.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the
occurrence or impending occurrence of any event or circumstance relating to it
or any of its Subsidiaries which (a) is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on it or (b) is reasonably
likely to cause or constitute a material breach of any of its representations,
warranties, or covenants contained herein, and to use its reasonable efforts to
prevent or promptly to remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time, and each Party and the First National
Subsidiaries shall deliver to the other Party copies of all such reports
promptly after the same are filed. If financial statements are contained in
any such reports filed with the SEC, such financial statements will fairly
present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods
then ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC will comply in all
material respects with the securities Laws 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 in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL.
Wachovia shall file the Registration Statement with the SEC as soon as
reasonably practicable and shall use its reasonable efforts to cause the
Registration Statement to become effective under the 1933 Act and take any
action required to be taken under the applicable state Blue Sky or securities
Laws in connection with the issuance of the shares of Wachovia Common Stock
upon consummation of the Merger. First National shall furnish all information
concerning it and the holders of its capital stock as Wachovia may reasonably
request in connection with such action. First National shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. In connection with the Shareholders' Meeting, (a) Wachovia
and First National shall prepare and file with the SEC a Proxy Statement (which
shall be included in the Registration Statement) and shall mail it to First
National's shareholders, (b) the Parties shall furnish to each other all
information concerning them that they may reasonably request in connection with
such Proxy Statement, (c) the Board of Directors of First National shall
recommend (subject to compliance with their fiduciary duties as advised by
counsel) to its shareholders the approval of this Agreement, (d) the Board of
Directors and officers of First National shall use their reasonable efforts to
obtain such shareholders' approval (subject to compliance with their fiduciary
duties as advised by counsel), and (e) the members of the Board of Directors of
First National shall vote all of their shares of First National Common Stock in
favor of approval of this Agreement.
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8.2 LISTING. Wachovia shall use its best efforts to list, prior
to the Effective Time, on the NYSE the shares of Wachovia Common Stock to be
issued to the holders of First National Common Stock pursuant to the Merger.
8.3 APPLICATIONS. Wachovia shall promptly prepare and file as
soon as reasonably practicable, but in no case later than February 15, 1996,
and First National shall cooperate in the preparation and, where appropriate,
filing of, applications with all Regulatory Authorities (excluding the SEC and
the NYSE) having jurisdiction over the transactions contemplated by this
Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Wachovia shall execute and file the North
Carolina Articles of Merger with the Secretary of State of the State of North
Carolina in connection with the Closing and First National shall execute and
file the Georgia Articles of Merger with the Secretary of State of the State of
Georgia in connection with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws, as promptly as practicable so as to permit
consummation of the Merger at the earliest possible date and to otherwise
enable consummation of the transactions contemplated hereby and shall cooperate
fully with the other Party hereto to that end (it being understood that any
amendments to the Registration Statement filed by Wachovia in connection with
the Wachovia Common Stock to be issued in the Merger or a resolicitation of
proxies as a consequence of an acquisition agreement by Wachovia or any of its
Subsidiaries shall not violate this covenant), including, without limitation,
using its reasonable efforts to lift or rescind any Order adversely affecting
its ability to consummate the transactions contemplated herein and to cause to
be satisfied the conditions referred to in Article 9 of this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its
reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party will keep the
other Party advised of all material developments relevant to its business and
to consummation of the Merger and shall permit the other Party to make or cause
to be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the
other Party reasonably requests, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. No investigation by a Party
shall affect the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and
agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return all documents and copies
thereof and all work papers containing confidential information received from
the other Party, except for one copy
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of any materials prepared by that Party or any attorney for or other
representative of that Party based upon such confidential information.
(c) Each Party agrees to give the other Party notice as
soon as practicable after any determination by it of any fact or occurrence
relating to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent,
either a material breach of any representation, warranty, covenant or agreement
of the other Party or which has had or is reasonably likely to have a Material
Adverse Effect on the other Party.
8.7 PRESS RELEASES. Prior to the Effective Time, First National
and Wachovia shall consult with each other as to the form and substance of any
press release or other public disclosure materially related to this Agreement
or any other transaction contemplated hereby; provided, however, that nothing
in this Section 8.7 shall be deemed to prohibit any Party from making any
disclosure which its counsel deems necessary or advisable in order to satisfy
such Party's disclosure obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and
the transactions contemplated hereby, no First National Company nor any
Affiliate thereof nor any investment banker, attorney, accountant or other
representative (collectively, "Representatives") retained by any First National
Company shall directly or indirectly solicit any Acquisition Proposal by any
Person. Except to the extent necessary to comply with the fiduciary duties of
First National's Board of Directors as advised by counsel, no First National
Company or any Affiliate or Representative thereof shall furnish any non-public
information that it is not legally obligated to furnish, negotiate with respect
to, or enter into any Contract with respect to, any Acquisition Proposal, but
First National may communicate information about such an Acquisition Proposal
to its shareholders if and to the extent that it is required to do so in order
to comply with its legal obligations as advised by counsel. First National
shall promptly notify Wachovia orally and in writing in the event that it
receives any inquiry or proposal relating to any such transaction. First
National shall (a) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and (b) direct and use its reasonable
efforts to cause all of its Representatives not to engage in any of the
foregoing.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes
and agrees to use its reasonable efforts to cause the Merger, and to take no
action which would cause the Merger not, to qualify for treatment as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code for federal income tax purposes.
8.10 CHARTER PROVISIONS. Each First National Company shall take
all necessary actions to ensure that the entering into this Agreement and the
consummation of the Merger and the other transactions contemplated hereby do
not and will not result in the grant of any rights to any person under the
Articles of Incorporation, Bylaws or other governing instruments of any First
National Company or restrict or impair the ability of Wachovia to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of
any First National Company that may be acquired or controlled by it.
8.11 AGREEMENT OF AFFILIATES. First National has Previously
Disclosed all Persons whom it reasonably believes is an "affiliate" of First
National for purposes of Rule 145 under the 1933 Act. First National shall use
its reasonable efforts to cause each such Person to deliver to Wachovia not
later than thirty (30) days after the date of this Agreement, a written
agreement, substantially in the form of Exhibit 4, providing that such Person
will not sell, pledge, transfer, or otherwise dispose of the shares of First
National Common Stock held by such Person except as contemplated by such
agreement or by
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this Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of Wachovia Common Stock to be received by such Person upon consummation
of the Merger except in compliance with applicable provisions of the 1933 Act
and the rules and regulations thereunder. Wachovia shall be entitled to place
restrictive legends upon certificates for shares of Wachovia Common Stock
issued to affiliates of First National pursuant to this Agreement to enforce
the provisions of this Section 8.11. Wachovia shall not be required to
maintain the effectiveness of the Registration Statement under the 1933 Act for
the purposes of resale of Wachovia Common Stock by such affiliates.
8.12 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective
Time, Wachovia shall provide generally to officers and employees of the First
National Companies who continue employment with the First National Companies
following the Effective Time employee benefits under employee benefit plans
(including the Retirement Income Plan and the Retirement Savings and
Profit-Sharing Plan but excluding any stock option or other plan involving the
potential issuance of Wachovia Common Stock), on terms and conditions which
when taken as a whole are substantially similar to those currently provided by
the Wachovia Companies to their similarly situated officers and employees. For
purposes of participation and vesting under such employee benefit plans, the
service of the employees of the First National Companies prior to the Effective
Time shall be treated as service with a Wachovia Company participating in such
employee benefit plans, provided that, with respect to any employee benefit
plan where the benefits are funded through insurance, the granting of such
service shall be subject to the consent of the appropriate insurer and may be
conditioned upon an employee's participation in a First National Benefit Plan
of the same type immediately prior to the Effective Time. Wachovia also shall
honor in accordance with their terms all employment, severance, consulting and
other compensation Contracts Previously Disclosed to Wachovia between any First
National Company and any current or former director, officer, or employee
thereof and all provisions for vested benefits or other vested amounts earned
or accrued through the Effective Time under the First National Benefit Plans.
8.13 CONVERSION OF OPERATIONAL SYSTEMS. The Parties agree to use
their to use their reasonable efforts to implement the conversion of First
National's operational systems into the operational systems being used
currently by Wachovia Bank of Georgia, National Association.
8.14 INDEMNIFICATION.
(a) For a period of six years after the Effective Time,
Wachovia shall indemnify, defend and hold harmless the present and former
directors, officers, employees and agents of the First National Companies
(each, an "Indemnified Party") against all Liabilities 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 full extent
permitted under Section 14-2-850 through Section 14-2-859 of the GBCC and which
are not excluded under First National's directors and officers liability policy
as in effect as of the date hereof. Without limiting the foregoing, in any
case in which approval by Wachovia is required to effectuate any
indemnification, Wachovia shall determine whether such approval will be granted
based upon the statutory requirements for approval set forth in Section
14-2-851 of the GBCC.
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a), upon learning of any such Liability or
Litigation, shall notify Wachovia of such Liability or Litigation within ten
(10) days of receipt of notice thereof or in such lesser time as may be
required to permit the filing of
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any required responsive pleading within the applicable time limits. In the
event of any such Litigation (whether arising before or after the Effective
Time), (i) Wachovia shall have the right but not the obligation to assume the
defense thereof and Wachovia shall not be liable to such Indemnified Parties
for any legal expenses of other counsel or any other expenses subsequently
incurred by such Indemnified Parties in connection with the defense thereof,
except that if Wachovia elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between Wachovia and the Indemnified Parties and Wachovia
concurs as to the existence of such conflicts of interest, the Indemnified
Parties may retain counsel satisfactory to them and such counsel in
consultation with Wachovia counsel shall have responsibility for the defense of
such Liability or Litigation, and Wachovia shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that Wachovia shall be obligated
pursuant to this paragraph (c) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction, (but Wachovia will have the right to
attempt to consolidate actions in multiple jurisdictions and to effect such
changes in venue and jurisdiction where appropriate), (ii) the Indemnified
Parties will cooperate in the defense of any such Litigation, and (iii)
Wachovia shall not be liable for any settlement effected without its prior
written consent; and provided further that Wachovia shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become final,
that the indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:
(a) SHAREHOLDER APPROVAL. The shareholders of First
National shall have approved this Agreement, and the consummation of
the transactions contemplated hereby, including the Merger, as and to
the extent required by Law, or by the provisions of any governing
instruments.
(b) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to all Regulatory Authorities
required for consummation of the Merger shall have been obtained or
made and shall be in full force and effect and all waiting periods
required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner
(including, without limitation, requirements relating to the raising
of additional capital or the disposition of Assets) which in the
reasonable judgment of the Board of Directors of either Party would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render
inadvisable the consummation of the Merger.
(c) CONSENTS AND APPROVALS. Each Party shall have
obtained any and all Consents required for consummation of the Merger
(other than those referred to in Section 9.1(b) of this Agreement) or
for the preventing of any Default under any Contract or Permit of such
Party
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which, if not obtained or made, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on such
Party.
(d) LEGAL PROCEEDINGS. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) or taken any other action which
prohibits, restricts or makes illegal consummation of the transactions
contemplated by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement
shall be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and
all necessary approvals under state securities Laws or the 1933 Act or
1934 Act relating to the issuance or trading of the shares of Wachovia
Common Stock issuable pursuant to the Merger shall have been received.
(f) TAX MATTERS. First National and Wachovia shall have
received a written opinion of counsel from Powell, Goldstein, Frazer &
Murphy, in form reasonably satisfactory to it (the "Tax Opinion"), to
the effect that for federal income tax purposes (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code, (ii) the exchange in the Merger of First
National Common Stock for Wachovia Common Stock will not give rise to
gain or loss to the shareholders of First National with respect to
such exchange (except to the extent of any cash received), and (iii)
neither First National nor Wachovia will recognize gain or loss as a
consequence of the Merger (except for income and deferred gain
recognized pursuant to Treasury regulations issued under Section 1502
of the Internal Revenue Code). In rendering such Tax Opinion, counsel
shall be entitled to rely upon representations of officers of First
National and Wachovia reasonably satisfactory in form and substance to
such counsel.
(g) AGREEMENT REGARDING STOCK OPTIONS AND STOCK WARRANTS.
Wachovia and each of the holders of the First National Stock Options
and the First National Stock Warrants shall have executed an Officer's
Option Agreement or a Director's Option Agreement, as applicable.
9.2 CONDITIONS TO OBLIGATIONS OF WACHOVIA. The obligations of
Wachovia to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Wachovia pursuant to Section 11.6(a) of
this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of First National set forth or referred to in this
Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Effective Time with the same
effect as though all such representations and warranties had been made
on and as of the Effective Time (provided that representations and
warranties which are confined to a specified date shall speak only as
of such date), except (i) as expressly contemplated by this Agreement,
or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 5.3 of this
Agreement, which shall be true in all material respects) the
inaccuracies of which relate to matters that are not reasonably like
to have, individually or in the aggregate, a Material Adverse Effect
on First National.
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(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of First National to be performed
and complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.
(c) CERTIFICATES. First National shall have delivered to
Wachovia (i) a certificate, dated as of the Effective Time and signed
on its behalf by its chief executive officer, to the effect that the
conditions of its obligations set forth in Section 9.2(a) and 9.2(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by First National's Board of Directors and
shareholders evidencing the taking of all corporate action necessary
to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated
hereby, all in such reasonable detail as Wachovia and its counsel
shall request.
(d) OPINION OF COUNSEL. First National shall have
delivered to Wachovia an opinion of Powell, Goldstein, Frazer &
Murphy, counsel to First National, dated as of the Closing Date, in
substantially the form of Exhibit 5 hereto.
(e) ACCOUNTANT'S LETTERS. Wachovia shall have received
from Mauldin & Jenkins letters dated not more than five (5) days prior
to (i) the date of the Proxy Statement and (ii) the Effective Time,
with respect to certain financial information regarding First
National, in form and substance reasonably satisfactory to Wachovia,
which letters shall be based upon customary specified procedures
undertaken by such firm.
(f) AFFILIATES AGREEMENTS. Wachovia shall have received
from each affiliate of First National the affiliates letter referred
to in Section 8.11 hereof.
9.3 CONDITIONS TO OBLIGATIONS OF FIRST NATIONAL. The obligations
of First National to perform this Agreement and consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by First National pursuant to Section
11.6(b) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Wachovia set forth or referred to in this Agreement
shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date), except (i) as expressly contemplated by this Agreement, or (ii)
for representations and warranties (other than the representations and
warranties set forth in Section 6.3 of this Agreement, which shall be
true in all material respects) the inaccuracies of which relate to
matters that are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Wachovia.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of Wachovia to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.
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(c) CERTIFICATES. Wachovia shall have delivered to First
National (i) a certificate, dated as of the Effective Time and signed
on its behalf by its chief executive officer, to the effect that the
conditions of its obligations set forth in Section 9.3(a) and 9.3(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Wachovia's Board of Directors evidencing
the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as First National and its counsel shall request.
(d) OPINION OF COUNSEL. Wachovia shall have delivered to
First National an opinion of its legal counsel dated as of the Closing
Date, in substantially the form of Exhibit 6 hereto.
(e) LISTING. The shares of Wachovia Common stock
issuable pursuant to the Merger shall have been approved for listing
on the NYSE.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of First National, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of
Wachovia and the Board of Directors of First National; or
(b) By the Board of Directors of either Party (provided
that the terminating Party is not then in material breach of any
representation, warranty, covenant or other agreement contained in
this Agreement) in the event of a breach by the other Party of any
representation or warranty contained in this Agreement which cannot be
or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach and which breach
would provide the non-breaching party the ability to refuse to
consummate the Merger under the standard set forth in Section 9.2(a)
of this Agreement in the case of Wachovia and Section 9.3(a) of this
Agreement in the case of First National; or
(c) By the Board of Directors of either Party (provided
that the terminating Party is not then in material breach of any
representation, warranty, covenant or other agreement contained in
this Agreement) in the event of a material breach by the other Party
of any covenant or agreement contained in this Agreement which cannot
be or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party (provided
that the terminating Party is not then in material breach of any
representation, warranty, covenant or other agreement contained in
this Agreement) in the event (i) any Consent of any Regulatory
Authority required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal provided,
however, that each party agrees to exercise reasonable efforts to make
a timely appeal in such instance, or (ii) if the shareholders of First
National fail to vote their approval of this Agreement and the
transactions contemplated hereby as
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required by the GBCC at the Shareholders' Meeting where the
transactions were presented to such shareholders for approval and
voted upon; or
(e) By the Board of Directors of either Party in the
event that the Merger shall not have been consummated on or before
June 30, 1996 but only if the failure to consummate the transactions
contemplated hereby on or before such date is not caused by any breach
of this Agreement by the Party electing to terminate pursuant to this
Section 10.1(e); or
(f) By the Board of Directors of either Party (provided
that the terminating Party is not then in material breach of any
representation, warranty, covenant or other agreement contained in
this Agreement) in the event that any of the conditions precedent to
the obligations of such Party to consummate the Merger cannot be
satisfied or fulfilled by the date specified in Section 10.1(e) of
this Agreement.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (a) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (b) a termination pursuant to
Sections 10.1(b), 10.1(c) or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except for this Section 10.3 and
Articles 2, 3, 4 and 11 and Section 8.11 and Section 8.14 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS. Except as otherwise provided herein, the
capitalized terms set forth below (in their singular and plural forms as
applicable) shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or Assets of, or other business
combination involving such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial
portion of the Assets of such Party or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person or
(ii) any officer, director, partner, employer, or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of
such Person.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated
herein by reference.
"ALLOWANCE" shall have the meaning provided in Section 5.9 of
this Agreement.
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"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or
utilized in such Person's business, directly or indirectly, in whole
or in part, whether or not carried on the books and records of such
Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"BHC ACT" shall mean the federal Bank Holding Company Act of
1956, as amended.
"CLOSING" shall mean the closing of the transactions
contemplated hereby, as described in Section 1.2 of this Agreement.
"CLOSING DATE" shall mean the date on which the Effective Time
occurs.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
"DEFAULT" shall mean (a) any breach or violation of or default
under any Contract, Order or Permit, (b) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract,
Order or Permit, or (c) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to
a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order or Permit.
"EFFECTIVE TIME" shall mean the date and time at which the
Merger becomes effective as defined in Section 1.3 of this Agreement.
"ENVIRONMENTAL LAWS" shall mean all Laws which are
administered, interpreted or enforced by the United States
Environmental Protection Agency and state and local agencies with
primary jurisdiction over pollution or protection of the environment.
"ERISA" shall mean the Employee Retirement Income First
National Act of 1974, as amended.
"ERISA AFFILIATE" shall have the meaning provided in Section
5.14 of this Agreement.
"ERISA PLAN" shall have the meaning provided in Section 5.14
of this Agreement.
"EXCHANGE AGENT" shall be Wachovia Bank of North Carolina,
N.A. or its designee.
"EXHIBITS" 1 through 6, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made
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a part hereof and may be referred to in this Agreement and any other
related instrument or document without being attached hereto.
"FIRST NATIONAL BENEFIT PLANS" shall have the meaning set
forth in Section 5.14 of this Agreement.
"FIRST NATIONAL COMMON STOCK" shall mean the $1.00 par value
common stock of First National.
"FIRST NATIONAL COMPANIES" shall mean, collectively, First
National and FNB.
"FIRST NATIONAL FINANCIAL STATEMENTS" shall mean (a) the
consolidated balance sheets (including related notes and schedules, if
any) of First National as of June 30, 1995, and as of December 31,
1994 and 1993, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) for the six months ended June 30, 1995, and for
each of the three fiscal years ended December 31, 1994, 1993 and 1992,
as filed by First National in SEC Documents, and (b) the consolidated
balance sheets of First National (including related notes and
schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to June 30, 1995.
"FIRST NATIONAL STOCK OPTIONS" shall mean the options to
purchase an aggregate of 14,230 shares of First National Common Stock
held by FNB officers as of the Effective Time.
"FIRST NATIONAL STOCK WARRANTS" shall mean the warrants to
purchase an aggregate of 188,750 shares of First National Common Stock
held by the members of the First National Board of Directors as of the
Effective Time.
"FNB" shall mean The First National Bank of Henry County, a
national bank and sole subsidiary of First National.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"GEORGIA ARTICLES OF MERGER" shall mean the Articles of Merger
to be executed by Wachovia and filed with the Secretary of State of
the State of Georgia relating to the Merger as contemplated by Section
1.1 of this Agreement.
"HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, or
hazardous substance within the meaning of the Comprehensive
Environment Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., or any similar federal, state or local Law.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
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"KNOWLEDGE" as used with respect to a Person shall mean the
knowledge after due inquiry of the Chairman, President, Chief
Financial Officer, Chief Accounting Officer, Chief Credit Officer,
General Counsel, any Assistant or Deputy General Counsel, or any
Senior or Executive Vice President of such Person.
"LAW" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities or business, including, without
limitation, those promulgated, interpreted or enforced by any of the
Regulatory Authorities.
"LIABILITY" shall mean any direct or primary liability,
indebtedness, obligation, penalty, cost or expense actually incurred
(including, without limitation, costs of investigation, collection and
defense), claim, deficiency, guaranty or endorsement of or by either
party to this Agreement or their shareholders (other than endorsements
of notes, bills, checks, and drafts presented for collection or
deposit in the ordinary course of business) of any type, whether
accrued, absolute or contingent, liquidated or unliquidated, matured
or unmatured, or otherwise, provided that Liability shall not include
special, indirect or consequential damages.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention or other security arrangement, or
any adverse right or interest, charge, or claim of any nature
whatsoever of on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due
and payable. (ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits and other Liens incurred in the ordinary
course of the banking business, and (iii) Liens which are not
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on a Party.
"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any
Person alleging potential Liability or requesting information relating
to or affecting a Party, its business, its Assets (including, without
limitation, Contracts related to it), or the transactions contemplated
by this Agreement, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by
Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned by the Party in
question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only
with respect to such property.
"MATERIAL" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement
shall determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event,
change or occurrence which has a material adverse effect on (a) the
financial position, business, or results of operations of such Party
and its Subsidiaries, taken as a whole, or (b) the ability of such
Party to perform its obligations under this Agreement or to consummate
the Merger or the other transactions
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contemplated by this Agreement, provided that "material adverse
effect" shall not be deemed to include the impact of (i) changes in
banking and similar Laws of general applicability or interpretations
thereof by courts or governmental authorities, (ii) changes in
generally accepted accounting principles or regulatory accounting
principles generally applicable to banks and their holding companies,
(iii) actions and omissions of a Party (or any of its Subsidiaries)
taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, and (iv) the
Merger and compliance with the provisions of this Agreement on the
operating performance of the Parties.
"MERGER" shall mean the merger of First National with and into
Wachovia referred to in Section 1.1 of this Agreement.
"NCGS" shall mean the North Carolina General Statutes.
"NORTH CAROLINA ARTICLES OF MERGER" shall mean the Articles of
Merger to be executed by Wachovia and filed with the Secretary of
State of the State of North Carolina relating to the Merger as
contemplated by Section 1.1 of this Agreement.
"NYSE" shall mean the New York Stock Exchange, Inc.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi- judicial decision or
award, ruling, or writ of any federal, state, local or foreign or
other court, arbitrator, mediator, tribunal, administrative agency or
Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates
in the management (including any property or facility held in a joint
venture) and, where required by the context, said term means the owner
or operator of such facility or property, but only with respect to
such facility or property.
"PARTY" shall mean either First National or Wachovia, and
"Parties" shall mean both First National and Wachovia.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its capital stock, Assets, Liabilities, or business.
"PERSON" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
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"PLAN OF CONSOLIDATION" shall have the meaning provided in
Section 1.4 of this Agreement.
"PREVIOUSLY DISCLOSED" shall mean information (a) delivered in
a written memorandum prior to the date of this Agreement in the manner
and to the Party and counsel described in Section 11.8 of this
Agreement and describing in reasonable detail the matters contained
therein, provided that in the case of Subsidiaries acquired after the
date of this Agreement, such information may be so delivered by the
acquiring Party to the other Party prior to the date of such
acquisition, or (b) disclosed prior to the date of this Agreement by
one Party to the other in an SEC Document delivered to such other
Party in which the specific information has been identified in the
written memorandum by the Party making the disclosure.
"PROXY STATEMENT" shall mean the proxy statement used by First
National to solicit the approval of its shareholders of the
transactions contemplated by this Agreement and shall include the
prospectus of Wachovia relating to shares of Wachovia Common Stock to
be issued to the shareholders of First National.
"REGISTRATION STATEMENT" shall mean the Registration Statement
on Form S-4, or other appropriate form, filed with the SEC by Wachovia
under the 1933 Act in connection with the transactions contemplated by
this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board
of the Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, all state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries, the NYSE and the SEC.
"RESULTING BANK" shall mean Wachovia Bank of Georgia, N.A. as
the resulting bank under the Plan of Consolidation.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC DOCUMENTS" shall mean all reports and registration
statements filed, or required to be filed, by a Party or any of its
Subsidiaries with any Regulatory Authority pursuant to the Securities
Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory Authority promulgated
thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the
shareholders of First National to be held pursuant to Section 8.1 of
this Agreement, including any adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns
or controls 5% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
5% or more of the
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outstanding equity securities is owned directly or indirectly by its
parent; provided, however, there shall not be included any such entity
acquired through foreclosure or any such entity the equity securities
of which are owned or controlled in a fiduciary capacity.
"SURVIVING CORPORATION" shall mean Wachovia as the surviving
corporation resulting from the Merger.
"TAX AND TAXES" shall mean any federal, state, county, local,
foreign and other taxes, assessments, charges, fares, and impositions,
including interest and penalties thereon or with respect thereto.
"TAX RETURN" shall mean any return required to be filed
(including information returns) with any taxing authority whether or
not such Tax Return reflects a tax liability.
"WACHOVIA CAPITAL STOCK" shall mean, collectively, the
Wachovia Common Stock and any other class or series of capital stock
of Wachovia.
"WACHOVIA COMMON STOCK" shall mean the $5.00 par value common
stock of Wachovia.
"WACHOVIA COMPANIES" shall mean, collectively, Wachovia and
all Wachovia Subsidiaries.
"WACHOVIA FINANCIAL STATEMENTS" shall mean (a) the
consolidated statements of condition (including related notes and
schedules, if any) of Wachovia as of June 30, 1995 and December 31,
1994 and 1993, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) for the six months ended June 30, 1995, and for
each of the three years ended December 31, 1994, 1993 and 1992, as
filed by Wachovia in SEC Documents and (b) the consolidated statements
of condition of Wachovia (including related notes and schedules, if
any) and related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any)
included in SEC Documents filed with respect to periods ended
subsequent to June 30, 1995.
"WACHOVIA SUBSIDIARIES" shall mean the Subsidiaries of
Wachovia.
11.2 EXPENSES. Except as otherwise provided in this Section 11.2,
each of the Parties shall bear and pay all direct costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and application fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that Wachovia shall bear all the
filing fees payable in connection with the Registration Statement and the Proxy
Statement and the printing costs incurred in connection with the printing of
the Registration Statement and the Proxy Statement.
11.3 BROKERS AND FINDERS. Except for First National's engagement
of Stevens & Company, each of the Parties represents and warrants that neither
it nor any of its officers, directors, employees, or Affiliates has employed
any broker or finder or incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions, or finders' fees in
connection with this Agreement or the transactions contemplated hereby. In the
event of a claim by any broker or finder based upon his or its representing or
being retained by or allegedly representing or being retained by First National
or Wachovia, each of First National and Wachovia, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any Liability in
respect of any such claim.
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11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral. Nothing in this
Agreement expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, other than as
provided in Section 8.14 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties; provided, however,
that after any such approval by the holders of First National Common Stock,
there shall be made no amendment that pursuant to the GBCC requires further
approval by such shareholders without the further approval of such
shareholders.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, Wachovia, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by First National, to waive or extend the time for the
compliance or fulfillment by First National of any and all of its obligations
under this Agreement, and to waive any or all of the conditions precedent to
the obligations of Wachovia under this Agreement, except any condition which,
if not satisfied, would result in the violation of any Law. No such waiver
shall be effective unless in writing signed by a duly authorized officer of
Wachovia.
(b) Prior to or at the Effective Time, First National,
acting through its Board of Directors, chief executive officer or other
authorized officer, shall have the right to waive any Default in the
performance of any term of this Agreement by Wachovia, to waive or extend the
time for the compliance or fulfillment by Wachovia of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of First National under this Agreement, except any
condition which, if not satisfied, would result in the violation of any Law.
No such waiver shall be effective unless in writing signed by a duly authorized
officer of First National.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of such condition or breach or a
waiver of any other condition or of the breach of any other term of this
Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below
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(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Wachovia: Wachovia Corporation
301 North Main Street
Post Office Box 3099
Winston-Salem, NC 27150
Attention: Kenneth W. McAllister
Telecopy Number: (910) 770-6630
First National: The First National Bankshares of
Henry County, Inc.
5490 Highway 155 North
Post Office Box 190
Stockbridge, Georgia 30281
Attention: J. Randall Dixon
Telecopy Number: (404) 389-5883
Copy to Counsel: Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Kathryn L. Knudson
Telecopy Number: (404) 572-6999
11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of North Carolina, without
regard to any applicable conflicts of Laws, except to the extent that the
federal laws of the United States may apply to the Plan of Consolidation.
11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
11.13 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or
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unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<CAPTION>
ATTEST: WACHOVIA CORPORATION
<S> <C>
/s/ Alice Washington Grogan By: /s/ Robert S. McCoy, Jr.
- ------------------------------------------- -----------------------------------------------------------------------
Secretary Executive Vice President and
Chief Financial Officer
[CORPORATE SEAL]
ATTEST: THE FIRST NATIONAL BANKSHARES OF HENRY COUNTY, INC.
/s/ J. Randall Dixon By: /s/ Harold C. Johnson, Sr.
- ------------------------------------------- -----------------------------------------------------------------------
President Chairman
[CORPORATE SEAL]
</TABLE>
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APPENDIX B
DISSENTERS RIGHTS
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PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
Section 14-2-1301. DEFINITIONS.
As used in this article, the term:
a. "Beneficial shareholder" means the person who is a
beneficial owner of shares held in a voting trust or by a nominee as
the record shareholder.
b. "Corporate Action" means the transaction or other
action by the corporation that creates dissenters' rights under the
Code Section 14-2-1302.
c. "Corporation" means the issuer of shares held by a
dissenter before the corporate action, or the surviving or acquiring
corporation by merger or share exchange of that issuer.
d. "Dissenter" means a shareholder who is entitled to
dissent from corporate action under Code Section 14-2-1302 and who
exercises that right when and in the manner required by Code Sections
14-2-1320 through 14-2-1327.
e. "Fair value," with respect to a dissenter's shares,
means the value of the shares immediately before the effectuation of
the corporate action to which the dissenter objects, excluding any
appreciation or depreciation in anticipation of the corporate action.
f. "Interest" means interest from the effective date of
the corporate action until the date of payment, at a rate that is fair
and equitable under all the circumstances.
g. "Record shareholder" means the person in whose name
shares are registered in the records of a corporation or the
beneficial owner of shares to the extent of the rights granted by a
nominee certificate on file with a corporation.
h. "Shareholder" means the record shareholder or the
beneficial shareholder.
Section 14-2-1302. RIGHT TO DISSENT.
(a) A record shareholder of the corporation is entitled
to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the
corporation is a party:
(A) If approval of the shareholders of
the corporation is required for the merger by Code
Section 14-2-1103 or the articles of incorporation
and the shareholder is entitled to vote on the
merger; or
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(B) If the corporation is a subsidiary
that is merged with its parent under Code Section
14-2-1104;
(2) Consummation of a plan of share exchange to
which the corporation is a party as the corporation whose
shares will be acquired, if the shareholder is entitled to
vote on the plan;
(3) Consummation of a sale or exchange of all or
substantially all of the property of the corporation if a
shareholder vote is required on the sale or exchange pursuant
to Code Section 14-2-1202, but not including a sale pursuant
to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will
be distributed to the shareholders within one year after the
date of sale;
(4) An amendment of the articles of incorporation
that materially and adversely affects rights in respect of a
dissenter's shares because it:
(A) Alters or abolishes a preferential
right of the shares;
(B) Creates, alters, or abolishes a
right in respect of redemption, including a provision
respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive
right of the holder of the shares to acquire shares
or other securities;
(D) Excludes or limits the right of the
shares to vote on any matter, or to cumulate votes,
other than a limitation by dilution through issuance
of shares or other securities with similar voting
rights;
(E) Reduces the number of shares owned
by the shareholder to a fraction of a share if the
fractional share so created is to be acquired for
cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all
or part of the shares of the class; or
(5) Any corporate action taken pursuant to a
shareholder vote to the extent that Article 9 of this chapter,
the articles of incorporation, bylaws, or a resolution of the
board of directors provides that voting or nonvoting
shareholders are entitled to dissent and obtain payment for
their shares.
(b) A shareholder entitled to dissent and obtain payment
for his shares under this article may not challenge the corporate
action creating his entitlement unless the corporate action fails to
comply with procedural requirements of this chapter or the articles of
incorporation or bylaws of the corporation or the vote required to
obtain approval of the
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corporate action was obtained by fraudulent and deceptive means,
regardless of whether the shareholder has exercised dissenter's
rights.
(c) Notwithstanding any other provision of this article,
there shall be no right of dissent in favor of the holder of shares of
any class or series which, at the record date fixed to determine the
shareholders entitled to receive notice of and to vote at a meeting at
which a plan of merger or share exchange or a sale or exchange of
property or an amendment of the articles of incorporation is to be
acted on, were either listed on a national securities exchange or held
of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share
exchange, the holders of shares of the class or series are
required under the plan of merger or share exchange to accept
for their shares anything except shares of the surviving
corporation or another publicly held corporation which at the
effective date of the merger or share exchange are either
listed on a national securities exchange or held of record by
more than 2,000 shareholders, except for scrip or cash
payments in lieu of fractional shares; or
(2) The articles of incorporation or a resolution
of the board of directors approving the transaction provides
otherwise.
Section 14-2-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
A record shareholder may assert dissenters' rights as to fewer
than all the shares registered in his name only if he dissents with
respect to all shares beneficially owned by any one beneficial
shareholder and notifies the corporation in writing of the name and
address of each person on whose behalf he asserts dissenters' rights.
The rights of a partial dissenter under this Code section are
determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
Section 14-2-1320. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters'
rights under Code Section 14-2-1302 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that shareholders
are or may be entitled to assert dissenters' rights under this article
and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under
Code Section 14-2-1302 is taken without a vote of shareholders, the
corporation shall notify in writing all shareholders entitled to
assert dissenters' rights that the action was taken and send them the
dissenters' notice described in Code Section 14-2-1322 no later than
ten days after the corporate action was taken.
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Section 14-2-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters'
rights under Code Section 14-2-1302 is submitted to a vote at a
shareholders' meeting, a record shareholder who wishes to assert
dissenters' rights:
(1) must deliver to the corporation before the
vote is taken written notice of his intent to demand payment
for his shares if the proposed action is effectuated; and
(2) must not vote his shares in favor of the
proposed action.
(b) A record shareholder who does not satisfy the
requirements of subsection (a) of this Code section is not entitled to
payment for his shares under this article.
Section 14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters'
rights under Code Section 14-2-1302 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to
all shareholders who satisfied the requirements of Code Section
14-2-1321.
(b) The dissenters' notice must be sent no later than ten
days after the corporate action was taken and must:
(1) State where the payment demand must be sent
and where and when certificates for certificated shares must
be deposited;
(2) Inform holders of uncertificated shares to
what extent transfer of the shares will be restricted after
the payment demand is received;
(3) Set a date by which the corporation must
receive the payment demand, which date may not be fewer than
30 nor more than 60 days after the date the notice required in
subsection (a) of this Code section is delivered; and
(4) Be accompanied by a copy of this article.
Section 14-2-1323. DUTY TO DEMAND PAYMENT.
(a) A record shareholder sent a dissenters' notice
described in Code Section 14-2-1322 must demand payment and deposit
his certificates in accordance with the terms of the notice.
(b) A record shareholder who demands payment and deposits
his shares under subsection (a) of this Code section retains all other
rights of a shareholder until these rights are cancelled or modified
by the taking of the proposed corporate action.
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(c) A record shareholder who does not demand payment or
deposit his share certificates where required, each by the date set in
the dissenters' notice, is not entitled to payment for his shares
under this article.
Section 14-2-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of
uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is taken or the
restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted
as to uncertificated shares retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the
proposed corporate action.
Section 14-2-1325. OFFER OF PAYMENT.
(a) Except as provided in Code Section 14-2-1327, within
ten days of the later of the date the proposed corporate action is
taken or receipt of a payment demand, the corporation shall by notice
to each dissenter who complied with Code Section 14-2-1323 offer to
pay to such dissenter the amount the corporation estimates to be the
fair value of his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end
of a fiscal year ending not more than 16 months before the
date of payment, an income statement for that year, a
statement of changes in shareholders' equity for that year,
and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of
the fair value of the shares;
(3) An explanation of how the interest was
calculated;
(4) A statement of the dissenter's right to
demand payment under Code Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by
written notice to the corporation within 30 days after the
corporation's offer or is deemed to have accepted such offer by
failure to respond within said 30 days, payment for his or her shares
shall be made within 60 days after the making of the offer or the
taking of the proposed corporate action, whichever is later.
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Section 14-2-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action
within 60 days after the date set for demanding payment and depositing
share certificates, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on
uncertificated shares.
(b) If, after returning deposited certificates and
releasing transfer restrictions, the corporation takes the proposed
action, it must send a new dissenters' notice under Code Section
14-2-1322 and repeat the payment demand procedure.
Section 14-2-1327. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH
PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of
his own estimate of the fair value of his shares and amount of
interest due, and demand payment of his estimate of the fair value of
his shares and interest due, if:
(1) The dissenter believes that the amount
offered under Code Section 14-2-1325 is less than the fair
value of his shares or that the interest due is incorrectly
calculated; or
(2) The corporation, having failed to take the
proposed action, does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated
shares within 60 days after the date set for demanding
payment.
(b) A dissenter waives his or her right to demand payment
under this Code section and is deemed to have accepted the
corporation's offer unless he or she notifies the corporation of his
or her demand in writing under subsection (a) of this Code section
within 30 days after the corporation offered payment for his or her
shares, as provided in Code Section 14-2-1325..
(c) If the corporation does not offer payment within the
time set forth in subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information
required under subsection (b) of Code Section 14-2-1325, and
the corporation shall provide the information to the
shareholder within ten days after receipt of a written demand
for the information; and
(2) The shareholder may at any time, subject to
the limitations period of Code Section 14-2-1332, notify the
corporation of his own estimate of the fair value of his
shares and the amount of interest due and demand payment of
his estimate of the fair value of his shares and interest due.
PART 3. JUDICIAL APPRAISAL OF SHARES
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Section 14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327
remains unsettled, the corporation shall commence a proceeding within
60 days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the 60 day period,
it shall pay each dissenter whose demand remains unsettled the amount
demanded.
(b) The corporation shall commence the proceeding, which
shall be a nonjury equitable valuation proceeding, in the superior
court of the county where a corporation's registered office is
located. If the surviving corporation is a foreign corporation
without a registered office in this state, it shall commence the
proceeding in the county in this state where the registered office of
the domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
(c) The corporation shall make all dissenters, whether or
not residents of this state, whose demands remain unsettled parties to
the proceeding, which shall have the effect of an action quasi in rem
against their shares. The corporation shall serve a copy of the
petition in the proceeding upon each dissenting shareholder who is a
resident of this state in the manner provided by law for the service
of a summons and complaint, and upon each nonresident dissenting
shareholder either by registered or certified mail or by publication,
or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding
is commenced under subsection (b) of this Code section is plenary and
exclusive. The court may appoint one or more persons as appraisers to
receive evidence and recommend decision on the question of fair value.
The appraisers have the powers described in the order appointing them
or in any amendment to it. Except as otherwise provided in this
chapter, Chapter 11 of Title 9, known as the "Georgia Civil Practice
Act," applies to any proceeding with respect to dissenters' rights
under this chapter.
(e) Each dissenter made a party to the proceeding is
entitled to judgment for the amount which the court finds to be the
fair value of his shares, plus interest to the date of judgment.
Section 14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under
Code Section 14-2-1330 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers
appointed by the court, but not including fees and expenses of
attorneys and experts for the respective parties. The court shall
assess the costs against the corporation, except that the court may
assess the costs against all or some of the dissenters, in amounts the
court finds equitable, to the extent the court finds the dissenters
acted arbitrarily, vexatiously, or not in good faith in demanding
payment under Code Section 14-2-1327.
B-8
<PAGE> 105
(b) The court may also assess the fees and expenses of
attorneys and experts for the respective parties, in amounts the court
finds equitable:
(1) Against the corporation and in favor of any
or all dissenters if the court finds the corporation did not
substantially comply with the requirements of Code Sections
14-2-1320 through 14-2- 1327; or
(2) Against either the corporation or a
dissenter, in favor of any other party, if the court finds
that the party against whom the fees and expenses are assessed
acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for
any dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services should not be
assessed against the corporation, the court may award to these
attorneys reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
Section 14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights shall
be brought more than three years after the corporate action was taken,
regardless of whether notice of the corporate action and of the right
to dissent was given by the corporation in compliance with the
provisions of Code Section 14-2-1320 and Code Section 14-2-1322.
B-9
<PAGE> 106
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated under the laws of North Carolina.
Sections 55-8-50 et seq. of the North Carolina Business Corporation Act
prescribe the conditions under which indemnification may be obtained by a
present or former director or officer of the Registrant who incurs expenses or
liability as a consequence of certain proceedings arising out of his or her
activities as a director or officer. Article IX of the Registrant's Bylaws
also provides for indemnification of directors and officers under certain
circumstances. The Registrant has purchased a standard liability policy,
which, subject to any limitations set forth in the policy, indemnifies the
Registrant's directors and officers for damages that they become legally
obligated to pay as a result of any negligent act, error or omission committed
while serving in their official capacity.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits (See exhibit index immediately preceding the exhibits for
the page number where each exhibit can be found)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of November 22, 1995, by and between Wachovia Corporation and The
First National Bankshares of Henry County, Inc. (included as Appendix A to the Proxy Statement/Prospectus
and incorporated by reference herein).
3.1 -- Amended and Restated Articles of Incorporation (Exhibit 3.1 to Wachovia Corporation's Form 10-K for the
fiscal year ended December 31, 1993, File No. 1-9021*).
3.2 -- Bylaws (Exhibit 3.2 to Wachovia Corporation's Form 10-K for the fiscal year ended December 31, 1993, File
No. 1-9021*).
4.1 -- Articles IV, VII, IX, X and XI of Wachovia Corporation's Amended and Restated Articles of Incorporation
(included in Exhibit 3.1 hereto).
4.2 -- Article 1, Section 1.8, and Article 6 of Wachovia Corporation's Bylaws (included in Exhibit 3.2 hereto).
4.3 -- Indenture dated as of May 15, 1986 between South Carolina National Corporation and Morgan Guaranty Trust
Company of New York, as Trustee, relating to $35,000,000 principal amount of 6 1/2% Convertible Subordinated
Debentures due in 2001 (Exhibit 28 to S-3 Registration Statement of South Carolina National Corporation,
File No. 33-7710*).
</TABLE>
II-1
<PAGE> 107
<TABLE>
<S> <C> <C>
4.4 -- First Supplemental Indenture dated as of November 26, 1991 by and among South Carolina National Corporation,
Wachovia Corporation and Morgan Guaranty Trust Company of New York, as Trustee, amending the indenture
described in Exhibit 4.3 hereto (Exhibit 4.10 to Report on Form 10-K of Wachovia Corporation for the fiscal
year ended December 31, 1991, File No. 1-9021*).
4.5 -- Indenture dated as of March 15, 1991 between South Carolina National Corporation and Bankers Trust Company,
as Trustee, relating to certain unsecured subordinated securities (Exhibit 4(a) to S-3 Registration
Statement of South Carolina National Corporation, File No. 333-39754*).
4.6 -- First Supplemental Indenture dated as of January 24, 1992 by and among South Carolina National Corporation,
Wachovia Corporation and Bankers Trust Company, as Trustee, amending the Indenture described in Exhibit 4.5
hereto (Exhibit 4.12 to Report on Form 10-K of Wachovia Corporation for the fiscal year ended December 31,
1991, File No. 1-9021*).
4.7 -- Indenture dated as of August 22, 1989 between First Wachovia Corporation and the Philadelphia National Bank,
as Trustee, relating to $300,000,000 principal amount of subordinated debt securities (Exhibit 4(c) to S-3
(Shelf) Registration Statement of First Wachovia Corporation, File No. 33-30721*).
4.8 -- First Supplemental Indenture, dated as of September 15, 1992 between Wachovia Corporation and CoreStates
Bank, National Association, as Trustee, amending the Indenture described in Exhibit 4.7 hereto (Exhibit 4(d)
to Report on Form 8 of Wachovia Corporation, filed on October 15, 1992, File No. 1-9021*).
4.9 -- Indenture dated as of March 1, 1993 between Wachovia Corporation and CoreStates Bank, National Association,
as Trustee, relating to $500,000,000 principal amount of subordinated debt securities (Exhibit 4(a) to S-3
(Shelf) Registration Statement of Wachovia Corporation, File No. 33-59206*).
5.1 -- Opinion of Kenneth W. McAllister, including consent.
8.1 -- Opinion of Powell, Goldstein, Frazer & Murphy, including consent.
23.1 -- Consent of Kenneth W. McAllister (appears in Legal Opinion, Exhibit 5.1)
23.2 -- Consent of Powell, Goldstein, Frazer & Murphy (appears in Legal Opinion, Exhibit 8.1)
23.3 -- Consent of Ernst & Young LLP
23.4 -- Consent of Mauldin & Jenkins
23.5 -- Consent of Stevens & Company
24.1 -- Power of Attorney
</TABLE>
II-2
<PAGE> 108
99.1 -- Form of Proxy
______________________________
* Incorporated herein by reference
(b) Financial Statement Schedules
Schedules are omitted because they are not required or are not
applicable, or the required information is shown in the financial statements or
notes thereto.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement;
(i) To include any Prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or
events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That prior to any public reoffering of the securities
registered hereunder through use of a Prospectus which is a part of this
Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the Registrant undertakes that
such reoffering Prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who may be
deemed underwriters, in addition to the information called for by the other
Items of the applicable form.
(5) That every Prospectus (a) that is filed pursuant to
paragraph (4) immediately preceding, or (b) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a
II-3
<PAGE> 109
part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions (See
Item 20), or otherwise, the Registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(b) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(c) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of
and included in the Registration Statement when it became effective.
II-4
<PAGE> 110
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Winston-Salem, State of North Carolina, on February 15, 1996.
WACHOVIA CORPORATION
By: /s/ L. M. Baker
------------------------
L. M. Baker, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ L.M. Baker, Jr. Director, President and February 15, 1996
--------------------------------------- Chief Executive Officer
L.M. Baker, Jr.
/s/ Rufus C. Barkley, Jr.* Director February 15, 1996
---------------------------------------
Rufus C. Barkley, Jr.
/s/ Crandall C. Bowles* Director February 15, 1996
---------------------------------------
Crandall C. Bowles
/s/ John L. Clendenin* Director February 15, 1996
---------------------------------------
John L. Clendenin
/s/ Lawrence M. Gressette, Jr.* Director February 15, 1996
---------------------------------------
Lawrence M. Gressette, Jr.
/s/ Thomas K. Hearn, Jr.* Director February 15, 1996
---------------------------------------
Thomas K. Hearn, Jr.
/s/ W. Hayne Hipp* Director February 15, 1996
---------------------------------------
W. Hayne Hipp
/s/ Robert M. Holder, Jr.* Director February 15, 1996
---------------------------------------
Robert M. Holder, Jr.
/s/ Donald R. Hughes* Director February 15, 1996
---------------------------------------
Donald R. Hughes
</TABLE>
II-5
<PAGE> 111
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ F. Kenneth Iverson* Director February 15, 1996
---------------------------------------
F. Kenneth Iverson
/s/ James W. Johnston* Director February 15, 1996
---------------------------------------
James W. Johnston
/s/ Robert S. McCoy, Jr. Executive Vice February 15, 1996
--------------------------------------- President and Chief
Robert S. McCoy, Jr. Financial Officer
/s/ John C. McLean, Jr. Comptroller (Principal February 15, 1996
--------------------------------------- Accounting Officer)
John C. McLean, Jr.
/s/ John G. Medlin, Jr.* Director February 15, 1996
---------------------------------------
John G. Medlin, Jr.
/s/ Wyndham Robertson* Director February 15, 1996
---------------------------------------
Wyndham Robertson
/s/ Herman J. Russell* Director February 15, 1996
---------------------------------------
Herman J. Russell
/s/ Sherwood H. Smith, Jr.* Director February 15, 1996
---------------------------------------
Sherwood H. Smith, Jr.
/s/ Charles McKenzie Taylor* Director February 15, 1996
---------------------------------------
Charles McKenzie Taylor
</TABLE>
- --------------------------
*By: /s/ Kenneth W. McAllister
--------------------------------------
(Signature)
Kenneth W. McAllister
--------------------------------------
(Print Name)
Attorney-in-fact
--------------------------------------
(Title)
II-6
<PAGE> 112
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF SEQUENTIAL
NUMBER EXHIBITS PAGE NO.
- ------ -------- --------
<S> <C> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of November 22, 1995,
by and between Wachovia Corporation and The First National
Bankshares of Henry County, Inc. (included as Appendix A to
the Proxy Statement/Prospectus and incorporated by reference
herein). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
3.1 -- Amended and Restated Articles of Incorporation (Exhibit 3.1
to Wachovia Corporation's Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-9021*). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
3.2 -- Bylaws (Exhibit 3.2 to Wachovia Corporation's Form 10-K for
the fiscal year ended December 31, 1993, File No. 1-9021*). . . . . . . . . . . . . . . . . . . . . . . N/A
4.1 -- Articles IV, VII, IX, X and XI of Wachovia Corporation's
Amended and Restated Articles of Incorporation (included in
Exhibit 3.1 hereto). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
4.2 -- Article 1, Section 1.8, and Article 6 of Wachovia Corporation's
Bylaws (included in Exhibit 3.2 hereto). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
4.3 -- Indenture dated as of May 15, 1986 between South Carolina
National Corporation and Morgan Guaranty Trust Company of
New York, as Trustee, relating to $35,000,000 principal amount
of 6 1/2% Convertible Subordinated Debentures due in 2001
(Exhibit 28 to S-3 Registration Statement of South Carolina
National Corporation, File No. 33-7710*). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
4.4 -- First Supplemental Indenture dated as of November 26, 1991
by and among South Carolina National Corporation, Wachovia
Corporation and Morgan Guaranty Trust Company of New York,
as Trustee, amending the indenture described in Exhibit 4.3
hereto (Exhibit 4.10 to Report on Form 10-K of Wachovia
Corporation for the fiscal year ended December 31, 1991,
File No. 1-9021*). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
4.5 -- Indenture dated as of March 15, 1991 between South Carolina
National Corporation and Bankers Trust Company, as Trustee,
relating to certain unsecured subordinated securities (Exhibit 4(a)
to S-3 Registration Statement of South Carolina National Corporation,
File No. 333-39754*). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
</TABLE>
<PAGE> 113
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF SEQUENTIAL
NUMBER EXHIBITS PAGE NO.
- ------ -------- --------
<S> <C> <C> <C>
4.6 -- First Supplemental Indenture dated as of January 24, 1992 by
and among South Carolina National Corporation, Wachovia
Corporation and Bankers Trust Company, as Trustee, amending
the Indenture described in Exhibit 4.5 hereto (Exhibit 4.12 to
Report on Form 10-K of Wachovia Corporation for the fiscal
year ended December 31, 1991, File No. 1-9021*). . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
4.7 -- Indenture dated as of August 22, 1989 between First Wachovia
Corporation and the Philadelphia National Bank, as Trustee,
relating to $300,000,000 principal amount of subordinated debt
securities (Exhibit 4(c) to S-3 (Shelf) Registration Statement of
First Wachovia Corporation, File No. 33-30721*). . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
4.8 -- First Supplemental Indenture, dated as of September 15, 1992
between Wachovia Corporation and CoreStates Bank, National
Association, as Trustee, amending the Indenture described in
Exhibit 4.7 hereto (Exhibit 4(d) to Report on Form 8
of Wachovia Corporation, filed on October 15, 1992, File No. 1-9021*). . . . . . . . . . . . . . . . . N/A
4.9 -- Indenture dated as of March 1, 1993 between Wachovia Corporation
and CoreStates Bank, National Association, as Trustee, relating
to $500,000,000 principal amount of subordinated debt securities
(Exhibit 4(a) to S-3 (Shelf) Registration Statement of Wachovia
Corporation, File No. 33-59206*). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
5.1 -- Opinion of Kenneth W. McAllister, including consent. . . . . . . . . . . . . . . . . . . . . . . . . _____
8.1 -- Opinion of Powell, Goldstein, Frazer & Murphy, including consent. . . . . . . . . . . . . . . . . . . _____
23.1 -- Consent of Kenneth W. McAllister (appears in Legal Opinion,
Exhibit 5.1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____
23.2 -- Consent of Powell, Goldstein, Frazer & Murphy (appears in
Legal Opinion, Exhibit 8.1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____
23.3 -- Consent of Ernst & Young LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____
23.4 -- Consent of Mauldin & Jenkins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____
23.5 -- Consent of Stevens & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____
24.1 -- Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____
</TABLE>
<PAGE> 114
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF SEQUENTIAL
NUMBER EXHIBITS PAGE NO.
- ------ -------- --------
<S> <C> <C> <C>
99.1 -- Form of Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____
</TABLE>
- ------------------------
* Incorporated herein by reference
<PAGE> 1
EXHIBIT 5.1
WACHOVIA CORPORATION
100 NORTH MAIN STREET
WINSTON-SALEM, NORTH CAROLINA 27150
February 16, 1996
Wachovia Corporation
100 North Main Street
P. O. Box 3099
Winston-Salem, North Carolina 27150
Re: Registration Statement on Form S-4
Gentlemen:
I am familiar with the proceedings taken by Wachovia Corporation (the
"Company") in connection with the preparation and filing with the Securities
and Exchange Commission of a Registration Statement on Form S-4 (the
"Registration Statement") under the Securities Act of 1933, as amended,
pertaining to the issuance of up to 218,870 shares of the Company's Common
Stock, par value $5.00 per share (the "Shares"), pursuant to terms of the
Agreement and Plan of Merger by and between the Company and The First National
Bankshares of Henry County, Inc. dated as of November 22, 1995 (the "Merger
Agreement").
As counsel for the Company, I have reviewed the Registration
Statement and the Merger Agreement, and I have examined and am familiar with
the records relating to the organization of the Company, including its articles
of incorporation, bylaws and all amendments thereto, and the records of all
proceedings taken by the Board of Directors and shareholders of the Company
pertinent to the rendering of this opinion.
Based on the foregoing, and having regard for such legal
considerations as I have deemed relevant, I am of the opinion that the Shares
have been duly authorized and, upon issuance in accordance with the terms of
the Merger Agreement, will be validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
Kenneth W. McAllister
<PAGE> 1
EXHIBIT 8.1
POWELL, GOLDSTEIN, FRAZER & MURPHY
SIXTEENTH FLOOR
191 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30303
February 15, 1996
The First National Bankshares of Henry County, Inc.
5490 Highway 155 North
Post Office Box 190
Stockbridge, Georgia 30281
Wachovia Corporation
301 North Main Street
Post Office Box 3099
Winston-Salem, North Carolina 27150
Ladies and Gentlemen:
You have requested our opinion with respect to certain federal income
tax consequences of the proposed merger of The First National Bankshares of
Henry County, Inc., a corporation organized and existing under the laws of the
state of Georgia ("First National"), with and into Wachovia Corporation, a
corporation organized and existing under the laws of the state of North
Carolina ("Wachovia"). For purposes of rendering this opinion, we have
reviewed and relied on the Agreement and Plan of Merger between Wachovia and
First National, dated as of November 22, 1995 (the "Merger Agreement"), the
Form S-4 Registration Statement filed with the Securities and Exchange
Commission on or about February 16, 1996 (the "S-4"), the certificates
attached hereto, and such other documents as we have considered appropriate.
Unless otherwise indicated, terms used in this opinion have the same meaning
as in the Merger Agreement.
For purposes of this opinion, we have assumed that the Merger will be
consummated at the Effective Time pursuant to the terms and conditions set
forth in the Merger Agreement. We have assumed that the cash paid to First
National shareholders pursuant to the Merger (including pursuant to a
shareholder's statutory right to dissent) does not exceed more than fifty
percent (50%) of the value of all shares of First National Common Stock
outstanding as of the Effective Time. Also, we have assumed that there is no
plan or intention on the part of the shareholders of First National to sell,
exchange or otherwise dispose of a number of shares of Wachovia Common Stock
received in the Merger that would reduce First National shareholders' ownership
of Wachovia Common Stock to a number of shares having a value, determined as of
the Effective Time, of less than fifty percent (50%) of the value of all of the
formerly outstanding First National Common Stock as of the Effective Time.
In addition, we have assumed with your permission that the facts and
representations certified to us in writing by First National and Wachovia which
are set forth in the certificates attached hereto, apply as of the Effective
Time. Copies of such certificates are attached hereto and
<PAGE> 2
The First National Bankshares of Henry County, Inc.
Wachovia Corporation
February 15, 1996
Page 2
incorporated herein by reference. We have neither investigated nor verified
the accuracy of any of the facts which have been certified to us, upon which
this opinion is based.
This opinion is based also on the Internal Revenue Code, Treasury
Regulations, Internal Revenue Service rulings, judicial decisions, and other
applicable authority, all as in effect on the date of this opinion. The legal
authorities on which this opinion is based may be changed at any time. Any
such changes may be retroactively applied and could modify the opinions
expressed herein. This opinion does not address any tax considerations under
foreign, state, or local laws, or the tax considerations to certain First
National shareholders in light of their particular circumstances, including
persons who are not United States persons, dealers in securities, tax-exempt
entities, shareholders who do not hold First National Common Stock as "capital
assets" within the meaning of Section 1221 of the Internal Revenue Code, and
shareholders who acquired their shares of First National Common Stock pursuant
to the exercise of First National options or otherwise as compensation.
Based upon and subject to the foregoing, we are of the opinion that
the Merger will constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code, and that the following are certain
federal income tax consequences which will result:
(a) No gain or loss will be recognized for federal income
tax purposes by First National shareholders upon the exchange of their
shares of First National Common Stock for Wachovia Common Stock.
(b) The basis of the shares of Wachovia Common Stock to
be received by First National shareholders will be the same as the
basis of First National Common Stock surrendered in exchange therefor.
(c) The holding period of the Wachovia Common Stock to be
received by each First National shareholder will include the period
during which the shares of First National Common Stock surrendered in
exchange therefor had been held, provided such shares were held by
such shareholders as a capital asset at the Effective Time of the
Merger.
(d) The payment of cash in lieu of fractional shares of
Wachovia Common Stock will be treated as if the fractional shares were
issued as part of the exchange and then redeemed by Wachovia. These
cash payments will be treated as having been received as distributions
in full payment in exchange for the fractional shares of Wachovia
Common Stock redeemed as provided in Section 302(a) of the Internal
Revenue Code. Generally, any gain or loss recognized from such
exchange will be capital gain or loss, provided (i) the First National
Common Stock constitutes a capital asset in the hands of such
shareholder, and (ii) the requirements of Section 302(b)(1) of the
Internal Revenue Code are met. Each affected
<PAGE> 3
The First National Bank of Henry County, Inc.
Wachovia Corporation
February 15, 1996
Page 3
First National shareholder should consult such shareholder's own tax
advisor for the tax effect of such redemption (i.e., exchange
treatment or dividend).
(e) First National shareholders who receive solely cash
pursuant to their statutory right to dissent will be treated as having
received such payment in redemption, as provided in Section 302(a) of
the Internal Revenue Code, of their stock. Generally, any gain or
loss recognized by any such First National shareholder will be capital
gain or loss, provided (i) the First National Common Stock constitutes
a capital asset in the hands of such shareholder, and (ii) the
requirements of 302(b)(1), (2) or (3) of the Internal Revenue Code are
met. Each affected First National shareholder should consult such
shareholder's own tax advisor for the tax effect of such redemption
(i.e., exchange treatment or dividend).
(f) No gain or loss will be recognized for federal income
tax purposes by First National or Wachovia as a consequence of the
Merger, except for deferred gain or loss recognized pursuant to
Treasury Regulations issued under Section 1502 of the Internal Revenue
Code.
This opinion is being rendered solely to the parties to whom it is
addressed and may be relied upon by them and the shareholders of First
National. This opinion may not be relied upon by any other party without the
express written permission of our Firm. We hereby consent to the reference to
our Firm in, and to the filing of this opinion as an exhibit to the S-4.
Very truly yours,
POWELL, GOLDSTEIN, FRAZER & MURPHY
<PAGE> 4
CERTIFICATE OF
THE FIRST NATIONAL BANKSHARES OF HENRY COUNTY, INC.
In connection with the merger of The First National Bankshares
of Henry County, Inc. ("First National") with and into Wachovia Corporation
("Wachovia"), with Wachovia as the surviving entity, and in accordance with the
Agreement and Plan of Merger by and between First National and Wachovia dated
as of November 22, 1995 (the "Agreement"), J. Randall Dixon and Joe S. Chafin,
the President and the Secretary, respectively, of First National, make the
following certifications. Unless otherwise indicated, terms used in this
certificate have the same meaning as in the Agreement.
1. The undersigned are the President and Secretary,
respectively, of First National, a corporation organized and existing under
the laws of the State of Georgia, and in such capacities have access to the
information contained herein.
2. The following facts and representations made on
behalf of the management of First National, presented to Powell, Goldstein,
Frazer & Murphy in connection with rendering the tax opinion referred to in the
Agreement, are on the date hereof true, correct, and complete.
3. The Merger is expected to permit First National to
(i) avoid business concerns associated with remaining as an independent
financial institution in light of current economic conditions and the
competition presented by larger financial institutions, (ii) develop a more
liquid trading market for the First National shareholders' investment, and
(iii) strengthen the franchise and thereby make a long-term contribution to
earnings per share.
4. The payment of cash in lieu of fractional shares of
Wachovia Common Stock is solely for the purpose of avoiding the expense and
inconvenience to Wachovia of issuing fractional shares and is not separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to the First National shareholders in lieu of issuing fractional
shares of Wachovia Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the First National
shareholders in exchange for their shares of First National Common Stock. The
fractional share interests of each First National shareholder will be
aggregated, and no First National shareholder will receive cash in an amount
equal to or greater than the value of one full share of Wachovia Common Stock.
5. The fair market value of the Wachovia Common Stock
and other consideration received by the shareholders of First National will be,
in each instance, approximately equal to the fair market value of the First
National Common Stock surrendered in exchange therefor.
6. To the best knowledge of the undersigned, there is no
present plan or intention by Wachovia to reacquire any of its Common Stock
issued in the Merger. There is no plan or intention by any shareholder of
First National who owns five (5) percent or more of First National Common
Stock, and to the best knowledge of the undersigned, there is no plan or
intention by any other shareholder of First National to sell, exchange, or
otherwise dispose of any of the shares of Wachovia Common Stock received by
them in the Merger, in an amount which will cause the historic shareholders of
First National to own a number of shares which, in the aggregate, is less than
50% of the Wachovia Common Stock received by them in the Merger. In addition,
there were no transfers of First National Common Stock by any of First
National's shareholders prior to the Effective Time of the Merger which were
made in contemplation of, or as part of a plan involving, the Merger, nor has
First National redeemed any stock or made any distribution with respect to any
of its stock in
<PAGE> 5
contemplation of, or as part of a plan involving, the Merger other than
pursuant to shareholder statutory dissenter's rights.
7. To the best knowledge of the undersigned, there is no
present plan or intention by Wachovia to sell or otherwise dispose of any of
the assets of First National acquired in the transaction except for
dispositions made in the ordinary course of business, or transfers to a
corporation controlled by Wachovia. For purposes of the foregoing, Wachovia is
considered to control a corporation in which it holds at least eighty percent
(80%) of the total combined voting power of all classes of stock entitled to
vote and at least eighty percent (80%) of the total number of all other classes
of stock.
8. First National has paid or will pay expenses it
incurred in connection with the Merger. First National did not and will not
pay the expenses of Wachovia or any shareholder of First National incurred in
connection with the Merger.
9. There is no indebtedness outstanding between Wachovia
and First National, which was issued, acquired, or will be settled at a
discount.
10. Not more than twenty-five percent (25%) of the fair
market value of First National's total assets consist of stock and securities
of any one issuer, and not more than fifty percent (50%) of the fair market
value of its total assets consists of stock and securities of five or fewer
issuers. For purposes of the preceding sentence, (a) a corporation's total
assets exclude cash, cash items (including accounts receivable and cash
equivalents), and United States government securities, (b) a corporation's
total assets exclude stock and securities issued by any subsidiary at least
fifty percent (50%) of the voting power or fifty percent (50%) of the total
fair market value of the stock of which is owned by the corporation, but the
corporation is treated as owning directly a ratable share (based on the
percentage of the fair market value of the subsidiary's stock owned by the
corporation) of the assets owned by any such subsidiary, and (c) all
corporations that are members of the same "controlled group" within the meaning
of section 1563(a) of the Code are treated as a single issuer.
11. The fair market value of the assets of First National
transferred to Wachovia equalled or exceeded the sum of the liabilities, if
any, assumed by Wachovia plus the liabilities, if any, to which the transferred
assets are subject.
12. None of the compensation received by any
shareholder-employees of First National was or will be separate consideration
for, or allocable to, any of their shares of First National Common Stock; none
of the shares of Wachovia Common Stock or cash, if any, received by any
shareholder-employees of First National is separate consideration for, or
allocable to, any employment agreement; and the compensation paid to any
shareholder-employees of First National is or will be for services actually
rendered and was or will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services.
13. The liabilities of First National, if any, assumed by
Wachovia and the liabilities, if any, to which the transferred assets of First
National are subject were incurred by First National in the ordinary course of
its business.
- 2 -
<PAGE> 6
14. The transfer of assets pursuant to the Merger
Agreement does not constitute a transfer in a "title 11 or similar case" as
such term is defined in Section 368(a)(3) of the Code.
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands as of this 15 day of February, 1996.
/s/ J. Randall Dixon
-------------------------------------------
/s/ Joe S. Chafin
-------------------------------------------
- 3 -
<PAGE> 7
CERTIFICATE OF
WACHOVIA CORPORATION
In connection with the merger of The First National Bankshares
of Henry County, Inc. ("First National") with and into Wachovia Corporation
("Wachovia"), with Wachovia as the surviving entity, and in accordance with the
Agreement and Plan of Merger by and between First National and Wachovia dated
as of November 22, 1995 (the "Agreement"), Robert S. McCoy, Jr. and John C.
McLean, Jr., the Executive Vice President and Chief Financial Officer and the
Comptroller, respectively, of Wachovia make the following certifications.
Unless otherwise indicated, terms used in this certificate have the same
meaning as in the Agreement.
1. The undersigned are the Executive Vice President and
Chief Financial Officer and Comptroller, respectively, of Wachovia, a
corporation organized and existing under the laws of the State of North
Carolina, and in such capacities have access to the information contained
herein.
2. The following facts and representations made on
behalf of the management of Wachovia presented to Powell, Goldstein, Frazer &
Murphy in connection with rendering the tax opinion referred to in the
Agreement, are on the date hereof true, correct, and complete.
3. The merger is expected to permit Wachovia to expand
its operations into the Henry County area currently served by First National to
strengthen the franchise and thereby make a long-term contribution to earnings
per share.
4. Following the Effective Time, it is Wachovia's plan
that it will either (i) continue the historic business of First National or
(ii) use, in a going concern, a significant portion of First National's
business assets.
5. Wachovia has paid or will pay expenses it incurred in
connection with the Merger. Wachovia did not and will not pay the expenses of
First National or any shareholder of First National incurred in connection with
the Merger.
6. There is no indebtedness outstanding between Wachovia
and First National which was issued, acquired, or will be settled at a
discount.
7. Not more than twenty-five percent (25%) of the fair
market value of Wachovia's total assets consist of stock and securities of any
one issuer, and not more than fifty percent (50%) of the fair market value of
its total assets consists of stock and securities of five or fewer issuers.
For purposes of the preceding sentence, (a) a corporation's total assets
exclude cash, cash items (including accounts receivable and cash equivalents),
and United States government securities, (b) a corporation's total assets
exclude stock and securities issued by any subsidiary at least fifty percent
(50%) of the voting power or fifty percent (50%) of the total fair market value
of the stock of which is owned by the corporation, but the corporation is
treated as owning directly a ratable share (based on the percentage of the fair
market value of the subsidiary's stock owned by the corporation) of the assets
owned by any such subsidiary, and (c) all corporations that are members of the
same "controlled group" within the meaning of section 1563(a) of the Code are
treated as a single issuer.
<PAGE> 8
8. The fair market value of the assets of First National
transferred to Wachovia equalled or exceeded the sum of the liabilities, if
any, assumed by Wachovia plus the liabilities, if any, to which the transferred
assets are subject.
9. To the best knowledge of the undersigned, the
liabilities of First National, if any, assumed by Wachovia and the liabilities,
if any, to which the transferred assets of First National are subject were
incurred by First National in the ordinary course of its business.
10. The transfer of assets pursuant to the Merger
Agreement does not constitute a transfer in a "title 11 or similar case" as
such term is defined in Section 368(a)(3) of the Code.
11. The payment of cash in lieu of fractional shares of
Wachovia Common Stock is solely for the purpose of avoiding the expense and
inconvenience to Wachovia of issuing fractional shares and is not separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to the First National shareholders in lieu of issuing fractional
shares of Wachovia Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the First National
shareholders in exchange for their shares of First National Common Stock. The
fractional share interests of each First National shareholder will be
aggregated, and no First National shareholder will receive cash in an amount
equal to or greater than the value of one full share of Wachovia Common Stock.
12. None of the shares of Wachovia Common Stock or cash,
if any, received by any shareholder- employees of First National is separate
consideration for, or allocable to, any employment agreement.
13. The fair market value of the Wachovia Common Stock
and other consideration received by the shareholders of First National will be,
in each instance, approximately equal to the fair market value of the First
National Common Stock surrendered in exchange therefor.
14. Wachovia has no present plan or intention to
reacquire any of its Common Stock issued in the Merger. To the best knowledge
of the undersigned, there is no plan or intention by any shareholder of First
National to sell, exchange, or otherwise dispose of any of the shares of
Wachovia Common Stock received by such shareholder in the Merger. To the best
knowledge of the undersigned, there have been no transfers of First National
Common Stock by any of First National's shareholders prior to the Effective
Time of the Merger which were made in contemplation of, or as part of a plan
involving, the Merger, nor, to the best knowledge of the undersigned, First
National has not redeemed any of its stock or made any distribution with
respect to any of its stock in contemplation of, or as part of a plan
involving, the Merger other than pursuant to shareholder statutory dissenters'
rights.
15. Wachovia has no plan or intention to sell or
otherwise dispose of the assets of First National acquired in the transaction
except for dispositions made in the ordinary course of business or transfers to
a corporation controlled by Wachovia. For purposes of the foregoing, Wachovia
is considered to control a corporation in which it holds at least eighty
percent (80%) of the total combined voting power of all classes of stock
entitled to vote and at least eighty percent (80%) of the total number of all
other classes of stock.
- 2 -
<PAGE> 9
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands as of this 15th day of February, 1996.
/s/ Robert S. McCoy, Jr.
-----------------------------------------
/s/ John C. McLean, Jr.
-----------------------------------------
- 3 -
<PAGE> 1
EXHIBIT 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4 filed on or about February 16, 1996) and
related Prospectus of Wachovia Corporation for the registration of 218,870
shares of its common stock and to the incorporation by reference therein of our
report dated January 12, 1995, with respect to the consolidated financial
statements of Wachovia Corporation incorporated by reference in its Annual
Report (Form 10-K) for the year ended December 31, 1994, filed with the
Securities and Exchange Commission
Ernst & Young LLP
Winston-Salem, North Carolina
February 15, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form
S-4 of our report, dated February 10, 1995, relating to the consolidated
financial statements of The First National Bankshares of Henry County, Inc. and
to the reference of our Firm under the caption "Experts" in the Prospectus.
Mauldin & Jenkins
Atlanta, Georgia
February 15, 1996
<PAGE> 1
EXHIBIT 23.5
CONSENT OF STEVENS & COMPANY
We hereby consent to the use of our name under the caption "The Merger
- -- Background of the Merger" in this Registration Statement on Form S-4 and the
related Prospectus of Wachovia Corporation.
Stevens & Company
LaGrange, Georgia
February 15, 1996
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
We, the undersigned directors of Wachovia Corporation, and each of us,
do hereby make, constitute and appoint Kenneth W. McAllister and Alice
Washington Grogan, and each of them (either of whom may act without the consent
or joinder of the other), our attorneys-in-fact and agents with full power of
substitution for us and in our name, place and stead, in any and all
capacities, to file a Registration Statement on Form S-4 or other applicable
form, relating to one or more offerings of the Corporation's common stock, with
the Securities and Exchange Commission, and to sign any and all amendments
(including post-effective amendments) to the Registration Statement, and to
file the same, with any exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact, and each of them individually, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact or
either of them, or their substitutes, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, we the undersigned have executed this Power of
Attorney this 27th day of October, 1995.
<TABLE>
<S> <C>
/s/ L.M. Baker, Jr. /s/ Rufus C. Barkley, Jr.
- --------------------------------------------------- -------------------------------------------------------------
L.M. Baker, Jr. Rufus C. Barkley, Jr.
/s/ Crandall C. Bowles /s/ John L. Clendenin
- --------------------------------------------------- -------------------------------------------------------------
Crandall C. Bowles John L. Clendenin
/s/ Lawrence M. Gressette, Jr. /s/ Thomas K. Hearn, Jr.
- --------------------------------------------------- -------------------------------------------------------------
Lawrence M. Gressette, Jr. Thomas K. Hearn, Jr.
/s/ W. Hayne Hipp /s/ Robert M. Holder, Jr.
- --------------------------------------------------- -------------------------------------------------------------
W. Hayne Hipp Robert M. Holder, Jr.
/s/ Donald R. Hughes /s/ F. Kenneth Iverson
- --------------------------------------------------- -------------------------------------------------------------
Donald R. Hughes F. Kenneth Iverson
/s/ James W. Johnston /s/ John G. Medlin, Jr.
- --------------------------------------------------- -------------------------------------------------------------
James W. Johnston John G. Medlin, Jr.
/s/ Wyndham Robertson /s/ Herman J. Russell
- --------------------------------------------------- -------------------------------------------------------------
Wyndham Robertson Herman J. Russell
/s/ Sherwood H. Smith, Jr. /s/ Charles McKenzie Taylor
- --------------------------------------------------- -------------------------------------------------------------
Sherwood H. Smith, Jr. Charles McKenzie Taylor
</TABLE>
<PAGE> 1
EXHIBIT 99.1
THE FIRST NATIONAL BANKSHARES OF HENRY COUNTY, INC.
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints William D. Coker, Roy H. Kuhn and W.
Norman Strawn, or any of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote, as
designated below, all the shares of Common Stock of The First National
Bankshares of Henry County, Inc. ("First National") held of record by the
undersigned on February 15, 1996 at the Special Meeting of Shareholders to be
held at 6:00 p.m. on Tuesday, March 26, 1996 at First National's main office,
located at 5490 North Henry Boulevard, Stockbridge, Georgia.
1. PROPOSAL: To approve the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of November 22, 1995, by and between First
National and Wachovia Corporation ("Wachovia"), pursuant to which,
among other matters, (a) First National will merge with and into
Wachovia (the "Merger") and (b) each share of First National Common
Stock will be converted into the right to receive 0.4024 shares of
Wachovia Common Stock, as described in the Proxy Statement/Prospectus
dated ____________, 1996.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in
full corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
DATED:
-----------------------------------
-----------------------------------
Signature
-----------------------------------
Signature if held jointly
