<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 1997.
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WACHOVIA CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NORTH CAROLINA 6060 56-1473727
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation) Industrial Identification No.)
Classification Code No.)
</TABLE>
<TABLE>
<S> <C>
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
</TABLE>
(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)
WITH COPIES TO:
<TABLE>
<S> <C> <C>
MARK J. MENTING ROBERT E. STROUD
SULLIVAN & CROMWELL MCGUIRE, WOODS, BATTLE & BOOTHE, L.L.P.
125 BROAD STREET AND COURT SQUARE BUILDING
NEW YORK, NEW YORK 10004 P.O. BOX 1288
(212) 558-4000 CHARLOTTESVILLE, VA 22902-1288
(804) 977-2500
</TABLE>
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. [ ]
CALCULATION OF REGISTRATION FEE
[CAPTION]
<TABLE>
<S> <C> <C> <C> <C>
TITLE OF EACH CLASS PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) OFFERING PRICE PER UNIT PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common stock....... 8,950,000 shares N/A N/A $171,851.00(2)
-$108,236.80(3)
$63,614.20(3)
</TABLE>
(1) The number of shares of Common Stock, par value $5.00 per share ("Wachovia
Common Stock"), of Wachovia Corporation to be registered pursuant to this
Registration Statement is based upon the number of shares of Common Stock,
par value $2.50 per share ("Jefferson Common Stock"), of Jefferson
Bankshares, Inc. ("Jefferson") presently outstanding or reserved for
issuance under various plans or otherwise expected to be issued upon the
consummation of the proposed transaction to which this Registration
Statement relates multiplied by the exchange ratio of 0.625 of a share of
Wachovia Common Stock for each share of Jefferson Common Stock.
(2) Pursuant to Rules 457(f) and 457(c) under the Securities Act of 1933, as
amended, the registration fee is based on the average of the high and low
sales prices of Jefferson Common Stock, as reported in the Nasdaq National
Market System on September 5, 1997 ($39.63), and computed based on the
estimated maximum number of such shares (14,310,000) that may be exchanged
for the Wachovia Common Stock being registered.
(3) A registration fee of $108,236.80 was previously paid in connection with the
filing by Jefferson of preliminary proxy solicitation materials, under
Section 14(g) and Rule 0-11(a)(2) of the Securities Exchange Act of 1934, as
amended, which fee, pursuant to Rule 457(b) under the Securities Act of
1933, as amended, has been credited against the registration fee payable
hereunder.
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>
September 11, 1997
Dear Shareholders:
You are cordially invited to attend a Special Meeting of Shareholders of
Jefferson Bankshares, Inc., which will be held on October 22, 1997 at 10:00 a.m.
in the Jefferson National Bank Operations Center at 321 East Main Street,
Charlottesville, Virginia.
At this Special Meeting, you will be asked to consider and vote upon a
proposal to approve an Agreement and Plan of Merger and a related Plan of Merger
(together the "Merger Agreement"), under which Jefferson would be merged into
Wachovia Corporation (the "Merger"). If the Merger is approved, each outstanding
share of Jefferson Common Stock will be converted into and exchanged for 0.625
of a share of Wachovia Common Stock.
The Board of Directors of Jefferson has unanimously approved the Merger
Agreement. The Board believes that the Merger is beneficial to all shareholders
and strongly encourages you to vote FOR the proposal. Jefferson's financial
adviser, Goldman, Sachs & Co., has issued its opinion to Jefferson's Board of
Directors that the exchange ratio is fair to Jefferson's shareholders.
Regardless of the number of shares you own, or whether you plan to attend
the Special Meeting, it is very important that your shares be represented and
voted at the meeting. The affirmative vote of more than two-thirds of the shares
of Jefferson's Common Stock is required for approval. Please read the enclosed
material carefully and complete, sign and return the enclosed proxy in the
envelope provided as soon as possible.
We have engaged Georgeson & Co. Inc. to assist us with the proxy
solicitation effort. You may receive a phone call from one of their
representatives reminding you to send in your proxy. In addition, if you have
questions, you may call Georgeson at 1-800-223-2064.
We look forward to seeing you at the Special Meeting.
Sincerely,
/s/ O. Kenton McCartney
O. KENTON MCCARTNEY
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
123 East Main Street, Post Office Box 711, Charlottesville, Virginia 22902-0711
(Bullet) (804) 972-1100
<PAGE>
JEFFERSON BANKSHARES, INC.
123 East Main Street
Post Office Box 711
Charlottesville, Virginia 22902
(804) 972-1100
NOTICE OF SPECIAL MEETING
TO BE HELD OCTOBER 22, 1997
TO THE SHAREHOLDERS OF JEFFERSON BANKSHARES, INC.:
Notice is hereby given that a special meeting of shareholders (the "Special
Meeting") of Jefferson Bankshares, Inc. ("Jefferson") will be held in the
Community Room in the Jefferson National Bank Operations Center, located at 321
East Main Street, Charlottesville, Virginia at 10:00 a.m., on October 22, 1997,
for the following purposes:
(1) To consider and vote upon an Agreement and Plan of Merger, dated as of
June 9, 1997, as amended, and a related Plan of Merger (together the
"Merger Agreement"), between Jefferson and Wachovia Corporation
("Wachovia"), pursuant to which Jefferson will merge with and into
Wachovia (the "Merger") and each share of Jefferson Common Stock
outstanding on the effective date of the Merger will be converted into
0.625 of a share 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.
(2) 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 August 15, 1997 are
entitled to receive notice of and to vote at the Special Meeting or any
adjournments or postponements thereof. Approval of the Merger Agreement requires
the affirmative vote of the holders of more than two-thirds of the shares of
Jefferson Common Stock entitled to vote at the Special Meeting.
THE BOARD OF DIRECTORS OF JEFFERSON UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT. ON BEHALF OF THE BOARD
OF DIRECTORS, I URGE YOU TO VOTE "FOR" THE PROPOSAL.
By Order of the Board of Directors,
/s/ William M. Watson, Jr.
WILLIAM M. WATSON, JR.
GENERAL COUNSEL AND SECRETARY
September 11, 1997
<PAGE>
<TABLE>
<S> <C>
PROXY STATEMENT OF PROSPECTUS OF
JEFFERSON BANKSHARES, INC. WACHOVIA CORPORATION
</TABLE>
<TABLE>
<S> <C>
COMMON STOCK
(PAR VALUE $5.00 PER
SHARE)
</TABLE>
This Proxy Statement/Prospectus is being furnished to holders of common
stock, $2.50 par value ("Jefferson Common Stock"), of Jefferson Bankshares,
Inc., a Virginia corporation ("Jefferson"), in connection with the solicitation
of proxies by the board of directors of Jefferson ("Jefferson Board") for use at
a Special Meeting of Shareholders to be held at 10:00 a.m., on October 22, 1997,
in the Community Room in the Jefferson National Bank Operations Center, located
at 321 East Main Street, Charlottesville, Virginia 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 June 9, 1997, as amended
as of September 2, 1997, and a related Plan of Merger (together the "Merger
Agreement"), by and between Jefferson and Wachovia Corporation, a North Carolina
corporation ("Wachovia"), which provides for, among other things, the merger of
Jefferson 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 Jefferson Common
Stock shall cease to be outstanding and each such share (excluding Treasury
Stock (as defined herein)) shall be converted into and exchanged for 0.625 of a
share (the "Exchange Ratio") of common stock, par value $5.00 per share of
Wachovia ("Wachovia Common Stock"), with cash in lieu of any fractional share
interest. The Merger Agreement also provides for the conversion upon
consummation of the Merger of all stock options outstanding under the Jefferson
1995 Long Term Incentive Stock Plan (the "Jefferson Stock Options") into options
to acquire shares of Wachovia Common Stock, appropriately adjusted to reflect
the Exchange Ratio and, in the case of certain Jefferson Stock Options, to
comply with applicable Federal tax laws. See "The Merger."
This Proxy Statement also constitutes a prospectus of Wachovia in respect
of the shares of Wachovia Common Stock to be issued to shareholders of Jefferson
in connection with the Merger. The Proxy Statement/Prospectus also constitutes a
prospectus of Wachovia in respect of any shares of Wachovia Common Stock that
are issuable upon exercise of the Jefferson Stock Options following consummation
of the Merger.
Based on the 13,964,689 shares of Jefferson Common Stock outstanding on the
Record Date (as hereinafter defined), the 267,100 shares of Jefferson Common
Stock issuable upon exercise of outstanding stock options, the 76,240 shares of
Jefferson Common Stock estimated to be issued under certain employee benefit
plans of Jefferson and the 0.625 Exchange Ratio, up to approximately 8,950,000
Wachovia Common Shares will be issuable upon consummation of the Merger.
Wachovia Common Stock is listed and traded on the New York Stock Exchange,
Inc. ("NYSE") Jefferson Common Stock is traded in the National Market System of
the Nasdaq Stock Market (the "Nasdaq Stock Market"). On June 9, 1997, the last
business day prior to public announcement of the execution of the Merger
Agreement, the last reported sale prices per share of Wachovia Common Stock on
the NYSE Composite Transactions Reporting System (the "NYSE Composite Tape") and
of Jefferson Common Stock on the Nasdaq Stock Market were $62 1/8 and $30,
respectively, and on September 10, 1997, the last practicable date prior to the
mailing of this Proxy Statement/Prospectus, the last reported sale prices per
share were $67 1/4 and $42, respectively.
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 September 11, 1997, and it
is being mailed or otherwise delivered to Jefferson shareholders on or about
such date.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
AVAILABLE INFORMATION...................................................................................... 1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................................................... 1
SUMMARY.................................................................................................... 3
Parties to the Merger.................................................................................... 3
Special Meeting; Record Date............................................................................. 4
The Merger............................................................................................... 4
Acquisitions............................................................................................. 7
Market for Common Stock and Related Shareholder Matters.................................................. 8
Comparison of Certain Unaudited per Share Data........................................................... 8
Selected Financial Data of Wachovia (Historical)......................................................... 10
Selected Financial Data of Jefferson (Historical)........................................................ 11
Wachovia and Central Fidelity Unaudited Pro Forma Combined Financial Data................................ 12
GENERAL INFORMATION........................................................................................ 13
Special Meeting.......................................................................................... 13
Record Date, Solicitation and Revocability of Proxies.................................................... 13
Vote Required............................................................................................ 14
Recommendation of Jefferson's Board of Directors......................................................... 14
THE MERGER................................................................................................. 14
General.................................................................................................. 14
Background of, and Reasons for, the Merger............................................................... 14
Opinion of Jefferson's Financial Adviser................................................................. 18
Reasons of Wachovia for the Merger....................................................................... 23
Effective Time........................................................................................... 24
Distribution of Wachovia Certificates.................................................................... 24
Fractional Shares........................................................................................ 24
Conversion of Holdings in Dividend Reinvestment and Stock Purchase Plans................................. 25
Stock Options............................................................................................ 25
Certain Federal Income Tax Consequences.................................................................. 25
Management and Operations After the Merger............................................................... 26
Post-Acquisition Compensation and Benefits............................................................... 26
Interests of Certain Persons in the Merger............................................................... 26
Conditions to Consummation............................................................................... 29
Regulatory Approvals..................................................................................... 30
Amendment, Waiver and Termination........................................................................ 31
Conduct of Business Pending the Merger................................................................... 31
Expenses and Fees........................................................................................ 33
Accounting Treatment..................................................................................... 33
Dissenters' Rights....................................................................................... 33
Stock Exchange Listing of Wachovia Common Stock.......................................................... 33
Resales of Wachovia Common Stock......................................................................... 33
Stock Option Agreement................................................................................... 33
ACQUISITIONS............................................................................................... 36
Merger with Central Fidelity Banks, Inc.................................................................. 36
Merger with 1st United Bancorp........................................................................... 37
Acquisitions Generally................................................................................... 38
WACHOVIA AND CENTRAL FIDELITY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION........................... 39
DESCRIPTION OF WACHOVIA CAPITAL STOCK...................................................................... 45
General.................................................................................................. 45
Preferred Stock.......................................................................................... 45
Common Stock............................................................................................. 45
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Changes in Control....................................................................................... 46
CERTAIN DIFFERENCES IN THE RIGHTS OF WACHOVIA SHAREHOLDERS AND JEFFERSON SHAREHOLDERS...................... 48
Amendment of Articles of Incorporation and Bylaws........................................................ 48
Special Meetings of Shareholders......................................................................... 49
Number of Directors, Classified Board of Directors....................................................... 49
Removal of Directors..................................................................................... 49
Advance Notice of Director Nominations................................................................... 49
Restrictions on Business Combinations.................................................................... 49
Control Share Acquisitions............................................................................... 50
Limitation on Director Liability......................................................................... 50
Indemnification.......................................................................................... 51
Dissenters' Rights....................................................................................... 51
Right to Receive Reports................................................................................. 51
Shareholder Inspection Rights; Shareholder Lists......................................................... 52
COMPARATIVE MARKET PRICES AND DIVIDENDS.................................................................... 52
Wachovia................................................................................................. 52
Jefferson................................................................................................ 53
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF JEFFERSON.................................................. 53
Principal Beneficial Owners.............................................................................. 53
Shares Beneficially Owned By Directors and Executive Officers............................................ 53
EXPERTS.................................................................................................... 55
VALIDITY OF WACHOVIA COMMON STOCK.......................................................................... 55
OTHER MATTERS.............................................................................................. 55
SHAREHOLDER PROPOSALS...................................................................................... 55
</TABLE>
<TABLE>
<S> <C>
APPENDICES:
APPENDIX A -- Agreement and Plan of Merger, dated as of June 9, 1997, Amendment No. 1, dated as of September
2, 1997 and the related Plan of Merger attached thereto, by and between Wachovia and Jefferson
APPENDIX B -- Stock Option Agreement, dated as of June 10, 1997, by and between Wachovia and Jefferson
Appendix C -- Opinion of Goldman, Sachs & Co.
</TABLE>
ii
<PAGE>
AVAILABLE INFORMATION
Wachovia and Jefferson 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
Jefferson 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. Certain of such reports, proxy statements and other
information are also available from the Commission over the Internet at
http://www.sec.gov. In addition, Wachovia Common Stock is traded on the NYSE.
Reports, proxy statements, and other information concerning Wachovia may be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
Jefferson Common Stock is traded in the NASDAQ Stock Market. Reports, proxy
statements and other information concerning Jefferson may be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
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.
This Proxy Statement/Prospectus contains statements describing the material
provisions of certain documents filed as exhibits to the Registration Statement.
Such descriptions are not necessarily complete, and all such statements
contained in this Proxy Statement/Prospectus are qualified in their 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
Jefferson and its subsidiaries has been supplied by Jefferson.
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 JEFFERSON. 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,
JEFFERSON, 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 with the Commission (File No.
1-9021) under Section 13(a) or 15(d) of the Exchange Act are hereby incorporated
by reference in this Proxy Statement/Prospectus: Wachovia's Annual Report on
Form 10-K as of and for the year ended December 31, 1996 (the "1996 Wachovia
10-K"); the portions of Wachovia's Proxy Statement for the Annual Meeting of
shareholders held on April 25, 1997 (the "1997 Wachovia Proxy Statement") that
have been incorporated by reference in the 1996 Wachovia 10-K; Wachovia's
Quarterly Reports on Form 10-Q for the three months ended March 31, 1997 and the
six months ended June 30, 1997; the description of Wachovia Common Stock set
forth in Wachovia's Registration Statement
1
<PAGE>
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 Wachovia's
Current Reports on Form 8-K, dated June 9, June 23, August 6 and September 8,
1997.
The following documents filed by Jefferson with the Commission (File No.
0-9101) under Section 13(a) or 15(d) of the Exchange Act are hereby incorporated
by reference in this Proxy Statement/Prospectus: Jefferson's Annual Report on
Form 10-K for the year ended December 31, 1996 (the "1996 Jefferson 10-K"); the
portions of Jefferson's Proxy Statement for the Annual Meeting of shareholders,
held on April 22, 1997, that have been incorporated by reference in the 1996
Jefferson 10-K; Jefferson's Quarterly Reports on Form 10-Q for the three months
ended March 31, 1997 and the six months ended June 30, 1997; the description of
Jefferson Common Stock set forth in Jefferson's Registration Statement on Form
8-A filed pursuant to Section 12 of the Exchange Act, and any amendment or
report filed for the purpose of updating any such description; and Jefferson's
Current Report on Form 8-K, dated June 19, 1997.
All documents filed by Wachovia and Jefferson pursuant to Section 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 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 JEFFERSON BANKSHARES, INC., 123 EAST MAIN STREET,
POST OFFICE BOX 711, CHARLOTTESVILLE, VIRGINIA 22902, ATTENTION: SECRETARY,
(804) 972-1100, AS TO JEFFERSON DOCUMENTS. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY OCTOBER 15, 1997.
THIS PROXY STATEMENT/PROSPECTUS CONTAINS OR INCORPORATES BY REFERENCE
CERTAIN FORWARD LOOKING STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION,
RESULTS OF OPERATIONS AND BUSINESS OF WACHOVIA AND, ASSUMING THE CONSUMMATION OF
THE MERGER, THE CENTRAL FIDELITY MERGER (AS DEFINED HEREIN) AND THE 1ST UNITED
MERGER (AS DEFINED HEREIN), A COMBINED WACHOVIA/JEFFERSON COMPANY, INCLUDING
STATEMENTS RELATING TO: (A) THE COST SAVINGS AND ACCRETION TO CASH EARNINGS AND
REPORTED EARNINGS THAT WILL BE REALIZED FROM THE MERGERS; (B) THE IMPACT ON
REVENUES OF THE MERGERS, INCLUDING THE POTENTIAL FOR ENHANCED REVENUES AND THE
IMPACT ON REVENUES OF CONSOLIDATION OF RETAIL BRANCHES AND OTHER OPERATIONS AS
PLANNED; AND (C) THE RESTRUCTURING CHARGES EXPECTED TO BE INCURRED IN CONNECTION
WITH THE MERGERS. THESE FORWARD LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND
UNCERTAINTIES. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE
FOLLOWING POSSIBILITIES: (1) EXPECTED COSTS SAVINGS FROM THE MERGERS CANNOT BE
FULLY REALIZED OR REALIZED WITHIN THE EXPECTED TIME FRAME; (2) COSTS OR
DIFFICULTIES RELATED TO THE INTEGRATION OF THE BUSINESSES OF WACHOVIA AND
JEFFERSON, CENTRAL FIDELITY OR 1ST UNITED ARE GREATER THAN EXPECTED; (3)
REVENUES FOLLOWING THE MERGERS ARE LOWER THAN EXPECTED; (4) COMPETITIVE PRESSURE
AMONG DEPOSITORY INSTITUTIONS INCREASES SIGNIFICANTLY; (5) CHANGES IN THE
INTEREST RATE ENVIRONMENT REDUCE INTEREST MARGINS; (6) GENERAL ECONOMIC
CONDITIONS, EITHER NATIONALLY OR IN THE STATES IN WHICH THE COMBINED COMPANY
WILL BE DOING BUSINESS, ARE LESS FAVORABLE THAN EXPECTED; OR (7) LEGISLATION OR
REGULATORY CHANGES ADVERSELY AFFECT THE BUSINESSES IN WHICH THE COMBINED COMPANY
WOULD BE ENGAGED.
2
<PAGE>
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. A COPY OF THE STOCK OPTION
AGREEMENT (AS DEFINED HEREIN) IS INCLUDED AS APPENDIX B TO THIS PROXY
STATEMENT/PROSPECTUS AND REFERENCE IS MADE THERETO FOR A COMPLETE DESCRIPTION OF
THE TERMS OF THE OPTION (AS DEFINED HEREIN). 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 "JEFFERSON"
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 has one
principal banking subsidiary, Wachovia Bank, National Association, ("Wachovia
Bank") the assets of which constitute substantially all of the assets of
Wachovia. Wachovia has 451 banking offices and 883 ATMs, predominantly in North
Carolina, South Carolina and Georgia. The First National Bank of Atlanta and
Wachovia Bank Card Services, Inc., in Wilmington, Delaware, provide credit card
services for Wachovia Bank. Wachovia also has bank-related subsidiaries engaged
in large corporate and institutional relationship management and business
development, corporate leasing, remittance processing and discount brokerage
services. Wachovia's subsidiaries have offices in Chicago, New York City,
London, Hong Kong, Tokyo and the Cayman Islands. Based on its consolidated asset
size and market capitalization at June 30, 1997, Wachovia was ranked 20th and
22nd, respectively, among domestic U.S. bank holding companies. At that date,
Wachovia had consolidated assets, deposits and shareholders' equity of $48.5
billion, $28.9 billion and $3.7 billion, 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).
Certain financial and other information relating to Wachovia and its business,
including information relating to Wachovia's directors and executive officers,
is set forth under "Summary -- Selected Financial Data of Wachovia (Historical)"
and in the 1996 Wachovia 10-K (including the portions of the 1997 Wachovia Proxy
Statement incorporated by reference in Part III thereof), Wachovia's 1997 First
and Second Quarter Reports on Form 10-Q and 1997 Current Reports on Form 8-K,
each of which documents is incorporated by reference herein. See "Available
Information" and "Incorporation of Certain Information by Reference."
JEFFERSON. Jefferson is a bank holding company registered under the BHC
Act. Jefferson was incorporated under the laws of Virginia on March 22, 1979,
and became an active bank holding company on December 31, 1979, through the
consolidation of NB Corporation and Southern Bankshares. Jefferson has one
subsidiary bank, Jefferson National Bank, Charlottesville, Virginia, and four
nonbank subsidiaries. Jefferson National Bank provides retail and commercial
banking and trust services and, as of June 30, 1997, had 96 banking offices and
60 ATM's located in Virginia from the City of Virginia Beach in the east to
Augusta County in the west and Frederick County in the north. At that date,
Jefferson had consolidated assets, deposits and shareholders' equity of $2.2
billion, $1.9 billion and $212 million, respectively.
Jefferson's principal executive offices are located at 123 East Main
Street, Post Office Box 711, Charlottesville, Virginia 22902 (telephone: (804)
972-1100). Certain financial and other information relating to Jefferson and its
business is set forth under "Summary -- Selected Financial Data of Jefferson
(Historical)" and in the 1996 Jefferson 10-K, Jefferson's 1997 First and Second
Quarter Reports on Form 10-Q and 1997 Current Reports on Form 8-K, each of which
documents is incorporated by reference herein. See "Available Information" and
"Incorporation of Certain Information by Reference."
3
<PAGE>
SPECIAL MEETING; RECORD DATE
The Special Meeting will be held at 10:00 a.m. on October 22, 1997, in the
Community Room in the Jefferson National Bank Operations Center at 321 East Main
Street, Charlottesville, Virginia. At the Special Meeting, Jefferson's
shareholders will consider and vote upon approval of the Merger Agreement and
the consummation of the transactions contemplated therein. The Jefferson Board
has fixed the close of business on August 15, 1997, as the record date for
determining the Jefferson shareholders entitled to receive notice of and to vote
at the Special Meeting (the "Record Date"). As of the Record Date, there were
13,964,689 shares of Jefferson 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 Jefferson 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 by the Jefferson shareholders 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."
EXCHANGE RATIO. At the time of the Merger, each outstanding share of
Jefferson Common Stock will cease to be outstanding and each such share
(excluding shares held by Jefferson, Wachovia or their subsidiaries other than
in a fiduciary capacity or as a result of debts previously contracted in good
faith ("Treasury Stock")) will be converted into and exchanged for 0.625 of a
share of Wachovia Common Stock. 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 Jefferson shareholder would be entitled
upon consummation of the Merger, based on the average of the last sale prices of
the Wachovia Common Stock as reported by the NYSE Composite Transactions
Reporting System (as reported in The Wall Street Journal or, if not reported
therein, any other authoritative source) for the five trading days immediately
preceding the Effective Date (as defined herein).
VOTE REQUIRED. Approval of the Merger Agreement and consummation of the
transactions contemplated therein require the affirmative vote of the holders of
more than two-thirds of the outstanding shares of the Jefferson Common Stock
entitled to vote at the Special Meeting. As of the Record Date, the directors
and executive officers of Jefferson and their affiliates held 770,748 shares (or
approximately 5.5% of the outstanding shares) of Jefferson Common Stock. As of
the Record Date, no shares of Jefferson Common Stock were owned by the directors
and executive officers of Wachovia and their affiliates. As of the Record Date,
Jefferson held 653,227 shares of Jefferson Common Stock in a fiduciary capacity
for others and Wachovia held 55,348 shares of Jefferson Stock in a fiduciary
capacity for others. See "General Information -- Vote Required."
It is not expected that the Merger Agreement and the consummation of the
transactions contemplated therein will require the approval of the holders of
Wachovia Common Stock under either the North Carolina Business Corporation Act
or the rules of the NYSE. See "General Information -- Vote Required."
RECOMMENDATION OF THE JEFFERSON BOARD OF DIRECTORS. The Jefferson Board
believes that the Merger is in the best interests of Jefferson and its
shareholders and has unanimously approved the Merger Agreement and approved the
consummation of the transactions contemplated therein. In deciding to adopt the
Merger Agreement and approve the transactions contemplated therein, the
Jefferson Board considered a number of factors, including the financial
condition, results of operations, and future prospects of Jefferson and
Wachovia. See "The Merger -- Background of, and Reasons for, the Merger," and
" -- Interests of Certain Persons in the Merger."
THE JEFFERSON BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL OF
THE MERGER AGREEMENT.
OPINION OF FINANCIAL ADVISER. Goldman, Sachs & Co. ("Goldman Sachs") have
served as financial advisers to Jefferson in connection with the Merger and have
rendered an opinion to the Jefferson Board that the Exchange Ratio of 0.625 of a
share of Wachovia Common Stock for each share of Jefferson Common Stock is fair
to Jefferson shareholders. For additional information concerning Goldman Sachs
and its opinion, see "The Merger -- Opinion of Financial Adviser" and the
opinion of Goldman Sachs attached as Appendix C to this Proxy
Statement/Prospectus.
4
<PAGE>
EFFECTIVE TIME. If the Merger is approved by the requisite vote of the
Jefferson 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 (the
"Effective Date") and at the time (the "Effective Time") that articles of merger
reflecting the Merger are filed with the office of the Virginia State
Corporation Commission and the Secretary of State of North Carolina and a
certificate of merger is issued by the Virginia State Corporation Commission.
Unless otherwise agreed by Jefferson and Wachovia, and subject to the conditions
to the obligations of the parties to effect the Merger, the parties have agreed
to cause the Effective Date to occur on (i) the fifth business day to occur
after the last of the conditions to the consummation of the Merger have been
satisfied or waived (or, at the election of Wachovia, on the last business day
of the month in which such date occurs). Wachovia and Jefferson each has the
right, acting unilaterally, to terminate the Merger Agreement should the Merger
not be consummated by June 30, 1998. See "The Merger -- Effective Time" and
" -- Amendment, Waiver and Termination."
DELIVERY OF WACHOVIA CERTIFICATES. Promptly after the Effective Time,
Wachovia will send or will cause to be sent transmittal materials to each record
holder of shares of Jefferson Common Stock outstanding at the Effective Time for
use in exchanging those certificates for shares of Wachovia Common Stock. See
"The Merger -- Distribution of Wachovia Certificates."
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 Jefferson shareholders as a
result of the Merger except with respect to any cash received in lieu of
fractional share interests. A condition to consummation of the Merger is the
receipt by each of Wachovia and Jefferson of an opinion from their respective
legal counsel as to the qualification of the Merger as a tax-free reorganization
and certain other federal income tax consequences of the Merger.
ALL STOCKHOLDERS SHOULD CAREFULLY READ THE DISCUSSION OF THE MATERIAL
FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED MERGER UNDER "THE
MERGER -- CERTAIN FEDERAL INCOME TAX CONSEQUENCES" AND ARE URGED TO CONSULT WITH
THEIR OWN TAX ADVISERS AS TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES IN THEIR PARTICULAR CIRCUMSTANCES.
MANAGEMENT AFTER THE MERGER. Wachovia will be the surviving corporation
resulting from the Merger. Wachovia has agreed to cause one member of the
Jefferson Board to be elected or appointed as a director of Wachovia. See "The
Merger -- Management and Operations After the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER. Members of the Jefferson Board
and certain members of Jefferson's management have interests in the Merger in
addition to their interests as shareholders of Jefferson generally. Those
interests relate to, among other things, provisions in the Merger Agreement
regarding indemnification, the treatment of outstanding options and other
incentive awards with respect to Jefferson Common Stock and employment
agreements with Wachovia.
Wachovia has generally agreed to indemnify, for a period of six years after
the Effective Time, the present officers and directors of Jefferson and its
subsidiaries against certain liabilities arising prior to the effective time of
the Merger. Wachovia has also agreed to provide directors' and officers'
liability insurance for the present and former officers and directors of
Jefferson for a period of three years following the Effective Time.
The Merger Agreement provides that all options to acquire Jefferson Common
Stock outstanding at the Effective Time under Jefferson's stock option plan,
including those held by management, will be converted into options to acquire
shares of Wachovia Common Stock. In addition, Jefferson has agreements with
certain of its executive officers that provide for severance payments and
certain other benefits if the officer's employment terminates under certain
circumstances after a "change in control" of Jefferson.
Wachovia has entered into an employment agreement with O. Kenton McCartney
pursuant to which Mr. McCartney will receive an annual base salary equal to
$310,000. Mr. McCartney will also receive restricted shares of Wachovia Common
Stock and options to purchase additional shares, all of which will vest over a
period of five years. Mr. McCartney has also entered into a retirement agreement
with Wachovia pursuant to which he will receive monthly retirement benefits the
present value of which, based on certain assumptions, is estimated at
$1,264,000. Five year employment agreements will also be offered to five other
executives of Jefferson who will
5
<PAGE>
be selected after the Merger. See "Certain Differences in the Rights of Wachovia
Shareholders and Jefferson Shareholders -- Indemnification,"
" -- Post-Acquisition Compensation and Benefits," " -- Stock Options" and
" -- Interests of Certain Persons in the Merger."
CONDITIONS TO CONSUMMATION. Consummation of the Merger is subject to
various conditions, including, among other matters: (i) approval of the Merger
Agreement by the Jefferson shareholders; (ii) receipt of all governmental and
other consents and approvals necessary to permit consummation of the Merger; and
(iii) satisfaction of certain other usual conditions, including the receipt of
the tax opinions discussed above. Under the terms of the Merger Agreement, the
conditions to the Merger, including receipt of the tax opinions, may generally
be waived by Wachovia or Jefferson, as applicable. As of the date of this Proxy
Statement/Prospectus, neither Wachovia nor Jefferson intends to waive the
conditions as to the receipt of opinions of counsel on taxation matters. In the
event of a failure to obtain tax opinions, and a party's determination to waive
such condition to the consummation of the Merger, Jefferson will resolicit the
votes of its shareholders to approve the Merger without such condition and
update the information contained herein with respect to the tax consequences of
the Merger as necessary. See "The Merger -- Conditions to Consummation" and " --
Amendment, Waiver and Termination."
REGULATORY APPROVALS. Wachovia received approval for the Merger from the
Board of Governors of the Federal Reserve System on August 26, 1997. The Merger
is also subject to the prior approval of the State Corporation Commission of
Virginia (the "Virginia Commission"), and an application for approval of the
Merger has been filed therewith. There can be no assurance that the approval of
the Virginia Commission 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 Jefferson 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, 1998, unless the failure to consummate by such
time is due to knowing action or inaction of the party seeking to terminate. If
for any reason the Merger is not consummated, Jefferson expects to 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."
DISSENTERS' RIGHTS. Under the Virginia Stock Corporation Act, holders of
Jefferson Common Stock have no dissenters' rights in connection with the
Proposed Merger. See "The Merger -- Dissenters' Rights."
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 to be "affiliates" (generally
including directors, certain executive officers, and 10% or more shareholders)
of Jefferson or Wachovia under applicable federal securities laws. See "The
Merger Resales of Wachovia Common Stock."
STOCK OPTION AGREEMENT. As an inducement to the willingness of Wachovia to
continue to pursue the transactions contemplated by the Merger Agreement,
Jefferson, as issuer, entered into a stock option agreement with Wachovia, as
grantee, dated as of June 10, 1997 (the "Stock Option Agreement"). The Stock
Option Agreement is attached hereto as Appendix B and is incorporated herein by
reference.
Pursuant to the Stock Option Agreement, Jefferson granted to Wachovia an
irrevocable option (the "Option") pursuant to which Wachovia has the right, upon
the occurrence of certain events (none of which has occurred to the best of
Wachovia's and Jefferson's knowledge), to purchase up to 2,770,000 shares of
Jefferson Common Stock, subject to adjustment in certain cases as described
below but in no event exceeding 19.9% of the number of shares of Jefferson
Common Stock outstanding immediately before exercise of the Option, subject to
termination during certain periods, for a purchase price of $29.6875 per share,
subject to adjustment in certain circumstances.
Under certain circumstances, Wachovia could also elect to sell the Option,
and any shares previously purchased thereunder, back to Jefferson at a price
generally reflecting the price offered or paid by a third-party acquirer for
other shares of Jefferson. Alternatively, under certain circumstances, Wachovia
could surrender the Option for a cash payment from Jefferson of $15 million. The
maximum profit realizable by Wachovia by exercise or transfer of the Option or
surrender of the Option for cash is $25 million.
6
<PAGE>
In the event that Jefferson shareholders fail to approve the Merger
Agreement, either Jefferson or Wachovia may terminate the Merger Agreement in
accordance with its terms. The Stock Option Agreement will automatically
terminate within 15 months after such termination. Wachovia will be entitled to
exercise its rights under the Stock Option Agreement if both an Initial
Triggering Event (as defined herein) and a Subsequent Triggering Event (as
defined herein) occur within such 15 month period. The purchase of any shares of
Jefferson Common Stock pursuant to the Option is subject to compliance with
applicable law, including the receipt of necessary approvals under the BHC Act.
Arrangements such as the Stock Option Agreement are entered into in
connection with corporate mergers and acquisitions in an effort to increase the
likelihood that the transactions will be consummated in accordance with their
terms and to compensate the grantee for the efforts undertaken and the expenses,
losses and opportunity costs incurred by it in connection with the transactions
if they are not consummated under certain circumstances involving an acquisition
or potential acquisition of the issuer by a third party. The Stock Option
Agreement was entered into to accomplish these objectives. The Stock Option
Agreement may have the effect of discouraging offers by third parties to acquire
Jefferson prior to the Merger, even if in the case of Jefferson, such persons
might have been prepared to offer to pay consideration to Jefferson's
shareholders that has a higher current market price than the shares of Wachovia
Common Stock to be received by such holders pursuant to the Merger Agreement.
See "The Merger -- Background of the Merger", " -- Stock Option Agreement" and
Appendix B to this Proxy Statement/Prospectus.
ACQUISITIONS
MERGER WITH CENTRAL FIDELITY BANKS, INC. On June 23, 1997, Wachovia entered
into a merger agreement (the "Central Fidelity Merger") with Central Fidelity
Banks, Inc. ("Central Fidelity"), the parent of Central Fidelity National Bank
in Richmond, Virginia. The boards of directors of both companies have approved
the Central Fidelity Merger. The Central Fidelity Merger is subject to the
approval of shareholders and appropriate regulatory agencies and is expected to
close in the fourth quarter of 1997.
Central Fidelity is a bank holding company registered under the provisions
of the BHC Act. Central Fidelity, the third largest banking company
headquartered in Virginia, serves Virginia markets primarily through its
wholly-owned banking subsidiary, Central Fidelity National Bank, a national
banking association. Central Fidelity National Bank operates 248 branch offices,
including 27 full-service supermarket locations, and 228 automated teller
machines throughout Virginia. At June 30, 1997, Central Fidelity had total
assets of approximately $10.7 billion, deposits of approximately $8.1 billion
and shareholders' equity of approximately $804 million. Net income for the first
six months ended June 30, 1997 was $61.6 million. Central Fidelity, through
Central Fidelity National Bank and its other subsidiaries, provides a wide
variety of financial services to a broad customer base of individuals,
corporations, institutions and governments primarily located in Virginia.
The Central Fidelity Merger is expected to be accounted for as a pooling of
interests and provides for a tax-free exchange of 0.63 of a share of Wachovia
Common Stock for each common share of Central Fidelity. In connection with the
merger agreement, Central Fidelity has granted Wachovia a stock option
representing approximately 19.9% of Central Fidelity's outstanding shares.
Wachovia will add three current members of the Central Fidelity board of
directors to the Wachovia board of directors. See " -- Comparison of Certain
Unaudited per Share Data," "Acquisitions -- Merger with Central Fidelity Banks,
Inc." and "Wachovia and Central Pro Forma Unaudited Combined Financial
Information."
MERGER WITH 1ST UNITED BANCORP. On August 6, 1997 Wachovia entered into an
agreement for a merger (the "1st United Merger") with 1st United Bancorp ("1st
United"), the parent of 1st United Bank, headquartered in Boca Raton, Florida.
The boards of directors of both companies have approved the agreement. The 1st
United Merger is subject to the approval of 1st United's shareholders and
appropriate regulatory agencies and is expected to close in the fourth quarter
of 1997.
1st United, headquartered in Boca Raton, Florida operates 33 full service
banking centers in the Florida counties of Palm Beach, Martin, Broward and
Brevard. It is the largest commercial bank headquartered in Palm Beach County
and specializes in serving individuals and small businesses within its trade
area. At July 1, 1997, the effective date of 1st United's merger with Seaboard
Savings Bank, 1st United had total assets of approximately $821 million,
deposits of approximately $739 million and shareholders' equity of approximately
$69 million.
7
<PAGE>
The 1st United Merger is expected to be accounted for as a purchase and
provides for a tax-free exchange of a minimum of 0.3 and a maximum of 0.366 of a
share of Wachovia Common Stock for each common share of 1st United. In
connection with the 1st United Merger, 1st United has granted Wachovia a stock
option representing approximately 19.9% of 1st United's outstanding shares. As
of August 31, 1997, 1st United had 10,156,327 common shares outstanding and
314,028 issuable upon exercise of outstanding stock options (excluding the stock
option granted to Wachovia). See "Acquisitions -- Merger with 1st United
Bancorp."
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Wachovia Common Stock is listed on the NYSE. Jefferson Common Stock is
traded on the NASDAQ Stock Market. The following table sets forth the last sale
price of Wachovia Common Stock, the last sale price of Jefferson Common Stock,
and the equivalent price per share (as explained below) of Jefferson Common
Stock at the close of business on June 9, 1997, the last trading day immediately
preceding public announcement of the Merger, and September 10, 1997, the last
practicable date prior to the mailing of this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
MARKET PRICE PER SHARE
WACHOVIA JEFFERSON EQUIVALENT PER
COMMON STOCK COMMON STOCK SHARE PRICE(1)
<S> <C> <C> <C>
June 9, 1997.................. $ 62 1/8 $ 30 $ 38.83
September 10, 1997............ $ 67 1/4 $ 42 $ 42.03
</TABLE>
(1) The equivalent per share price of Jefferson 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 0.625.
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."
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following summary presents selected comparative unaudited per share
data for Wachovia and Jefferson (i) on a historical basis, (ii) on a pro forma
combined basis assuming the Merger had been effective during the periods
presented and (iii) on a pro forma combined basis assuming the Central Fidelity
Merger and 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 Central Fidelity Merger is reflected under the
pooling of interests method of accounting. The information shown below should be
read in conjunction with the historical financial data and statements of
Wachovia and Jefferson included or incorporated by reference herein, including
the respective notes thereto. See "Available Information," "Incorporation of
Certain Information by Reference," " -- Selected Financial Data of Wachovia
(Historical)," " -- Selected Financial Data of Jefferson (Historical)" and "The
Merger -- Accounting Treatment".
The per share data set forth herein are presented for comparative purposes
only and are not necessarily indicative of the future combined financial
position, the results of the future operations or the actual results or combined
financial position of Wachovia that would have been achieved had the Merger and
the Central Fidelity Merger been consummated as of the dates or for the periods
indicated. While no assurance can be given, Wachovia expects that it will
achieve substantial benefits from both the Merger and the Central Fidelity
Merger including operating cost savings and revenue enhancements. See
"Acquisitions -- Merger with Central Fidelity Banks, Inc," and "Wachovia and
Central Fidelity Unaudited Pro Forma Combined Financial Information." However,
the pro forma comparative unaudited per share data do not reflect any direct
costs, potential savings or revenue enhancements which are expected to result
from the consolidation of operations of Jefferson, Central Fidelity and
Wachovia, and therefore, do not purport to be indicative of the results of
future operations of Wachovia.
8
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED
JUNE 30, DECEMBER 31,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
WACHOVIA CORPORATION
NET INCOME PER PRIMARY COMMON SHARE
Historical................................................................ $ 2.00 $ 3.81 $3.50 $3.13
Jefferson pro forma combined (1).......................................... $ 1.92 $ 3.65 N/A N/A
Central Fidelity and Jefferson pro forma combined (2), (3)................ $ 1.88 $ 3.54 $3.38 $2.98
NET INCOME PER FULLY DILUTED COMMON SHARE
Historical................................................................ $ 2.00 $ 3.80 $3.49 $3.12
Jefferson pro forma combined (1).......................................... $ 1.92 $ 3.63 N/A N/A
Central Fidelity and Jefferson pro forma combined (2), (3)................ $ 1.87 $ 3.51 $3.35 $2.96
DIVIDENDS DECLARED PER COMMON SHARE (4)
Historical................................................................ $ .80 $ 1.52 $1.38 $1.23
Jefferson pro forma combined.............................................. $ .80 $ 1.52 N/A N/A
Central Fidelity and Jefferson pro forma combined......................... $ .80 $ 1.52 $1.38 $1.23
BOOK VALUE PER COMMON SHARE
Historical................................................................ $ 23.07 $22.96 N/A N/A
Jefferson pro forma combined (1).......................................... $ 25.12 $24.97 N/A N/A
Central Fidelity and Jefferson pro forma combined (2), (3)................ $ 24.11 $24.56 N/A N/A
JEFFERSON COMMON STOCK
NET INCOME PER PRIMARY COMMON SHARE
Historical................................................................ $ 1.08 $ 1.86 $1.64 $1.49
Equivalent Jefferson pro forma combined (1), (5).......................... $ 1.20 $ 2.28 N/A N/A
Equivalent Central Fidelity and Jefferson pro forma combined (6).......... $ 1.18 $ 2.21 $2.11 $1.86
NET INCOME PER FULLY DILUTED COMMON SHARE
Historical................................................................ $ 1.08 $ 1.86 $1.64 $1.49
Equivalent Jefferson pro forma combined (1), (5).......................... $ 1.20 $ 2.27 N/A N/A
Equivalent Central Fidelity and Jefferson pro forma combined (6).......... $ 1.17 $ 2.19 $2.09 $1.85
DIVIDENDS PER COMMON SHARE
Historical................................................................ $ .50 $ .88 $ .76 $ .68
Equivalent Jefferson pro forma combined (1), (5).......................... $ .50 $ .95 N/A N/A
Equivalent Central Fidelity and Jefferson pro forma combined (6).......... $ .50 $ .95 $ .86 $ .77
BOOK VALUE PER COMMON SHARE
Historical................................................................ $ 15.20 $14.66 N/A N/A
Equivalent Jefferson pro forma combined (1), (5).......................... $ 15.70 $15.61 N/A N/A
Equivalent Central Fidelity and Jefferson pro forma combined (6).......... $ 15.07 $15.35 N/A N/A
</TABLE>
(1) Wachovia's merger with Jefferson will be accounted for as a purchase;
accordingly, pro forma per share data for years before December 31, 1996 are
not applicable.
(2) Central Fidelity and Jefferson pro forma combined amounts include Central
Fidelity for all periods and Jefferson, as described in (1), for the year
ended December 31, 1996 and the six months ended June 30, 1997.
(3) The effect of estimated merger and restructuring costs expected to be
incurred in connection with the Central Fidelity Merger has been reflected
in the June 30, 1997 Central Fidelity and Jefferson Unaudited Pro Forma
Combined Statement of Condition; however, since the estimated costs are
non-recurring, they have not been reflected in the Central Fidelity and
Jefferson Unaudited Pro Forma Combined Statements of Income.
(4) Pro forma dividends per share represent historical dividends paid by
Wachovia.
(5) Equivalent Jefferson pro forma combined amounts are computed by multiplying
the Jefferson pro forma combined amounts by the exchange ratio of 0.625.
(6) Equivalent Central Fidelity and Jefferson pro forma combined amounts are
computed by multiplying the Central Fidelity and Jefferson pro forma
combined amounts by the exchange ratio of 0.625. As described in (1),
amounts for the years ended December 31, 1995 and 1994 exclude Jefferson.
9
<PAGE>
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, including the respective notes thereto, and
unaudited interim financial information, in each case incorporated herein by
reference. The interim financial information has been derived from unaudited
financial statements of Wachovia, which, in the opinion of management, include
all adjustments, consisting only of normal recurring adjustments, necessary for
fair statement of the results for the unaudited interim periods. Results for the
interim periods are not necessarily indicative of results which may be expected
for any other interim or annual period. See "Incorporation of Certain
Information by Reference."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
SUMMARY OF OPERATIONS
Interest Income.................. $ 1,675,025 $ 1,575,966 $ 3,227,314 $ 3,019,730 $ 2,362,294 $ 2,122,837 $ 2,222,078
Interest Expense................. 856,314 824,800 1,672,602 1,579,107 1,038,388 839,012 967,028
Other Income..................... 435,231 383,179 787,650 735,632 607,752 627,603 556,225
Other Expense.................... 678,830 618,332 1,257,549 1,203,596 1,098,413 1,131,236 1,095,652
Net Income....................... 328,705 309,233 644,557 602,543 539,058 492,095 433,225
PER SHARE AMOUNTS
Net Income, Primary.............. $2.00 $1.81 $3.81 $3.50 $3.13 $2.83 $2.51
Net Income, Fully Diluted........ 2.00 1.81 3.80 3.49 3.12 2.81 2.48
Weighted Average Shares
Outstanding, Primary........... 164,145,000 170,664,000 169,094,000 172,089,000 172,339,000 173,941,000 172,641,000
Weighted Average Shares
Outstanding, Fully Diluted..... 164,158,000 170,808,000 169,827,000 172,957,000 172,951,000 175,198,000 175,512,000
Dividends........................ $.80 $.72 $1.52 $1.38 $1.23 $1.11 $1.00
STATEMENT OF CONDITION
(PERIOD END)
Total Assets..................... $48,512,096 $46,049,096 $46,904,515 $44,981,314 $39,187,958 $36,525,772 $33,366,519
Interest Earning Assets.......... 42,610,130 41,139,806 40,788,754 40,000,768 34,711,988 32,348,507 29,136,317
Loans............................ 33,255,625 30,672,641 31,283,192 29,261,153 25,890,804 22,977,488 21,085,653
Deposits......................... 28,938,060 25,973,349 27,250,122 26,368,757 23,069,258 23,352,398 23,375,461
Shareholders' Equity............. 3,679,827 3,699,612 3,761,832 3,773,757 3,286,507 3,017,947 2,774,767
RATIOS
Return on Average Assets......... 1.42% 1.38% 1.43% 1.45% 1.46% 1.46% 1.36%
Return on Average Equity......... 18.15 16.87 17.62 17.67 17.41 17.13 16.69
Dividend Payout Ratio............ 39.49 39.38 39.50 39.10 39.10 38.90 39.40
Average Equity to
Average Assets Ratio........... 7.82 8.20 8.09 8.22 8.36 8.54 8.16
</TABLE>
10
<PAGE>
SELECTED FINANCIAL DATA OF JEFFERSON (HISTORICAL)
The following table sets forth selected historical financial data of
Jefferson and has been derived from its financial statements. Such selected
historical financial data should be read in conjunction with Jefferson's audited
consolidated financial statements, including the respective notes thereto, and
unaudited interim financial information, in each case incorporated herein by
reference. The interim financial information has been derived from unaudited
financial statements of Jefferson, 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. Results for the
interim periods are not necessarily indicative of results which may be expected
for any other interim or annual period. See "Incorporation of Certain
Information by Reference."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
SUMMARY OF OPERATIONS
Interest Income......................... $ 80,052 $ 75,176 $ 153,628 $ 146,373 $ 129,496 $ 128,922 $ 129,072
Interest Expense........................ 31,012 28,915 59,046 58,644 45,393 47,820 56,505
Other Income............................ 10,672 9,600 18,977 19,019 17,910 17,245 16,655
Other Expense........................... 34,726 33,622 67,655 66,580 66,423 61,668 54,965
Net Income.............................. 14,996 13,513 27,801 24,863 22,600 23,585 21,044
PER SHARE AMOUNTS
Net income, Primary..................... $1.08 $.89 $1.86 $1.64 $1.49 $1.57 $1.50
Net income, Fully Diluted............... $1.08 $.89 $1.86 $1.64 $1.49 $1.57 $1.50
Average Shares
Outstanding, Primary.................. 13,944,887 15,168,061 14,982,442 15,181,152 15,148,400 15,060,873 14,075,372
Weighted Average Shares
Outstanding, Fully Diluted............ 13,944,887 15,168,061 14,982,442 15,181,152 15,148,400 15,060,873 14,075,372
Dividends............................... $.50 $.44 $.88 $.76 $.68 $.62 $.53
STATEMENT OF CONDITION
(PERIOD END)
Total Assets............................ $2,168,470 $2,080,770 $2,161,825 $2,051,188 $1,925,950 $1,941,961 $1,842,447
Total Earning Assets.................... 1,986,264 1,909,601 1,974,908 1,878,599 1,740,048 1,749,740 1,675,448
Loans-Net of Unearned
Income................................ 1,442,863 1,282,900 1,365,854 1,220,421 1,101,500 1,022,911 979,365
Deposits................................ 1,876,473 1,794,668 1,891,109 1,793,199 1,688,872 1,677,354 1,636,346
Shareholders' Equity.................... 212,101 229,229 204,314 226,540 206,553 196,434 180,023
RATIOS
Return on Average Assets................ 1.40% 1.33% 1.34% 1.25% 1.18% 1.27% 1.23%
Return on Average Equity................ 14.34 11.76 12.20 11.43 11.05 12.34 12.96
Dividend Payout Ratio................... 46.48 49.33 46.99 45.02 44.40 36.07 33.42
Average Equity to
Average Assets Ratio.................. 9.78 11.29 11.00 10.92 10.65 10.27 9.48
</TABLE>
11
<PAGE>
WACHOVIA AND CENTRAL FIDELITY PRO FORMA COMBINED FINANCIAL DATA
No pro forma financial statements are included in this Proxy
Statement/Prospectus with respect to the Merger with Jefferson 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 Jefferson.
The following table sets forth selected unaudited pro forma financial data
of Wachovia giving effect to the Central Fidelity Merger as if it occurred as of
the beginning of each of the periods indicated below, after giving effect to the
pro forma adjustments described in the Notes to Unaudited Pro Forma Combined
Financial Information. The Central Fidelity Merger is expected to be accounted
for as a pooling of interests. Such selected unaudited pro forma financial data
should be read in conjunction with the Wachovia and Central Fidelity pro forma
combined financial information, including the notes thereto, appearing elsewhere
in this Proxy Statement/Prospectus. The effect of estimated merger and
restructuring costs expected to be incurred in connection with the Central
Fidelity Merger has been reflected in the Unaudited Pro Forma Combined Statement
of Condition; however, since the estimated costs are nonrecurring, they have not
been reflected in the Unaudited Pro Forma Combined Statements of Income. The
Unaudited Pro Forma Combined Financial Information does not give effect to any
anticipated cost savings in connection with the Central Fidelity Merger. The
Unaudited Pro Forma Combined Statement of Condition is not necessarily
indicative of the actual financial position that would have existed had the
Central Fidelity Merger been consummated as of the beginning of the periods
indicated below, or that may exist in the future. The Unaudited Pro Forma
Combined Statements of Income are not necessarily indicative of the results that
would have occurred had the Merger been consummated on the date indicated or
that may be achieved in the future. See "Incorporation of Certain Information by
Reference" and "Wachovia and Central Fidelity Unaudited Pro Forma Combined
Financial Information."
<TABLE>
<CAPTION>
SIX MONTHS ENDED FOR THE YEARS ENDED
JUNE 30, DECEMBER 31,
1997 1996 1996 1995 1994
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
SUMMARY OF OPERATIONS
Interest Income..................................... $ 2,073,667 $ 1,968,349 $ 4,015,934 $ 3,791,650 $ 3,027,091
Interest Expense.................................... $ 1,055,499 $ 1,033,980 2,085,955 2,011,402 1,369,079
Other Income........................................ 484,999 424,758 873,565 815,307 666,990
Other Expense....................................... 809,200 738,866 1,509,490 1,441,761 1,343,478
Net Income.......................................... 390,280 366,023 757,259 707,913 623,922
PER SHARE AMOUNTS
Net Income, Primary................................. $1.94 $1.76 $3.66 $3.38 $2.98
Net Income, Fully Diluted........................... 1.94 1.75 3.64 3.35 2.96
Weighted Average Shares
Outstanding, Primary.............................. 200,728,000 208,490,000 206,728,000 209,684,000 209,346,000
Weighted Average Shares
Outstanding, Fully Diluted........................ 201,679,000 209,241,000 208,105,000 211,118,000 210,663,000
Dividend (1)........................................ $.80 $.72 $1.52 $1.38 $1.23
STATEMENT OF CONDITION
(PERIOD END)
Total Assets(2)..................................... $59,241,694 $56,540,625 $57,444,875 $55,792,288 $49,242,130
Interest Earning Assets............................. 52,653,592 51,053,334 50,725,790 50,180,624 44,168,738
Loans............................................... 40,182,001 37,132,537 38,000,028 35,577,966 31,662,897
Deposits............................................ 37,014,680 33,937,409 35,321,576 34,354,655 30,296,502
Shareholders' Equity(2)............................. 4,370,292 4,508,136 4,608,331 4,600,304 3,909,579
RATIOS
Return on Average Assets............................ 1.38% 1.33% 1.36% 1.37% 1.34%
Return on Average Equity............................ 17.58 16.34 16.91 17.00 16.58
Average Equity to
Average Assets Ratio.............................. 7.84 8.13 8.05 8.05 8.09
</TABLE>
(1) Pro forma dividends per share represent historical dividends paid by
Wachovia.
(2) Total Assets and Shareholders' Equity at June 30, 1997 have been reduced to
reflect the aggregate estimated merger and restructuring costs of $174
million ($113 million net of taxes) expected to be incurred in connection
with the Central Fidelity Merger.
12
<PAGE>
GENERAL INFORMATION
SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to the shareholders of
Jefferson in connection with the solicitation of proxies by the Jefferson Board
for use at the Special Meeting. The Special Meeting will be held in the
Community Room in the Jefferson National Bank Operations Center, located at 321
East Main Street, Charlottesville, Virginia at 10:00 a.m., on October 22, 1997,
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
Jefferson 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 Jefferson Board has fixed the close of business on August 15, 1997, as
the record date for determining the Jefferson shareholders entitled to receive
notice of and to vote at the Special Meeting. Only holders of record of
Jefferson Common Stock as of the Record Date are entitled to notice of and to
vote at the Special Meeting. As of the Record Date, 13,964,689 shares of
Jefferson Common Stock were issued and outstanding and held by approximately
8,000 record holders. Holders of Jefferson Common Stock are entitled to one vote
on each matter considered and voted on at the Special Meeting for each share of
Jefferson 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 shares of Jefferson 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. 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 the Jefferson Board. Shares of Jefferson 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 in the discretion of the persons named in the enclosed
form of proxy as to any other matter that may come before the special meeting or
any adjournment or postponement thereof including, among other things, a motion
to adjourn or postpone the Special Meeting to another time and/or place, for the
purpose of soliciting additional proxies or otherwise; PROVIDED, HOWEVER, that
no proxy which is voted against the proposal to approve the Merger Agreement
will be voted in favor of any such adjournment or postponement.
A Jefferson 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 Jefferson, (b) properly submitting to Jefferson 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 Jefferson as follows: 123 East
Main Street, Post Office Box 711, Charlottesville, Virginia 22902, Attention:
William M. Watson, Jr., Secretary. 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
Jefferson's Secretary or other person responsible for tabulating votes on behalf
of Jefferson.
The expense of soliciting proxies for the Special Meeting will be paid for
by Jefferson, although pursuant to the Merger Agreement, Wachovia has agreed to
share equally with Jefferson all filing fees and printing expenses 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, Jefferson will be contacting brokers, dealers, banks and voting
trustees or their nominees who can be identified as record holders of Jefferson
Common Stock; such holders, after inquiry by Jefferson, will provide information
concerning quantity of proxy and other materials needed to supply such materials
to beneficial owners, and Jefferson will reimburse them for the expense of
mailing the proxy materials to such persons.
13
<PAGE>
Jefferson has retained Georgeson & Company Inc. ("Georgeson") to assist
Jefferson in connection with its communications with its shareholders with
respect to, and to provide other services to Jefferson in connection with, the
Special Meeting. Georgeson will receive $8,000 for its services and
reimbursement of out-of-pocket expenses in connection therewith. Jefferson has
agreed to indemnify Georgeson against certain liabilities arising out of or in
connection with its engagement.
VOTE REQUIRED
Approval of the Merger Agreement and consummation of the transactions
contemplated therein requires the affirmative vote of the holders of more than
two-thirds of the outstanding shares of Jefferson Common Stock entitled to vote
thereon at the Special Meeting. It is not expected that the Merger Agreement and
the consummation of the transactions contemplated therein will require the
approval of the holders of Wachovia Common Stock under either the North Carolina
Business Corporation Act or the rules of the NYSE because Wachovia expects that
the number of shares of Wachovia Common Stock issued in the Merger will be less
than 20% of the shares of Wachovia Common Stock outstanding at the time of the
Merger. It this were not the case, the Merger would require the approval of the
holders of a majority of the outstanding shares of Wachovia Common Stock and
Wachovia would seek such approval at a special meeting of shareholders.
As of the Record Date, Jefferson's directors and executive officers and
their affiliates held approximately 5.5% of the outstanding shares of Jefferson
Common Stock entitled to vote at the Special Meeting. As of the Record Date
Jefferson held 653,227 shares of Jefferson Common Stock in a fiduciary capacity
for others. As of the Record Date, Wachovia held 55,348 shares of Jefferson
Common Stock in a fiduciary capacity for others.
RECOMMENDATION OF JEFFERSON'S BOARD OF DIRECTORS
For the reasons described in the section of this Proxy Statement/Prospectus
entitled "The Merger -- Background of, and Reasons for, the Merger", the
Jefferson Board has adopted the Merger Agreement, believes the Merger is in the
best interests of Jefferson and its shareholders and recommends that
shareholders of Jefferson vote "FOR" approval of the Merger Agreement. See "The
Merger -- Background of, and Reasons for, the Merger," and " -- Interests of
Certain Persons in the Merger."
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 Jefferson will
merge with and into Wachovia. Wachovia will be the surviving corporation of the
Merger. At the Effective Time, each share of issued and outstanding Jefferson
Common Stock will cease to be outstanding and each such share (excluding
Treasury Stock) will be converted into and exchanged for 0.625 of a share of
Wachovia Common Stock. The Merger Agreement provides that Wachovia may change
the method of effecting the combination with Jefferson, provided that it cannot
alter the consideration to be received by Jefferson shareholders, adversely
affect the tax treatment for Jefferson shareholders or materially delay the
transactions contemplated by the Merger Agreement.
BACKGROUND OF, AND REASONS FOR, THE MERGER
At a meeting held on January 28, 1997, the Executive Committee (the
"Committee") of the Jefferson Board considered some of the strategic
alternatives that might be available to Jefferson. The Committee noted that
smaller community banks remain attractive to customers in a number of market
areas, while large financial institutions have technology capabilities, a wider
range of product offerings and other resources that permit more effective
competition for deposit, loan and investment business. Jefferson, as a mid-sized
financial institution, may not have the advantages of either a smaller
institution or a larger one, and therefore may be at a competitive disadvantage
because of its size. In that regard, the Committee discussed the alternative of
Jefferson remaining
14
<PAGE>
independent and pursuing a course of action that the Committee considered to be
successful to date, in comparison to seeking an alliance with another financial
institution in order to be able to compete more effectively with large financial
institutions. After discussion, the Committee decided that management should
request that Jefferson's financial adviser, Goldman, Sachs & Co. ("Goldman
Sachs"), meet with the Committee and advise it about Jefferson's strategic
alternatives and whether it should seek to pursue any of them.
The Committee met again on February 20, 1997. At that meeting,
representatives from Goldman Sachs presented four major strategic alternatives
available to Jefferson: remain independent and operate under its current
business plan; seek acquisitions of smaller financial institutions that would
complement its market area and provide an external earnings growth opportunity;
seek to merge or affiliate with a financial institution of a comparable size to
that of Jefferson; or seek to be acquired by a larger financial institution that
could continue Jefferson's banking relationships with its customers while
offering additional banking products and resources available from a larger
financial institution. The discussion included consideration of Jefferson's role
in its communities, service to its customer base, its employees, the ability of
Jefferson to compete effectively with larger financial institutions in its
market area, and the benefits to the Jefferson shareholders from pursuing each
of the strategic alternatives. The Committee considered the valuation of
Jefferson's stock by the securities market, and in a five-year comparison to a
peer group of financial institutions, Jefferson's earnings growth, its operating
performance in terms of return on average assets and return on average equity,
and its growth with respect to assets, loans and deposits. Other information
considered by the directors included a review of recent bank merger activity and
market valuations for the merged institutions. The Committee also discussed the
procedures by which Jefferson might consider a merger opportunity. At the
conclusion of the meeting, the Committee determined that it would not make a
recommendation, but would request that representatives of Goldman Sachs make a
similar presentation to the full Jefferson Board.
At a meeting of the Jefferson Board on March 25, 1997, representatives from
Goldman Sachs repeated the presentation they had made at the February 20, 1997
meeting of the Committee. In addition, the Goldman Sachs representatives
outlined market trends affecting financial institutions in the United States,
noting record profitability levels, high levels of equity capital, peaking of
the current business/credit cycle, continued disintermediation of funds with
non-traditional competitors gaining market share, and the changing nature of
competition through rapid advancements in technology. The Jefferson Board was
given information and analysis about potential financial institutions that
Jefferson might acquire and likely prices that would have to be paid for the
acquisitions; information about financial institutions of a similar size and
market to that of Jefferson, and with whom Jefferson might combine, including
potential cost savings and share ownership of the resulting institutions; and
financial institutions that could acquire Jefferson, including cost savings that
would be required and likely prices that would be paid for Jefferson. After
discussion, the Jefferson Board directed management to complete its long term
planning process and present its long-term plan to the Jefferson Board so that
the plan could be compared with the possibility of a combination with another
financial institution.
The Jefferson Board met again on May 14, 1997, to consider the matter.
Management presented its business plan which included an estimate of the
compound annual earnings growth management believed Jefferson could achieve if
it remained independent. The plan assumed a significant investment in
technology, in order that Jefferson could remain competitive in the longer term.
It also assumed significant expenditures for improvements to other aspects of
Jefferson's infrastructure. After exploring the details and consequences of the
business plan with management, the Jefferson Board considered its other
strategic alternatives in comparison with that plan. With respect to the
alternative of growth through acquisition of smaller institutions, it was noted
that Jefferson had elected to forego several specific acquisition opportunities
in recent years because, in each case, the price required to consummate the
transaction would have been unacceptably dilutive to earnings. The Jefferson
Board also determined that growth through a merger or affiliation with a
comparably-sized financial institution was not feasible at this time. With
regard to Jefferson being acquired by a larger financial institution, it was
noted that a strategic combination with certain institutions could be beneficial
to Jefferson's business and its shareholders, and permit the achievement of
greater earnings growth than Jefferson might be able to achieve on its own.
The Jefferson Board discussed the alternative of Jefferson remaining
independent and pursuing its business plan as outlined in management's
presentation to the Jefferson Board. There was discussion of the various
transactions during the preceding five years where Jefferson had been
unsuccessful in acquiring smaller financial institutions in which it had an
interest which in part was attributable to the fact that Jefferson's Common
Stock was not perceived to be as attractive an instrument for payment of the
acquisition price as was the stock of other
15
<PAGE>
financial institutions. Absent a reasonably aggressive and successful
acquisition program in future years, and given the expected need to invest a
considerable amount of funds in improvements in Jefferson's technology and
infrastructure, it appeared doubtful to the Jefferson Board that Jefferson could
achieve a greater earnings growth than that projected in management's business
plan. Alternatively, an alignment of Jefferson with a carefully chosen larger
financial institution could assist Jefferson with the technology and
infrastructure improvements that would be required for the future, and could
improve the rate of growth in earnings per share that the Jefferson shareholders
could expect to receive following such an alliance. By selecting the right
financial institution for a business combination, the Jefferson Board believed
that it could retain for its customers the same sort of banking commitment and
service that Jefferson's customers currently receive and could provide continued
employment opportunities for its staff. The Jefferson Board also reviewed the
pro-forma effect of a business combination with various financial institutions
that might have an interest in acquiring Jefferson, as set forth in the data
presented to the Jefferson Board by the Goldman Sachs representatives.
After discussion, the Jefferson Board determined to explore the strategic
alternative of merging with a larger financial institution that might be
expected to expand the type of services now available to Jefferson's existing
customer base and bring greater value to Jefferson's shareholders. After review
of the financial data and materials provided by Goldman Sachs regarding various
financial institutions that might be considered for a possible merger or
business combination with Jefferson, the Jefferson Board selected three
institutions that the Jefferson Board believed might meet its expectations.
Factors considered by the Jefferson Board in making its selection included the
following items with respect to the various financial institutions identified by
Goldman Sachs as possible merger candidates: prospects for future earnings
growth, relationship of market area to that of Jefferson, and the range of
financial services and products provided to its customers. Wachovia was one of
the three institutions. The Jefferson Board instructed Mr. O. Kenton McCartney,
President and Chief Executive Officer of Jefferson, to make an initial contact
with the chief executive officers of these institutions for the purpose of
exploring their strategic objectives, assessing their banking characteristics in
comparison to Jefferson's characteristics and determining whether there was
interest in discussing a possible business combination with Jefferson. Each of
the financial institutions that showed interest would be contacted by
representatives of Goldman Sachs for the purpose of discussing possible terms of
a business combination and an exchange ratio for conversion of shares of
Jefferson Common Stock into shares of the stock of the financial institution.
Mr. McCartney met separately with the chief executive officers of each of
the three financial institutions selected by the Jefferson Board, including
Wachovia, on May 27 and May 28, 1997. All three financial institutions expressed
interest in having conversations with Jefferson although they differed slightly
in their degree of interest and preferred timing of such discussions. On May 29,
1997, Mr. L. M. Baker, Jr., President and Chief Executive Officer of Wachovia,
called Mr. McCartney to reiterate Wachovia's interest in a business combination
with Jefferson, expressing his intention to work constructively toward that end
and noting the advantages to Jefferson's shareholders and customers. Mr. Baker
again called Mr. McCartney on May 30, 1997, to say that Wachovia was ready to
discuss the exchange ratio for converting shares of Jefferson Common Stock into
shares of Wachovia Common Stock, could complete its initial due diligence
inquiry about Jefferson over the coming weekend, and would thereafter be
prepared to enter into an agreement with Jefferson.
Rather than meet immediately with Wachovia, Jefferson determined to take
more time to consider its alternatives. Based on his initial contact with the
three chief executive officers, Mr. McCartney concluded that the projected
earnings growth of one of the three financial institutions would not be as
likely to meet the expectations of the Jefferson Board as would those of the
other two financial institutions. After discussing the matter with Mr. Hovey S.
Dabney, Chairman of the Jefferson Board, and several individual directors, Mr.
McCartney instructed the representatives of Goldman Sachs to contact the other
two financial institutions, including Wachovia. From May 30, 1997 through June
6, 1997, representatives of Goldman Sachs had further discussions with
representatives of the other two institutions. On June 6, 1997, based on the
results of these discussions, Mr. McCartney and Mr. Dabney, after conferring
individually with the members of the Jefferson Board, determined to pursue the
negotiation of an agreement with Wachovia. Between June 6, 1997 and June 9,
1997, representatives of Goldman Sachs, Jefferson and Wachovia negotiated the
exchange ratio for the exchange of shares of Jefferson Common Stock for shares
of Wachovia Common Stock. During the same time period, representatives of
Jefferson, Goldman Sachs and Jefferson's legal counsel engaged in negotiations
with representatives of Wachovia and its legal counsel with respect to the terms
of the definitive Merger Agreement and Stock Option
16
<PAGE>
Agreement. During such period, representatives of Wachovia also conducted due
diligence with respect to Jefferson, and representatives of Jefferson conducted
due diligence with respect to Wachovia.
On the afternoon of June 9, 1997, the Jefferson Board met to receive a
report on the status of negotiations and the terms of the proposed transaction.
Mr. McCartney reviewed the events that had occurred since the last meeting of
the Jefferson Board. Representatives of Goldman Sachs made a presentation to the
Jefferson Board on the proposed transaction with Wachovia, the current bank
merger and acquisition environment and the results of various financial analyses
Goldman Sachs had prepared in connection with the proposed transaction. It was
noted that Jefferson would be entitled to have one person nominated for election
to the board of directors of Wachovia (the "Wachovia Board"). The
representatives of Goldman Sachs reported that it was the view of Goldman Sachs
that, subject to the assumptions made, matters considered and limitations on the
review undertaken, the exchange ratio negotiated between Jefferson and Wachovia
was fair to the Jefferson shareholders. Representatives of McGuire, Woods,
Battle & Boothe, L.L.P., legal counsel to Jefferson, reviewed and summarized the
provisions of the Merger Agreement and the Stock Option Agreement that had been
negotiated with Wachovia.
At the invitation of the Jefferson Board, Mr. Baker and Mr. Robert S.
McCoy, Jr., Chief Financial Officer of Wachovia, were invited to join the
meeting and answer questions posed by the Jefferson Board regarding Wachovia's
goals and objectives in the proposed business combination, matters regarding its
strategic plan, and its intentions with regard to the effect of the business
combination on Jefferson's business. Following their answers to such questions,
Messrs. Baker and McCoy left the meeting.
After further discussion, the Jefferson Board concluded that a merger with
Wachovia, substantially on the terms presented to them at the meeting, was in
the best interests of the Jefferson shareholders and, by unanimous vote,
approved the Merger Agreement and the Stock Option Agreement, authorized the
officers of Jefferson to execute these agreements, and directed that the Merger
Agreement be submitted to a vote of the shareholders of Jefferson. At the
conclusion of the meeting on June 9, 1997, Jefferson and Wachovia entered into
the Merger Agreement. The Stock Option Agreement was delivered the following
day. On the morning of June 10, 1997, the parties issued a press release
announcing the proposed Merger.
In reaching its decision to recommend approval of the Merger, the Jefferson
Board consulted with certain members of Jefferson's executive management as well
as its financial and legal advisers, and considered various factors including
the following material factors:
(i) The competitive challenges facing Jefferson and the banking and
financial services industry, including the likelihood of continuing
consolidation and increasing competition, the growing importance of
financial resources and economies of scale to a banking institution's
ability to compete successfully, and the increasing cost of technology and
infrastructure required to compete successfully; and the risk involved in
attempting to achieve growth through internal means or through
acquisitions, particularly in light of Jefferson's lack of success in
several recent acquisition efforts; and the probability that a business
combination with Wachovia would likely result in greater value to
Jefferson's shareholders than other alternatives that the Jefferson Board
had considered, including remaining independent.
(ii) The financial terms of the Merger, including the Exchange Ratio
and the value of the consideration to be received by Jefferson's
shareholders as a result of the merger compared to the market value of
Jefferson's shares; and the multiple that such consideration represents to
the per share book value, market value and earnings of the Jefferson Common
Stock.
(iii) The financial strength of Wachovia, its record of profitability,
and its stock price performance; the business of Wachovia, the nature of
its franchise, its business and operating philosophy, and its business mix.
(iv) The treatment of a merger as a tax free exchange of Jefferson
Common Stock for Wachovia Common Stock for federal income tax purposes.
(v) The opinion of Goldman Sachs, based on the procedures and subject
to the assumptions made, matters considered and limitations set forth in
its opinion, as to the fairness of the Exchange Ratio to the holders of
Jefferson Common Stock.
(vi) The diversification of risk associated with ownership of a
financial institution which serves a broad geographic area encompassing
Virginia, North Carolina, South Carolina and Georgia.
17
<PAGE>
(vii) The increased investment liquidity available to holders of
Wachovia Common Stock as a result of Wachovia's larger market
capitalization and the greater trading volume in its common stock.
The foregoing list of factors is not intended to be an exhaustive list, but
is intended to include the material factors considered by the Jefferson Board.
In reaching its determination to approve and recommend the merger, the Jefferson
Board did not assign any relative or specific weights to the foregoing factors,
and the individual directors may have given differing weights to different
factors.
OPINION OF JEFFERSON'S FINANCIAL ADVISER
Goldman Sachs was retained by Jefferson to act as its financial adviser in
connection with evaluating Jefferson's strategic alternatives, which included a
possible combination with a larger financial institution. See "The
Merger -- Background of, and Reasons For, the Merger." At a meeting of the
Jefferson Board held on June 9, 1997, Goldman Sachs made a presentation on the
financial aspects of the Merger and delivered to the Jefferson Board its oral
opinion (which opinion was delivered to the Jefferson Board in written form the
following day) dated as of June 9, 1997 to the effect that, as of the date of
such opinion, based on the matters set forth in such opinion, the proposed
Exchange Ratio pursuant to the Merger Agreement was fair to the holders of the
Jefferson Common Stock. Goldman Sachs has confirmed its June 9, 1997 opinion by
delivery of its written opinion to the Jefferson Board, dated the date of this
Proxy Statement/Prospectus, stating that, as of the date hereof and based on the
matters set forth in such opinion, the proposed Exchange Ratio pursuant to the
Agreement is fair to the holders of the Jefferson Common Stock.
Goldman Sachs has consented to the inclusion of its opinion, dated the date
hereof, in this Proxy Statement/Prospectus (the "Goldman Sachs Opinion").
THE FULL TEXT OF THE GOLDMAN SACHS OPINION, DATED THE DATE OF THIS PROXY
STATEMENT/PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES
FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
APPENDIX C TO THIS PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY
REFERENCE. THE DESCRIPTION OF THE GOLDMAN SACHS OPINION SET FORTH HEREIN IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX C. THE GOLDMAN SACHS OPINION
IS SUBSTANTIALLY IDENTICAL TO THE OPINION DELIVERED TO THE JEFFERSON BOARD DATED
JUNE 9, 1997, ALTHOUGH IN CONDUCTING ITS REVIEW AND ANALYSIS OF THE MERGER IN
CONNECTION WITH THE OPINION DATED THE DATE OF THIS PROXY STATEMENT/PROSPECTUS,
GOLDMAN SACHS TOOK INTO ACCOUNT THE PROPOSED ACQUISITION OF CENTRAL FIDELITY
BANKS, INC. BY WACHOVIA, WHICH WAS AGREED TO SUBSEQUENT TO JUNE 9, 1997.
JEFFERSON SHAREHOLDERS ARE URGED TO READ THE GOLDMAN SACHS OPINION IN ITS
ENTIRETY.
Goldman Sachs is a nationally recognized investment banking firm and was
selected by Jefferson based on the firm's reputation and experience in
investment banking in general, its recognized expertise in the valuation of
banking businesses and because of its familiarity with, and prior work for,
Jefferson. Goldman Sachs, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes.
In connection with rendering its opinions dated June 9, 1997 and the date
hereof, Goldman Sachs, among other things: (i) reviewed the Merger Agreement and
the Stock Option Agreement; (ii) reviewed the Annual Reports to Stockholders and
Annual Reports on Form 10-K of Jefferson and Wachovia for the five years ended
December 31, 1996; (iii) reviewed certain interim reports to stockholders and
Quarterly Reports on Form 10-Q of Jefferson and Wachovia; (iv) reviewed certain
other communications from Jefferson and Wachovia to their respective
stockholders; (v) reviewed certain internal financial analyses and forecasts for
Jefferson and Wachovia prepared by their respective managements; (vi) held
discussions with members of the senior managements of Jefferson and Wachovia
regarding the strategic rationale for, and the potential benefits of, the
transaction contemplated by the Merger Agreement and the past and current
business operations, financial condition and future prospects of their
respective companies; (vii) reviewed the reported price and trading activity for
the Jefferson Common Stock and the Wachovia Common Stock; (viii) compared
certain financial and stock market information for Jefferson and Wachovia with
similar information for certain other companies the securities of which are
publicly traded; (ix) reviewed the financial terms of certain recent business
combinations in the commercial
18
<PAGE>
banking industry and (x) performed such other studies and analyses as Goldman
Sachs deemed appropriate. In addition, in connection with rendering the Goldman
Sachs Opinion, Goldman Sachs (i) reviewed the Registration Statement of which
this Proxy Statement/Prospectus is a part; (ii) reviewed the Agreement and Plan
of Merger, dated as of June 23, 1997, by and between Wachovia and Central
Fidelity Banks, Inc. ("Central Fidelity"), and certain other information with
respect to the proposed merger of Central Fidelity with and into Wachovia (the
"Central Fidelity Merger"); (iii) reviewed the Annual Reports to Shareholders
and Annual Reports on Form 10-K of Central Fidelity for the five years ended
December 31, 1996; (iv) reviewed certain interim reports to stockholders and
Quarterly Reports on Form 10-Q of Central Fidelity; and (v) reviewed certain
other financial information concerning the business and operations of Wachovia,
including certain internal financial analyses, pro forma financial statements
giving effect to the Central Fidelity Merger and the Merger prepared by senior
management of Wachovia and forecasts for Wachovia, Central Fidelity and
Jefferson prepared by the senior management of Wachovia.
In connection with rendering the Goldman Sachs Opinion, as set forth
therein, Goldman Sachs relied without independent verification upon the accuracy
and completeness of all the financial and other information reviewed by it and
has assumed such accuracy and completeness for purposes of such opinion. With
Jefferson's consent, Goldman Sachs assumed that the financial forecasts
(including, without limitation, certain information regarding under-performing
and non-performing assets and net charge-offs) were reasonably prepared on a
basis reflecting the best currently available judgments and estimates of
Jefferson and Wachovia, and that such forecasts would be realized in the amounts
and at the times contemplated thereby. Goldman Sachs is not an expert in the
evaluation of loan and lease portfolios for purposes of assessing the adequacy
of the allowances for losses with respect thereto, and assumed, with Jefferson's
consent, that such allowances for each of Jefferson, Wachovia and Central
Fidelity are in the aggregate adequate to cover all such losses. In addition,
Goldman Sachs has not reviewed individual credit files nor has it made an
independent evaluation or appraisal of the assets and liabilities of Jefferson,
Wachovia and Central Fidelity or any of their respective subsidiaries and has
not been furnished with any such evaluation or appraisal.
The following is a summary of the material financial analyses presented by
Goldman Sachs to the Jefferson Board in connection with providing its opinion to
the Jefferson Board on June 9, 1997, and does not purport to be a complete
description of the analyses performed by Goldman Sachs. Subject to the foregoing
description of the review and analysis of certain information relating to the
Central Fidelity Merger, Goldman Sachs used substantially the same types of
financial analyses in preparing its written opinion dated as of the date of this
Proxy Statement/Prospectus as it used in providing its opinion dated as of June
9, 1997.
SUMMARY OF TERMS OF PROPOSED TRANSACTION. Goldman Sachs reviewed the terms
of the proposed Merger, including the form of consideration offered, the
expected method of accounting, the Exchange Ratio, the closing price of Wachovia
Common Stock as of June 6, 1997, and the resulting notional price per share of
Jefferson Common Stock pursuant to the proposed Merger. The proposed form of
consideration offered in connection with the Merger was Wachovia Common Stock.
The proposed method of accounting for the Merger was the purchase method. The
notional price per share of Jefferson Common Stock for the Merger was $39.38,
determined by multiplying the Exchange Ratio by the closing price of the
Wachovia Common Stock on June 6, 1997 (the last trading date immediately
preceding the Jefferson Board meeting on June 9, 1997) (the "Notional Price").
The Notional Price therefore was necessarily dependent on the closing price of
the Wachovia Common Stock at a specific time. The Notional Price reflects a
premium over the closing price of the Jefferson Common Stock on June 6, 1997 of
34.0 percent.
In addition to reviewing the Notional Price resulting from the Merger, the
analyses described indicated values resulting from the Merger expressed as
multiples of Jefferson's earnings for the twelve months ended March 31, 1997 and
of estimates of Jefferson 1997 and 1998 earnings, as well as multiples of
various measures of Jefferson book value. In performing these analyses, Goldman
Sachs used estimates based upon the most recent median earnings estimates
published by the Institutional Brokers Estimate System ("IBES") and the earnings
estimates prepared by Jefferson management (the "Jefferson Estimates"). IBES is
a data service that monitors and publishes compilations of earnings estimates by
selected research analysts regarding companies of interest to institutional
investors. Under these analyses, the Notional Price reflected (i) a multiple of
20.4 times Jefferson earnings for the twelve months ending March 31, 1997, (ii)
a multiple of 19.1 times the IBES median estimate of Jefferson 1997 earnings,
and (iii) a multiple of 17.1 times the IBES median estimate of Jefferson 1998
earnings. The earnings estimates of Jefferson management for each of 1997 and
1998 were slightly higher, and therefore
19
<PAGE>
the multiples to such earnings estimates represented by the Notional Price were
slightly lower, than the IBES estimates. The Notional Price also reflected (i) a
multiple of 2.7 times Jefferson stated book value, (ii) a multiple of 2.8 times
Jefferson tangible book value, and (iii) a multiple of 3.8 times Jefferson
adjusted tangible book value (adjusted to reflect a 6 percent tangible common
equity to tangible assets ratio).
Goldman Sachs also performed a pro forma analysis of certain other
financial aspects of the Merger, calculating the pro forma market capitalization
of the combined entity to be $10.7 billion ($10.2 billion assuming the
previously planned repurchase by Wachovia of 100% of the shares of Wachovia
Common Stock issued in the Merger at market price (such repurchase has since
been rescinded) and the pro forma assets of the combined entity to be $50.2
billion, based upon data as of March 31, 1997. Goldman Sachs analyzed the pro
forma impact on estimated earnings per share of the combined entity and
estimated that holders of the shares of Jefferson Common Stock would own 5.1
percent of the combined entity resulting from the Merger (5.2% assuming the
previously planned repurchase by Wachovia of 100% of the shares of Wachovia
Common Stock issued in the Merger at market price (such repurchase has since
been rescinded)). The pro forma analysis assumed that approximately $17.0
million in pre-tax synergies would be realized from the Merger. Indicated annual
dividends per share of Jefferson Common Stock were estimated to be $1.00 for the
combined entity. Goldman Sachs estimated that the combined entity would rank
approximately twenty-second, based on market capitalization as of June 6, 1997,
among United States bank holding companies.
SELECTED COMPANY ANALYSIS -- JEFFERSON. Based on publicly available
information and IBES earnings estimates, Goldman Sachs reviewed and compared
actual and estimated selected financial, operating and stock market information
and financial ratios of Jefferson and a group of 10 additional banking
organizations consisting of BB&T Corporation (presented pro forma for its
acquisition of United Carolina Bankshares Corporation); Crestar Financial
Corporation; SouthTrust Corporation; First Tennessee National Corporation;
Central Fidelity Banks, Inc.; CCB Financial Corporation (presented pro forma for
its pending acquisition of American Federal Savings Bank, FSB); Centura Banks,
Inc.; One Valley Bancorp; F&M National Corporation and WesBanco, Inc. (the
"Jefferson Selected Banks"). Such information and ratios included, among other
things, equity market capitalization, total assets, common equity and capital
ratios, price-earnings ratios, price to tangible book value per share ratios,
dividend yields and certain profitability and asset quality data.
Goldman Sachs noted for the Jefferson Board that, among other things: (i)
Jefferson had a ratio of tangible common equity to tangible assets and a Tier 1
ratio, in each case as of March 31, 1997, of 9.3 percent and 12.6 percent,
respectively, as compared with a median tangible common equity to tangible
assets ratio and a median Tier 1 ratio for the Jefferson Selected Banks, as of
March 31, 1997, of 7.7 percent and 10.7 percent, respectively; (ii) Jefferson
had a ratio of total loans to total deposits and a ratio of nonperforming loans
to total loans, in each case as of March 31, 1997, of 73.5 percent and 0.32
percent, respectively, as compared with a median ratio of total loans to total
deposits and a median ratio of nonperforming loans to total loans for the
Jefferson Selected Banks, in each case as of March 31, 1997, of 83.2 percent and
0.56 percent, respectively; (iii) Jefferson had a return on average assets and
return on average equity (calculated in each case for Jefferson and the
Jefferson Selected Banks based on net income excluding extraordinary and
non-recurring items, including gains and losses on securities and charges
related to the recapitalization of the SAIF), in each case for the latest 12
months ending March 31, 1997, of 1.33 percent and 12.6 percent, respectively, as
compared with a median return on assets and median return on equity for the
Jefferson Selected Banks for the latest 12 months ending March 31, 1997, of 1.28
percent and 15.4 percent, respectively; and (iv) Jefferson had a ratio of market
price to tangible book value, as of March 31, 1997, of 2.1 times, as compared
with a median ratio of market price to tangible book value for the Jefferson
Selected Banks, as of March 31, 1997, of 2.5 times (in each case based on
closing market prices as of June 6, 1997).
DIVIDEND DISCOUNT ANALYSIS. Using a discounted dividend analysis, Goldman
Sachs estimated the present value of the future dividend streams and terminal
values that Jefferson could produce over the approximately five-year period from
April 1, 1997 to December 31, 2001. The estimate of Jefferson future dividend
streams and terminal values assumed earnings growth rates for the approximately
five-year period ranging from 7.5 percent to 12.5 percent and was based on
Jefferson management's earnings estimates through 1997. Using assumed discount
rates of 10.0, 12.5 and 15.0 percent and multiples of price to trailing earnings
per share for the twelve-month period ending December 31, 2001 ranging from 12.0
times to 20.0 times, Goldman Sachs calculated net present values ranging from
$21 to $48 for the estimated dividend streams and terminal values produced by
Jefferson over such approximately five-year period. The analysis assumed a
dividend payout ratio approximately
20
<PAGE>
equal to Jefferson's existing dividend payout ratio, and assumed terminal values
of each dividend stream equal to various multiples of estimated earnings for the
twelve months ending December 31, 2001. Based upon such assumed ranges of
earnings growth rates and multiples of price to trailing earnings per share for
the twelve months ending December 31, 2001 ranging from 12.0 times to 20.0
times, Goldman Sachs calculated implied multiples of share price to book value
per share as of December 31, 2001 ranging from 1.60 times to 3.10 times.
STOCK TRADING ANALYSIS. Goldman Sachs reviewed and analyzed the historical
trading prices for the Jefferson Common Stock and the Wachovia Common Stock on a
daily basis from June 6, 1996 to June 6, 1997, on a weekly basis from June 10,
1994 to June 6, 1997, and on a monthly basis from May 31, 1992 to May 31, 1997,
in the case of each of Jefferson and Wachovia, and also from June 30, 1987 to
May 30, 1992, in the case of Wachovia. Goldman Sachs also compared the
historical trading prices of each of the Jefferson Common Stock and the Wachovia
Common Stock with a composite index of selected regional banks on a daily basis
from June 5, 1996 to June 6, 1997, on a weekly basis from June 10, 1994 to June
6, 1997, and on a monthly basis from May 31, 1992 to May 31, 1997. In addition,
Goldman Sachs reviewed and analyzed the four-year price to earnings ratio
history of each of the Jefferson Common Stock and the Wachovia Common Stock,
compared with the price to earnings ratio history for such period of a composite
index of selected regional banks, on a monthly basis from June 1993 through May
1997.
SELECTED TRANSACTION ANALYSIS. Goldman Sachs reviewed certain information
relating to 34 selected bank mergers across the United States and announced
since January 1996 and prior to June 9, 1997 in which the aggregate
consideration paid was in excess of $100 million (the "National Selected Bank
Mergers"). The National Selected Bank Mergers were: Huntington Bancshares/First
Michigan Bank Corporation; Area Bancshares Corporation/Cardinal Bancshares;
Monarch Bancorp/SC Bancorp; First Bank System, Inc./U. S. Bancorp; Bancorp
Hawaii, Inc./CU Bancorp; Community First Banks/KeyBank NA -- Wyoming; Citizens
Banking Corporation/CB Financial Corporation; Allied Irish Banks/Daupin Deposit
Corporation; BanPonce Corporation/Roig Commercial Bank; BANC ONE
CORPORATION/Liberty Bancorp, Inc.; Keystone Financial/Financial Trust
Corporation; First Commercial Corporation/Southwest Bancshares; Westamerica
Bancorp/Vallicorp Holdings; Southern National Corporation/United Carolina
Bancshares; Huntington Bancshares/Citi-Bancshares, Inc.; First Virginia
Bankshares/Premier Bancshares; Park National Corporation/First-Knox Banc Corp;
Mercantile Bancorp/Mark Twain Bancshares; Norwest Corporation/Central Bancorp,
Inc.; Crestar Financial/Citizens Bancorp; Valley National Bancorp/Midland
Bancorporation; Magna Group/Homeland Bankshares; NationsBank
Corporation/Boatmen's Bancshares; Summit Bancorporation/BMJ Financial
Corporation; ABN-AMRO Holding, Inc./CNBC Bancorp, Inc.; Community First
Bankshares/Mountain Parks Financial Corporation; Regions Financial/Allied
Bankshares; Taylor Investment Group/Cole Taylor Bank; Hibernia Corporation/C M
Bank Holding Co.; ABN-AMRO Holding, Inc./Comerica Bank -- Illinois; U.S.
Bancorp/California Bancshares, Inc.; Hubco, Inc./Lafayette American; Wells
Fargo/First Interstate; and Firstar Corp/American Bancorporation. Such analysis
indicated that the median premium paid as a percentage of market capitalization
in the National Selected Bank Mergers was 21.1 percent, as compared to a premium
of 34.0 percent to be paid pursuant to the Merger. Such analysis also indicated
that the median multiples of per share consideration paid to book value,
tangible book value per share and to the latest 12-month earnings per share for
the National Selected Bank Mergers were 2.2 times, 2.5 times (3.1 times based on
price and tangible book value adjusted to reflect a 6 percent tangible common
equity to tangible assets ratio) and 17.8 times, respectively, compared to a
multiple of price to book value per share of Jefferson of 2.7 times, a multiple
of price to tangible book value of Jefferson of 2.8 times (3.8 times based on
price and tangible book value adjusted to reflect a 6 percent tangible common
equity to tangible assets ratio) and a multiple of price to Jefferson's earnings
per share for the 12-month period ended March 31, 1997 of 20.4 times.
Additionally, Goldman Sachs reviewed certain information relating to 15
selected bank mergers across the Southeast region of the United States and
announced since January 1994 and prior to June 9, 1997 in which the aggregate
consideration paid was in excess of $100 million (the "Southeast Selected Bank
Mergers"). The Southeast Selected Bank Mergers were: First Commercial
Corp/Southwest Bancshares; BB&T Corp/United Carolina Bancshares; First Virginia
Banks/Premier Bankshares; Crestar Financial/Citizens Bancorp; Regions
Financial/Allied Bankshares; Regions Financial/First National Bancorp;
NationsBank Corporation/Bank South Corporation; Mercantile Bancorp/TCBankshares;
CCB Financial Corporation/Security Capital; Synovus Financial/NBSC Corporation;
Boatmen's Bancshares/Worthen Banking Corporation; Southern National/BB&T
Financial Corp; First Virginia Banks/Farmers National Bancorp; BB&T Financial
Corp/Commerce Bank; and
21
<PAGE>
First Fidelity Bancorp/Baltimore Bancorp. Such analysis indicated that the
median premium represented by the price paid in the Southeast Selected Bank
Merger to closing market price on the last trading date prior to announcement of
the Merger was 15.9 percent, compared to 34.0 percent to be paid pursuant to the
Merger. Such analysis also indicated that the median multiples of price to
tangible book value and latest twelve month's earnings per share were 2.4 times
(2.9 times based on price and tangible book value as adjusted to reflect a
tangible common equity to tangible assets ratio of 6 percent) and 17.8 times,
respectively, compared to a multiple of price to be paid pursuant to the Merger
to Jefferson's tangible book value and to Jefferson's earnings per share for the
twelve months ended March 31, 1997 of 2.8 times (3.8 times based on price and
tangible book value as adjusted to reflect a tangible common equity to tangible
assets ratio of 6 percent) and 20.4 times, respectively.
In addition, Goldman Sachs reviewed certain pending and completed merger
transactions, including a review of the projected cost savings in each
transaction, the period anticipated to achieve such cost savings, the resulting
implied net present value of such cost savings, and a comparison of such net
present value of cost savings as a percentage of market value to the premium to
market value received by target shareholders in such merger transactions.
ABILITY TO PAY ANALYSIS. Goldman Sachs performed an analysis comparing the
Merger to hypothetical acquisitions of Jefferson by six banking institutions
other than Wachovia for consideration equivalent in value to the value of the
consideration proposed in the Merger and reviewed certain publicly available
information with respect to such hypothetical acquirers. The transaction
analysis used IBES median earnings estimates for the hypothetical acquirers and
assumed, depending on the hypothetical acquirer, a range of cost savings from
25% to 40% of Jefferson's annualized non-interest expense. The analyses included
varying scenarios in which each hypothetical transaction was accounted for as a
pooling of interests, a purchase (funded 75% by common equity and 25% by debt)
and a purchase in which the price paid by the hypothetical acquiror was
constrained by certain specified limits on reduction in its estimated Tier 1
capital ratio upon consummation of the hypothetical transactions. Goldman Sachs
analyzed the effect of such transactions on the hypothetical acquirors' 1998 and
1999 earnings (as reported according to generally accepted accounting principles
and, in the case of 1999 estimates only, on a cash earnings basis) and examined
the implications of such transactions to the hypothetical acquirors' Tier 1
capital ratio, to Jefferson's pro forma ownership in the hypothetical acquiror
and to the pro forma dividends per share of Jefferson Common Stock after the
acquisition. Goldman Sachs also estimated the price at which an acquisition of
Jefferson by such hypothetical acquirors would be neither accretive nor dilutive
in 1999, indicating a price per share of Jefferson Common Stock of between $32
and $49 per share.
SELECTED COMPANY ANALYSIS -- WACHOVIA. Based on publicly available
information and IBES earnings estimates, Goldman Sachs reviewed and compared
actual and estimated selected financial, operating and stock market information
and financial ratios of Wachovia and a group of nine additional banking
organizations consisting of Mellon Bank Corporation, SunTrust Banks, Inc.,
BankBoston Corporation, National City Corporation, CoreStates Financial Corp.,
Barnett Banks, Inc., Fifth Third Bancorp, State Street Corporation and Comerica
Incorporated (the "Wachovia Selected Banks"). Such information and ratios
included, among other things, equity market capitalization, total assets, common
equity ratios, price-earnings ratios, price to tangible book value per share
ratios, dividend yields and certain profitability data.
Goldman Sachs noted for the Jefferson Board that, among other things: (i)
Wachovia had a ratio of tangible common equity to tangible assets, as of March
31, 1997, of 7.7 percent, as compared with a median tangible common equity to
tangible assets ratio for the Wachovia Selected Banks, as of March 31, 1997, of
6.9 percent; (ii) Wachovia had a return on average assets and return on average
equity (calculated in each case for Wachovia and the Wachovia Selected Banks
based on net income excluding extraordinary and non-recurring items, including
gains and losses on securities and charges related to the recapitalization of
the SAIF), in each case for the latest 12 months ending March 31, 1997, of 1.42
percent and 17.7 percent, respectively, as compared with a median return on
assets and median return on equity for the Wachovia Selected Banks, in each case
for the latest 12 months ending March 31, 1997, of 1.41 percent and 17.8
percent, respectively; and (iii) Wachovia had a ratio of market price to
tangible book value, as of March 31, 1997, of 2.8, as compared with a median
ratio of market price to tangible book value for the Wachovia Selected Banks, as
of March 31, 1997, of 3.6 (in each case based on closing market prices as of
June 6, 1997).
OTHER ANALYSES. Goldman Sachs also reviewed, among other things, selected
investment research reports on, and earnings estimates for, Jefferson and
Wachovia and analyzed available information regarding the ownership
22
<PAGE>
of the Wachovia Common Stock. Goldman Sachs examined the implied premiums to
market price and to core deposits, the implied multiples of actual and projected
net income for certain periods and of book value as of March 31, 1997 and a
hypothetical acquiring company's implied internal rate of return in 1999, in
each case corresponding to a range of hypothetical prices per share of Jefferson
Common Stock. In addition, Goldman Sachs prepared an overview of Wachovia's
board of directors and senior management, prepared a summary of the historical
financial performance of Wachovia, summarized Wachovia management estimates of
financial performance in 1997, and, based on publicly available information,
analyzed Wachovia's deposit market share and branch presence in the regions in
which it operates.
The summary set forth above describes the material analyses that Goldman
Sachs performed and presented to the Jefferson Board on June 9, 1997, and does
not purport to be a complete description of such analyses. The preparation of a
fairness opinion is a complex process and is not necessarily susceptible to
partial analysis or a summary description.
Goldman Sachs believes that its analyses must be considered as a whole and
that selecting portions of its analyses without considering all factors and
analyses would create an incomplete view of the analyses and processes
underlying its opinion. In its analyses, Goldman Sachs relied upon numerous
assumptions made by Jefferson and Wachovia with respect to industry performance,
general business and economic conditions, and other matters, many of which are
beyond the control of Jefferson or Wachovia. Analyses based upon forecasts of
future results are not necessarily indicative of actual values, which may be
significantly more or less favorable than suggested by such analyses. No company
or transaction used as a comparison in the analyses is identical to Jefferson,
Wachovia or Central Fidelity or to the Merger. Additionally, estimates of the
value of businesses do not purport to be appraisals or necessarily reflective of
the prices at which businesses actually may be sold. Because such estimates are
inherently subject to uncertainty, none of the Jefferson Board, Goldman Sachs,
nor any other person assumes responsibility for the accuracy of such estimates.
Goldman Sachs analyses were prepared solely for purposes of its opinions
rendered June 9, 1997 and the date of this Proxy Statement/Prospectus provided
to the Jefferson Board regarding the fairness of the Exchange Ratio pursuant to
the Merger to holders of Jefferson Common Stock, and do not purport to be
appraisals or necessarily reflect the prices at which Jefferson or its
securities actually may be sold.
For the services of Goldman Sachs as financial adviser to Jefferson in
connection with the Merger, pursuant to an engagement letter dated May 19, 1997,
Jefferson has agreed to pay Goldman Sachs a transaction fee of 0.75 percent of
the aggregate consideration paid in the event that, during the term specified in
the engagement letter, the purchase of 50 percent or more of the outstanding
Jefferson Common Stock or the assets (based on the book value thereof) of
Jefferson is agreed upon (and eventually consummated), or is accomplished in one
or a series of transactions. Based on the number of Jefferson shares outstanding
on June 10, 1997, the closing price of Wachovia Common Stock on June 9, 1997,
and the Exchange Ratio of 0.625 of a share of Wachovia Common Stock for each
share of Jefferson Common Stock, the aggregate value of the transaction would be
$541.8 million and would generate a fee of $4.1 million to Goldman Sachs. The
actual amount of the fee will depend upon the per share value of Wachovia Common
Stock and the number of shares of Jefferson Common Stock outstanding on the
Effective Date. Jefferson has also agreed to pay Goldman Sachs its reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of its
counsel, and to indemnify Goldman Sachs against certain liabilities, including
certain liabilities arising under the federal securities laws. Goldman Sachs has
provided certain investment banking and advisory services to Jefferson from time
to time, for which it has received, and will receive, customary compensation,
including acting as financial adviser for Jefferson in connection with the
Merger Agreement. In addition, Goldman Sachs has provided, and may provide in
the future, certain investment banking services to Wachovia, for which it has
received, and will receive, customary compensation.
Goldman Sachs has advised Jefferson that, in the ordinary course of its
business as a full-service securities firm, Goldman Sachs may, subject to
certain restrictions, actively trade the equity and/or debt securities of
Jefferson, Central Fidelity and/or of Wachovia for its own account or for the
accounts of its customers, and, accordingly, may at any time hold a long or
short position in such securities.
REASONS OF WACHOVIA FOR THE MERGER
The acquisition of Jefferson is consistent with Wachovia's publicly stated
plan to have operations, offices and distinct capabilities in every market of
its choice within the region. Wachovia believes that, in addition to
23
<PAGE>
expanding Wachovia's presence into very attractive Virginia markets, the Merger
provides an opportunity to enhance Wachovia's shareholder value by eliminating
redundant or unnecessary costs and enhancing revenue growth prospects.
EFFECTIVE TIME
If the Merger Agreement is approved by the requisite vote of Jefferson
shareholders, all other 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 (the "Effective Date")
and at the time (the "Effective Time") that articles of merger reflecting the
Merger are filed with the office of the Virginia State Corporation Commission
and the Secretary of State of North Carolina and a certificate of merger is
issued by the Virginia State Corporation Commission. Wachovia and Jefferson have
agreed to cause the Effective Date to occur on the fifth business day to occur
after the last of the conditions set forth in the Merger Agreement shall have
been satisfied or waived (or, at the election of Wachovia, on the last business
day of the month in which such day occurs) or such other date to which Wachovia
and Jefferson may agree in writing. Assuming satisfaction of all conditions to
consummation of the Merger, the Merger is expected to be made effective October
29, 1997 or as soon thereafter as practicable. Either Wachovia or Jefferson may
terminate the Merger Agreement if the Merger has not been consummated by June
30, 1998. See " -- Conditions to Consummation" and " -- Amendment, Waiver and
Termination."
DISTRIBUTION OF WACHOVIA CERTIFICATES
Promptly after the Effective Time, Wachovia will send or cause to be sent
transmittal materials to each record holder of Jefferson Common Stock for use in
exchanging those certificates for the shares of Wachovia Common Stock to which
such shareholder is entitled as a result of the Merger. JEFFERSON SHAREHOLDERS
SHOULD NOT SURRENDER THEIR CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE THE
LETTER OF TRANSMITTAL AND INSTRUCTIONS. Wachovia will cause the certificates for
Wachovia Common Stock and/or any check in respect of any fractional share
interests or dividends or distributions which a holder of Jefferson Common Stock
will be entitled to receive to be delivered upon surrender to Wachovia Bank,
National Association, as exchange agent (the "Exchange Agent") of certificates
representing such shares of Jefferson Common Stock owned by such shareholder. No
party will be liable to a holder of Jefferson Common Stock for any property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat or similar law.
After the Effective Time, at the election of Wachovia, no dividend or other
distribution payable after the Effective Time with respect to Wachovia Common
Stock, will be paid to the holder of any unsurrendered Jefferson certificate,
and no such unsurrendered shares will be entitled to vote, 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 Jefferson
Common Stock on Jefferson's stock transfer books. If certificates representing
shares of Jefferson 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.
FRACTIONAL SHARES
Pursuant to the terms of the Merger Agreement, each holder of shares of
Jefferson 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 determined by
multiplying such fraction by the average of the last sale prices of Wachovia
Common Stock, as reported by the NYSE Composite Tape (as reported in THE WALL
STREET JOURNAL or, if not reported therein, in another authoritative source),
for the five NYSE trading days immediately preceding the Effective Date. No such
holder will be entitled to dividends, voting rights, or any other rights as a
shareholder in respect of any fractional shares.
24
<PAGE>
CONVERSION OF HOLDINGS IN DIVIDEND REINVESTMENT AND STOCK PURCHASE PLANS
Jefferson maintains a Dividend Reinvestment Plan, Employee Stock Purchase
Plan, and Deferred Compensation and Stock Purchase Plan for Non-Employee
Directors (the "Jefferson Stock Purchase Plans"), pursuant to which shareholders
of record, employees, and non-employee directors may purchase shares of
Jefferson Common Stock. Wachovia maintains a single Dividend Reinvestment and
Common Stock Purchase Plan that permits shareholders, employees and non-employee
directors to purchase shares of Wachovia Common Stock. At the Effective Time of
the Merger, each share of Jefferson Common Stock held in the Jefferson Stock
Purchase Plans will be converted into, and exchanged for, 0.625 of a share of
Wachovia Common Stock and will be held in Wachovia's Dividend Reinvestment and
Common Stock Purchase Plan.
STOCK OPTIONS
The Merger Agreement provides that, at the Effective Time of the Merger,
each Jefferson Stock Option which is outstanding at the Effective Time of the
Merger, whether or not vested, will be converted into an option to acquire, on
the same terms and conditions as were applicable under the Jefferson 1995
Long-Term Incentive Stock Plan (the "1995 Stock Plan"), Wachovia Common Stock
with the exercise price and shares purchasable thereunder being adjusted to
reflect the Exchange Ratio.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING SUMMARY OF THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER TO HOLDERS WHO HOLD SHARES OF JEFFERSON COMMON STOCK AS CAPITAL
ASSETS DEALS ONLY WITH HOLDERS WHO ARE (I) CITIZENS OR RESIDENTS OF THE UNITED
STATES, (II) DOMESTIC CORPORATIONS OR (III) OTHERWISE SUBJECT TO UNITED STATES
FEDERAL INCOME TAX ON A NET INCOME BASIS IN RESPECT OF SHARES OF JEFFERSON
COMMON STOCK ("U.S. HOLDERS"). THIS SUMMARY MAY NOT APPLY TO CERTAIN CLASSES OF
TAXPAYERS, INCLUDING, WITHOUT LIMITATION, INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS, FINANCIAL INSTITUTIONS, DEALERS IN SECURITIES, PERSONS WHO
ACQUIRED OR ACQUIRE SHARES OF JEFFERSON COMMON STOCK PURSUANT TO THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR RIGHTS OR OTHERWISE AS COMPENSATION AND PERSONS WHO
HOLD SHARES OF JEFFERSON COMMON STOCK IN A HEDGING TRANSACTION OR AS PART OF A
STRADDLE OR CONVERSION TRANSACTION. ALSO, THE SUMMARY DOES NOT ADDRESS STATE,
LOCAL OR FOREIGN TAX CONSEQUENCES OF THE MERGER. CONSEQUENTLY, EACH HOLDER
SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISER AS TO THE SPECIFIC TAX CONSEQUENCES
OF THE MERGER TO SUCH HOLDER.
This summary is based on current law and the advice of Sullivan & Cromwell,
special counsel to Wachovia. Future legislative, judicial or administrative
changes or interpretations, which may be retroactive, could alter or modify the
statements set forth herein. The advice of Sullivan & Cromwell set forth in this
summary is based on, among other things, assumptions relating to certain facts
and circumstances of, and the intentions of the parties to, the Merger, which
assumptions have been made with the consent of Wachovia. Wachovia would not
expect to request any ruling from the Internal Revenue Service as to the United
States federal income tax consequences of the Merger.
It is intended that the Merger would be treated as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and that, accordingly, for federal income tax purposes no gain or
loss would be recognized by either Jefferson or Wachovia as a result of the
Merger.
Wachovia expects that Sullivan & Cromwell would deliver an opinion
substantially to the effect that the material federal income tax consequences of
the Merger to each of Wachovia, Jefferson and U.S. Holders who exchange shares
of Jefferson Common Stock for shares of Wachovia Common Stock pursuant to the
Merger would be as follows:
(i) no gain or loss would be recognized by Wachovia or Jefferson as a
result of the consummation of the Merger;
(ii) no gain or loss would be recognized by a U.S. Holder, except as
described below with respect to a U.S. Holder who receives cash in lieu of
a fractional share interest in Wachovia Common Stock;
(iii) the aggregate adjusted tax basis of shares of Wachovia Common
Stock (including a fractional share interest in Wachovia Common Stock
deemed received and redeemed as described below) received by a U.S. Holder
would be the same as the aggregate adjusted tax basis of the shares of
Jefferson Common Stock exchanged therefor;
25
<PAGE>
(iv) the holding period of shares of Wachovia Common Stock (including
a fractional share interest in Wachovia Common Stock deemed received and
redeemed as described below) received by a U.S. Holder would include the
holding period of the Jefferson Common Stock, exchanged therefor; and
(v) a U.S. Holder of Jefferson Common Stock who receives cash in lieu
of a fractional share interest in Wachovia Common Stock would be treated as
having received such fractional share interest and then as having received
the cash in redemption of such fractional share interest. Under Section 302
of the Code, if such deemed distribution were "substantially
disproportionate" with respect to the U.S. Holder or were "not essentially
equivalent to a dividend" after giving effect to the constructive ownership
rules of the Code, the U.S. Holder would generally recognize capital gain
or loss equal to the difference between the amount of cash received and the
U.S. Holder's adjusted tax basis in the fractional share interest. Such
capital gain or loss would be long-term capital gain or loss if the U.S.
Holder's holding period in the fractional share interest is more than one
year.
Wachovia expects that such opinion would be based on, among other things,
customary factual assumptions and representations, made by each of Wachovia and
Jefferson. Such opinion may state that no opinion is expressed as to the effect
of the Merger on Wachovia, Jefferson or any U.S. Holder with respect to any
asset as to which any unrealized gain or loss is required to be recognized for
federal income tax purposes at the end of a taxable year (or on the termination
or transfer thereof) under a mark-to-market system of accounting.
Under the terms of the Merger Agreement, the conditions to the Merger,
including receipt by each party of opinions of counsel relating to tax matters,
may generally be waived by Wachovia or Jefferson, as applicable. As of the
date of this Proxy Statement/Prospectus, neither Wachovia nor Jefferson
intends to waive the conditions as to the receipt of opinions of counsel
on tax matters. In the event of a failure to obtain tax opinions, and
a party's determination to waive such condition to the consummation
of the Merger, Jefferson will resolicit the votes of its shareholders to
approve the Merger without such conditions and update the information
contained herein with respect to the tax consequences of the Merger
as necessary. See "The Merger--Conditions to Consummation" and "--Amendment,
Waiver and Termination.
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH HOLDER OF JEFFERSON COMMON STOCK AND OTHER
FACTORS, EACH SUCH HOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISER AS
TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDER (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. Under the Merger Agreement, Wachovia has agreed to
cause one member of the Jefferson Board, selected by Wachovia after consultation
with Jefferson, who is willing and eligible to serve to be elected or appointed
as a director of Wachovia at, or as promptly as practicable after, the Effective
Time. The directors and officers of Wachovia in office immediately prior to the
Effective Time, together with such additional director selected from the
Jefferson Board and 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.
POST-ACQUISITION COMPENSATION AND BENEFITS
The Merger Agreement provides generally that, as soon as practicable
following the Effective Time (but in no event later than January 1, 1998 if the
Effective Time occurs prior to January 1, 1998) (i) Wachovia will provide
employees of Jefferson who become employees of Wachovia with employee benefit
plans no less favorable in the aggregate than those provided to similarly
situated employees of Wachovia; (ii) any such employees generally will receive
credit for service with Jefferson or any of its subsidiaries or predecessors
prior to the Effective Time for the purpose of determining eligibility to
participate, eligibility for benefits, benefit forms, and vesting under
Wachovia's employee benefit plans (including certain prior periods of service
with Wachovia); and (iii) Wachovia will cause any and all pre-existing condition
limitations and eligibility waiting periods under group health plans to be
waived with respect to such participants and their eligible dependents. All
discretionary awards and benefits under any employee benefit plans of Wachovia
will be subject to the discretion of the persons or committee administering such
plans. Wachovia will honor all employee benefit obligations to current and
former employees of Jefferson in accordance with the terms of applicable benefit
plans.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Jefferson's management, including all of its directors,
have certain interests in the Merger in addition to the interests they may have
as Jefferson shareholders generally. These interests include,
26
<PAGE>
among others, indemnification rights of Jefferson directors and officers under
the Merger Agreement, potential severance and other employee benefits described
below, the understanding that Wachovia will employ Mr. O. Kenton McCartney,
President and Chief Executive Officer of Jefferson, as a senior officer for a
period of at least three years, subject to renewal under certain circumstances,
and the understanding that Wachovia will enter into employment agreements with
at least five other executives of Jefferson who have not been identified at this
time. Additionally, in the Merger Agreement Wachovia agreed that one person from
the Jefferson Board who is eligible and willing to serve will be elected or
appointed to the Wachovia Board. The Jefferson Board was aware of the interests
of all of such persons at the time it approved the Merger Agreement and the
Stock Option Agreement.
Wachovia also agreed that for a period of six years after the Merger it
would indemnify the directors and officers of Jefferson against costs or
expenses (including reasonable attorneys' fees), judgments, liens, losses,
claims, damages or liabilities incurred in connection with any claim, action,
suit, proceeding or investigation (civil or criminal), administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Merger, to the fullest extent that Jefferson is permitted to indemnify (and
advance expenses) to its directors and officers under the laws of the
Commonwealth of Virginia and Jefferson's articles of incorporation and bylaws in
effect on the date of the Merger Agreement, provided any such director's or
officer's conduct complies with the standards set forth under Virginia law and
Jefferson's articles of incorporation and bylaws. In addition, Wachovia agreed
that for a period of three years after the Merger it would use its reasonable
best efforts to obtain directors' and officers' liability insurance for the
benefit of Jefferson's directors and officers, to provide insurance coverage
that will reimburse the present and former directors and officers of Jefferson
or any of its subsidiaries with respect to claims against such directors and
officers arising from facts or events which occurred before the Merger, with
coverages and policy limits no less advantageous than the coverage provided by
Jefferson on the date of the Merger Agreement, subject to the cost for such
insurance not exceeding 200 percent of the amount expended by Jefferson for such
insurance on the date of the Merger Agreement.
Under Jefferson's 1995 Stock Plan and the stock option agreements issued
thereunder, the outstanding and unexercised stock options granted to key
employees, including the executive officers, prior to the Merger will become
fully vested and immediately exercisable upon the occurrence of a change in
control of Jefferson. Approval of the Merger by Jefferson's shareholders will
constitute a change in control under the 1995 Stock Plan. Pursuant to the Merger
Agreement, each stock option outstanding under the 1995 Stock Plan at the
Effective Time of the Merger will be converted into an option to acquire, on the
same terms and conditions as were applicable under the 1995 Stock Plan, Wachovia
Common Stock with the exercise price and number of shares purchasable thereunder
being adjusted to reflect the Exchange Ratio. Each stock option which is
intended to be an "incentive stock option" within the meaning of Section 422 of
the Code will be converted in accordance with the requirements of Section 422 of
the Code (to the extent such stock option continues to qualify as an "Incentive
Stock Option" after it becomes fully vested).
Under Jefferson's 1985 Incentive Stock Plan (the "1985 Award Plan"), the
committee appointed by the Jefferson Board to administer the 1985 Award Plan has
the discretion to accelerate the vesting of awards granted to key employees,
including the executive officers, who are participants in the 1985 Award Plan in
the event of a merger, consolidation, sale of substantially all of the assets,
dissolution or liquidation of Jefferson. On June 9, 1997, the committee took
action to accelerate the vesting of all outstanding awards under the 1985 Awards
Plan, to be effective upon the Merger becoming effective. As a result, the
awards held by key employees, including the executive officers, under the 1985
Award Plan will become fully vested at the Effective Time of the Merger and will
be converted into an equivalent number of shares of Wachovia Common Stock based
on the Exchange Ratio of Wachovia Common Stock relative to Jefferson Common
Stock.
In addition, the Jefferson Board has amended the 1985 Award Plan to clarify
that the committee that administers the plan may in its discretion specify the
time and manner in which benefits will be paid under the plan following a
merger, consolidation, sale of substantially all of the assets, dissolution or
liquidation of Jefferson. In accordance with the authority granted to it under
the terms of this amendment, the administrative committee for the 1985 Award
Plan has directed that all benefits payable under the plan shall be paid to
participants in two substantially equal payments as of May 1, 1998 and May 1,
1999 (regardless of any other payment elections which participants may have
previously made), unless a participant terminates employment from Jefferson or
Wachovia prior to receipt of such payments, in which case the entire amount of
the participant's benefits under the plan will be paid within 15 days of the
participant's termination of employment.
27
<PAGE>
Under the Jefferson Profit Sharing Plan (the "Profit Sharing Plan"),
participants who are employed by Jefferson upon a change in control of Jefferson
become fully vested in their respective account balances as of the date of the
change in control. Approval of the Merger by the Jefferson shareholders will
constitute a change in control under the Profit Sharing Plan. As a result,
Jefferson employees, including the executive officers, who are participants in
the Profit Sharing Plan will become fully vested in their respective account
balances under the Profit Sharing Plan upon the change in control.
Fifteen officers of Jefferson, including the executive officers, are
parties to executive continuity agreements with Jefferson which provide for the
continuation of salary (at a level at least equal to the base salary paid or
payable in respect of the twelve-month period immediately preceding the change
in control), participation in incentive, retirement and split dollar life
insurance plans and other arrangements applicable generally to other peer
executives, and participation in certain welfare benefit plans and fringe
benefit plans during an employment period of up to two years following a change
in control of Jefferson. In addition, Jefferson will be deemed to have achieved
certain specified levels of performance goals for purposes of determining the
officer's award under a Jefferson incentive bonus program. Upon the occurrence
of certain events connected with a termination of employment following a change
in control, the executive is entitled to certain enhanced retirement benefits, a
continuance of certain welfare benefits and retirement benefits for a period of
up to two years, plus a lump sum payment equal to a multiple (specified in each
executive continuity agreement and ranging from 1.50 to 2.99) of the greater of
(i) the executive's taxable compensation (with certain adjustments) for the
twelve months preceding termination of the executive's employment or (ii) the
executive's taxable compensation (with certain adjustments) for the twelve
months preceding the change in control. The amount of lump sum payments to the
fifteen executive officers, all of whom are parties to continuity agreements
with Jefferson (assuming termination of services on October 31, 1997), will vary
in amount from a minimum of approximately $260,000 to a maximum of approximately
$1,700,000, with the average payment estimated at approximately $600,000. These
amounts may be larger to the extent any additional payments are required to be
made under the terms of the continuity agreements to compensate for excise and
additional taxes on the lump sum payments. The Merger will constitute a change
in control under the executive continuity agreements. The payments and benefits
described above will become payable if a qualifying termination of employment
occurs with respect to any of the covered executive officers. It is possible
that some of the executive officers will not continue in the employment of
Wachovia following the Merger and will, therefore, be entitled to receive
severance payments under their respective executive continuity agreements, and
other executive officers will continue in their current positions or accept
other positions with Wachovia following the Merger and, in connection therewith,
waive their rights under their executive continuity agreements. As of the date
of this Proxy Statement/Prospectus, the executives who will receive termination
payments have not been identified, since it is not known which executives will
continue in current, similar or different positions with Wachovia.
After the executives who will continue in current, similar or different
roles have been identified, five selected executives, as determined collectively
by the CEO of Wachovia and Mr. McCartney, will be offered a fixed five year
employment agreement along with a base salary, incentive plan opportunity, stock
option awards and restricted stock awards commensurate with the position. Such
employment agreements will provide that if the executive terminates employment
during the term of the agreement for good reason (as described in the agreement)
or is involuntarily terminated other than for cause, the executive will receive
additional cash compensation and will be permitted to continue to participate in
Wachovia employee benefit plans for the remainder of the term of the agreement,
his or her stock options will become fully vested and exercisable, and his or
her restricted awards will be deemed to have been earned in full. The
executive's right to these benefits and additional cash compensation is subject
to non-competition and confidentiality requirements during the remainder of the
term of the agreement. The executive may elect to continue his or her existing
executive continuity agreement if he or she so chooses, in lieu of accepting
employment under the Wachovia employment agreement.
Under Jefferson's Deferred Compensation and Stock Purchase Plan for
Non-Employee Directors (the "Directors' Plan"), the fees that participating
directors have elected to defer, either in the form of cash or shares of
Jefferson Common Stock, will become immediately distributable following a change
in control of Jefferson. Approval of the Merger by the Jefferson shareholders
will constitute a change in control under the terms of the Directors' Plan. The
committee appointed by the Jefferson Board to administer the Directors' Plan has
the discretion to determine whether such deferred fees will be paid in a lump
sum or in installments over a period of years. A director may request a change
in the timing of payment of his or her deferred fees; however, the committee is
28
<PAGE>
not obligated to honor such a request. It is contemplated that the committee
will take action to authorize payment of participating directors' deferred fees
in three substantially equal annual installments that begin in 1997 and end in
1999.
It is contemplated that Wachovia will employ Mr. McCartney after the Merger
under a three-year employment agreement as a senior officer of Wachovia, with
responsibilities as president of its Virginia banking operations. Mr. McCartney
will initially be paid a base salary of $310,000 (which is equal to the base
salary that he is currently receiving from Jefferson) and be granted an
opportunity to participate in an incentive plan commensurate with that provided
to similarly situated executives of Wachovia. In addition, he will initially be
granted options to purchase 20,000 shares of Wachovia Common Stock at an
exercise price equal to the market price of Wachovia Common Stock as of the
Effective Time, and 7,500 restricted shares of Wachovia Common Stock as of the
Effective Time. The options will vest over a five year period in 20% increments
beginning after the first year of Mr. McCartney's employment and the restricted
shares will be subject to five-year, nongraded vesting and will be subject to
the satisfaction by Wachovia of a return on equity goal. The primary purpose of
the stock options and restricted shares of stock which will be awarded Mr.
McCartney on the Effective Time is to incent performance and enhance retention.
The award of stock options and restricted shares are in keeping with Wachovia's
compensation philosophy which includes a heavy emphasis on a long-term component
which is both equity based and subject to certain performance goals for
Wachovia. Executives at a similar responsibility level within Wachovia are
generally awarded options and restricted shares commensurate in amount with
those which will be awarded Mr. McCartney. The average annual awards of stock
options and restricted shares during 1996 and 1997 for Wachovia executives
within a similar salary range of Mr. McCartney's initial salary are 17,000
options and 9,750 restricted shares. Based on the closing price of Wachovia
Common Stock as of August 27, 1997 of $62.8125 per share, the estimated current
market value of the 7,500 restricted shares to be awarded Mr. McCartney is
$471,000. It is also contemplated that Mr. McCartney will enter into an
executive retirement agreement with Wachovia that will provide for payment of a
retirement benefit upon his termination of employment under certain conditions.
The retirement benefit will be computed as a single life annuity payable in
monthly installments, in an amount equal to 2.5% of Mr. McCartney's final
average compensation multiplied by his years of service (up to a maximum of
62.5% of his final average compensation), subject to reductions for certain
other benefits payable to Mr. McCartney. In no event will the annual amount of
the retirement benefit payable to Mr. McCartney under the agreement, when
combined with other retirement benefits payable by Jefferson or Wachovia and
under the Social Security Act, be less than $275,000. The present value of Mr.
McCartney's retirement benefit under the executive retirement agreement,
assuming he remains employed to the normal retirement date specified under the
plan at the same salary and estimated bonus and using the actuarial equivalent
lump sum factors as set forth in the Wachovia Retirement Income Plan, is
$1,264,000.
The directors and certain officers of Jefferson own shares of Jefferson
Common Stock which will be converted into shares of Wachovia Common Stock at the
same exchange ratio as will apply to every other Jefferson shareholder. See
"Voting Securities and Principal Shareholders of Jefferson -- Shares
Beneficially Owned by Directors and Executive Officers."
CONDITIONS TO CONSUMMATION
The obligations of Jefferson and Wachovia to consummate the Merger are
subject to the satisfaction or written waiver of the following conditions: (i)
the Merger Agreement shall have been approved by the requisite vote of the
shareholders of Jefferson; (ii) the required regulatory approvals described
under "Regulatory Approvals" shall have been received, generally without any
conditions, restrictions or requirements which Wachovia reasonably determines in
good faith would (a) following the Effective Time, have a material adverse
effect on Wachovia and its subsidiaries taken as a whole or (b) reduce the
benefits of the Merger to such a degree that Wachovia would not have entered
into the Merger Agreement had such conditions, restrictions or requirements been
known at the date of the Merger Agreement; (iii) no court or regulatory
authority shall have taken any action prohibiting the consummation of the
transactions contemplated by the Merger Agreement; (iv) 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; (v) 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 states in which
such qualification, registration or approval is required; (vi) the shares of
Wachovia Common Stock issuable pursuant to the Merger shall have been
29
<PAGE>
approved for listing on the NYSE; (vii) Jefferson shall have received an opinion
of McGuire, Woods, Battle & Boothe, L.L.P. as to certain tax matters; (viii)
Wachovia shall have received an opinion of Sullivan & Cromwell as to certain tax
matters; (ix) the other party's representations and warranties shall remain
accurate; (x) the other party shall have performed in all material respects all
of the obligations required to be performed by it pursuant to the Merger
Agreement, and shall have delivered certificates confirming satisfaction of the
foregoing requirements; and (xi) each party shall have received a letter of the
other party's independent accountants as to certain financial information of the
other party.
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, including receipt of the tax
opinions, 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 Jefferson shareholders. As of the date of this Proxy
Statement/Prospectus, neither Wachovia nor Jefferson intends to waive the
conditions as to the receipt of opinions of counsel on taxation matters. In the
event of a failure to obtain tax opinions, and a party's determination to waive
such condition to the consummation of the Merger, Jefferson would resolicit the
votes of its shareholders to approve the Merger without such condition and
update the information contained herein with respect to the tax consequences of
the Merger as necessary. See " -- Amendment, Waiver and Termination."
REGULATORY APPROVALS
FEDERAL RESERVE BOARD. The Merger is subject to prior approval by the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board") under
Section 3 of the BHC Act. Such approval was obtained August 26, 1997.
Pursuant to the BHC Act, the Merger may not be consummated until 30 days
after Federal Reserve approval (or September 25, 1997), during which time the
United States Department of Justice may challenge the Merger on antitrust
grounds. The commencement of an antitrust action would stay the effectiveness of
the Federal Reserve Board's approval unless a court specifically ordered
otherwise. With the approval of the Federal Reserve Board and the concurrence of
the Department of Justice, the waiting period may be reduced to no less than 15
days. Wachovia and Jefferson believe that the Merger does not raise substantial
antitrust or other significant regulatory concerns and that they will be able to
obtain all requisite regulatory approvals on a timely basis without the
imposition of any condition that would have a material adverse effect on
Wachovia.
STATE AUTHORITIES. Consummation of the Merger is subject to the prior
approval of the State Corporation Commission of Virginia (the "Virginia
Commission"). The Virginia Commission will consider the safety and soundness of
Jefferson and Jefferson National Bank; the qualification and experience of
Wachovia and its directors and officers; whether the Merger would be prejudicial
to depositors, creditors, beneficiaries of fiduciary accounts or shareholders of
Wachovia, Jefferson or their banking subsidiaries; and whether the Merger would
be in the public interest. The Merger may also be subject to the approval of, or
notice to, other state authorities under various state bank, insurance and
securities regulatory statutes.
STATUS OF REGULATORY APPROVALS AND OTHER INFORMATION. Wachovia and
Jefferson have filed all applications and notices and have taken (or will
promptly take) other appropriate action with respect to any requisite approvals
or other action of any governmental authority. The Merger Agreement provides
that the obligation of each of Wachovia and Jefferson to consummate the Merger
is conditioned upon, among other things, (i) the receipt of all requisite
regulatory approvals, including the approvals of the Federal Reserve Board and,
to the extent necessary, the state authorities, (ii) the termination or
expiration of all statutory or regulatory waiting periods in respect thereof and
(iii) no such approvals containing conditions, restrictions or requirements
which the Wachovia Board reasonably determines in good faith would, after the
Effective Date, have a material adverse effect on Wachovia and its subsidiaries
taken as a whole or reduce the benefits of the transactions contemplated in the
Merger Agreement to such a degree that Wachovia would not have entered into the
Merger Agreement.
THE MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY
APPROVALS. THERE CAN BE NO ASSURANCE THAT ALL SUCH REGULATORY APPROVALS WILL BE
OBTAINED OR AS TO THE DATES OF SUCH APPROVALS. THERE CAN ALSO BE NO ASSURANCE
THAT SUCH APPROVALS WILL NOT CONTAIN A CONDITION, RESTRICTION OR REQUIREMENT
THAT
30
<PAGE>
CAUSES SUCH APPROVALS TO FAIL TO SATISFY THE CONDITIONS SET FORTH IN THE MERGER
AGREEMENT. SEE " -- CONDITIONS TO THE MERGER."
See " -- The Effective Time," " -- Conditions to the Merger" and
" -- Termination of the Merger Agreement."
AMENDMENT, WAIVER AND TERMINATION
To the extent permitted by law, Jefferson and Wachovia may amend the Merger
Agreement by written agreement at any time. Prior to or at the Effective Time,
either Jefferson or Wachovia 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
Jefferson and Wachovia. In addition, the Merger Agreement may be terminated, and
the Merger abandoned, prior to the Effective Time by either Wachovia or
Jefferson if: (i) 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 such breach, individually or in the aggregate, has a
Material Adverse Effect (as defined in the Merger Agreement) on the
non-breaching party; (ii) any consent or approval of certain regulatory
authorities is denied by final nonappealable action of such authority or the
Jefferson shareholders fail to approve the Merger Agreement; or (iii) the Merger
has not been consummated by June 30, 1998. Also, Wachovia may terminate the
Merger Agreement if the Jefferson Board shall fail to recommend approval of the
Merger, or has modified or changed such recommendation.
CONDUCT OF BUSINESS PENDING THE MERGER
JEFFERSON. Jefferson has agreed in the Merger Agreement, unless the prior
written consent of Wachovia is obtained, and except as otherwise contemplated by
the Merger Agreement, not to, and to cause each of its subsidiaries not to
(a) conduct the business of Jefferson and its subsidiaries other than
in the ordinary and usual course or fail to use reasonable efforts to
preserve intact their business organizations and assets and maintain their
rights, franchises and existing relations with customers, suppliers,
employees and business associates, or take any action reasonably likely to
have an adverse effect upon Jefferson's ability to perform any of its
material obligations under the Merger Agreement;
(b) except in limited circumstances, issue, sell or otherwise permit
to become outstanding, or authorize the creation of, any additional shares
of, or rights to acquire, Jefferson Common Stock, enter into any agreement
with respect to the foregoing, or permit any additional shares of Jefferson
Common Stock to become subject to new grants of employee or director stock
options, other rights or similar stock-based employee rights;
(c)(i) make, declare, pay or set aside for payment any dividend (other
than quarterly cash dividends in an amount not to exceed $0.25 per share
and dividends from wholly owned subsidiaries, except that if Wachovia
increases its regular quarterly dividend to an amount in excess of $0.40
per share, then Jefferson may increase, at its option, all future dividends
in an amount proportionate to the increase in the Wachovia dividend) or
(ii) directly or indirectly adjust, split, combine, redeem, reclassify,
purchase or otherwise acquire, any shares of capital stock;
(d) enter into or amend or renew any employment, consulting, severance
or similar agreements with any director, officer or employee of Jefferson
or its subsidiaries, or grant any salary or wage increase or increase any
employee benefit, except (i) for normal individual increases in
compensation to employees, (ii) for other changes that are required by
applicable law, (iii) to satisfy previously disclosed contractual
obligations or (iv) for grants of awards to newly hired employees
consistent with past practice;
(e) enter into, establish, adopt or amend (except as may be required
by applicable law or to satisfy previously disclosed contractual
obligations) any benefit plan in respect of any director, officer or
employee
31
<PAGE>
of Jefferson or its subsidiaries, or take any action to accelerate the
vesting or exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder;
(f) sell, transfer, mortgage, encumber or otherwise dispose of or
discontinue any of its assets, deposits, business or properties except in
the ordinary course of business and in a transaction that is not material;
(g) acquire all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business
and in a transaction that is not material;
(h) amend its or any subsidiary's certificate of incorporation or
bylaws;
(i) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by generally accepted
accounting principles;
(j) except in the ordinary course of business consistent with past
practice, enter into or terminate any material contract or amend or modify
in any material respect any of its existing material contracts;
(k) except in the ordinary course of business consistent with past
practice, generally settle any material claim, action or proceeding;
(l)(i) take any action reasonably likely to prevent or impede the
Merger from qualifying as a reorganization for tax purposes; or (ii)
knowingly take any action that is intended or is reasonably likely to
result in (A) any of its representations and warranties set forth in the
Merger Agreement being or becoming untrue, (B) any of the conditions to the
Merger not being satisfied or (C) a material violation of any provision of
the Merger Agreement except, in each case, as may be required by applicable
law or regulation;
(m) except as required by applicable law or regulation, (i) implement
or adopt any material change in its interest rate and other risk management
policies, procedures or practices; (ii) fail to follow its existing
policies or practices with respect to managing its exposure to interest
rate and other risk; or (iii) fail to use commercially reasonable means to
avoid any material increase in its aggregate exposure to interest rate
risk;
(n) incur any indebtedness for borrowed money other than in the
ordinary course of business; or
(o) agree or commit to do any of the foregoing.
In addition, Jefferson has agreed that neither it nor any of its
subsidiaries nor any of their respective officers and directors will, and
Jefferson will direct and use its reasonable best efforts to cause its
employees, agents and representatives not to, initiate, solicit or encourage,
directly or indirectly, any enquiries or the making of any proposal or offer
with respect to a merger, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or any equity
securities of, Jefferson or Jefferson National Bank (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or, except to the
extent legally required for the discharge by the Jefferson Board of its
fiduciary duties as advised in writing by its counsel, engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal. In the Merger Agreement Jefferson agreed to cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of the Merger Agreement with any parties other than Wachovia with respect
to any of the foregoing and agreed to use its reasonable best efforts to enforce
any confidentiality or similar agreement relating to an Acquisition Proposal.
Jefferson has agreed to promptly (within 24 hours) advise Wachovia following the
receipt by Jefferson of any Acquisition Proposal and the substance thereof, and
immediately advise Wachovia of any developments with respect to any Acquisition
Proposal.
WACHOVIA. Wachovia has agreed in the Merger Agreement, unless the prior
written consent of Jefferson is obtained, and except as otherwise contemplated
by the Merger Agreement, not to, and cause each of its subsidiaries not to:
(a) make, declare, pay or set aside for payment any extraordinary
dividend; or
(b)(i) take any action which would materially adversely affect its
ability to consummate the Merger; (ii) take any action reasonably likely to
prevent or impede the Merger from qualifying as a reorganization for tax
purposes; or (iii) knowingly take any action that is intended or is
reasonably likely to result in (A) any of its representations and
warranties set forth in the Merger Agreement being or becoming untrue; (B)
any of the
32
<PAGE>
conditions to the Merger not being satisfied; or (C) a material violation
of any provision of the Merger Agreement except, in each case, as may be
required by applicable law.
EXPENSES AND FEES
The Merger Agreement provides that each party shall be responsible for all
expenses incurred by it in connection with the negotiation and consummation of
the transactions contemplated by the Merger Agreement, except that Wachovia and
Jefferson have agreed to share equally all Commission filing fees and printing
expenses payable 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 generally accepted accounting principles, for accounting and
financial reporting purposes. Under purchase accounting, the assets and
liabilities of Jefferson 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 Jefferson.
DISSENTERS' RIGHTS
Under the Virginia Stock Corporation Act, holders of Jefferson Common Stock
have no dissenters' rights in connection with the Merger.
STOCK EXCHANGE LISTING OF WACHOVIA COMMON STOCK
Wachovia has agreed to use its reasonable best efforts to list, prior to
the Effective Date, on the NYSE, subject to official notice of issuance, the
shares of Wachovia Common Stock to be issued to the holders of Jefferson Common
Stock in the Merger.
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 Jefferson 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 Jefferson under Rule 145. 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 Jefferson.
STOCK OPTION AGREEMENT
As an inducement to Wachovia's willingness to continue to pursue the
transaction contemplated by the Merger Agreement, Jefferson entered into the
Stock Option Agreement with Wachovia. The following description of the Stock
Option Agreement is qualified in its entirety by reference to the text of such
Stock Option Agreement, a copy of which is attached as Appendix B and which is
incorporated herein by reference.
Pursuant to the Stock Option Agreement, Jefferson granted Wachovia the
Option, which permits Wachovia to purchase up to 2,770,000 shares of Jefferson
Common Stock, subject to adjustment in certain cases as described below but in
no event exceeding 19.9% of the number of shares of Jefferson Common Stock
outstanding immediately before exercise of the Option (the "Option Shares"). The
exercise price of the Option is $29.6875 per share (the average of the last
reported sale price on the last two trading days preceding the execution of the
Merger Agreement), subject to adjustment under specified circumstances (such
exercise price, as so adjusted, being referred to herein as the "Option Price").
The Option will become exercisable in whole or in part if both an "Initial
Triggering Event" and a "Subsequent Triggering Event" occur with respect to
Jefferson prior to the occurrence of an "Exercise Termination
33
<PAGE>
Event," as such terms are defined below. The purchase of any shares of Jefferson
Common Stock pursuant to the Option is subject to compliance with applicable
law, including the receipt of necessary approvals under the BHC Act. If Wachovia
were to exercise its right to acquire the full 19.9% of the outstanding shares
of Jefferson Common Stock subject to the Option, Wachovia would hold
approximately 16.6% of the outstanding shares of Jefferson Common Stock
immediately after such exercise.
The Stock Option Agreement generally defines the term "Initial Triggering
Event" to mean any of the following events or transactions:
(i) Jefferson or Jefferson National Bank, without Wachovia's prior
written consent, enters into an agreement to engage in an "Acquisition
Transaction" (as defined below) with a third party or the Jefferson Board
recommends that the shareholders of Jefferson approve or accept any
Acquisition Transaction, other than as contemplated by the Merger
Agreement;
(ii) A third party shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 15% or more of the outstanding
shares of Jefferson Common Stock;
(iii) The shareholders of Jefferson shall have voted and failed to
approve the Merger Agreement at Jefferson's shareholder meeting or such
meeting has not been held in violation of the Merger Agreement or has been
canceled prior to termination of the Merger Agreement if, prior to such
shareholder meeting (or if such shareholder meeting shall not have been
held or shall have been canceled, prior to such termination), it shall have
been publicly announced that any third party shall have made, or disclosed
an intention to make, a proposal to engage in an Acquisition Transaction
with respect to Jefferson;
(iv) The Jefferson Board withdraws or modifies (or publicly announces
its intention to withdraw or modify) in any manner adverse to Wachovia its
recommendation that the shareholders of Jefferson approve the Merger
Agreement at Jefferson's shareholder meeting, or Jefferson, without
Wachovia's prior written consent, authorizes, recommends or proposes (or
publicly announces its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with a third party;
(v) A third party makes a proposal to Jefferson or its shareholders by
public announcement or written communication that is or becomes the subject
of public disclosure;
(vi) A third party shall have filed with the Commission a registration
statement with respect to a potential exchange offer that would constitute
an Acquisition Transaction (or filed a preliminary proxy statement with the
Commission with respect to a potential vote by its shareholders to approve
the issuance of shares to be offered in such an exchange offer);
(vii) Jefferson willfully breaches any covenant or obligation
contained in the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach Wachovia would be
entitled to terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or
(viii) A third party files an application or notice with the Federal
Reserve Board or other federal or state bank regulatory or antitrust
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
As used in the Stock Option Agreement, the term "Acquisition Transaction"
means (i) a merger or consolidation or any similar transaction, involving
Jefferson or any "Significant Subsidiary" (as defined in Rule 1-02 of Regulation
S-X promulgated by the Commission) of Jefferson (other than mergers,
consolidations or similar transactions involving solely Jefferson and/or one or
more of its wholly-owned subsidiaries, provided that any such transaction is not
entered into in violation of the terms of the Merger Agreement), (ii) a
purchase, lease or other acquisition of all or substantially all of the assets
or deposits of Jefferson or any of its Significant Subsidiaries (as defined in
the Merger Agreement) or (iii) a purchase or other acquisition (including by
merger, consolidation, share exchange or otherwise) of securities representing
15% or more of the voting power of Jefferson or any of its subsidiaries.
The Stock Option Agreement generally defines the term "Subsequent
Triggering Event" to mean any of the following events or transactions: (i) the
acquisition by a third party of beneficial ownership of 25% or more of the then
outstanding Jefferson Common Stock or (ii) Jefferson or any of its subsidiaries,
without having received the
34
<PAGE>
prior written consent of Wachovia, enters into an agreement to engage in an
Acquisition Transaction with a third party or the Jefferson Board recommends
that the shareholders of Jefferson approve or accept any Acquisition
Transaction, other than as contemplated by the Merger Agreement; provided, that
for purposes of the definition of "Subsequent Triggering Event," the percentage
referred to in clause (c) of the definition of "Acquisition Transaction" above
shall be 25% rather than 15%.
The Stock Option Agreement defines the term "Exercise Termination Event" to
mean any of (i) the Effective Time; (ii) termination of the Merger Agreement in
accordance with its terms, if such termination occurs prior to the occurrence of
an Initial Triggering Event, except a termination by Wachovia if Jefferson
breaches, and does not timely cure any breach of, a representation, warranty,
covenant or other agreement contained in the Merger Agreement and such breach,
individually or in the aggregate, would be reasonably likely to result in a
Material Adverse Effect (as defined in the Merger Agreement) or if Jefferson's
board of directors has failed to recommend approval of the Merger, if necessary,
or has withdrawn, modified or changed such recommendation in a manner in any
respect adverse to Wachovia's interests (see " -- Amendment, Waiver and
Termination") or a termination by either Wachovia or Jefferson if the Jefferson
shareholders fail to approve the Merger; or (iii) the passage of 15 months,
subject to extension in order to obtain required regulatory approvals, to comply
with applicable regulatory waiting periods or to avoid liability under Section
16(b) of the Exchange Act, after termination of the Merger Agreement if such
termination is concurrent with or follows the occurrence of an Initial
Triggering Event or is a termination described in clause (ii) above.
Notwithstanding anything to the contrary contained in the Stock Option
Agreement, the Option may not be exercised at any time when Wachovia is in
breach of any of its covenants or agreements contained in the Merger Agreement
such that Jefferson shall be entitled to terminate the Merger Agreement pursuant
to the terms thereof, and the Stock Option Agreement shall automatically
terminate upon the termination of the Merger Agreement by Jefferson pursuant to
the terms thereof as a result of a breach by Wachovia of its covenants or
agreements contained therein.
If the Option becomes exercisable, it may be exercised in whole or in part
within six months following the applicable Subsequent Triggering Event.
Wachovia's right to exercise the Option and certain other rights under the Stock
Option Agreement are subject to an extension in order to obtain required
regulatory approvals and comply with applicable regulatory waiting periods and
to avoid liability under Section 16(b) of the Exchange Act. The Option Price and
the number of shares issuable under the Option are subject to adjustment in the
event of specified changes in the capital stock of Jefferson.
Upon the occurrence of a Subsequent Triggering Event that occurs prior to
an Exercise Termination Event, Wachovia will have certain registration rights
with respect to the shares of Jefferson Common Stock issued or issuable pursuant
to the Option.
The Stock Option Agreement also provides that at any time after the
occurrence of a "Repurchase Event" (as defined below), upon request, Jefferson
shall be obligated to repurchase the Option and all or any part of the Option
Shares from the holder thereof. Such repurchase of the Option shall be at a
price per share equal to the amount by which the "Market/Offer Price" (as
defined below) exceeds the Option Price (as adjusted). A repurchase of Option
Shares shall be at a price per share equal to the Market/Offer Price. The term
"Market/Offer Price" means the highest of (i) the price per share at which a
tender or exchange offer has been made for Jefferson Common Stock, (ii) the
price per share of Jefferson Common Stock that any third party is to pay
pursuant to an agreement with Jefferson, (iii) the highest closing price per
share of Jefferson Common Stock within the six month period immediately
preceding the date that notice to repurchase is given or (iv) in the event of a
sale of all or substantially all of Jefferson's assets or deposits, the sum of
the price paid for such assets or deposits and the current market value of the
remaining assets (as determined by a nationally recognized investment banking
firm), divided by the number of shares of Jefferson Common Stock outstanding at
the time of such sale. The term "Repurchase Event" is defined to mean (i) the
acquisition by any third party of beneficial ownership of 50% or more of the
outstanding shares of Jefferson Common Stock or (ii) the consummation of an
Acquisition Transaction; provided, that for purposes of the definition of
"Repurchase Event," the percentage referred to in clause (c) of the definition
of "Acquisition Transaction" above shall be 50% rather than 15%.
The Stock Option Agreement also provides that Wachovia may, at any time
following a Repurchase Event and prior to an Exercise Termination Event,
surrender the Option (and any Option Shares obtained upon the exercise thereof
and still held by Wachovia) for a cash surrender fee (the "Surrender Fee") equal
to $15 million (i) plus, if applicable, Wachovia's purchase price with respect
to any Option Shares and (ii) minus, if applicable,
35
<PAGE>
any net cash received pursuant to the sale of Option Shares to any third party
(less the purchase price of such Option Shares). Wachovia may not exercise its
right to surrender the Option and receive the Surrender Fee if Jefferson has
previously repurchased any Option Shares as described in the preceding
paragraph.
The "Total Profit" (as defined below) that Wachovia may realize with
respect to the Option may not exceed $25 million. If Wachovia's Total Profit
were to exceed such amount, Wachovia would be required, at its sole election, to
(a) reduce the number of Option Shares subject to the Option, (b) deliver Option
Shares to Jefferson for cancellation, (c) pay cash to Jefferson or (d) do any
combination of the foregoing so that Wachovia's actual realized Total Profit
shall not exceed $25 million. "Total Profit" is defined to mean the aggregate
(before taxes) of (i) any amount received pursuant to Jefferson's repurchase of
the Option (or any portion thereof), (ii) any amount received pursuant to
Jefferson's repurchase of the Option Shares (less the purchase price for such
Option Shares), (iii) any net cash received pursuant to the sale of Option
Shares to any third party (less the purchase price of such Option Shares), (iv)
any amounts received on transfer of the Option or any portion thereof to a third
party and (v) any equivalent amounts received with respect to the Substitute
Option (as defined below). In addition, Wachovia may not exercise the Option for
a number of Option Shares as would, as of the date of such exercise, result in
Wachovia (if it were immediately to sell such Option Shares, together with all
other Option Shares held by Wachovia and its affiliates as of such date, at the
closing market price on the previous trading day) realizing a net gain in excess
of $25 million.
Pursuant to the terms of the Stock Option Agreement, in the event that,
prior to an Exercise Termination Event, Jefferson enters into certain
transactions in which Jefferson is not the surviving corporation, certain
fundamental changes in the capital stock of Jefferson occur or Jefferson sells
all or substantially all of its or certain of its subsidiaries' assets, the
Option shall be converted into a substitute option (the "Substitute Option"),
with terms similar to those of the Option, to purchase capital stock of the
entity that is the effective successor to Jefferson.
The Stock Option Agreement provides that neither Wachovia nor Jefferson may
assign any of its rights or obligations thereunder without the written consent
of the other party, except that in the event an Initial Triggering Event occurs
prior to an Exercise Termination Event, Wachovia may, subject to certain
limitations, assign its rights and obligations thereunder in whole or in part
(subject to extension in certain cases).
Arrangements such as the Stock Option Agreement are customarily entered
into in connection with corporate mergers and acquisitions in an effort to
increase the likelihood that the transactions will be consummated in accordance
with their terms, and to compensate the grantee for the efforts undertaken and
the expenses, losses and opportunity costs incurred by it in connection with the
transactions if they are not consummated under certain circumstances involving
an acquisition or potential acquisition of the issuer by a third party. The
Stock Option Agreement was entered into to accomplish these objectives. The
Stock Option Agreement may have the effect of discouraging offers by third
parties to acquire Jefferson prior to the Merger, even if such persons were
prepared to offer to pay consideration to Jefferson's shareholders which has a
higher current market value than the shares of Wachovia Common Stock to be
received by such holders pursuant to the Merger Agreement.
To the best knowledge of Jefferson and Wachovia, no event giving rise to
the right to exercise the Option has occurred as of the date of this Proxy
Statement/Prospectus.
ACQUISITIONS
MERGER WITH CENTRAL FIDELITY BANKS, INC.
On June 23, 1997, Wachovia entered into a merger agreement with Central
Fidelity, pursuant to which Central Fidelity will be merged with and into
Wachovia, with Wachovia being the surviving corporation. At the effective time
of the merger, each outstanding share of common stock of Central Fidelity
("Central Fidelity Common Stock") will be converted into the right to receive
0.63 of a share of Wachovia Common Stock. In connection with the merger
agreement, Central Fidelity has granted Wachovia a stock option to purchase a
number of shares of Central Fidelity Common Stock up to 19.9% of the number of
shares of Central Fidelity Common Stock outstanding immediately before exercise
of the option for a purchase price of $32.19 per share, subject to adjustment in
certain circumstances. The boards of directors of both companies have approved
the merger.
Central Fidelity is a bank holding company registered under the provisions
of the BHC Act. Central Fidelity, the third largest banking company
headquartered in Virginia, serves Virginia markets primarily through its
36
<PAGE>
wholly-owned banking subsidiary, Central Fidelity National Bank, a national
banking association. Central Fidelity National Bank operates 248 branch offices,
including 27 full-service supermarket locations, and 228 automated teller
machines throughout Virginia. At June 30, 1997, Central Fidelity had total
assets of approximately $10.7 billion, deposits of approximately $8.1 billion
and shareholders' equity of approximately $804 million. Net income for the first
six months ended June 30, 1997 was $61.6 million and net income for the year
ended December 31, 1996 was $112.7 million. Central Fidelity, through Central
Fidelity National Bank and its other subsidiaries, provides a wide variety of
financial services to a broad customer base of individuals, corporations,
institutions and governments primarily located in Virginia.
The merger is expected to be accounted for as a pooling of interests. In
connection with the Central Fidelity merger, both Wachovia and Central Fidelity
rescinded their previously announced share repurchase programs, including the
repurchase of shares announced in connection with the Merger. Pursuant to the
merger agreement with Central Fidelity, Wachovia will add three current members
of the Central Fidelity board of directors to the Wachovia Board. The merger is
subject to the approval of the shareholders of Central Fidelity and appropriate
regulatory agencies, including the Federal Reserve Board, and is expected to
close in the fourth quarter of 1997.
In connection with the announcement of the Central Fidelity Merger,
Wachovia announced that it estimated that the Central Fidelity Merger (after
giving effect to the Jefferson Merger) would be accretive to Wachovia's reported
earnings per share in 1999 by 4%. This estimate includes Wachovia's current
estimates of cost savings equal to 30% of Central Fidelity's operating expenses
and revenue enhancements equal to at least 10% of non-interest income. Wachovia
estimates it will incur a $174 million pretax charge in connection with the
Merger, including a one-time charge of $117 million in 1997 and a charge of $57
million to be expensed in 1998.
Additional information concerning the Central Fidelity Merger and financial
information relating to Central Fidelity are contained in Wachovia's Current
Reports on Form 8-K dated June 9, 1997 and September 8, 1997, each of which
documents is incorporated by reference herein. See "Available Information" and
"Incorporation of Certain Information by Reference."
MERGER WITH 1ST UNITED BANCORP
On August 6, 1997, Wachovia entered into a merger agreement with 1st
United, the parent of 1st United Bank in Boca Raton, Florida, pursuant to which
1st United will be merged with and into Wachovia (the "1st United Merger"). At
the effective time of the 1st United Merger, each outstanding share of common
stock of 1st United ("1st United Common Stock") will be exchanged for a minimum
of 0.3 and a maximum of 0.366 of a share of Wachovia Common Stock. In connection
with the 1st United Merger, 1st United has granted Wachovia a stock option to
purchase a number of shares of 1st United Common Stock equal to up to 19.9% of
the 1st United Common Stock outstanding immediately before exercise of the
option, for a purchase price of $18.75 per share, subject to adjustment in
certain circumstances. The boards of directors of both companies have approved
the 1st United Merger.
1st United, headquartered in Boca Raton, Florida, is a bank holding company
registered under the provisions of the BHC Act. At July 31, 1997, the effective
date of 1st United's merger with Seaboard Savings Bank, 1st United had assets of
approximately $821 million, deposits of approximately $739 million, and
shareholders' equity of approximately $69 million. Net income for the year
ending on December 31, 1996, was approximately $7.4 million. 1st United operates
33 full service banking centers in the Florida counties of Palm Beach, Martin,
Broward and Brevard. It is the largest commercial bank headquartered in Palm
Beach County and specializes in serving individuals and small businesses within
its trade area.
The 1st United Merger is expected to be accounted for by the purchase
accounting method. The 1st United Merger is subject to the approval of the
shareholders of 1st United and appropriate regulatory agencies, including the
Federal Reserve Board, and is expected to close in the fourth quarter of 1997.
In connection with the announcement of the 1st United Merger, Wachovia
announced that it estimated that the 1st United Merger will be accretive to
reported earnings per share in 1998. This estimate includes Wachovia's current
estimates of cost savings equal to 20% of 1st United's operating expenses and
revenue enhancements equal to at least 10% of non-interest income. Wachovia
estimates it will incur a $3 million pretax charge in connection with the 1st
United Merger. In addition, in connection with the 1st United Merger, Wachovia
announced that it may repurchase up to 3.5 million shares issued pursuant to the
1st United Merger.
37
<PAGE>
Additional information concerning the 1st United Merger and financial
information relating to 1st United are contained in Wachovia's Current Report on
Form 8-K dated August 6, 1997, which is incorporated by reference herein. See
"Available Information" and "Incorporation of Certain Information by Reference."
ACQUISITIONS GENERALLY
Wachovia regularly evaluates acquisition opportunities and conducts due
diligence activities in connection with possible acquisitions. As a result,
acquisition discussions and, in some cases, negotiations may take place and
future acquisitions involving cash, debt or equity securities may occur.
Acquisitions typically involve the payment of a premium over book and market
values, and, therefore, some dilution of Wachovia's book value and net income
per common share may occur in connection with any future transactions.
38
<PAGE>
WACHOVIA AND CENTRAL FIDELITY UNAUDITED PRO FORMA
COMBINED FINANCIAL INFORMATION
No pro forma financial statements are included in this Proxy
Statement/Prospectus with respect to the mergers with Jefferson and 1st United
because the pro forma effects of these mergers 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
Jefferson.
The following Unaudited Pro Forma Combined Financial Information combines
the historical Consolidated Financial Statements of Wachovia and Central
Fidelity, giving effect to the Central Fidelity Merger as if it had been
effective on June 30, 1997, with respect to the Unaudited Pro Forma Combined
Statement of Condition, and as of the beginning of the periods indicated herein,
with respect to the Unaudited Pro Forma Combined Statements of Income. The
Central Fidelity Merger is expected to be accounted for as a pooling of
interests. Under the pooling of interests method of accounting, the historical
book values of the assets, liabilities and shareholders' equity of Central
Fidelity as reported on its consolidated Statement of Condition will be carried
over onto the consolidated Statement of Condition of Wachovia after addressing
conformity issues, and no goodwill or other intangible assets will be created.
Wachovia will include in its consolidated statement of income the consolidated
results of operations of Central Fidelity for the entire fiscal year in which
the Central Fidelity Merger occurs after addressing conformity issues and will
combine and restate its results of operations for prior periods to include the
reported consolidated results of operations of Central Fidelity for prior
periods after addressing conformity issues. This information should be read in
conjunction with the historical Consolidated Financial Statements of Wachovia
and Central Fidelity, including their respective notes thereto, which are
incorporated by reference into this Proxy Statement/Prospectus (including
Central Fidelity financial statements included in Wachovia's Current Report on
Form 8-K dated September 8, 1997). The effect of estimated merger and
restructuring costs expected to be incurred in connection with the Central
Fidelity Merger has been reflected in the Unaudited Pro Forma Combined Statement
of Condition; however, since the estimated costs are nonrecurring, they have not
been reflected in the Unaudited Pro Forma Combined Statements of Income. The
Unaudited Pro Forma Combined Financial Information does not give effect to any
anticipated cost savings in connection with the Central Fidelity Merger. The
Unaudited Pro Forma Combined Statement of Condition is not necessarily
indicative of the actual financial position that would have existed had the
Central Fidelity Merger been consummated on the dates indicated, or that may
exist in the future. The Unaudited Pro Forma Combined Statements of Income are
not necessarily indicative of the results that would have occurred had the
Central Fidelity Merger been consummated on the dates indicated or that may be
achieved in the future.
39
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF CONDITION
AS OF JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks............................ $ 3,392,418 $ 312,192 $ -- $ 3,704,610
Federal funds sold and other money market
investments...................................... 1,099,967 149,860 -- 1,249,827
Securities available for sale...................... 6,983,389 2,967,226 -- 9,950,615
Securities held to maturity........................ 1,271,149 -- -- 1,271,149
Loans.............................................. 33,255,625 6,926,376 -- 40,182,001
Allowance for loan losses........................ (409,335) (110,000) -- (519,335)
Net loans.......................................... 32,846,290 6,816,376 -- 39,662,666
Premises and equipment............................. 622,925 164,496 -- 787,421
Other assets....................................... 2,295,958 258,548 60,900(2) 2,615,406
TOTAL ASSETS..................................... $48,512,096 $10,668,698 $ 60,900 $59,241,694
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand............................................. $10,345,408 $ 1,288,662 $ -- $11,634,070
Large denomination certificates.................... 2,367,267 502,780 -- 2,870,047
Other.............................................. 16,225,385 6,285,178 -- 22,510,563
Total deposits................................... 28,938,060 8,076,620 -- 37,014,680
Federal funds purchased and securities sold under
repurchase agreements............................ 6,253,688 1,065,467 -- 7,319,155
Other liabilities.................................. 9,640,521 723,046 174,000(2) 10,537,567
Total liabilities................................ 44,832,269 9,865,133 174,000 54,871,402
Shareholders' Equity:
Preferred stock.................................... -- -- -- --
Common stock....................................... 797,698 283,623 (104,940)(1) 976,381
Capital surplus.................................... 185,500 108,484 104,940(1) 398,924
Retained earnings.................................. 2,660,914 402,844 (113,100)(2) 2,950,658
Unrealized gains (losses) on securities available
for sale, net of tax............................. 35,715 8,614 -- 44,329
Total shareholders' equity....................... 3,679,827 803,565 (113,100) 4,370,292
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....... $48,512,096 $10,668,698 $ 60,900 $59,241,694
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
39
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans.................................. $1,361,985 $300,376 $ -- $1,662,361
Securities available for sale............................... 228,005 95,851 -- 323,856
Securities held to maturity................................. 52,245 -- -- 52,245
Other interest income....................................... 32,790 2,415 -- 35,205
Total interest income................................ 1,675,025 398,642 -- 2,073,667
INTEREST EXPENSE
Total deposits.............................................. 478,367 155,868 -- 634,235
Short-term borrowings....................................... 200,958 24,854 -- 225,812
Other....................................................... 176,989 18,463 -- 195,452
Total interest expense............................... 856,314 199,185 -- 1,055,499
Net interest income......................................... 818,711 199,457 -- 1,018,168
Provision for loan losses................................... 97,713 27,565 -- 125,278
Net interest income after provision for loan losses......... 720,998 171,892 -- 892,890
OTHER INCOME
Service charges on deposit accounts......................... 127,564 20,691 -- 148,255
Fees for trust services..................................... 75,226 9,292 -- 84,518
Investment securities gains (losses)........................ 661 1,881 -- 2,542
Other income................................................ 231,780 17,904 -- 249,684
Total other income................................... 435,231 49,768 -- 484,999
OTHER EXPENSE
Salaries and employee benefits.............................. 355,754 74,924 -- 430,678
Net occupancy and equipment expense......................... 102,975 24,672 -- 127,647
Other expense............................................... 220,101 30,774 -- 250,875
Total other expense.................................. 678,830 130,370 -- 809,200
Income before income taxes.................................. 477,399 91,290 -- 568,689
Income taxes................................................ 148,694 29,715 -- 178,409
NET INCOME.................................................. $ 328,705 $ 61,575 $ -- $ 390,280
Net income per primary share................................ $2.00 $1.06 $1.94
Weighted average primary shares outstanding................. 164,145 58,068 200,728
Net income per fully diluted share.......................... $2.00 $1.03 $1.94
Weighted average fully diluted shares outstanding........... 164,158 59,557 201,679
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
40
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans.................................. $2,544,658 $570,615 $ -- $3,115,273
Securities available for sale............................... 472,108 212,875 -- 684,983
Securities held to maturity................................. 117,548 -- -- 117,548
Other interest income....................................... 93,000 5,130 -- 98,130
Total interest income................................ 3,227,314 788,620 -- 4,015,934
INTEREST EXPENSE
Total Deposits.............................................. 881,562 322,187 -- 1,203,749
Short-term borrowings....................................... 431,094 51,250 -- 482,344
Other....................................................... 359,946 39,916 -- 399,862
Total interest expense............................... 1,672,602 413,353 -- 2,085,955
Net interest income......................................... 1,554,712 375,267 -- 1,929,979
Provision for loan losses................................... 149,911 43,865 -- 193,776
Net interest income after provision for loan losses......... 1,404,801 331,402 -- 1,736,203
OTHER INCOME
Service charges on deposit accounts......................... 242,368 37,832 -- 280,200
Fees for trust services..................................... 137,841 16,780 -- 154,621
Investment securities gains (losses)........................ 3,736 99 -- 3,835
Other income................................................ 403,705 31,204 -- 434,909
Total other income................................... 787,650 85,915 -- 873,565
OTHER EXPENSE
Salaries and employee benefits 654,525 142,347 -- 796,872
Net occupancy and equipment expense......................... 204,443 46,147 -- 250,590
Other expense............................................... 398,581 63,447 -- 462,028
Total other expense.................................. 1,257,549 251,941 -- 1,509,490
Income before income taxes.................................. 934,902 165,376 -- 1,100,278
Income tax expense.......................................... 290,345 52,674 -- 343,019
NET INCOME.................................................. $ 644,557 $112,702 $ -- $ 757,259
Net income per primary share................................ $3.81 $1.89 $3.66
Weighted average primary shares outstanding................. 169,094 59,737 206,728
Net income per fully diluted share.......................... $3.80 $1.85 $3.64
Weighted average fully diluted shares outstanding........... 169,827 60,758 208,105
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
41
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans.................................. $2,384,919 $526,896 $ -- $2,911,815
Securities available for sale............................... 268,106 239,010 -- 507,116
Securities held to maturity................................. 294,241 -- -- 294,241
Other interest income....................................... 72,464 6,014 -- 78,478
Total interest income................................ 3,019,730 771,920 -- 3,791,650
INTEREST EXPENSE
Total deposits.............................................. 823,454 319,725 -- 1,143,179
Short-term borrowings....................................... 467,007 61,037 -- 528,044
Other....................................................... 288,646 51,533 -- 340,179
Total interest expense............................... 1,579,107 432,295 -- 2,011,402
Net interest income......................................... 1,440,623 339,625 -- 1,780,248
Provision for loan losses................................... 103,791 26,713 -- 130,504
Net interest income after provision for loan losses......... 1,336,832 312,912 -- 1,649,744
OTHER INCOME
Service charges on deposit accounts......................... 209,113 35,150 -- 244,263
Fees for trust services..................................... 130,521 14,943 -- 145,464
Gain on sale of mortgage servicing portfolio................ 79,025 -- -- 79,025
Investment securities gains (losses)........................ (23,494) 3,253 -- (20,241)
Other income................................................ 340,467 26,329 -- 366,796
Total other income................................... 735,632 79,675 -- 815,307
OTHER EXPENSE
Salaries and employee benefits.............................. 600,326 133,186 -- 733,512
Net occupancy and equipment expense......................... 196,806 42,979 -- 239,785
Other expense............................................... 406,464 62,000 -- 468,464
Total other expense.................................. 1,203,596 238,165 -- 1,441,761
Income before income taxes.................................. 868,868 154,422 -- 1,023,290
Income tax expense.......................................... 266,325 49,052 -- 315,377
NET INCOME.................................................. $ 602,543 $105,370 $ -- $ 707,913
Net income per primary share................................ $3.50 $1.77 $3.38
Weighted average primary shares outstanding................. 172,089 59,674 209,684
Net income per fully diluted share.......................... $3.49 $1.74 $3.35
Weighted average fully diluted shares outstanding........... 172,957 60,573 211,118
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
42
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans.................................. $ 1,864,082 $440,691 $ -- $2,304,773
Securities available for sale............................... 182,440 217,945 -- 400,385
Securities held to maturity................................. 273,813 -- -- 273,813
Other interest income....................................... 41,959 6,161 -- 48,120
Total interest income................................ 2,362,294 664,797 -- 3,027,091
INTEREST EXPENSE
Total deposits.............................................. 539,232 243,632 -- 782,864
Short-term borrowings....................................... 272,572 45,834 -- 318,406
Other....................................................... 226,584 41,225 -- 267,809
Total interest expense............................... 1,038,388 330,691 -- 1,369,079
Net interest income......................................... 1,323,906 334,106 -- 1,658,012
Provision for loan losses................................... 71,763 24,359 -- 96,122
Net interest income after provision for loan losses......... 1,252,143 309,747 -- 1,561,890
OTHER INCOME
Service charges on deposit accounts......................... 196,149 34,557 -- 230,706
Fees for trust services..................................... 128,100 13,926 -- 142,026
Investment securities gains (losses)........................ 3,320 (25,984) -- (22,664)
Other income................................................ 280,183 36,739 -- 316,922
Total other income................................... 607,752 59,238 -- 666,990
OTHER EXPENSE
Salaries and employee benefits.............................. 563,507 127,683 -- 691,190
Net occupancy and equipment expense......................... 187,419 41,653 -- 229,072
Other expense............................................... 347,487 75,729 -- 423,216
Total other expense.................................. 1,098,413 245,065 -- 1,343,478
Income before income taxes.................................. 761,482 123,920 -- 885,402
Income tax expense.......................................... 222,424 39,056 -- 261,480
NET INCOME.................................................. $ 539,058 $ 84,864 $ -- $ 623,922
Net income per primary share................................ $3.13 $1.45 $2.98
Weighted average primary shares outstanding................. 172,339 58,742 209,346
Net income per fully diluted share.......................... $3.12 $1.42 $2.96
Weighted average fully diluted shares outstanding........... 172,951 59,861 210,663
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
43
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(1) Pursuant to the Central Fidelity Merger Agreement, each outstanding
share (56,724,684 shares at June 30, 1997) of Central Fidelity Common
Stock will be converted into 0.63 shares (35,736,551 shares at June 30,
1997) of Wachovia Common Stock, subject to adjustment in the event of
stock dividends, stock splits or similar changes in Wachovia's
capitalization.
(2) Reflects management's current estimate, for purposes of pro forma
presentation, of the aggregate estimated merger and restructuring costs
of $174 million ($113 million net of taxes) expected to be incurred in
connection with the Central Fidelity Merger. While a portion of these
costs may be required to be recognized over time, the current estimate
of these costs has been recorded in the pro forma combined statement of
condition in order to disclose the aggregate effect of these activities
on Wachovia's pro forma combined financial position. The estimated
aggregate costs, primarily comprised of anticipated cash charges,
include the following:
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Personnel................................................................. $ 43
Systems and operations.................................................... 67
Business unit integration and branch conversions.......................... 34
Other..................................................................... 30
$ 174
</TABLE>
The personnel costs include costs of staff reductions, comprising
employee severance costs, termination of certain employee benefit plans
and employee assistance costs for separated employees resulting from
reorganizations in connection with the Central Fidelity Merger. Systems
and operations costs include costs associated with the elimination of
redundant systems, including service contract terminations and other
related costs of computer equipment and software write-offs due to
duplication or incompatibility, and costs of transitioning customer
accounts to a common system. Business unit integration and branch
conversion costs consist of business unit consolidation expenses, lease
termination and other costs associated with the closing and disposition
of redundant branches and marketing and communications costs. Other
expense includes transaction costs and other expenses directly associated
with completing the Central Fidelity Merger. Wachovia anticipates that
the majority of these costs, primarily comprised of cash charges, will be
paid in 1997 and 1998.
Management's cost estimates are forward looking. While the costs
represent management's current estimate of merger and restructuring costs
that will be incurred, the ultimate level and timing of recognition of
such costs will be based on the final merger and integration plan to be
completed prior to consummation of the Central Fidelity Merger, which is
currently being developed by various Wachovia and Central Fidelity task
forces and integration committees. Readers are cautioned that the
completion of the Central Fidelity Merger and integration plan and the
resulting management plans detailing actions to be undertaken to effect
the Central Fidelity Merger will impact these estimates; the type and
amount of actual costs incurred could vary materially from these
estimates if future developments differ from the underlying assumptions
used by management in determining its current estimate of these costs.
See the statement regarding forward looking statements in "Incorporation
of Certain Information by Reference."
44
<PAGE>
DESCRIPTION OF WACHOVIA CAPITAL STOCK
THE DESCRIPTIVE INFORMATION BELOW OUTLINES CERTAIN PROVISIONS OF WACHOVIA'S
ARTICLES OF INCORPORATION AND BYLAWS AND THE NORTH CAROLINA BUSINESS CORPORATION
ACT. THE INFORMATION DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ALL
RESPECTS BY REFERENCE TO THE PROVISIONS OF WACHOVIA'S ARTICLES OF INCORPORATION
AND BYLAWS, WHICH ARE INCORPORATED BY REFERENCE AS EXHIBITS TO THE REGISTRATION
STATEMENT, AND THE NORTH CAROLINA BUSINESS CORPORATION ACT. SEE "AVAILABLE
INFORMATION."
GENERAL
Wachovia's authorized capital stock consists of 500,000,000 shares of
Wachovia Common Stock, and 50,000,000 shares of preferred stock, par value $5.00
per share (the "Wachovia Preferred Stock"). As of June 30, 1997 there were
159,539,560 shares of Wachovia Common Stock outstanding and no shares of
Wachovia Preferred Stock outstanding. In addition, at July 31, 1997, 22,219,602
shares of Wachovia Common Stock were reserved for issuance upon conversion of
notes, exercise of stock options and awards and under Wachovia's dividend
reinvestment plan. In addition, Wachovia estimates that 47,723,000 shares of
Wachovia Common Stock will be issued in connection with the Merger, the Central
Fidelity Merger and the 1st United Merger.
Because Wachovia is a holding company, the rights of Wachovia to
participate in any distribution of assets of any subsidiary upon its liquidation
or reorganization or otherwise (and thus the ability of Wachovia's shareholders
to benefit indirectly from such distribution) would be subject to the prior
claims of creditors of that subsidiary, except to the extent that Wachovia
itself may be a creditor of that subsidiary with recognized claims. Claims on
Wachovia's subsidiaries by creditors other than Wachovia will include
substantial obligations with respect to deposit liabilities and purchased funds.
PREFERRED STOCK
The Wachovia Board is authorized to fix the preferences, limitations and
relative rights of the Wachovia Preferred Stock and may establish series of such
Wachovia Preferred Stock and determine the variations between series, and may
cause Wachovia to issue any such shares without the approval of the holders of
Wachovia Common Stock. If and when any Wachovia Preferred Stock is issued, the
holders of Wachovia Preferred Stock may have a preference over holders of
Wachovia Common Stock in the payment of dividends, upon liquidation of Wachovia,
in respect of voting rights and in the redemption of the capital stock of
Wachovia.
COMMON STOCK
DIVIDENDS. The holders of Wachovia Common Stock are entitled to share
ratably in dividends when and if declared by the Wachovia Board from funds
legally available therefor.
VOTING RIGHTS. Each holder of Wachovia Common Stock has one vote for each
share held on matters presented for consideration by the shareholders.
CLASSIFICATION OF BOARD OF DIRECTORS. The Wachovia Board is divided into
three classes, each serving three-year terms, so that approximately one-third of
the directors of Wachovia are elected at each annual meeting of the shareholders
of Wachovia. Classification of the Wachovia Board has the effect of decreasing
the number of directors that could be elected in a single year by any person who
seeks to elect its designees to a majority of the seats on the Wachovia Board
and thereby could impede a change in control of Wachovia.
PREEMPTIVE RIGHTS. The holders of Wachovia Common Stock have no preemptive
rights to acquire any additional shares of Wachovia Common Stock.
ISSUANCE OF STOCK. Wachovia's articles of incorporation (the "Wachovia
Articles") authorize the Wachovia Board to issue authorized shares of Wachovia
Common Stock and Wachovia Preferred Stock and any other securities without
shareholder approval. However, Wachovia Common Stock is listed on the NYSE,
which requires shareholder approval of the issuance of additional shares of
Wachovia Common Stock under certain circumstances.
LIQUIDATION RIGHTS. In the event of liquidation, dissolution or winding-up
of Wachovia, whether voluntary or involuntary, the holders of Wachovia Common
Stock will be entitled to share ratably in any of its assets or funds
45
<PAGE>
that are available for distribution to its shareholders after the satisfaction
of its liabilities (or after adequate provision is made therefor) and after
preferences of any outstanding Wachovia Preferred Stock.
CHANGES IN CONTROL
Certain provisions of the Wachovia Articles and Wachovia's bylaws may have
may have the effect of preventing, discouraging or delaying any change in
control of Wachovia. The authority of the Wachovia Board to issue Wachovia
Preferred Stock with such rights and privileges as it may deem appropriate may
enable the Wachovia Board to prevent a change in control despite a shift in
ownership of the Wachovia Common Stock. In addition, the Wachovia Board's power
to issue additional shares of Wachovia Common Stock may help delay or deter a
change in control by increasing the number of shares needed to gain control.
Moreover, the classification of the Wachovia Board would delay the ability of a
dissatisfied shareholder or anyone who obtains a controlling interest in the
Wachovia Common Stock to elect its designees to a majority of the seats on the
Wachovia Board. The following provisions also may deter any change in control of
Wachovia.
FAIR PRICE PROVISIONS. Certain provisions of the Wachovia Articles (the
"Fair Price Provisions") limit the ability of an Interested Shareholder to
effect certain transactions involving Wachovia. An "Interested Shareholder" is
defined in the Wachovia Articles to mean a shareholder who directly or
indirectly beneficially owns, alone or with associates or affiliates, more than
10% of the outstanding voting shares of Wachovia or a subsidiary of Wachovia,
and certain assignees of or successors to any share of capital stock of Wachovia
or a subsidiary which was at any time within two years prior thereto
beneficially owned by an Interested Shareholder. Such transactions, which are
referred to below collectively as a "Business Combination," include any merger
with or consolidation into an Interested Shareholder or an affiliate thereof,
any sale or other disposition of more than $25 million in assets to an
Interested Shareholder or an associate or affiliate thereof, any issuance or
transfer to any Interested Shareholder, or an associate or affiliate thereof, of
equity securities of Wachovia or a subsidiary having a fair market value of $10
million or more, any recapitalization or reclassification of Wachovia securities
or similar transaction increasing the percentage of outstanding shares owned by
an Interested Shareholder or an associate or affiliate thereof or any proposal
for liquidation or dissolution of Wachovia.
Under the Fair Price Provisions, a Business Combination must either (i) be
approved by 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 (ii) comply
with either the Continuing Director (as defined below) approval requirements
described in this paragraph or the price requirements described in the following
paragraph, in which case a Business Combination must be approved by the
affirmative vote of a majority of the outstanding voting shares of Wachovia
entitled to vote thereon. Under the Continuing Director requirement, the
Business Combination must be approved 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 more than 10% of the voting securities
and any directors recommended to join the Wachovia Board by a majority of
directors so elected. These approval provisions are less stringent than those
contained in the North Carolina Shareholder Protection Act, which is not
applicable to Wachovia (see " -- Antitakeover Legislation"), but are more
stringent than the standard provisions of the North Carolina Business
Corporation Act, which would apply in the absence of the Fair Price Provisions.
Under the price requirements of the Fair Price Provisions, the price per
share paid in a Business Combination must be at least equal to the greater of
(i) the fair market value per share of Wachovia Common Stock on the date of the
first public announcement of the proposed Business Combination (the
"Announcement Date") or on the date on which the Interested Shareholder became
an Interested Shareholder, whichever is higher, multiplied by the ratio of (A)
the highest per share price paid by the Interested Shareholder for any shares of
Wachovia Common Stock acquired by it during the two-year period immediately
prior to the Announcement Date to (B) the fair market value per share of
Wachovia Common Stock on the first day during such two-year period on which the
Interested Shareholder acquired any shares of Wachovia Common Stock and (ii) the
highest per share price paid by such Interested Shareholder in acquiring any
shares of Wachovia Common Stock. In addition, the consideration paid for
Wachovia Common Stock in a Business Combination must be either cash or the same
form of consideration paid by the Interested Shareholder to acquire its shares
of Wachovia Common Stock. Moreover, the Interested Shareholder must not (i)
have, directly or indirectly, acquired, after having become an Interested
Shareholder, additional shares of newly issued Wachovia capital stock from
Wachovia (other than upon conversion of convertible securities, a pro rata stock
dividend or stock split or pursuant to the Fair Price provisions),
46
<PAGE>
(ii) have received the benefit directly, or indirectly, of financial assistance
from Wachovia or (iii) have made any major changes in Wachovia's business or
equity capital structure.
The Fair Price Provisions are designed to discourage attempts to take over
Wachovia in non-negotiated transactions utilizing two-tier pricing tactics,
which typically involve the accumulation of a substantial block of the target
corporation's stock followed by a merger or other reorganization of the acquired
company on terms determined by the purchaser. In such two-step takeover
attempts, the purchaser generally pays cash to acquire a controlling interest in
a company and acquires the remaining equity interest by paying the remaining
shareholders a price lower than that paid to acquire the controlling interest,
often utilizing non-cash consideration.
Although federal and state securities laws and regulations require that
disclosure be made to shareholders of the terms of such a transaction, these
laws provide no assurance that the financial terms of such a transaction will be
fair to shareholders or that the shareholders can effectively prevent its
consummation. The Fair Price Provisions are intended to address some of the
effects of these gaps in federal and state law and to prevent some of the
potential inequities of two-step takeover attempts by encouraging negotiations
with Wachovia. While the terms of such a non-negotiated takeover could be fair
to Wachovia shareholders, negotiated transactions may result in more favorable
terms to Wachovia's shareholders because of such factors as timing of the
transaction, tax effects on the shareholders, and the fact that the nature and
amount of the consideration paid to all shareholders will be negotiated by the
parties at arm's length rather than dictated by the purchaser.
The Fair Price Provisions are designed to protect those shareholders who
have not tendered or otherwise sold their shares to an Interested Shareholder in
the initial step of a takeover attempt to which the requisite majority of
shareholders or Continuing Directors is not receptive by assuring that at least
the same price and form of consideration are paid to such shareholders as were
paid in the initial step of the acquisition.
Due to the difficulties of complying with the requirements of the Fair
Price Provisions, the Fair Price Provisions generally may discourage attempts to
obtain control of Wachovia. 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. In addition, the Fair Price Provisions would give veto power to the
holders of a minority of the shares of Wachovia Common Stock with respect to a
Business Combination which is opposed by more than 33 1/3% of the Continuing
Directors but which a majority of shareholders may believe to be desirable and
beneficial. Moreover, in any Business Combination not receiving the requisite
super majority approval of shareholders or of Continuing Directors, the minimum
price provisions of the Fair Price Provisions, while providing objective pricing
criteria, could be arbitrary and not indicative of value.
REMOVAL OF DIRECTORS. 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 and a majority of the voting shares not held by Interested
Shareholders.
AMENDMENT OF WACHOVIA ARTICLES. Except in certain specified circumstances,
the provisions of the Wachovia Articles concerning their amendment; the duration
of the corporation; the authorized capital stock; the number, classification,
election and removal of directors; pre-emptive rights of shareholders; and the
approval of Business Combinations may be amended only by the affirmative vote of
the holders of 66 2/3% of the outstanding voting shares and a majority of the
outstanding voting shares not held by Interested Shareholders.
ANTITAKEOVER LEGISLATION. In 1987 the North Carolina General Assembly
enacted The North Carolina Shareholder Protection Act and The North Carolina
Control Share Acquisition Act (the "Control Share Act"), each of which contains
provisions intended to prevent, discourage or delay a change in control of North
Carolina corporations electing to be covered by such legislation. Wachovia has
elected to be subject only to the Control Share Act. For a summary of the
material provisions of the Control Share Act, see "Certain Differences in the
Rights of Wachovia and Jefferson Shareholders -- Control Share Acquisitions."
CONTROL ACQUISITIONS. The Federal Change in Bank Control Act of 1978, as
amended, prohibits a person or group of persons from acquiring "control" of a
bank holding company unless the Federal Reserve Board has been given 60 days'
prior written notice of such proposed acquisition and within that time period
the Federal Reserve Board has not issued a notice disapproving the proposed
acquisition or extending for up to another 30 days the period during which such
a disapproval may be issued. An acquisition may be made prior to the expiration
of the disapproval period if the Federal Reserve Board issues written notice of
its intent not to disapprove the action. Under a rebuttable presumption
established by the Federal Reserve Board, the acquisition of more than 10% of a
47
<PAGE>
class of voting stock of a bank holding company with a class of securities
registered under Section 12 of the Exchange Act would, under the circumstances
set forth in the presumption, constitute the acquisition of control.
In addition, any "company" would be required to obtain the approval of the
Federal Reserve Board under the BHC Act before acquiring 25% (5% in the case of
an acquiror that is a bank holding company) or more of the outstanding shares of
Wachovia Common Stock, or such lesser number of shares as constitute control
over Wachovia.
SAVINGS AND LOAN HOLDING COMPANY REGULATIONS. As a savings and loan holding
company, Wachovia is subject to additional regulations that restrict
acquisitions of control by third parties. Subject to certain limited exceptions,
control of a savings association or a savings and loan holding company may only
be obtained with the approval (or in the case of an acquisition of control by an
individual, the absence of disapproval) of the Office of Thrift Supervision
("OTS"), after a public comment and application review process. Any company
acquiring control of a savings association becomes a savings and loan holding
company, must register and file periodic reports with the OTS, and is subject to
OTS examination.
CERTAIN DIFFERENCES IN THE RIGHTS OF WACHOVIA SHAREHOLDERS
AND JEFFERSON SHAREHOLDERS
At the Effective Time, Jefferson shareholders automatically will become
shareholders of Wachovia, and their rights as shareholders will be determined by
the Wachovia Articles, bylaws and the North Carolina Business Corporation Act,
instead of by the articles of incorporation or bylaws of Jefferson and the
Virginia Stock Corporation Act. The following is a summary of the material
differences in the rights of shareholders of Wachovia and Jefferson. 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 Virginia Stock
Corporation Act, the North Carolina Business Corporation Act and the articles of
incorporation and bylaws of each corporation.
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
WACHOVIA. The Wachovia 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 associates or affiliates, 10 percent or more of Wachovia Common Stock (an
"Interested Shareholder"), is required to repeal certain provisions of the
Wachovia Articles relating to the duration of the corporation, the authorized
capital stock, the number, classification, election and removal of directors,
preemptive rights of shareholders, business combinations and amendment of the
Wachovia Articles. Amendment of such provisions requires the approval of the
holders of at least 66 2/3% of the voting shares of Wachovia, including a
majority of the voting shares not held by an Interested Shareholder, unless (a)
there is no Interested Shareholder and such amendment is approved by a majority
of the Wachovia Board or (b) there exists an Interested Shareholder, but such
amendment is approved by at least 66 2/3% of the Continuing Directors, in either
which case the affirmative vote of the holders of at least a majority of the
voting shares is sufficient to approve any such amendment.
Wachovia's bylaws provide that the Wachovia Board 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, except that a bylaw adopted, amended or repealed by the shareholders may
not be readopted, amended or repealed by the Wachovia Board, unless the Wachovia
Articles or a bylaw adopted by shareholders authorizes the Wachovia Board to do
so.
JEFFERSON. The Virginia Stock Corporation Act generally provides that a
Virginia corporation's articles of incorporation may be amended if each voting
group entitled to vote on the proposed amendment votes more than two-thirds of
all the votes entitled to be cast by that voting group in favor of the proposed
amendment. The articles of incorporation of a Virginia corporation may provide
for a greater or lesser vote than two-thirds or a vote by separate voting groups
so long as the vote provided for is not less than a majority of all the votes
cast on the amendment by each voting group entitled to vote. Jefferson's
articles of incorporation do not provide for a vote greater or lesser than the
statutory provision.
Jefferson's bylaws provide that the Jefferson Board 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
48
<PAGE>
the bylaws. The shareholders may prescribe that any bylaw made by them shall not
be altered, amended or repealed by the Jefferson Board.
SPECIAL MEETINGS OF SHAREHOLDERS
WACHOVIA. A special meeting of the shareholders of Wachovia may be called
only by its chief executive officer or by the Wachovia Board.
JEFFERSON. A special meeting of the shareholders of Jefferson may be called
by the Chairman of the Jefferson Board, the President, the Jefferson Board or
the holders of not less than one-tenth of all the shares entitled to vote at 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
Wachovia Board. The Wachovia Board has fixed the number at 16 directors.
Wachovia's bylaws state that the Wachovia Board 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 Wachovia 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 Wachovia Board.
JEFFERSON. Jefferson's bylaws state that the Jefferson Board shall be not
less than five nor more than twenty-five in number, with the exact number of
directors to be fixed by resolution of the Jefferson Board, and all directors
are elected annually.
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.
JEFFERSON. Jefferson's bylaws state that a director may be removed, with or
without cause, by a vote of stockholders holding a majority of the shares
entitled to vote at an election of the directors, at a meeting called for such
purpose. If any directors are so removed, new directors may be elected at the
same meeting.
ADVANCE NOTICE OF DIRECTOR NOMINATIONS
WACHOVIA. Wachovia's bylaws provide that director nominations by the
Wachovia Board must include the Chairman and the President if such person is not
then a director or his or her term as a director is set to expire. Director
nominations by a shareholder 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.
JEFFERSON. Jefferson's bylaws provide that nominations for election to the
Jefferson Board may be made by the Jefferson Board or by any holder of any
shares of the capital stock of Jefferson entitled to vote for the election of
directors. Nominations other than those made by or on behalf of the management
of Jefferson must be made in writing which specifies certain required
information about the proposed nominee and the notifying shareholder, and be
delivered or mailed to the president of Jefferson no less than 14 days nor more
than 50 days prior to any meeting of shareholders called for the election of
directors. However, if notice of the meeting is mailed to shareholders less than
21 days before the date set for the meeting, the nomination must be mailed or
delivered not later than the close of business on the seventh day following the
day on which the notice or meeting was mailed.
RESTRICTIONS ON BUSINESS COMBINATIONS
WACHOVIA. The Wachovia Articles have restrictions 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 are described above under "Description of Wachovia Capital
Stock -- Changes in Control -- Fair
49
<PAGE>
Price Provisions." Certain other provisions of the Wachovia Articles and bylaws
further restrict the ability of an Interested Shareholder to effect a change in
control of Wachovia.
JEFFERSON. The Affiliated Transaction Statute of the Virginia Stock
Corporation Act restricts certain transactions ("Affiliated Transactions")
between a publicly held Virginia corporation and a beneficial owner of more than
ten percent of any class of voting stock (a "10% Holder"). An "Affiliated
Transaction" is defined in the Virginia Stock Corporation Act as any of the
following transactions with or proposed by a 10% Holder: a merger; a share
exchange; certain dispositions of assets or guaranties of indebtedness other
than in the ordinary course of business; certain significant securities
issuances; dissolution of the corporation; or reclassification of the
corporation's securities. Under the statute, an Affiliated Transaction generally
requires the approval of a majority of disinterested directors and two-thirds of
the voting shares of the corporation other than shares owned by the 10% Holder
during a three-year period commencing as of the date the 10% Holder crosses the
ten percent threshold. This special voting provision does not apply if a
majority of disinterested directors approved the acquisition of the more than
ten percent interest in advance. After the expiration of the three-year
moratorium, Jefferson may engage in an affiliated transaction only if it is
approved by a majority of disinterested directors or by two-thirds of the
disinterested stockholders, or if the transaction complies with certain fair
price provisions. This special voting rule is in addition to, and not in lieu
of, other voting provisions contained in the Virginia Stock Corporation Act and
Jefferson's articles of incorporation.
CONTROL SHARE ACQUISITIONS
WACHOVIA. 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. The
Wachovia Articles and bylaws do not limit the ability of shareholders to cause
Wachovia to redeem their shares under the circumstances described above.
JEFFERSON. The Virginia Stock Corporation Act contains provisions relating
to Control Share Acquisitions (the "Virginia Control Share Act"). The Virginia
Control Share Act contains provisions that, under certain circumstances, would
preclude an acquiror of the shares of a Virginia 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 Virginia 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 at "fair value" (as defined in Section
13.1-728.8 of the Virginia Stock Corporation Act). Jefferson's articles of
incorporation and bylaws do not limit the ability of shareholders to cause
Jefferson to redeem their shares under the circumstances described above.
LIMITATION ON DIRECTOR LIABILITY
WACHOVIA. The Wachovia 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. North Carolina law generally provides for limitation on director's
liability provided that no such provision shall be effective with respect to (i)
acts or omissions that the director at the time of such breach knew or believed
were clearly in conflict with the best interests of the corporation, (ii) any
liability for unlawful distributions, (iii) any transaction from which the
director derived an improper personal benefit or (iv) acts or omissions
occurring prior to the date the provisions became effective.
50
<PAGE>
JEFFERSON. Neither Jefferson's articles of incorporation nor its bylaws
contain such a provision.
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 Wachovia Board 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.
JEFFERSON. Jefferson's articles of incorporation provide for
indemnification of any liability of directors, officers, named fiduciaries of an
employee benefit plan of Jefferson, or individuals who are or were serving at
the request of Jefferson as directors, officers, or named fiduciaries of an
employee benefit plan of another corporation, partnership, joint venture, trust
or other entity, except where such person has been adjudged liable because of
wilful misconduct, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office (any of which behavior is
hereinafter referred to collectively as "misfeasance"). No termination of any
proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO
CONTENDERE or its equivalent, shall of itself create a presumption of
misfeasance. The determination of whether indemnification is proper is made by
(a) by the Jefferson Board by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding; or (b) if
such a quorum is not obtainable, or even if obtainable, a majority of
disinterested directors so directs by independent legal counsel in a written
opinion; or (c) by the stockholders. If the determination is to be made by the
Jefferson Board, they may rely, as to all questions of law, on the advice of
independent counsel.
DISSENTERS' RIGHTS
WACHOVIA. North Carolina law generally provides dissenters' rights for
mergers and certain share exchanges that would require shareholder approval,
sales of all or substantially all of the assets (other than sales that are in
the usual and regular course of business and certain liquidations and
court-ordered sales), certain amendments to the articles of incorporation and
any corporate action taken pursuant to a shareholder vote to the extent the
articles of incorporation, bylaws or a resolution of the board of directors
entitles shareholders to dissent.
JEFFERSON. Virginia generally provides for dissenters' rights in connection
with mergers and share exchanges that would require shareholder approval, and
for sales of substantially all of the assets of a corporation (other than in the
usual and regular course of business and other than certain liquidations and
court-ordered sales). The Virginia Stock Corporation Act provides that no
shareholder is entitled to dissent with respect to shares of a class or series
of stock that is listed on a national securities exchange or is held of record
by at least 2,000 shareholders unless, among other things: (i) in the case of a
plan of merger or share exchange, the holders of that class or series of shares
are required to accept for such shares anything other than (a) cash, (b) shares,
or shares and cash in lieu of fractional shares, of the surviving or acquiring
corporation or of any other corporation that at the record date fixed for
determining shareholders entitled to receive notice of and to vote at the
meeting at which the merger or share exchange will be acted on, were either
listed subject to notice of issuance on a national securities exchange or held
of record by at least 2,000 stockholders, or (c) a combination of cash and
shares as set forth in (a) and (b) above; or (ii) the transaction to be voted on
is an "affiliated transaction" and is not approved by a majority of
disinterested directors as required by the Virginia Stock Corporation Act.
Holders of the Jefferson Common Stock have no dissenters' rights with respect to
the consummation of the Merger.
RIGHT TO RECEIVE REPORTS
WACHOVIA. The North Carolina Business Corporation Act provides that
Wachovia must notify its shareholders if the corporation indemnifies or advances
expenses to a director under the provisions of the North Carolina Business
Corporation Act in connection with a shareholder derivative action, or if
Wachovia issues or authorizes the issuance of shares for promissory notes or for
promises to render services in the future.
51
<PAGE>
JEFFERSON. Jefferson's shareholders are not entitled to such notification
under the Virginia Stock Corporation Act, although the disclosure requirements
of the federal securities laws may in some cases require disclosure of such
matters to Jefferson's shareholders in proxy statements and other documents
filed with the Commission.
SHAREHOLDER INSPECTION RIGHTS; SHAREHOLDER LISTS
WACHOVIA. Under the North Carolina Business Corporation Act, qualified
shareholders have the right to inspect and copy certain records of Wachovia if
their demand is in good faith and for a proper purpose. Such right of inspection
requires that the shareholder give Wachovia at least five business days' written
notice of the demand, describing with reasonable particularity his purpose and
the requested records. The records must be directly connected with the
shareholder's purpose. The rights of inspection and copying extend not only to
shareholders of record but also to beneficial owners whose beneficial ownership
is certified to Wachovia by the shareholder of record. However, Wachovia is
under no duty to provide any accounting records or any records with respect to
any matter that Wachovia determines in good faith may, if disclosed, adversely
affect Wachovia in the conduct of its business or may constitute material
non-public information, and the rights of inspection and copying are limited to
shareholders who either have been stockholders for at least six months or who
hold at least five percent of the outstanding shares of any class of stock of
Wachovia.
JEFFERSON. The Virginia Stock Corporation Act permits any Jefferson
shareholder, upon written demand submitted at least five business days in
advance, to inspect and copy certain listed materials, including the articles of
incorporation, the bylaws and certain Jefferson Board resolutions and minutes of
shareholders' meetings. The Virginia Stock Corporation Act further permits a
Jefferson shareholder who has held shares for six months or more or who owns
five percent or more of the outstanding stock of Jefferson to, upon five
business days' prior written demand made in good faith and for a proper purpose,
inspect and copy the accounting records, excerpts from minutes of meetings of
the Jefferson Board and its committees, the minutes of any shareholders'
meetings and the list of shareholders. In addition, Jefferson is required to
prepare a shareholder list with respect to any stockholders' meeting and to make
such list available at Jefferson' principal office to any shareholder for a
period of ten days prior to the meeting and during such meeting and any
adjournments thereof.
COMPARATIVE MARKET PRICES AND DIVIDENDS
WACHOVIA
Wachovia Common Stock is traded on the NYSE 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 NYSE, and the cash
dividends declared per share of Wachovia Common Stock for the indicated periods.
<TABLE>
<CAPTION>
PRICE RANGE CASH DIVIDENDS
QUARTER HIGH LOW DECLARED PER SHARE
<S> <C> <C> <C>
1995:
First........................................................ $36 1/2 $32 $.33
Second....................................................... 37 7/8 34 1/4 .33
Third........................................................ 45 35 3/8 .36
Fourth....................................................... 48 1/4 43 1/8 .36
1996:
First........................................................ 48 3/8 41 1/4 .36
Second....................................................... 46 1/4 40 7/8 .36
Third........................................................ 49 7/8 39 5/8 .40
Fourth....................................................... 60 1/4 48 3/4 .40
1997:
First........................................................ 64 5/8 54 1/2 .40
Second....................................................... 66 7/8 53 1/2 .40
Third (through September 10)................................. 67 11/16 59 1/8 .44
</TABLE>
On June 9, 1997, the last trading day before public announcement of the
Merger, the closing price per share of Wachovia Common Stock on the NYSE was
$62 1/8. Past price performance is not necessarily indicative of
52
<PAGE>
likely future price performance. Holders of Jefferson Common Stock are urged to
obtain current market quotations for shares of Wachovia Common Stock.
The holders of Wachovia Common Stock are entitled to receive dividends when
and if declared by the Wachovia Board out of funds legally available therefor.
Although Wachovia currently intends 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 Wachovia Board's
consideration of other relevant factors.
JEFFERSON
Jefferson Common Stock is traded on the Nasdaq Stock Market under the
symbol "JBNK." The following table sets forth, for the indicated periods, the
high and low closing sale prices for Jefferson Common Stock as reported by
Nasdaq, and the cash dividends declared per share of Jefferson Common Stock for
the indicated periods.
<TABLE>
<CAPTION>
PRICE RANGE CASH DIVIDENDS
QUARTER HIGH LOW DECLARED PER SHARE
<S> <C> <C> <C>
1995:
First.................................................. $20.75 19.13 $.19
Second................................................. 22.13 19.13 .19
Third.................................................. 23.50 21.00 .19
Fourth................................................. 23.50 20.13 .19
1996:
First.................................................. 22.63 20.00 .22
Second................................................. 22.50 20.63 .22
Third.................................................. 27.75 21.50 .22
Fourth................................................. 29.50 26.75 .22
1997:
First.................................................. 30.50 27.25 .25
Second................................................. 41.00 26.38 .25
Third (through September 10)........................... 42.13 36.56 N/A
</TABLE>
On June 9, 1997, the last trading day before public announcement of the
Merger, the closing price per share of Jefferson Common Stock on the Nasdaq
Stock Market was $30. Past price performance is not necessarily indicative of
likely future price performance. Holders of Jefferson Common Stock are urged to
obtain current market quotations for shares of Jefferson Common Stock.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF JEFFERSON
PRINCIPAL BENEFICIAL OWNERS
Jefferson knows of no person who, as of August 15, 1997, beneficially owned
or had the right to acquire more than five percent of the outstanding shares of
Jefferson's Common Stock. Wachovia has the potential right under the Stock
Option Agreement to acquire up to 19.9% of outstanding Jefferson Common Stock
under certain conditions. See "The Merger -- Stock Option Agreement."
SHARES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
Following is a table which indicates as of August 15, 1997, the amount and
the percent of beneficial ownership of Jefferson Common Stock for each director,
executive officer, and all directors and executive officers as a group. Unless
otherwise noted, each individual has sole voting and sole investment power with
respect to the number of shares set forth opposite his name.
53
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
ACQUIRABLE AS A
COMMON STOCK RESULT OF THE PERCENT OF
NAME OWNERSHIP MERGER(1) TOTAL COMMON STOCK
<S> <C> <C> <C> <C>
Robert H. Campbell, Jr................................ 10,383(2) 23,300 33,683 *
John T. Casteen, III.................................. 2,530 2,530 *
Hovey S. Dabney....................................... 80,000(3) 80,000 *
Lawrence S. Eagleburger............................... 1,030 1,030 *
Hunter Faulconer...................................... 208,136(4) 208,136 1.49
Fred L. Glaize, III................................... 301,784(5) 301,784 2.16
Henry H. Harrell...................................... 12,695 12,695 *
Alex J. Kay, Jr....................................... 18,228 18,228 *
J. A. Kessler, Jr..................................... 4,082(6) 4,082 *
O. Kenton McCartney................................... 14,606(7) 45,600 60,206 *
Allen T. Nelson, Jr................................... 1,614 14,600 16,214 *
W. A. Pace, Jr. (8)................................... 21,409 7,200 28,609 *
W. A. Rinehart, III................................... 44,684(9) 44,684 *
Gilbert M. Rosenthal.................................. 17,032 17,032 *
Alson H. Smith, Jr.................................... 2,914 2,914 *
William M. Watson, Jr................................. 7,149(10) 12,620 19,769 *
H. A. Williamson, Jr.................................. 15,671 15,671 *
Directors and Executive Officers as a group (18)...... 770,748(11) 115,920 886,668 6.20
</TABLE>
* Less than 1%
(1) Includes the following number of shares of Jefferson Common Stock that may
be acquired within 60 days of August 15, 1997 or, if later, on the
Effective Date of the Merger through the exercise of options granted on or
before January 2, 1997 under Jefferson's 1995 Long Term Incentive Stock
Plan (the "1995 Stock Plan") or the accelerated vesting of awards granted
on or before May 1, 1994 under Jefferson's 1985 Incentive Stock Plan (the
"1985 Award Plan"). With respect to the 1985 Award Plan: Mr.
Campbell -- 6,400 units, Mr. McCartney -- 8,000 units, Mr. Nelson -- 400
units, Mr. Pace -- 7,200 units, Mr. Watson -- 1,920 units, and all
directors and executive officers as a group -- 28,720 units. With respect
to the 1995 Stock Plan: Mr. Campbell -- 16,900 options, Mr.
McCartney -- 37,600 options, Mr. Nelson -- 14,200 options, Mr. Pace -- 0
options, Mr. Watson -- 10,700 options, and all directors or executive
officers as a group -- 87,200 options.
(2) Excludes 234 shares owned by Mrs. Campbell.
(3) Excludes 1,600 shares owned by Mrs. Dabney.
(4) Includes 134,666 shares held by a trust under the Estate of P. H.
Faulconer. Mr. Faulconer and Jefferson National Bank are co-trustees of the
trust, and Mr. Faulconer has a life interest in a portion of the income
from the trust.
(5) Includes 288,364 shares owned by Amherst Corporation, 31% of the stock of
which is beneficially owned by Mr. Glaize and of which Mr. Glaize is
President and a director, and 2,671 shares owned by Glaize Development,
Inc., 32% of the stock of which is beneficially owned by Mr. Glaize and of
which Mr. Glaize is a Vice President and a director.
(6) Excludes 8,108 shares owned by Mrs. Kessler.
(7) Excludes 1,500 shares owned by Mrs. McCartney.
(8) Retired June 30, 1997.
(9) Includes 21,000 shares held by a revocable trust in which Mr. Rinehart has
all beneficial interests and of which Jefferson National is the trustee.
Also includes 22,684 shares held by two trusts of which Mr. Rinehart and
Jefferson National are co-trustees. Mr. Rinehart has a life interest in one
of the two trusts and a residual interest in the other. Excludes 1,133
shares owned by Mrs. Rinehart.
(10) Excludes 1,000 shares owned by Mrs. Watson.
(11) Excludes 13,574 shares held by spouses of directors and executive officers.
54
<PAGE>
EXPERTS
The consolidated financial statements of Wachovia incorporated by reference
from Wachovia's Annual Report (Form 10-K) for the year ended December 31, 1996,
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.
The consolidated financial statements of Jefferson incorporated by
reference from Jefferson's Annual Report (Form 10-K) for the year ended December
31, 1996, have been audited by KPMG Peat Marwick 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.
The consolidated financial statements of Central Fidelity incorporated by
reference from Central Fidelity's Annual Report (Form 10-K) for the year ended
December 31, 1996, have been audited by KPMG Peat Marwick 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.
VALIDITY OF WACHOVIA COMMON STOCK
The validity of the shares of Wachovia Common Stock being offered hereby
will be passed upon for Wachovia by Kenneth W. McAllister, Executive Vice
President and General Counsel.
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, the Jefferson Board
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 in the discretion of such
individuals provided, however, that no proxy which is voted against the proposal
to approve the Merger Agreement will be voted in favor of any such adjournment
or postponement.
SHAREHOLDER PROPOSALS
If the Merger is not consummated, Jefferson expects to hold its next annual
meeting of shareholders on April 28, 1998. Under Commission rules, proposals of
Jefferson shareholders intended to be presented at that meeting must have been
received by Jefferson at its principal executive offices no later than November
14, 1997, for consideration by Jefferson for possible inclusion in such proxy
materials. Any such proposal should meet applicable requirements of the Exchange
Act.
55
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
dated as of June 9, 1997
by and between
Wachovia Corporation
and
Jefferson Bankshares, Inc.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
RECITALS......................................................................................................... 1
</TABLE>
ARTICLE I
<TABLE>
<S> <C> <C> <C>
Certain Definitions.............................................................................................. 1
1.01 CERTAIN DEFINITIONS........................................................................... 1
</TABLE>
ARTICLE II
<TABLE>
<S> <C> <C> <C>
The Merger....................................................................................................... 4
2.01 THE MERGER.................................................................................... 4
2.02 EFFECTIVE DATE AND EFFECTIVE TIME............................................................. 4
2.03 PLAN OF MERGER................................................................................ 4
</TABLE>
ARTICLE III
<TABLE>
<S> <C> <C> <C>
Consideration; Exchange Procedures............................................................................... 4
3.01 MERGER CONSIDERATION.......................................................................... 4
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS....................................................... 5
3.03 FRACTIONAL SHARES............................................................................. 5
3.04 EXCHANGE PROCEDURES........................................................................... 5
3.05 ANTI-DILUTION PROVISIONS...................................................................... 6
3.06 OPTIONS....................................................................................... 6
</TABLE>
ARTICLE IV
<TABLE>
<S> <C> <C> <C>
Actions Pending Acquisition...................................................................................... 6
4.01 FOREBEARANCES OF JEFFERSON.................................................................... 6
4.02 FOREBEARANCES OF WACHOVIA..................................................................... 8
</TABLE>
ARTICLE V
<TABLE>
<S> <C> <C> <C>
Representations and Warranties................................................................................... 8
5.01 DISCLOSURE SCHEDULES.......................................................................... 8
5.02 STANDARD...................................................................................... 8
5.03 REPRESENTATIONS AND WARRANTIES OF JEFFERSON................................................... 8
5.04 REPRESENTATIONS AND WARRANTIES OF WACHOVIA.................................................... 14
</TABLE>
ARTICLE VI
<TABLE>
<S> <C> <C> <C>
Covenants........................................................................................................ 16
6.01 REASONABLE BEST EFFORTS....................................................................... 16
6.02 STOCKHOLDER APPROVALS......................................................................... 16
6.03 REGISTRATION STATEMENT........................................................................ 16
6.04 PRESS RELEASES................................................................................ 17
6.05 ACCESS; INFORMATION........................................................................... 17
6.06 ACQUISITION PROPOSALS......................................................................... 18
6.07 AFFILIATE AGREEMENTS.......................................................................... 18
6.08 TAKEOVER LAWS................................................................................. 18
6.09 CERTAIN POLICIES.............................................................................. 18
6.10 NYSE LISTING.................................................................................. 18
6.11 REGULATORY APPLICATIONS....................................................................... 18
6.12 INDEMNIFICATION............................................................................... 19
6.13 BENEFIT PLANS................................................................................. 20
6.14 ACCOUNTANTS' LETTERS.......................................................................... 20
6.15 NOTIFICATION OF CERTAIN MATTERS............................................................... 20
6.16 DIRECTORS..................................................................................... 20
6.17 DIVIDEND REINVESTMENT AND OTHER STOCK PLANS................................................... 20
6.18 DIVIDEND COORDINATION......................................................................... 20
</TABLE>
i
<PAGE>
ARTICLE VII
<TABLE>
<S> <C> <C> <C>
Conditions to Consummation of the Merger......................................................................... 21
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.................................... 21
7.02 CONDITIONS TO OBLIGATION OF JEFFERSON......................................................... 21
7.03 CONDITIONS TO OBLIGATION OF WACHOVIA.......................................................... 22
</TABLE>
ARTICLE VIII
<TABLE>
<S> <C> <C> <C>
Termination...................................................................................................... 22
8.01 TERMINATION................................................................................... 22
8.02 EFFECT OF TERMINATION AND ABANDONMENT......................................................... 23
</TABLE>
ARTICLE IX
<TABLE>
<S> <C> <C> <C>
Miscellaneous.................................................................................................... 23
9.01 SURVIVAL...................................................................................... 23
9.02 WAIVER; AMENDMENT............................................................................. 23
9.03 COUNTERPARTS.................................................................................. 23
9.04 GOVERNING LAW................................................................................. 23
9.05 EXPENSES...................................................................................... 23
9.06 NOTICES....................................................................................... 23
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES............................................ 25
9.08 INTERPRETATION; EFFECT........................................................................ 25
</TABLE>
EXHIBIT A Form of Stock Option Agreement [See Appendix B]
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of June 9, 1997 (this "AGREEMENT")
by and between Jefferson Bankshares, Inc. ("JEFFERSON") and Wachovia Corporation
("WACHOVIA").
RECITALS
A. JEFFERSON BANKSHARES, INC. Jefferson is a Virginia corporation, having
its principal place of business in Charlottesville, Virginia.
B. WACHOVIA CORPORATION. Wachovia is a North Carolina corporation, having
its principal place of business in both Winston-Salem, North Carolina and
Atlanta, Georgia.
C. STOCK OPTION AGREEMENT. As an inducement to the willingness of Wachovia
to continue to pursue the transactions contemplated by this Agreement, Jefferson
expects (but is not obligated) to grant to Wachovia an option pursuant to a
stock option agreement, in substantially the form of EXHIBIT A.
D. INTENTIONS OF THE PARTIES. It is the intention of the parties to this
Agreement that the business combination contemplated hereby be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 (the
"Code").
E. BOARD ACTION. The respective Boards of Directors of each of Wachovia and
Jefferson have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:
"ACQUISITION PROPOSAL" has the meaning set forth in Section 6.06.
"AGREEMENT" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPENSATION AND BENEFIT PLANS" has the meaning set forth in Section
5.03(m).
"CORPORATION COMMISSION" has the meaning set forth in Section 2.01(b).
"COSTS" has the meaning set forth in Section 6.12(a).
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"EFFECTIVE DATE" means the date on which the Effective Time occurs.
"EFFECTIVE TIME" means the effective time of the Merger, as provided for in
Section 2.02.
"ENVIRONMENTAL LAWS" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Federal Clean Air Act, and the Occupational Safety and Health Act, each as
amended, regulations promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" has the meaning set forth in Section 5.03(m).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
A-1
<PAGE>
"EXCHANGE AGENT" has the meaning set forth in Section 3.04.
"EXCHANGE FUND" has the meaning set forth in Section 3.04.
"EXCHANGE RATIO" has the meaning set forth in Section 3.01.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.12(a).
"INSURANCE AMOUNT" has the meaning set forth in Section 6.12(b).
"INSURANCE POLICY" has the meaning set forth in Section 5.03(t).
"JEFFERSON" has the meaning set forth in the preamble to this Agreement.
"JEFFERSON AFFILIATE" has the meaning set forth in Section 6.07(a).
"JEFFERSON BOARD" means the Board of Directors of Jefferson.
"JEFFERSON BY-LAWS" means the Amended and Restated By-laws of Jefferson.
"JEFFERSON CERTIFICATE" means the Amended and Restated Articles of
Incorporation of Jefferson.
"JEFFERSON COMMON STOCK" means the common stock, par value $2.50 per share,
of Jefferson.
"JEFFERSON MEETING" has the meaning set forth in Section 6.02.
"JEFFERSON PREFERRED STOCK" means the preferred stock, par value $10.00 per
share, of Jefferson.
"JEFFERSON STOCK" means, collectively, Jefferson Common Stock and Jefferson
Preferred Stock.
"JEFFERSON STOCK PLAN" has the meaning set forth in Section 3.06.
"LIEN" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.
"MATERIAL ADVERSE EFFECT" means, with respect to Wachovia, Jefferson or the
Surviving Corporation, any effect that (i) is material and adverse to the
financial position, results of operations or business of Wachovia and its
Subsidiaries taken as a whole, Jefferson and its Subsidiaries taken as a whole,
or the Surviving Corporation and its Subsidiaries taken as a whole,
respectively, or (ii) would materially impair the ability of either Wachovia or
Jefferson to perform its obligations under this Agreement or otherwise
materially threaten or materially impede the consummation of the Merger and the
other transactions contemplated by this Agreement; PROVIDED, HOWEVER, that
Material Adverse Effect shall not be deemed to include the impact of (a) changes
in banking and similar laws of general applicability or interpretations thereof
by courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to banks
and their holding companies generally, (c) any modifications or changes to
valuation policies and practices in connection with the Merger or restructuring
charges taken in connection with the Merger, in each case in accordance with
generally accepted accounting principles, (d) effects of any action taken with
the prior written consent of Wachovia and (e) changes in conditions or
circumstances that affect the banking industry generally.
"MERGER" has the meaning set forth in Section 2.01.
"MERGER CONSIDERATION" has the meaning set forth in Section 2.01.
"MULTIEMPLOYER PLANS" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"NCBCA" means the North Carolina Business Corporation Act.
"NEW CERTIFICATE" has the meaning set forth in Section 3.04.
"NORTH CAROLINA SECRETARY" has the meaning set forth in Section 2.01(b).
"NYSE" means the New York Stock Exchange, Inc.
"OLD CERTIFICATE" has the meaning set forth in Section 3.04.
A-2
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means any individual, bank, corporation, partnership, association,
joint-stock Jefferson, business trust or unincorporated organization.
"PENSION PLAN" has the meaning set forth in Section 5.03(m).
"PLANS" has the meaning set forth in Section 5.03(m).
"PREVIOUSLY DISCLOSED" by a party shall mean information set forth in its
Disclosure Schedule.
"PROXY STATEMENT" has the meaning set forth in Section 6.03.
"REGISTRATION STATEMENT" has the meaning set forth in Section 6.03.
"REGULATORY AUTHORITY" has the meaning set forth in Section 5.03(i).
"REPRESENTATIVES" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"RIGHTS" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENTS" has the meaning set forth in Section 5.03(g).
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"STOCK OPTION AGREEMENT" has the meaning set forth in Recital C.
"SUBSIDIARY" and "SIGNIFICANT SUBSIDIARY" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.01.
"TAKEOVER LAWS" has the meaning set forth in Section 5.03 (o).
"TAX" and "TAXES" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gross receipts, gains, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority whether
arising before, on or after the Effective Date.
"TAX RETURNS" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with respect to any Tax.
"TREASURY STOCK" shall mean shares of Jefferson Stock held by Jefferson or
any of its Subsidiaries or by Wachovia or any of its Subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously contracted
in good faith.
"VSCA" means the Virginia Stock Corporation Act.
"WACHOVIA" has the meaning set forth in the preamble to this Agreement.
"WACHOVIA AVERAGE STOCK PRICE" has the meaning set forth in Section 3.01.
"WACHOVIA BOARD" means the Board of Directors of Wachovia.
"WACHOVIA COMMON STOCK" means the common stock, par value $5.00 per share,
of Wachovia.
"WACHOVIA PREFERRED STOCK" means the preferred stock, par value $5.00 per
share, of Wachovia.
"WACHOVIA STOCK" means, collectively, Wachovia Common Stock and Wachovia
Preferred Stock.
A-3
<PAGE>
ARTICLE II
THE MERGER
2.01 THE MERGER. (a) At the Effective Time, Jefferson shall merge with and
into Wachovia (the "Merger"), the separate corporate existence of Jefferson
shall cease and Wachovia shall survive and continue to exist as a North Carolina
corporation (Wachovia, as the surviving corporation in the Merger, sometimes
being referred to herein as the "SURVIVING CORPORATION"). Wachovia may at any
time prior to the Effective Time change the method of effecting the combination
with Jefferson (including, without limitation, the provisions of this Article
II) if and to the extent it deems such change to be necessary or appropriate;
PROVIDED, however, that no such change shall (i) alter or change the amount or
kind of consideration to be issued to holders of Jefferson Stock as provided for
in this Agreement (the "MERGER CONSIDERATION"), (ii) adversely affect the tax
treatment of Jefferson's stockholders as a result of receiving the Merger
Consideration or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
(b) Subject to the satisfaction or waiver of the conditions set forth in
Article VII, the Merger shall become effective upon the occurrence of the filing
in the office of the Virginia State Corporation Commission (the "CORPORATION
COMMISSION") of articles of merger in accordance with Section 13.1-725 of the
VSCA and the filing in the Office of the Secretary of State of the State of
North Carolina (the "NORTH CAROLINA SECRETARY") of articles of merger in
accordance with Section 55-11-05 of the NCBCA or such later date and time as may
be set forth in such articles and the issuance of certificates of merger by the
Corporation Commission and the North Carolina Secretary under the VSCA and the
NCBCA. The Merger shall have the effects prescribed in the NCBCA and the VSCA.
(c) ARTICLES OF INCORPORATION AND BY-LAWS. The articles of incorporation
and by-laws of Wachovia immediately after the Merger shall be those of Wachovia
as in effect immediately prior to the Effective Time.
(d) DIRECTORS AND OFFICERS OF WACHOVIA. The directors and officers of
Wachovia immediately after the Merger shall be the directors and officers of
Wachovia (except as provided in Section 6.16) immediately prior to the Effective
Time, until such time as their successors shall be duly elected and qualified.
2.02 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Merger (the "Effective Date") to occur on (i) the fifth
business day to occur after the last of the conditions set forth in Article VII
shall have been satisfied or waived in accordance with the terms of this
Agreement (or, at the election of Wachovia, on the last business day of the
month in which such day occurs) or (ii) such other date to which the parties may
agree in writing. The time on the Effective Date when the Merger shall become
effective is referred to as the "EFFECTIVE TIME."
2.03 PLAN OF MERGER. At the request of Wachovia, Wachovia and Jefferson
shall enter into a separate plan of merger reflecting the terms hereof for
purposes of any filing requirement.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement, at
the Effective Time, automatically by virtue of the Merger and without any action
on the part of any Person:
(a) OUTSTANDING JEFFERSON COMMON STOCK. Each share, excluding Treasury
Stock, of Jefferson Common Stock, issued and outstanding immediately prior
to the Effective Time shall become and be converted into 0.625 shares of
Wachovia Common Stock (the "EXCHANGE RATIO"). The Exchange Ratio shall be
subject to adjustment as set forth in Section 3.05.
(b) OUTSTANDING WACHOVIA STOCK. Each share of Wachovia Stock issued
and outstanding immediately prior to the Effective Time shall remain issued
and outstanding and unaffected by the Merger.
(c) TREASURY SHARES. Each share of Jefferson Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired
at the Effective Time and no consideration shall be issued in exchange
therefor.
A-4
<PAGE>
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of Jefferson Stock shall cease to be, and shall have no rights as,
stockholders of Jefferson, other than to receive any dividend or other
distribution with respect to such Jefferson Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock transfer
books of Jefferson or the Surviving Corporation of shares of Jefferson Stock.
3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Wachovia Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Wachovia shall pay to each holder of Jefferson Common Stock who would
otherwise be entitled to a fractional share of Wachovia Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash (without interest) determined by multiplying such fraction by the average
of the last sale prices of Wachovia Common Stock, as reported by the NYSE
Composite Transactions Reporting System (as reported in THE WALL STREET JOURNAL
or, if not reported therein, in another authoritative source), for the five NYSE
trading days immediately preceding the Effective Date.
3.04 EXCHANGE PROCEDURES. (a) At or prior to the Effective Time, Wachovia
shall deposit, or shall cause to be deposited, with Wachovia Bank, N.A. (in such
capacity, the "EXCHANGE AGENT"), for the benefit of the holders of certificates
formerly representing shares of Jefferson Common Stock ("OLD CERTIFICATES"), for
exchange in accordance with this Article III, certificates representing the
shares of Wachovia Common Stock ("NEW CERTIFICATES") and an estimated amount of
cash (such cash and New Certificates, together with any dividends or
distributions with a record date occurring after the Effective Date with respect
thereto (without any interest on any such cash, dividends or distributions),
being hereinafter referred to as the "EXCHANGE FUND") to be paid pursuant to
this Article III in exchange for outstanding shares of Jefferson Common Stock.
(b) As promptly as practicable after the Effective Date, Wachovia shall
send or cause to be sent to each former holder of record of shares of Jefferson
Common Stock immediately prior to the Effective Time transmittal materials for
use in exchanging such stockholder's Old Certificates for the consideration set
forth in this Article III. Wachovia shall cause the New Certificates into which
shares of a stockholder's Jefferson Common Stock are converted on the Effective
Date and/or any check in respect of any fractional share interests or dividends
or distributions which such person shall be entitled to receive to be delivered
to such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Jefferson Common Stock (or indemnity reasonably
satisfactory to Wachovia and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such stockholder. No interest will be paid
on any such cash to be paid in lieu of fractional share interests or in respect
of dividends or distributions which any such person shall be entitled to receive
pursuant to this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to any former holder of Jefferson Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) At the election of Wachovia, no dividends or other distributions with
respect to Wachovia Common Stock with a record date occurring after the
Effective Time shall be paid to the holder of any unsurrendered Old Certificate
representing shares of Jefferson Common Stock converted in the Merger into the
right to receive shares of such Wachovia Common Stock until the holder thereof
shall be entitled to receive New Certificates in exchange therefor in accordance
with the procedures set forth in this Section 3.04, and no such shares of
Jefferson Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.04. After becoming so entitled in
accordance with this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Wachovia Common Stock such holder had the right to receive upon surrender of the
Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Jefferson for twelve months after the Effective Time shall be
paid to Wachovia. Any stockholders of Jefferson who have not theretofore
complied with this Article III shall thereafter look only to Wachovia for
payment of the shares of Wachovia Common Stock, cash in lieu of any fractional
shares and unpaid dividends and distributions on Wachovia Common Stock
deliverable in respect of each share of Jefferson Common Stock such stockholder
holds as determined pursuant to this Agreement, in each case, without any
interest thereon and Wachovia shall make such payment.
A-5
<PAGE>
3.05 ANTI-DILUTION PROVISIONS. In the event Wachovia changes (or
establishes a record date for changing) the number of shares of Wachovia Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Wachovia Common Stock and the record date therefor shall be
prior to the Effective Date, the Exchange Ratio shall be proportionately
adjusted.
3.06 OPTIONS. At the Effective Time, each outstanding option to purchase
shares of Jefferson Common Stock under the Jefferson 1995 Long Term Incentive
Stock Plan (each, a "JEFFERSON STOCK OPTION"), whether vested or unvested, shall
be converted into an option to acquire, on the same terms and conditions as were
applicable under such Jefferson Stock Option, the number of shares of Wachovia
Common Stock equal to (a) the number of shares of Jefferson Common Stock subject
to the Jefferson Stock Option, multiplied by (b) the Exchange Ratio (such
product rounded down to the nearest whole number) (a "REPLACEMENT OPTION"), at
an exercise price per share (rounded up to the nearest whole cent) equal to (y)
the aggregate exercise price for the shares of Jefferson Common Stock which were
purchasable pursuant to such Jefferson Stock Option divided by (z) the number of
full shares of Wachovia Common Stock subject to such Replacement Option in
accordance with the foregoing. Notwithstanding the foregoing, each Jefferson
Stock Option which is intended to be an "incentive stock option" (as defined in
Section 422 of the Code) shall be adjusted in accordance with the requirements
of Section 424 of the Code. At or prior to the Effective Time, Jefferson shall
take all action necessary including obtaining any necessary consents from
Optionees, to permit the replacement of the outstanding Jefferson Stock Options
by Wachovia pursuant to this Section and to permit Wachovia to assume (to the
extent described below) the Jefferson 1995 Long Term Incentive Stock Plan.
Jefferson shall further take all action necessary to amend the Jefferson 1995
Long Term Incentive Stock Plan to eliminate automatic grants or awards
thereunder following the Effective Time. At the Effective Time, Wachovia shall
assume the Jefferson 1995 Long Term Incentive Stock Plan; provided, that such
assumption shall be only in respect of the Replacement Options and that Wachovia
shall have no obligation with respect to any awards under the Jefferson 1995
Long Term Incentive Stock Plan other than the Replacement Options and shall have
no obligation to make any additional grants or awards under such assumed plans.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 FOREBEARANCES OF JEFFERSON. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Wachovia, Jefferson will not, and will cause each of its
Subsidiaries not to:
(a) ORDINARY COURSE. Conduct the business of Jefferson and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action
reasonably likely to have an adverse affect upon Jefferson's ability to
perform any of its material obligations under this Agreement.
(b) CAPITAL STOCK. Other than (i) pursuant to Rights Previously
Disclosed and outstanding on the date hereof, (ii) "open market purchase"
sales without any discount under the Jefferson Dividend Reinvestment Plan
and the Jefferson Employee Stock Purchase Plan and (iii) pursuant to the
Jefferson Deferred Compensation and Stock Purchase Plan for Non-Employee
Directors, (A) issue, sell or otherwise permit to become outstanding, or
authorize the creation of, any additional shares of Jefferson Stock or any
Rights, (B) enter into any agreement with respect to the foregoing, or (C)
permit any additional shares of Jefferson Stock to become subject to new
grants of employee or director stock options, other Rights or similar
stock-based employee rights.
(c) DIVIDENDS, ETC. (a) Make, declare, pay or set aside for payment
any dividend (other than (A) quarterly cash dividends on Jefferson Stock in
an amount not to exceed $0.25 per share (the "Permitted Dividend Amount")
with record and payment dates consistent with past practice and (B)
dividends from wholly owned Subsidiaries to Jefferson or another wholly
owned Subsidiary of Jefferson) on or in respect of, or declare or make any
distribution on any shares of Jefferson Stock or (b) directly or indirectly
adjust, split, combine, redeem, reclassify, purchase or otherwise acquire,
any shares of its capital stock; PROVIDED, HOWEVER, if Wachovia shall
increase its regular quarterly dividend to an amount in excess of $0.40 per
share,
A-6
<PAGE>
then the Permitted Amount may be increased by Jefferson at its option for
all future dividends in an amount proportionate to the increase in the
Wachovia dividend.
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Jefferson or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof, or (iv) for grants
of awards to newly hired employees consistent with past practice.
(e) BENEFIT PLANS. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law or (ii) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof) any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any
director, officer or employee of Jefferson or its Subsidiaries, or take any
action to accelerate the vesting or exercisability of stock options,
restricted stock or other compensation or benefits payable thereunder.
(f) DISPOSITIONS. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business and in a transaction that is not material to it and its
Subsidiaries taken as a whole.
(g) ACQUISITIONS. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith,
in each case in the ordinary and usual course of business consistent with
past practice) all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business
and in a transaction that is not material to it and its Subsidiaries taken
as a whole.
(h) GOVERNING DOCUMENTS. Amend the Jefferson Certificate, Jefferson
By-laws or the certificate of incorporation or by-laws (or similar
governing documents) of any of Jefferson's Subsidiaries.
(i) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(j) CONTRACTS. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any
of its existing material contracts.
(k) CLAIMS. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually or in the aggregate for all such settlements, that is not
material to Jefferson and its Subsidiaries, taken as a whole.
(l) ADVERSE ACTIONS. (a) Take any action reasonably likely to prevent
or impede the Merger from qualifying as a reorganization within the meaning
of Section 368 of the Code; or (b) knowingly take any action that is
intended or is reasonably likely to result in (i) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Merger set forth in
Article VII not being satisfied or (iii) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
(m) RISK MANAGEMENT. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure
to interest rate risk.
(n) INDEBTEDNESS. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(o) COMMITMENTS. Agree or commit to do any of the foregoing.
A-7
<PAGE>
4.02 FOREBEARANCES OF WACHOVIA. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Jefferson, Wachovia will not, and will cause each of its
Subsidiaries not to:
(a) EXTRAORDINARY DIVIDENDS. Make, declare, pay or set aside for
payment any extraordinary dividend.
(b) ADVERSE ACTIONS. (i) Take any action which would materially
adversely affect its ability to consummate the Merger; (ii) take any action
reasonably likely to prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code; or (iii)
knowingly take any action that is intended or is reasonably likely to
result in (A) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (B) any of the conditions to the Merger set
forth in Article VII not being satisfied; or (C) a material violation of
any provision of this Agreement except, in each case, as may be required by
applicable law.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 DISCLOSURE SCHEDULES. On or prior to the date hereof, Wachovia has
delivered to Jefferson a schedule and Jefferson has delivered to Wachovia a
schedule (respectively, its "DISCLOSURE SCHEDULE") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04 or to one or more of its covenants contained in Article IV;
provided, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a representation or warranty if its absence would
not be reasonably likely to result in the related representation or warranty
being deemed untrue or incorrect under the standard established by Section 5.02,
and (b) the mere inclusion of an item in a Disclosure Schedule as an exception
to a representation or warranty shall not be deemed an admission by a party that
such item represents a material exception or fact, event or circumstance or that
such item is reasonably likely to result in a Material Adverse Effect.
5.02 STANDARD. No representation or warranty of Jefferson or Wachovia
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had or is reasonably likely to have a
Material Adverse Effect.
5.03 REPRESENTATIONS AND WARRANTIES OF JEFFERSON. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Jefferson hereby
represents and warrants to Wachovia:
(a) ORGANIZATION, STANDING AND AUTHORITY. Jefferson is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Jefferson is duly qualified to do business and is
in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) JEFFERSON STOCK. As of the date hereof, the authorized capital
stock of Jefferson consists solely of (i) 32,000,000 shares of Jefferson
Common Stock, of which 13,954,843 shares were outstanding as of the date
hereof and (ii) 1,000,000 shares of Jefferson Preferred Stock, of which no
shares were outstanding as of the date hereof. As of the date hereof, no
shares of Jefferson Common Stock and no shares of Jefferson Preferred Stock
were held in treasury by Jefferson or otherwise owned by Jefferson or its
Subsidiaries ("TREASURY STOCK"). The outstanding shares of Jefferson Stock
have been duly authorized and are validly issued and outstanding, fully
paid and nonassessable, and subject to no preemptive rights (and were not
issued in violation of any preemptive rights). As of the date hereof,
except as Previously Disclosed in its Disclosure Schedule, there are no
shares of Jefferson Stock authorized and reserved for issuance, Jefferson
does not have any Rights issued or outstanding with respect to Jefferson
Stock, and Jefferson does not have any commitment to authorize, issue or
sell any Jefferson Stock or Rights, except pursuant to this Agreement and
the Stock Option Agreement. The number of shares of Jefferson Common Stock
which are issuable and
A-8
<PAGE>
reserved for issuance upon exercise of Jefferson Stock Options as of the
date hereof are Previously Disclosed in Jefferson's Disclosure Schedule.
(c) SUBSIDIARIES. (i)(A) Jefferson has Previously Disclosed a list of
all of its Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) except as Previously Disclosed, it owns, directly
or indirectly, all the issued and outstanding equity securities of each of
its Subsidiaries, (C) no equity securities of any of its Subsidiaries are
or may become required to be issued (other than to it or its wholly-owned
Subsidiaries) by reason of any Right or otherwise, (D) there are no
contracts, commitments, understandings or arrangements by which any of such
Subsidiaries is or may be bound to sell or otherwise transfer any equity
securities of any such Subsidiaries (other than to it or its wholly-owned
Subsidiaries), (E) there are no contracts, commitments, understandings, or
arrangements relating to its rights to vote or to dispose of such
securities and (F) all the equity securities of each Subsidiary held by
Jefferson or its Subsidiaries are fully paid and nonassessable (except
pursuant to 12 U.S.C. (section mark)55) and are owned by Jefferson or its
Subsidiaries free and clear of any Liens.
(ii) Jefferson does not own beneficially, directly or indirectly, any
equity securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of Jefferson's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified.
(d) CORPORATE POWER. Jefferson and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Jefferson has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to
receipt of the requisite approval of the agreement of merger set forth in
this Agreement by the holders of more than two-thirds of the outstanding
shares of Jefferson Common Stock entitled to vote thereon (which is the
only shareholder vote required thereon), this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of Jefferson and the Jefferson
Board prior to the date hereof. This Agreement is a valid and legally
binding obligation of Jefferson, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles). The Jefferson Board of Directors has
received the written opinion of Goldman, Sachs & Co. to the effect that as
of the date hereof the Exchange Ratio is fair to the holders of Jefferson
Common Stock.
(f) REGULATORY FILINGS; NO DEFAULTS. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by Jefferson or any of its
Subsidiaries in connection with the execution, delivery or performance by
Jefferson of this Agreement or the Stock Option Agreement or to consummate
the Merger except for (A) the filing of a notice under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"), (B)
filings of applications or notices with federal and Virginia banking
authorities, (C) filings with the SEC and state securities authorities, and
(D) the filing of articles of merger with the North Carolina Secretary
pursuant to the NCBCA and the Corporation Commission pursuant to the VSCA.
As of the date hereof, Jefferson is not aware of any reason why the
approvals set forth in Section 7.01(b) will not be received without the
imposition of a condition, restriction or requirement of the type described
in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the Stock Option Agreement
and the consummation of the transactions contemplated hereby and thereby do
not and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any right
of termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of Jefferson or of any of its Subsidiaries or to which Jefferson
or any of its Subsidiaries or
A-9
<PAGE>
properties is subject or bound, (B) constitute a breach or violation of, or
a default under, the Jefferson Certificate or the Jefferson By-Laws, or (C)
require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license, agreement,
indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS; NO MATERIAL ADVERSE EFFECT.
(i) Jefferson's Annual Reports on Form 10-K for the fiscal years ended
December 31, 1994, 1995 and 1996, and all other reports, registration
statements, definitive proxy statements or information statements filed or
to be filed by it or any of its Subsidiaries subsequent to December 31,
1994 under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act, in the form filed or to be filed (collectively,
Jefferson's "SEC DOCUMENTS") with the SEC, as of the date filed, (A)
complied or will comply in all material respects as to form with the
applicable requirements under the Securities Act or the Exchange Act, as
the case may be, and (B) did not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of Jefferson and
its Subsidiaries as of its date, and each of the statements of income and
changes in stockholders' equity and cash flows or equivalent statements in
such SEC Documents (including any related notes and schedules thereto)
fairly presents, or will fairly present, the results of operations, changes
in stockholders' equity and changes in cash flows, as the case may be, of
Jefferson and its Subsidiaries for the periods to which they relate, in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements.
(ii) Since December 31, 1996, Jefferson and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
(iii) Since December 31, 1996, (A) Jefferson and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no
event has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in any
paragraph of Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to Jefferson.
(h) LITIGATION. No litigation, claim or other proceeding before any court
or governmental agency is pending against Jefferson or any of its Subsidiaries
and, to Jefferson's knowledge, no such litigation, claim or other proceeding has
been threatened.
(i) REGULATORY MATTERS. (i) Neither Jefferson nor any of its Subsidiaries
or properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any federal
or state governmental agency or authority charged with the supervision or
regulation of financial institutions or issuers of securities or engaged in the
insurance of deposits (including, without limitation, the Office of the
Comptroller of the Currency, the Federal Reserve Board and the FDIC) or the
supervision or regulation of it or any of its Subsidiaries (collectively, the
"REGULATORY AUTHORITIES").
(ii) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(j) COMPLIANCE WITH LAWS. Jefferson and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
A-10
<PAGE>
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Jefferson's knowledge,
no suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that Jefferson
or any of its Subsidiaries is not in compliance with any of the statutes,
regulations, or ordinances which such Governmental Authority enforces or
(B) threatening to revoke any license, franchise, permit, or governmental
authorization (nor, to Jefferson's knowledge, do any grounds for any of the
foregoing exist).
(k) MATERIAL CONTRACTS; DEFAULTS. Except for those agreements and other
documents filed as exhibits to its SEC Documents, neither it nor any of its
Subsidiaries is a party to, bound by or subject to any agreement, contract,
arrangement, commitment or understanding (whether written or oral) (i) that is a
"material contract" within the meaning of Item 601(b)(10) of the SEC's
Regulation S-K or (ii) that materially restricts the conduct of business by it
or any of its Subsidiaries. Neither it nor any of its Subsidiaries is in default
under any contract, agreement, commitment, arrangement, lease, insurance policy
or other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default.
(l) NO BROKERS. No action has been taken by Jefferson that would give rise
to any valid claim against any party hereto for a brokerage commission, finder's
fee or other like payment with respect to the transactions contemplated by this
Agreement, excluding a Previously Disclosed fee to be paid to Goldman, Sachs &
Co.
(m) EMPLOYEE BENEFIT PLANS. (i) Section 5.03(m)(i) of Jefferson's
Disclosure Schedule contains a complete and accurate list of all existing bonus,
incentive, deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option, severance, welfare and fringe benefit plans, employment or
severance agreements and all similar practices, policies and arrangements in
which any employee or former employee (the "EMPLOYEES"), consultant or former
consultant (the "CONSULTANTS") or director or former director (the "DIRECTORS")
of Jefferson or any of its Subsidiaries participates or to which any such
Employees, Consultants or Directors are a party (the "COMPENSATION AND BENEFIT
PLANS"). Neither Jefferson nor any of its Subsidiaries has any commitment to
create any additional Compensation and Benefit Plan or to modify or change any
existing Compensation and Benefit Plan.
(ii) Each Compensation and Benefit Plan has been operated and administered
in all material respects in accordance with its terms and with applicable law,
including, but not limited to, ERISA, the Code, the Securities Act, the Exchange
Act, the Age Discrimination in Employment Act, and any regulations or rules
promulgated thereunder, and all filings, disclosures and notices required by
ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act or any other applicable law have been timely made. Each
Compensation and Benefit Plan which is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a "PENSION PLAN") and which is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter (including a determination that the related trust under
such Compensation and Benefit Plan is exempt from tax under Section 501(a) of
the Code) from the Internal Revenue Service ("IRS") for "TRA" (as defined in
Rev. Proc. 93-39), or will file for such determination letter prior to the
expiration of the remedial amendment period for such Compensation and Benefit
Plan, and Jefferson is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no material
pending or, to the knowledge of Jefferson, threatened legal action, suit or
claim relating to the Compensation and Benefit Plans, other than routine claims
for benefits. Neither Jefferson nor any of its Subsidiaries has engaged in a
transaction, or omitted to take any action, with respect to any Compensation and
Benefit Plan that would reasonably be expected to subject Jefferson or any of
its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code
or Section 502 of ERISA, assuming for purposes of Section 4975 of the Code that
the taxable period of any such transaction expired as of the date hereof.
(iii) No liability (other than for payment of premiums to the PBGC which
have been made or will be made on a timely basis) under Title IV of ERISA has
been or is expected to be incurred by Jefferson or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within the
meaning of
A-11
<PAGE>
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or any single-employer plan of any entity (an "ERISA AFFILIATE") which is
considered one employer with Jefferson under Section 4001(a)(14) of ERISA or
Section 414(b) or (c) of the Code (an "ERISA AFFILIATE PLAN"). None of
Jefferson, any of its Subsidiaries or any ERISA Affiliate has contributed, or
has been obligated to contribute, to a multiemployer plan under Subtitle E of
Title IV of ERISA at any time since September 26, 1980. No notice of a
"reportable event", within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been waived, has been required to be filed
for any Compensation and Benefit Plan or by any ERISA Affiliate Plan within the
12-month period ending on the date hereof, and to the knowledge of Jefferson no
such notice will be required to be filed as a result of the transactions
contemplated by this Agreement. The PBGC has not instituted proceedings to
terminate any Pension Plan or ERISA Affiliate Plan and, to Jefferson's
knowledge, no condition exists that presents a material risk that such
proceedings will be instituted. To the knowledge of Jefferson, there is no
pending investigation or enforcement action by the PBGC, the Department of Labor
(the "DOL") or IRS or any other governmental agency with respect to any
Compensation and Benefit Plan. Under each Pension Plan and ERISA Affiliate Plan,
as of the date of the most recent actuarial valuation performed prior to the
date of this Agreement, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial assumptions contained in such actuarial valuation
of such Pension Plan or ERISA Affiliate Plan), did not exceed the then current
value of the assets of such Pension Plan or ERISA Affiliate Plan and since such
date there has been neither an adverse change in the financial condition of such
Pension Plan or ERISA Affiliate Plan nor any amendment or other change to such
Pension Plan or ERISA Affiliate Plan that would increase the amount of benefits
thereunder which reasonably could be expected to change such result.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any employee benefit
arrangements under any collective bargaining agreement to which Jefferson or any
of its Subsidiaries is a party have been timely made or have been reflected on
Jefferson's financial statements. Neither any Pension Plan nor any ERISA
Affiliate Plan has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA and all
required payments to the PBGC with respect to each Pension Plan or ERISA
Affiliate Plan have been made on or before their due dates. None of Jefferson,
any of its Subsidiaries or any ERISA Affiliate (x) has provided, or would
reasonably be expected to be required to provide, security to any Pension Plan
or to any ERISA Affiliate Plan pursuant to Section 401(a)(29) of the Code, and
(y) has taken any action, or omitted to take any action, that has resulted, or
would reasonably be expected to result, in the imposition of a lien under
Section 412(n) of the Code or pursuant to ERISA.
(v) Neither Jefferson nor any of its Subsidiaries has any obligations to
provide retiree health and life insurance or other retiree death benefits under
any Compensation and Benefit Plan, other than benefits mandated by Section 4980B
of the Code, and each such Compensation and Benefit Plan may be amended or
terminated without incurring liability thereunder. There has been no
communication to Employees by Jefferson or any of its Subsidiaries that would
reasonably be expected to promise or guarantee such Employees retiree health or
life insurance or other retiree death benefits on a permanent basis.
(vi) With respect to each Compensation and Benefit Plan, if applicable,
Jefferson has provided, or made available to Wachovia, true and complete copies
of existing: (A) Compensation and Benefit Plan documents and amendments thereto;
(B) trust instruments and insurance contracts; (C) two most recent Forms 5500
filed with the IRS; (D) most recent actuarial report and financial statement;
(E) the most recent summary plan description; (F) forms filed with the PBGC
(other than for premium payments); (G) most recent determination letter issued
by the IRS; (H) any Form 5310 or Form 5330 filed with the IRS; and (I) most
recent nondiscrimination tests performed under ERISA and the Code (including
401(k) and 401(m) tests).
(vii) The consummation of the transactions contemplated by this Agreement
would not, directly or indirectly (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time)
reasonably be expected to (A) entitle any Employee, Consultant or Director to
any payment (including severance pay or similar compensation) or any increase in
compensation, (B) result in the vesting or acceleration of any benefits under
any Compensation and Benefit Plan or (C) result in any material increase in
benefits payable under any Compensation and Benefit Plan.
A-12
<PAGE>
(viii) Neither Jefferson nor any of its Subsidiaries maintains any
compensation plans, programs or arrangements the payments under which would not
reasonably be expected to be deductible as a result of the limitations under
Section 162(m) of the Code and the regulations issued thereunder.
(ix) As a result, directly or indirectly, of the transactions contemplated
by this Agreement (including, without limitation, as a result of any termination
of employment prior to or following the Effective Time), none of Wachovia,
Jefferson or the Surviving Corporation, or any of their respective Subsidiaries
will be obligated to make a payment that would be characterized as an "excess
parachute payment" to an individual who is a "disqualified individual" (as such
terms are defined in Section 280G of the Code), without regard to whether such
payment is reasonable compensation for personal services performed or to be
performed in the future.
(n) LABOR MATTERS. Neither Jefferson nor any of its Subsidiaries is a party
to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
Jefferson or any of its Subsidiaries the subject of a proceeding asserting that
it or any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel Jefferson or
any such Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its Subsidiaries pending or, to Jefferson's knowledge,
threatened, nor is Jefferson aware of any activity involving its or any of its
Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in other organizational activity.
(o) TAKEOVER LAWS; DISSENTERS RIGHTS. Jefferson has taken all action
required to be taken by it in order to exempt this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby from, and this
Agreement, the Stock Option Agreement and the transactions contemplated hereby
and thereby are exempt from, the requirements of any "moratorium", "control
share", "fair price" "affiliate transaction", "business combination" or other
antitakeover laws and regulations of any state (collectively, "Takeover Laws"),
including, without limitation, the Commonwealth of Virginia, and including,
without limitation, Sections 13.1-725 through 13.1-728 of the VSCA (because a
majority of Jefferson's disinterested directors approved such transactions for
such purposes prior to any "determination date" with respect to Wachovia) and
Sections 13.1-728.1 through 13.1-728.9 of the VSCA. Holders of Jefferson Common
Stock do not have dissenters rights in connection with the Merger.
(p) ENVIRONMENTAL MATTERS. To the knowledge of Jefferson and its
Subsidiaries, neither the conduct nor operation of Jefferson or its Subsidiaries
nor any condition of any property presently or previously owned, leased or
operated by any of them (including, without limitation, in a fiduciary or agency
capacity), or on which any of them holds a Lien, violates or violated
Environmental Laws and no condition has existed or event has occurred with
respect to any of them or any such property that, with notice or the passage of
time, or both, is reasonably likely to result in liability under Environmental
Laws. Neither Jefferson nor any of its Subsidiaries has received any notice from
any person or entity that Jefferson or its Subsidiaries or the operation or
condition of any property ever owned, leased, operated, or held as collateral or
in a fiduciary capacity by any of them are or were in violation of or otherwise
are alleged to have liability under any Environmental Law, including, but not
limited to, responsibility (or potential responsibility) for the cleanup or
other remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such property.
(q) TAX MATTERS. All Tax Returns that are required to be filed by or with
respect to Jefferson and its Subsidiaries have been duly filed, (ii) all Taxes
shown to be due on the Tax Returns referred to in clause (i) have been paid in
full, (iii) the Tax Returns referred to in clause (i) have been examined by the
Internal Revenue Service or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired, (iv) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full, (v) no
issues that have been raised by the relevant taxing authority in connection with
the examination of any of the Tax Returns referred to in clause (i) are
currently pending, and (vi) no waivers of statutes of limitation have been given
by or requested with respect to any Taxes of Jefferson or its Subsidiaries.
Jefferson has made available to Wachovia true and correct copies of the United
States federal income Tax Returns filed by Jefferson and its Subsidiaries for
each of the three most recent fiscal years ended on or before December 31, 1995.
Neither Jefferson nor any of its Subsidiaries has any liability with respect to
income, franchise or similar Taxes that accrued on or before the end of the most
recent period covered by Jefferson's SEC Documents filed on or prior to the date
hereof in excess of the amounts accrued with respect thereto that are reflected
in the financial statements included in Jefferson's SEC Documents filed prior to
the date
A-13
<PAGE>
hereof. Neither Jefferson nor any of its Subsidiaries has any reason to believe
that any conditions exist that might prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(r) RISK MANAGEMENT INSTRUMENTS. All interest rate swaps, caps, floors,
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for Jefferson's own account, or
for the account of one or more of Jefferson's Subsidiaries or their customers
(all of which are listed on Jefferson's Disclosure Schedule), were entered into
(i) in accordance with prudent business practices and all applicable laws,
rules, regulations and regulatory policies and (ii) with counterparties believed
to be financially responsible at the time; and each of them constitutes the
valid and legally binding obligation of Jefferson or one of its Subsidiaries,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and are in full
force and effect. Neither Jefferson nor its Subsidiaries, nor to Jefferson's
knowledge any other party thereto, is in breach of any of its obligations under
any such agreement or arrangement.
(s) BOOKS AND RECORDS. The books and records of Jefferson and its
Subsidiaries have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present the financial position
of Jefferson and its Subsidiaries.
(t) INSURANCE. Jefferson's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by Jefferson or its
Subsidiaries ("INSURANCE POLICIES"). Jefferson and its Subsidiaries are insured
with reputable insurers against such risks and in such amounts as the management
of Jefferson reasonably has determined to be prudent in accordance with industry
practices. All the Insurance Policies are in full force and effect; Jefferson
and its Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(u) DISCLOSURE. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
5.04 REPRESENTATIONS AND WARRANTIES OF WACHOVIA. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Wachovia hereby
represents and warrants to Jefferson as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. Wachovia is duly organized,
validly existing and in good standing under the laws of the State of North
Carolina. Wachovia is duly qualified to do business and is in good standing
in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified. Wachovia has in effect all federal, state,
local, and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as it is now
conducted.
(b) WACHOVIA STOCK. (i) As of the date hereof, the authorized capital
stock of Wachovia consists solely of 500,000,000 shares of Wachovia Common
Stock, of which 159,802,330 shares were outstanding as of the date hereof
and 50,000,000 shares of Wachovia Preferred Stock, of which no shares were
outstanding as of the date hereof. As of the date hereof, except as set
forth in its Disclosure Schedule, Wachovia does not have any Rights issued
or outstanding with respect to Wachovia Stock, and Wachovia does not have
any commitment to authorize, issue or sell any Wachovia Stock or Rights,
except pursuant to this Agreement.
(ii) The shares of Wachovia Common Stock to be issued in exchange for
shares of Jefferson Common Stock in the Merger, when issued in accordance
with the terms of this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable.
(c) SUBSIDIARIES. Each of Wachovia's Significant Subsidiaries has been
duly organized and is validly existing in good standing under the laws of
the jurisdiction of its organization, and is duly qualified to do business
and in good standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified and
it owns, directly or indirectly, all the issued and outstanding equity
securities of each of its Significant Subsidiaries.
A-14
<PAGE>
(d) CORPORATE POWER. Wachovia and each of its Significant Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and Wachovia has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) CORPORATE AUTHORITY. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action
of Wachovia and its Board of Directors and does not require any vote of
stockholders. This Agreement is a valid and legally binding agreement of
Wachovia enforceable in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity
principles).
(f) REGULATORY APPROVALS; NO DEFAULTS. No consents or approvals of, or
filings or registrations with, any court, administrative agency or
commission or other governmental authority or instrumentality or with any
third party are required to be made or obtained by Wachovia or any of its
Subsidiaries in connection with the execution, delivery or performance by
Wachovia of this Agreement or to consummate the Merger except for (A) the
filing of applications and notices, as applicable, with the federal and
state banking authorities; (B) approval of the listing on the NYSE of
Wachovia Common Stock to be issued in the Merger; (C) the filing and
declaration of effectiveness of the Registration Statement; (D) the filing
of articles of merger with the North Carolina Secretary pursuant to the
NCBCA and the Corporation Commission pursuant to the VSCA; (E) such filings
as are required to be made or approvals as are required to be obtained
under the securities or "Blue Sky" laws of various states in connection
with the issuance of Wachovia Stock in the Merger; and (F) receipt of the
approvals set forth in Section 7.01(b). As of the date hereof, Wachovia is
not aware of any reason why the approvals set forth in Section 7.01(b) will
not be received without the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of Wachovia or of any of its
Subsidiaries or to which Wachovia or any of its Subsidiaries or properties
is subject or bound, (B) constitute a breach or violation of, or a default
under, the certificate of incorporation or by-laws (or similar governing
documents) of Wachovia or any of its Subsidiaries, or (C) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE EFFECT. (i)
Wachovia's SEC Documents, as of the date filed, (A) complied or will comply
in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (B) did not
and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such SEC Document (including the related
notes and schedules thereto) fairly presents, or will fairly present, the
financial position of Wachovia and its Subsidiaries as of its date, and
each of the statements of income and changes in stockholders' equity and
cash flows or equivalent statements in such SEC Documents (including any
related notes and schedules thereto) fairly presents, or will fairly
present, the results of operations, changes in stockholders' equity and
changes in cash flows, as the case may be, of Wachovia and its Subsidiaries
for the periods to which they relate, in each case in accordance with
generally accepted accounting principles consistently applied during the
periods involved, except in each case as may be noted therein, subject to
normal year-end audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1996, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to Wachovia.
A-15
<PAGE>
(h) LITIGATION; REGULATORY ACTION. (i) Other than as set forth in its
SEC Documents filed on or before the date hereof, no litigation, claim or
other proceeding before any Governmental Authority is pending against
Wachovia or any of its Subsidiaries and, to the best of Wachovia's
knowledge, no such litigation, claim or other proceeding has been
threatened.
(ii) Neither Wachovia nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has Wachovia or any of its Subsidiaries been
advised by a Regulatory Authority that such agency is contemplating issuing
or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(i) COMPLIANCE WITH LAWS. Wachovia and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices; and
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best of its
knowledge, no suspension or cancellation of any of them is threatened.
(j) NO BROKERS. No action has been taken by Wachovia that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a fee to be paid to
Credit Suisse First Boston Corporation.
(k) DISCLOSURE. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading.
ARTICLE VI
COVENANTS
6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of Jefferson and Wachovia agrees to use its reasonable
best efforts in good faith to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or desirable, or
advisable under applicable laws, so as to permit consummation of the Merger
as promptly as practicable and otherwise to enable consummation of the
transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
6.02 STOCKHOLDER APPROVALS. Jefferson agrees to take, in accordance
with applicable law or NASDAQ rules and its articles of incorporation and
by-laws, all action necessary to convene an appropriate meeting of
stockholders of Jefferson to consider and vote upon the approval and
adoption of this Agreement and any other matters required to be approved by
Jefferson's stockholders for consummation of the Merger (including any
adjournment or postponement, the "JEFFERSON MEETING") as promptly as
practicable after the Registration Statement is declared effective. Except
to the extent legally required for the discharge by the Board of Directors
of its fiduciary duties as advised in writing by its counsel, the Jefferson
Board shall recommend such approval, and Jefferson shall take all
reasonable, lawful action to solicit such approval by its stockholders. At
the request of Wachovia, Jefferson will utilize a professional proxy
solicitation firm to assist it in procuring the necessary stockholder vote.
6.03 REGISTRATION STATEMENT. (a) Wachovia agrees to prepare a
registration statement on Form S-4 (the "REGISTRATION STATEMENT") to be
filed by Wachovia with the SEC in connection with the issuance of Wachovia
Stock in the Merger (including the proxy statement and prospectus and other
proxy solicitation materials of Jefferson constituting a part thereof (the
"PROXY STATEMENT") and all related documents). Each of
A-16
<PAGE>
the parties hereto agrees to cooperate, and to cause its Subsidiaries to
cooperate, with the other, its counsel and its accountants, in preparation
of the Registration Statement and the Proxy Statement; and PROVIDED that
Jefferson and its Subsidiaries have cooperated as required above, Wachovia
agrees to file the Proxy Statement in preliminary form with the SEC as
promptly as reasonably practicable, and to file the Registration Statement
with the SEC as soon as reasonably practicable after any SEC comments with
respect to the preliminary Proxy Statement are resolved. Each of Jefferson
and Wachovia agrees to use all reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
reasonably practicable after filing thereof. Wachovia also agrees to use
all reasonable efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. Jefferson agrees to furnish to Wachovia all
information concerning Jefferson, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the
foregoing.
(b) Each of Jefferson and Wachovia agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it
for inclusion or incorporation by reference in (i) the Registration
Statement will, at the time the Registration Statement and each amendment
or supplement thereto, if any, becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Proxy Statement and any
amendment or supplement thereto will, at the date of mailing to
stockholders and at the time of the Jefferson Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading or any statement which, in the light of the circumstances under
which such statement is made, will be false or misleading with respect to
any material fact, or which will omit to state any material fact necessary
in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier statement in the Proxy
Statement or any amendment or supplement thereto. Each of Jefferson and
Wachovia further agrees that if it shall become aware prior to the
Effective Date of any information furnished by it that would cause any of
the statements in the Proxy Statement to be false or misleading with
respect to any material fact, or to omit to state any material fact
necessary to make the statements therein not false or misleading, to
promptly inform the other party thereof and to take the necessary steps to
correct the Proxy Statement.
(c) Wachovia agrees to advise Jefferson, promptly after Wachovia
receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the
issuance of any stop order or the suspension of the qualification of
Wachovia Stock for offering or sale in any jurisdiction, of the initiation
or threat of any proceeding for any such purpose, or of any request by the
SEC for the amendment or supplement of the Registration Statement or for
additional information.
6.04 PRESS RELEASES. Each of Jefferson and Wachovia agrees that it will
not, without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NYSE rules.
6.05 ACCESS; INFORMATION. (a) Each of Jefferson and Wachovia agrees that
upon reasonable notice and subject to applicable laws relating to the exchange
of information, it shall afford the other party and the other party's officers,
employees, counsel, accountants and other authorized representatives, such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as any party may reasonably request and, during such period, it
shall furnish promptly to such other party (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of federal
or state securities or banking laws, and (ii) all other information concerning
the business, properties and personnel of it as the other may reasonably
request.
(b) Each agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well
as any other information obtained prior to the date hereof in connection
with the entering into of this Agreement) for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. Subject to
the requirements of law, each party will keep confidential, and will cause
its representatives to keep confidential, all information and documents
obtained pursuant to this Section 6.05 (as well as any other information
obtained prior to the date hereof in connection with the
A-17
<PAGE>
entering into of this Agreement) unless such information (i) was already
known to such party, (ii) becomes available to such party from other
sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the party
to which such information pertains or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by this
Agreement shall otherwise fail to be consummated, each party shall promptly
cause all copies of documents or extracts thereof containing information
and data as to another party hereto to be returned to the party which
furnished the same. No investigation by either party of the business and
affairs of the other shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement, or the
conditions to either party's obligation to consummate the transactions
contemplated by this Agreement.
6.06 ACQUISITION PROPOSALS. Jefferson agrees that neither it nor any of its
Subsidiaries nor any of the respective officers and directors of Jefferson or
its Subsidiaries shall, and Jefferson shall direct and use its reasonable best
efforts to cause its employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, initiate, solicit or encourage, directly or
indirectly, any enquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to stockholders of Jefferson) with
respect to a merger, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or any equity
securities of, Jefferson or its Significant Subsidiary (any such proposal or
offer being hereinafter referred to as an "ACQUISITION PROPOSAL") or, except to
the extent legally required for the discharge by the board of directors of its
fiduciary duties as advised in writing by such board's counsel, engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal. It shall immediately cease and cause to be terminated any activities,
discussions or negotiations conducted prior to the date of this Agreement with
any parties other than Wachovia with respect to any of the foregoing and shall
use its reasonable best efforts to enforce any confidentiality or similar
agreement relating to an Acquisition Proposal. Jefferson shall promptly (within
24 hours) advise Wachovia following the receipt by Jefferson of any Acquisition
Proposal and the substance thereof (including the identity of the person making
such Acquisition Proposal), and advise Wachovia of any developments with respect
to such Acquisition Proposal immediately upon the occurrence thereof.
6.07 AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, Jefferson shall deliver to Wachovia, a schedule
of each person that, to its knowledge, is or is reasonably likely to be, as of
the date of the Jefferson Meeting, deemed to be an "affiliate" of it (each, a
"Jefferson Affiliate") as that term is used in Rule 145 under the Securities
Act.
(b) Jefferson shall use its reasonable best efforts to cause each person
who may be deemed to be a Jefferson Affiliate to execute and deliver to Wachovia
on or before the date of mailing of the Proxy Statement an "affiliates
agreement" in form and substance reasonably satisfactory to Wachovia.
6.08 TAKEOVER LAWS. No party hereto shall take any action that would cause
the transactions contemplated by this Agreement or the Stock Option Agreement to
be subject to requirements imposed by any Takeover Law and each of them shall
take all necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 CERTAIN POLICIES. Prior to the Effective Date, Jefferson shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it and Wachovia, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with those
of Wachovia; PROVIDED, HOWEVER, that Jefferson shall not be obligated to take
any such action pursuant to this Section 6.09 unless and until Wachovia
acknowledges that all conditions to its obligation to consummate the Merger have
been satisfied.
6.10 NYSE LISTING. Wachovia agrees to use its reasonable best efforts to
list, prior to the Effective Date, on the NYSE, subject to official notice of
issuance, the shares of Wachovia Common Stock to be issued to the holders of
Jefferson Common Stock in the Merger.
6.11 REGULATORY APPLICATIONS. (a) Wachovia and Jefferson and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare all documentation, to effect all filings and to obtain all
A-18
<PAGE>
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Each of Wachovia and Jefferson shall have the right to review
in advance, and to the extent practicable each will consult with the other, in
each case subject to applicable laws relating to the exchange of information,
with respect to, all material written information submitted to any third party
or any Governmental Authority in connection with the transactions contemplated
by this Agreement. In exercising the foregoing right, each of the parties hereto
agrees to act reasonably and as promptly as practicable. Each party hereto
agrees that it will consult with the other party hereto with respect to the
obtaining of all material permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep the
other party appraised of the status of material matters relating to completion
of the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 INDEMNIFICATION. (a) Following the Effective Date and for a period of
six years thereafter, Wachovia shall indemnify, defend and hold harmless the
present directors and officers of Jefferson and its Subsidiaries (each, an
"INDEMNIFIED PARTY") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "COSTS") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement) to the fullest extent that Jefferson is permitted to indemnify
(and advance expenses to) its directors and officers under the laws of the
Commonwealth of Virginia, the Jefferson Certificate and the Jefferson By-Laws as
in effect on the date hereof; PROVIDED that any determination required to be
made with respect to whether an officer's or director's conduct complies with
the standards set forth under Virginia law, the Jefferson Certificate and the
Jefferson By-Laws shall be made by independent counsel (which shall not be
counsel that provides material services to Wachovia) selected by Wachovia and
reasonably acceptable to such officer or director; and PROVIDED, FURTHER, that
in the absence of applicable Virginia judicial precedent to the contrary, such
counsel, in making such determination, shall presume such officer's or
director's conduct complied with such standard and Wachovia shall have the
burden to demonstrate that such officer's or director's conduct failed to comply
with such standard.
(b) For a period of three years from the Effective Time, Wachovia shall use
its reasonable best efforts to provide that portion of director's and officer's
liability insurance that serves to reimburse the present and former officers and
directors of Jefferson or any of its Subsidiaries (determined as of the
Effective Time) (as opposed to Jefferson) with respect to claims against such
directors and officers arising from facts or events which occurred before the
Effective Time, which insurance shall contain at least the same coverage and
amounts, and contain terms and conditions no less advantageous, as that coverage
currently provided by Jefferson; PROVIDED,however, that in no event shall
Wachovia be required to expend more than 200 percent of the current amount
expended by Jefferson (the "INSURANCE AMOUNT") to maintain or procure such
directors and officers insurance coverage; PROVIDED, FURTHER, that if Wachovia
is unable to maintain or obtain the insurance called for by this Section
6.12(b), Wachovia shall use its reasonable best efforts to obtain as much
comparable insurance as is available for the Insurance Amount; PROVIDED,
FURTHER, that officers and directors of Jefferson or any Subsidiary may be
required to make application and provide customary representations and
warranties to Wachovia's insurance carrier for the purpose of obtaining such
insurance.
(c) Any Indemnified Party wishing to claim indemnification under Section
6.12(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall promptly notify Wachovia thereof; PROVIDED that the
failure so to notify shall not affect the obligations of Wachovia under Section
6.12(a) unless and to the extent that Wachovia is actually prejudiced as a
result of such failure.
(d) If Wachovia or any of its successors or assigns shall consolidate with
or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any entity, then and in each case, proper provision shall
be made so that the successors and assigns of Wachovia shall assume the
obligations set forth in this Section 6.12.
A-19
<PAGE>
6.13 BENEFIT PLANS. As soon as practicable following the Effective Time
(but in no event later than January 1, 1998 if the Effective Time occurs prior
to January 1, 1998) (i) Wachovia will provide employees of Jefferson who become
employees of Wachovia with employee benefit plans no less favorable in the
aggregate than those provided to similarly situated employees of Wachovia; (ii)
any such employees will receive credit for service with Jefferson or any of its
Subsidiaries or predecessors (to the extent service with such predecessors was
credited under the Jefferson Compensation and Benefit Plans as Previously
Disclosed) prior to the Effective Time for the purpose of determining
eligibility to participate, eligibility for benefits, benefit forms, and vesting
under Wachovia's employee benefit plans (including any prior periods of service
with Wachovia to the extent such affected employees have not previously received
payment of benefits in respect of, or credit for, such prior Wachovia service);
and (iii) Wachovia shall cause any and all pre-existing condition limitations
(to the extent such limitations did not apply to a pre-existing condition under
the Jefferson Compensation and Benefit Plans) and eligibility waiting periods
under group health plans to be waived with respect to such participants and
their eligible dependents; PROVIDED, HOWEVER, that a maximum of 20 years of
service with Jefferson and its Subsidiaries and predecessors shall be recognized
for purposes of determining the annual defined dollar allowance under the
Wachovia Retirement Medical Plan; and PROVIDED, FURTHER, that any executive of
Jefferson who is a party to an executive severance agreement (or similar
arrangement) with Jefferson who becomes an employee of Wachovia or its
Subsidiaries and who terminates his or her employment with Wachovia and its
Subsidiaries within the thirty-day window period beginning one year following
the later of the "Change in Control Date" (as defined in such executive
severance agreement or similar arrangement as of the date hereof) or the
Effective Time shall not be eligible to participate or receive benefits under
the Wachovia Retirement Medical Plan. All discretionary awards and benefits
under any employee benefit plans of Wachovia shall be subject to the discretion
of the persons or committee administering such plans. Wachovia shall honor,
pursuant to the terms of the Jefferson Compensation and Benefit Plans Previously
Disclosed, all employee benefit obligations to current and former employees of
Jefferson under such Plans.
6.14 ACCOUNTANTS' LETTERS. Each of Jefferson and Wachovia shall use its
reasonable best efforts to cause to be delivered to the other party, and to
Wachovia's directors and officers who sign the Registration Statement, a letter
of KPMG Peat Marwick LLP and Ernst & Young, LLP, respectively, independent
auditors, dated (i) the date on which the Registration Statement shall become
effective and (ii) a date shortly prior to the Effective Date, and addressed to
such other party, and such directors and officers, in form and substance
customary for "comfort" letters delivered by independent accountants in
accordance with Statement of Accounting Standards No. 72.
6.15 NOTIFICATION OF CERTAIN MATTERS. Each of Jefferson and Wachovia shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (ii) would cause or constitute a material breach of
any of its representations, warranties, covenants or agreements contained
herein.
6.16 DIRECTORS. Wachovia agrees to cause one member of the Jefferson Board
on the date hereof (selected by Wachovia after consultation with Jefferson) who
is still a member of the Jefferson Board immediately prior to the Effective Time
and willing and eligible to serve to be elected or appointed as a director of
Wachovia at, or as promptly as practicable after, the Effective Time.
6.17 DIVIDEND REINVESTMENT AND OTHER STOCK PLANS. Jefferson shall at or
prior to the Effective Time cause to be terminated any obligation to issue
shares of Jefferson Common Stock under its Dividend Reinvestment Plan and
Employee Stock Purchase Plan and any other plan or arrangement pursuant to which
it issues Jefferson Common Stock or rights thereto, except for its stock option
plans with respect to issued options Previously Disclosed and its Deferred
Compensation and Stock Purchase Plan for Non-Employee Directors as Previously
Disclosed.
6.18 DIVIDEND COORDINATION. After August 30, 1997, the Board of Directors
of Jefferson shall cause its regular quarterly dividend record dates and payment
dates for Jefferson Common Stock to be the same as Wachovia's regular quarterly
dividend record dates and payment dates for Wachovia Common Stock, and Jefferson
shall not thereafter change its regular dividend payment dates and record dates.
A-20
<PAGE>
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of Wachovia and Jefferson to consummate the Merger
is subject to the fulfillment or written waiver by Wachovia and Jefferson prior
to the Effective Time of each of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly adopted
by the affirmative vote of the holders of more than two-thirds of the
outstanding shares of Jefferson Common Stock entitled to vote thereon in
accordance with Section 13.1-718 of the VSCA, other applicable law and the
Jefferson Certificate and the Jefferson By-Laws.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby, shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
in respect thereof shall have expired and no such approvals shall contain
any conditions, restrictions or requirements which the Wachovia Board
reasonably determines in good faith would (i) following the Effective Time,
have a Material Adverse Effect on the Surviving Corporation and its
Subsidiaries taken as a whole or (ii) reduce the benefits of the
transactions contemplated hereby to such a degree that Wachovia would not
have entered into this Agreement had such conditions, restrictions or
requirements been known at the date hereof.
(c) NO INJUNCTION. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) BLUE SKY APPROVALS. All permits and other authorizations under
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of Wachovia Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
(f) LISTING. The shares of Wachovia Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
7.02 CONDITIONS TO OBLIGATION OF JEFFERSON. The obligation of Jefferson to
consummate the Merger is also subject to the fulfillment or written waiver by
Jefferson prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Wachovia set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Effective Date as though made on and
as of the Effective Date (except that representations and warranties that
by their terms speak as of the date of this Agreement or some other date
shall be true and correct as of such date), and Jefferson shall have
received a certificate, dated the Effective Date, signed on behalf of
Wachovia by the Chief Executive Officer and the Chief Financial Officer of
Wachovia to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF WACHOVIA. Wachovia shall have
performed in all material respects all obligations required to be performed
by them under this Agreement at or prior to the Effective Time, and
Jefferson shall have received a certificate, dated the Effective Date,
signed on behalf of Wachovia by the Chief Executive Officer and the Chief
Financial Officer of Wachovia to such effect.
(c) OPINION OF JEFFERSON'S COUNSEL. Jefferson shall have received an
opinion of McGuire, Woods, Battle & Boothe, L.L.P., counsel to Jefferson,
to the effect that, on the basis of facts, representations and assumptions
set forth in such opinion, (i) the Merger constitutes a "reorganization"
within the meaning of Section 368 of the Code and (ii) no gain or loss will
be recognized by stockholders of Jefferson who receive shares of Wachovia
Common Stock in exchange for shares of Jefferson Common Stock, except that
gain or loss may be recognized as to cash received in lieu of fractional
share interests. In rendering its opinion, McGuire,
A-21
<PAGE>
Woods, Battle & Boothe, L.L.P. may require and rely upon representations
contained in letters from Jefferson and others.
(d) ACCOUNTANTS' LETTERS. Jefferson shall have received the letters
referred to in Section 6.14 from Ernst & Young, LLP, Wachovia's independent
auditors.
7.03 CONDITIONS TO OBLIGATION OF WACHOVIA. The obligation of Wachovia to
consummate the Merger is also subject to the fulfillment or written waiver by
Wachovia prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Jefferson set forth in this Agreement shall be true and correct as of
the date of this Agreement and as of the Effective Date as though made on
and as of the Effective Date (except that representations and warranties
that by their terms speak as of the date of this Agreement or some other
date shall be true and correct as of such date) and Wachovia shall have
received a certificate, dated the Effective Date, signed on behalf of
Jefferson by the Chief Executive Officer and the Chief Financial Officer of
Jefferson to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF JEFFERSON. Jefferson shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and Wachovia
shall have received a certificate, dated the Effective Date, signed on
behalf of Jefferson by the Chief Executive Officer and the Chief Financial
Officer of Jefferson to such effect.
(c) OPINION OF WACHOVIA'S COUNSEL. Wachovia shall have received an
opinion of Sullivan & Cromwell, special counsel to Wachovia, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
Sullivan & Cromwell may require and rely upon representations contained in
letters from Wachovia and others.
(d) ACCOUNTANTS' LETTERS. Wachovia and its directors and officers who
sign the Registration Statement shall have received the letters referred to
in Section 6.14 from KPMG Peat Marwick LLP, Jefferson's independent
auditors.
ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated, and the Acquisition may
be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the
mutual consent of Wachovia and Jefferson, if the Board of Directors of each
so determines by vote of a majority of the members of its entire Board.
(b) BREACH. At any time prior to the Effective Time, by Wachovia or
Jefferson, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (i) a breach by
the other party of any representation or warranty contained herein (subject
to the standard set forth in Section 5.02), which breach cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under
(i) or (ii)) would be reasonably likely, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect.
(c) DELAY. At any time prior to the Effective Time, by Wachovia or
Jefferson, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event that the Acquisition is not
consummated by June 30, 1998, except to the extent that the failure of the
Acquisition then to be consummated arises out of or results from the
knowing action or inaction of the party seeking to terminate pursuant to
this Section 8.01(c).
(d) NO APPROVAL. By Jefferson or Wachovia, if its Board of Directors
so determines by a vote of a majority of the members of its entire Board,
in the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall
A-22
<PAGE>
have been denied by final nonappealable action of such Governmental
Authority or (ii) the stockholder approval required by Section 7.01(a)
herein is not obtained at the Jefferson Meeting.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to Jefferson Meeting,
by Wachovia if Jefferson Board shall have failed to make its recommendation
referred to in Section 6.02, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse in any respect to the
interests of Wachovia.
(f) FAILURE TO EXECUTE AND DELIVER STOCK OPTION AGREEMENT. At any time
prior to June 12, 1997, by Wachovia if Jefferson shall not have executed
and delivered the Stock Option Agreement.
8.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and the abandonment of the Acquisition pursuant to this Article
VIII, no party to this Agreement shall have any liability or further obligation
to any other party hereunder except (i) as set forth in Section 9.01 and (ii)
that termination will not relieve a breaching party from liability for any
willful breach of this Agreement giving rise to such termination. In the event
of the termination of this Agreement, Wachovia agrees that, until June 30, 1998,
it will not, directly or indirectly, solicit to employ any person known by it to
be a current senior officer of Jefferson, so long as they are employed by
Jefferson, or directly or indirectly solicit or encourage any such officers or
employees to leave Jefferson's employ (other than pursuant to general
advertisements of employment in publications not specifically targeted at
Jefferson's employees), in either case, without obtaining the prior written
consent of Jefferson.
ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.12 and 6.16 and this Article IX which shall survive the Effective
Time) or the termination of this Agreement if this Agreement is terminated prior
to the Effective Time (other than Sections 6.03(b), 6.05, 8.02 and this Article
IX which shall survive such termination).
9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of this
Agreement may be (i) waived by the party benefitted by the provision, or (ii)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that, after the
Jefferson Meeting, this Agreement may not be amended if it would violate the
VSCL.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of North Carolina applicable to contracts
made and to be performed entirely within such State (except to the extent that
mandatory provisions of Federal law or of the NCBCA or VSCL are applicable).
9.05 EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing expenses and SEC fees shall be shared equally between Jefferson
and Wachovia.
9.06 NOTICES. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
A-23
<PAGE>
If to Jefferson, to:
Jefferson Bankshares, Inc.
123 East Main Street
Post Office Box 711
Charlottesville, Virginia 22901
Attention: Mr. O. Kenton McCartney,
President & Chief Executive Officer
Telephone: (804) 972-1106
Facsimile: (804) 972-1496
With a copy to:
Jefferson Bankshares, Inc.
123 East Main Street
Post Office Box 711
Charlottesville, Virginia 22901
Attention: William M. Watson, Jr., Esq.
Telephone: (804) 972-1113
Facsimile: (804) 972-1486
With a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
418 East Jefferson Street
Post Office Box 1288
Charlottesville, Virginia 22902
Attention: Robert E. Stroud, Esq.
Telephone: (804) 977-2511
Facsimile: (804) 980-2272
If to Wachovia, to:
Wachovia Corporation
301 North Main Street
Winston-Salem, North Carolina 27101
Attention: Chairman of the Board
Telephone: (910)
Facsimile: (910) 770-5959
With a copy to:
Wachovia Corporation
301 North Main Street
Winston-Salem, North Carolina 27101
Attention: Kenneth W. McAllister
Telephone: (910) 732-5141
Facsimile: (910) 732-5959
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
A-24
<PAGE>
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement and
any Stock Option Agreement entered into represent the entire understanding of
the parties hereto with reference to the transactions contemplated hereby and
thereby and this Agreement supersedes any and all other oral or written
agreements heretofore made (other than any such Stock Option Agreement). Except
for Section 6.13, nothing in this Agreement expressed or implied, is intended to
confer upon any person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9.08 INTERPRETATION; EFFECT. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
JEFFERSON BANKSHARES, INC.
By: /s/ O. KENTON MCCARTNEY
Name: O. Kenton McCartney
Title: President and
Chief Executive Officer
WACHOVIA CORPORATION
By: /s/ L.M. BAKER, JR.
Name: L.M. Baker, Jr.
Title: President and
Chief Executive Officer
A-25
<PAGE>
AMENDMENT NO. 1, dated as of September 2, 1997 (this "AMENDMENT") to the
AGREEMENT AND PLAN OF MERGER, dated as of June 9, 1997 (the "MERGER AGREEMENT")
by and between Jefferson Bankshares, Inc. ("JEFFERSON") and Wachovia Corporation
("WACHOVIA").
RECITALS
A. MERGER AGREEMENT. Jefferson and Wachovia have heretofore entered
into the Merger Agreement and now desire to amend certain provisions
thereof.
B. BOARD ACTION. The respective Boards of Directors of each of
Wachovia and Jefferson have determined that it is in the best interests of
their respective companies and their stockholders to enter into this
Amendment.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
1. AMENDMENTS. (a) Section 2.03 shall be amended in its entirety to read as
follows: "The plan of merger included in this Agreement is separately stated in
the Plan of Merger (the "Plan of Merger") attached hereto as EXHIBIT B. The
parties agree that subject to the provisions of this Agreement, including the
approval of the Plan of Merger by the requisite vote of stockholders of
Jefferson, the Plan of Merger shall be incorporated into the articles of merger
to be filed with the Virginia State Corporation Commission and the office of the
Secretary of the State of North Carolina to effect the merger."
(b) A new exhibit, attached hereto as Annex A, shall be added to the Merger
Agreement as EXHIBIT B.
2. DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Merger Agreement.
3. TERMS OF MERGER AGREEMENT. Except as amended hereby, all of the terms of
the Merger Agreement shall remain and continue in full force and effect and are
hereby confirmed in all respects.
4. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
5. GOVERNING LAW. This Amendment shall be governed by, and interpreted in
accordance with, the laws of the State of North Carolina applicable to contracts
made and to be performed entirely within such State (except to the extent that
mandatory provisions of Federal law or of the NCBCA or VSCA are applicable).
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
JEFFERSON BANKSHARES, INC.
By: /s/ O. Kenton McCartney
Name: O. Kenton McCartney
Title: President and
Chief Executive Officer
WACHOVIA CORPORATION
By: /s/ L.M. Baker, Jr.
Name: L.M. Baker, Jr.
Title: President and
Chief Executive Officer
A-26
<PAGE>
ANNEX A
EXHIBIT B
PLAN OF MERGER
PLAN OF MERGER (this "PLAN") of Jefferson Bankshares, Inc. ("JEFFERSON"), a
Virginia corporation, and Wachovia Corporation ("WACHOVIA"), a North Carolina
corporation.
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINITIONS. The following terms are used in this Plan with the
meanings set forth below:
"CODE" means the Internal Revenue Code of 1986, as amended.
"EFFECTIVE DATE" means the effective date of the Merger.
"EFFECTIVE TIME" means the effective time of the Merger.
"JEFFERSON COMMON STOCK" means the common stock, par value $2.50 per
share, of Jefferson.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as of
June 9, 1997, as amended, by and between Jefferson and Wachovia.
"NCBCA" means the North Carolina Business Corporation Act.
"NYSE" means the New York Stock Exchange, Inc.
"VSCA" means the Virginia Stock Corporation Act.
"WACHOVIA COMMON STOCK" means the common stock, par value $5.00 per
share, of Wachovia.
"WACHOVIA PREFERRED STOCK" means the preferred stock, par value $5.00
per share, of Wachovia.
"WACHOVIA STOCK" means, collectively, Wachovia Common Stock and
Wachovia Preferred Stock.
ARTICLE II
TERMS OF THE MERGER
2.1 THE MERGER. The names of the corporations to be merged are Wachovia
Corporation and Jefferson Bankshares, Inc. At the Effective Time, Jefferson
shall merge with and into Wachovia (the "MERGER"), the separate corporate
existence of Jefferson shall cease and Wachovia shall survive and continue to
exist as a North Carolina corporation (Wachovia, as the surviving corporation in
the Merger, sometimes being referred to herein as the "SURVIVING CORPORATION").
2.2 EFFECT OF THE MERGER. The Merger shall become effective upon the
occurrence of the filing in the office of the Virginia State Corporation
Commission (the "CORPORATION COMMISSION") of articles of merger in accordance
with Section 13.1-720 of the VSCA and the filing in the Office of the Secretary
of State of the State of North Carolina (the "NORTH CAROLINA SECRETARY") of
articles of merger in accordance with Section 55-11-05 of the NCBCA or such
later date and time as may be set forth in such articles and the issuance of a
certificate of merger by the Corporation Commission under the VSCA. The Merger
shall have the effects prescribed in the NCBCA and the VSCA.
2.3 ARTICLES OF INCORPORATION AND BY-LAWS. The articles of incorporation
and by-laws of Wachovia immediately after the Merger shall be those of Wachovia
as in effect immediately prior to the Effective Time.
2.4 DIRECTORS AND OFFICERS OF WACHOVIA. The directors and officers of
Wachovia immediately after the Merger shall be the directors and officers of
Wachovia immediately prior to the Effective Time, until such time as their
successors shall be duly elected and qualified, except that Wachovia agrees to
cause one member of the Jefferson board of directors (selected by Wachovia after
consultation with Jefferson) who is a member of the Jefferson board of directors
immediately prior to the Effective Time and willing and eligible to serve to be
elected or appointed as a director of Wachovia at, or as promptly as practicable
after, the Effective Time.
A-27
<PAGE>
ARTICLE III
MANNER AND BASIS OF
CONVERTING SHARES
3.1 MERGER CONSIDERATION. At the Effective Time, automatically by virtue of
the Merger and without any action on the part of any person:
(a) OUTSTANDING JEFFERSON COMMON STOCK. Each share of Jefferson Common
Stock issued and outstanding immediately prior to the Effective Time,
excluding shares of Jefferson Common Stock held by Jefferson or any of its
Subsidiaries or by Wachovia or any of its Subsidiaries, in each case other
than in a fiduciary capacity or as a result of debts previously contracted
in good faith, shall become and be converted into 0.625 of a share of
Wachovia Common Stock (the "EXCHANGE RATIO"). In the event Wachovia changes
(or establishes a record date for changing) the number of shares of
Wachovia Common Stock issued and outstanding prior to the Effective Date as
a result of a stock split, stock dividend, recapitalization or similar
transaction with respect to the outstanding Wachovia Common Stock and the
record date therefor shall be prior to the Effective Date, the Exchange
Ratio shall be proportionately adjusted. Jefferson Common Stock is the only
class of stock of Jefferson issued and outstanding.
(b) OUTSTANDING WACHOVIA STOCK. Each share of Wachovia Stock issued
and outstanding immediately prior to the Effective Time shall remain issued
and outstanding after by the Merger.
(c) OTHER SHARES. Each share of Jefferson Common Stock held by
Jefferson or any of its Subsidiaries or by Wachovia or any of its
Subsidiaries, in each case other than in a fiduciary capacity or as a
result of debts previously contracted in good faith, immediately prior to
the Effective Time, shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
3.2 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time, holders
of Jefferson Common Stock shall cease to be, and shall have no rights as,
stockholders of Jefferson, other than to receive any dividend or other
distribution with respect to such Jefferson Common Stock with a record date
occurring prior to the Effective Time and the consideration provided herein.
After the Effective Time, there shall be no transfers on the stock transfer
books of Jefferson or the Surviving Corporation of shares of Jefferson Common
Stock.
3.3 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Wachovia Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Wachovia shall pay to each holder of Jefferson Common Stock who would
otherwise be entitled to a fractional share of Wachovia Common Stock (after
taking into account all Old Certificates (as defined below) delivered by such
holder) an amount in cash (without interest) determined by multiplying such
fraction by the average of the last sale prices of Wachovia Common Stock, as
reported by the NYSE Composite Transactions Reporting System (as reported in THE
WALL STREET JOURNAL or, if not reported therein, in another authoritative
source), for the five NYSE trading days immediately preceding the Effective
Date.
3.4 MANNER OF CONVERTING SHARES. (a) At or prior to the Effective Time,
Wachovia shall deposit, or shall cause to be deposited, with Wachovia Bank, N.A.
(in such capacity, the "EXCHANGE AGENT"), for the benefit of the holders of
certificates formerly representing shares of Jefferson Common Stock ("OLD
CERTIFICATES"), for exchange, certificates representing the shares of Wachovia
Common Stock ("NEW CERTIFICATES") and an estimated amount of cash (such cash and
New Certificates, together with any dividends or distributions with a record
date occurring after the Effective Date with respect thereto (without any
interest on any such cash, dividends or distributions), being hereinafter
referred to as the "EXCHANGE FUND") to be paid in exchange for outstanding
shares of Jefferson Common Stock.
(b) As promptly as practicable after the Effective Date, Wachovia
shall send or cause to be sent to each former holder of record of shares of
Jefferson Common Stock immediately prior to the Effective Time transmittal
materials for use in exchanging such stockholder's Old Certificates.
Wachovia shall cause the New Certificates into which shares of a
stockholder's Jefferson Common Stock are converted on the Effective Date
and/or any check in respect of any fractional share interests or dividends
or distributions which such person shall be entitled to receive to be
delivered to such stockholder upon delivery to the Exchange Agent of Old
Certificates representing such shares of Jefferson Common Stock (or
indemnity reasonably satisfactory to Wachovia and the Exchange Agent, if
any of such certificates are lost, stolen or destroyed) owned by such
stockholder. No interest will be paid on any such cash to be paid in lieu
of fractional share interests or
A-28
<PAGE>
in respect of dividends or distributions which any such person shall be
entitled to receive upon such delivery.
(c) Notwithstanding the foregoing, neither of the Exchange
Agent, Jefferson or Wachovia shall be liable to any former holder
of Jefferson Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat
or similar laws.
(d) At the election of Wachovia, no dividends or other distributions
with respect to Wachovia Common Stock with a record date occurring after
the Effective Time shall be paid to the holder of any unsurrendered Old
Certificate representing shares of Jefferson Common Stock converted in the
Merger into the right to receive shares of such Wachovia Common Stock until
the holder thereof shall be entitled to receive New Certificates in
exchange therefor, and no such shares of Jefferson Common Stock shall be
eligible to vote until the holder of Old Certificates is entitled to
receive New Certificates. After becoming so entitled, the record holder
thereof also shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Wachovia Common Stock such holder had the
right to receive upon surrender of the Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Jefferson for twelve months after the Effective Time shall
be paid to Wachovia. Any stockholders of Jefferson who have not theretofore
complied with the exchange procedures shall thereafter look only to
Wachovia for payment of the shares of Wachovia Common Stock, cash in lieu
of any fractional shares and unpaid dividends and distributions on Wachovia
Common Stock deliverable in respect of each share of Jefferson Common Stock
such stockholder holds as determined pursuant to this Plan, in each case,
without any interest thereon and Wachovia shall make such payment.
3.5 OPTIONS. At the Effective Time, each outstanding option to purchase
shares of Jefferson Common Stock under the Jefferson 1995 Long Term Incentive
Stock Plan (each, a "JEFFERSON STOCK OPTION"), whether vested or unvested, shall
be converted into an option to acquire, on the same terms and conditions as were
applicable under such Jefferson Stock Option, the number of shares of Wachovia
Common Stock equal to (a) the number of shares of Jefferson Common Stock subject
to the Jefferson Stock Option, multiplied by (b) the Exchange Ratio (such
product rounded down to the nearest whole number) (a "REPLACEMENT OPTION"), at
an exercise price per share (rounded up to the nearest whole cent) equal to (y)
the aggregate exercise price for the shares of Jefferson Common Stock which were
purchasable pursuant to such Jefferson Stock Option divided by (z) the number of
full shares of Wachovia Common Stock subject to such Replacement Option in
accordance with the foregoing. Notwithstanding the foregoing, each Jefferson
Stock Option which is intended to be an "incentive stock option" (as defined in
Section 422 of the Code) shall be adjusted in accordance with the requirements
of Section 424 of the Code. At or prior to the Effective Time, Jefferson shall
take all action necessary including obtaining any necessary consents from
Optionees, to permit the replacement of the outstanding Jefferson Stock Options
by Wachovia pursuant to this Section and to permit Wachovia to assume (to the
extent described below) the Jefferson 1995 Long Term Incentive Stock Plan.
Jefferson shall further take all action necessary to amend the Jefferson 1995
Long Term Incentive Stock Plan to eliminate automatic grants or awards
thereunder following the Effective Time. At the Effective Time, Wachovia shall
assume the Jefferson 1995 Long Term Incentive Stock Plan; PROVIDED, that such
assumption shall be only in respect of the Replacement Options and that Wachovia
shall have no obligation with respect to any awards under the Jefferson 1995
Long Term Incentive Stock Plan other than the Replacement Options and shall have
no obligation to make any additional grants or awards under such assumed plans.
ARTICLE IV
CONDITIONS TO THE MERGER
4.1 Consummation of the Merger is conditioned upon the following:
(a) Approval of the Merger Agreement and this Plan by the affirmative
vote of more than two-thirds of the outstanding shares of Jefferson Common
Stock;
(b) Receipt of required regulatory approvals;
(c) Absence of governmental action prohibiting consummation;
A-29
<PAGE>
(d) An effective Registration Statement under the Securities Act of
1933 and no orders or other action suspending such effectiveness;
(e) Receipt of all required permits and authorizations under state
securities laws;
(f) Approval of the shares of Wachovia Common Stock issued in the
Merger for listing on the New York Stock Exchange;
(g) All representations and warranties made by the respective parties
are true and correct as of the Effective Time and receipt by the parties of
appropriate officers' certificates to such effect;
(h) Performance of all required obligations by the respective parties
and receipt by the parties of appropriate officers' certificates to such
effect; and
(i) Receipt by each party of appropriate opinions of counsel and
letter of their respective independent auditors related to the Merger.
ARTICLE V
TERMINATION
5.1 This Plan may be terminated prior to the Effective Time as
provided in Article VIII of the Merger Agreement.
A-30
<PAGE>
APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 10, 1997, between WACHOVIA
CORPORATION, a North Carolina corporation ("Grantee"), and JEFFERSON BANKSHARES,
INC., a Virginia corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement");
WHEREAS, as an inducement to the willingness of Wachovia Corporation to
continue to pursue the transactions contemplated by the Merger Agreement, Issuer
has agreed to grant Grantee the Option (as hereinafter defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement prior to the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to an aggregate of
2,770,000 fully paid and nonassessable shares of the common stock, par value
$2.50 per share, of Issuer ("Common Stock") at a price per share equal to the
average of last reported sale prices per share of Common Stock as reported on
the NASDAQ National Market System on June 6 and 9, 1997; PROVIDED, HOWEVER, that
in the event Issuer issues or agrees to issue any shares of Common Stock at a
price less than such average price per share (as adjusted pursuant to subsection
(b) of Section 5) (other than shares of Common Stock issued pursuant to stock
options granted under the 1995 Long Term Incentive Stock Plan prior to June 9,
1997), such price shall be equal to such lesser price (such price, as adjusted
if applicable, the "Option Price"); PROVIDED, FURTHER, that in no event shall
the number of shares for which this Option is exercisable exceed 19.9% of the
issued and outstanding shares of Common Stock. The number of shares of Common
Stock that may be received upon the exercise of the Option and the Option Price
are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), PROVIDED that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.01(b) or Section 8.01(e) of the
Merger Agreement or by Grantee or Issuer pursuant to Section 8.01(d)(ii) of the
Merger Agreement (each, a "Listed Termination"); or (iii) the passage of fifteen
(15) months (or such longer period as provided in Section 10) after termination
of the Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a Listed Termination. The term "Holder" shall mean the
holder or holders of the Option.
B-1
<PAGE>
Notwithstanding anything to the contrary contained herein, (i) the Option may
not be exercised at any time when Grantee shall be in breach of any of its
covenants or agreements contained in the Merger Agreement such that Issuer shall
be entitled to terminate the Merger Agreement pursuant to Section 8.01(b)
thereof and (ii) this Agreement shall automatically terminate upon the proper
termination of the Merger Agreement by Issuer pursuant to Section 8.01(b)
thereof as a result of the material breach by Grantee of its covenants or
agreements contained in the Merger Agreement.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or its Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC")) (the "Issuer Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the term
"person" for purposes of this Agreement having the meaning assigned thereto
in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or
the Board of Directors of Issuer (the "Issuer Board") shall have
recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction other than as contemplated by the Merger Agreement.
For purposes of this Agreement, (a) "Acquisition Transaction" shall mean
(x) a merger or consolidation, or any similar transaction, involving Issuer
or the Issuer Subsidiary (other than mergers, consolidations or similar
transactions involving solely Issuer and/or one or more wholly-owned
Subsidiaries of the Issuer, PROVIDED, any such transaction is not entered
into in violation of the terms of the Merger Agreement), (y) a purchase,
lease or other acquisition of all or any substantial part of the assets or
deposits of Issuer or the Issuer Subsidiary, or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 15% or more of the voting power of
Issuer or the Issuer Subsidiary and (b) "Subsidiary" shall have the meaning
set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of 15% or more of the outstanding shares of Common Stock (the
term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules
and regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been
held for that purpose or any adjournment or postponement thereof, or such
meeting shall not have been held in violation of the Merger Agreement or
shall have been cancelled prior to termination of the Merger Agreement if,
prior to such meeting (or if such meeting shall not have been held or shall
have been cancelled, prior to such termination), it shall have been
publicly announced that any person (other than Grantee or any of its
Subsidiaries) shall have made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse in any
respect to Grantee its recommendation that the shareholders of Issuer
approve the transactions contemplated by the Merger Agreement, or Issuer or
the Issuer Subsidiary shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall have
made a bona fide proposal to Issuer or its shareholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute
an Acquisition Transaction (or filed a preliminary proxy statement with the
SEC with respect to a potential vote by its shareholders to approve the
issuance of shares to be offered in such an exchange offer);
(vii) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach Grantee would be
B-2
<PAGE>
entitled to terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or
(viii) Any person other than Grantee or any Grantee Subsidiary,
without Grantee's prior written consent, shall have filed an application or
notice with the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") or other federal or state bank regulatory or
antitrust authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
PROVIDED, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, PROVIDED that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option. In addition, at such closing, the Holder shall
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder hereof
and Issuer and to resale restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof without charge
upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend
B-3
<PAGE>
shall be removed by delivery of substitute certificate(s) without such reference
if the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference in the opinion of Counsel to the Holder, in form and substance
reasonably satisfactory to the Issuer; and (iii) the legend shall be removed in
its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in Common Stock by
reason of a stock dividend, stock split, split-up, recapitalization, stock
combination, exchange of shares or similar transaction, the type and number of
shares or securities subject to the Option, and the Option Price therefor, shall
be adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Grantee shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Grantee would have received in respect of Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Common Stock are issued after the date
of this Agreement (other than pursuant to an event described in the first
sentence of this Section 5), the number of shares of Common Stock subject to the
Option shall be adjusted so that, after such issuance, it, together with any
shares of
B-4
<PAGE>
Common Stock previously issued pursuant hereto, equals 19.9% of the number of
shares of Common Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep current
a registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
PROVIDED, HOWEVER, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 20% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and PROVIDED FURTHER, HOWEVER, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for Issuer. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or any substantial part of Issuer's assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the
B-5
<PAGE>
current market value of the remaining net assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to Issuer, divided by the
number of shares of Common Stock of Issuer outstanding at the time of such sale.
In determining the market/offer price, the value of consideration other than
cash shall be determined by a nationally recognized investment banking firm
selected by the Holder or Owner, as the case may be, and reasonably acceptable
to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the Owner,
as the case may be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this Section 7. The
Holder shall also represent and warrant that it has sole record and beneficial
ownership of such Option Shares and that such Option Shares are then free and
clear of all liens. As promptly as practicable, and in any event within five
business days after the surrender of the Option and/or certificates representing
Option Shares and the receipt of such notice or notices relating thereto, Issuer
shall deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after such
date, the Holder shall nonetheless have the right to exercise the Option until
the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred upon the occurrence of any of the following events or transactions
after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b) (i) hereof, except that the percentage referred to in clause
(z) shall be 50%.
The Issuer's obligations under this Section 7 shall no longer apply if
there are more than 10 Holders of Option Shares.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of
B-6
<PAGE>
exchange with any person, other than Grantee or a Grantee Subsidiary and Issuer
shall not be the continuing or surviving corporation of such consolidation or
merger or the acquirer in such plan of exchange, (ii) to permit any person,
other than Grantee or a Grantee Subsidiary, to merge into Issuer or be acquired
by Issuer in a plan of exchange and Issuer shall be the continuing or surviving
or acquiring corporation, but, in connection with such merger or plan of
exchange, the then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
property or the then outstanding shares of Common Stock shall after such merger
or plan of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or the Issuer Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, then, and in
each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
person of a consolidation or merger with Issuer (if other than Issuer),
(ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer
is the continuing or surviving or acquiring person, and (iv) the transferee
of all or a substantial part of Issuer's assets or deposits (or the assets
or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; PROVIDED that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option, PROVIDED
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder.
B-7
<PAGE>
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder. This Section 8 shall take precedence over the second sentence of
Section 5.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor or the
portion thereof which the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
PROVIDED, HOWEVER, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of
B-8
<PAGE>
the notice by the Substitute Option Issuer described in the first sentence of
this subsection (c), or shall be scheduled to occur at any time before the
expiration of a period ending on the thirtieth day after such date, the
Substitute Option Holder shall nevertheless have the right to exercise the
Substitute Option until the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the Holder, Owner, Substitute Option
Holder or Substitute Share Owner, as the case may be, is using commercially
reasonable efforts to obtain such regulatory approvals), and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Issuer Board
prior to the date hereof and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer as follows:
(i) Grantee has corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Grantee and the performance of its obligations
hereunder by the Grantee have been duly and validly authorized by the Board of
Directors of Grantee and no other corporate proceedings on the part of the
Grantee are necessary to authorize this Agreement or for Grantee to perform its
obligations hereunder. This Agreement has been duly and validly executed and
delivered by Grantee.
(c) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with a
view to the public distribution thereof and will not be transferred or otherwise
disposed or except in a transaction registered or exempt from registration under
the 1933 Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; PROVIDED, HOWEVER,
that until the date 15 days following the date on which the Federal Reserve
Board has approved an application by Grantee to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of Issuer, (iii) an assignment to a single party (E.G., a broker
or investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve Board. Any assignment hereunder shall be made in compliance with
all applicable laws.
13. Each of Grantee and Issuer will use its reasonable best efforts to make
all filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the Federal Reserve
Board under the BHCA for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state
B-9
<PAGE>
banking authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
14. (a) (i) Notwithstanding any other provision of this Agreement, in no
event shall the Grantee's Total Profit (as hereinafter defined) exceed $25
million and, if it otherwise would exceed such amount, the Grantee, at its sole
election, shall either (a) reduce the number of shares of Common Stock subject
to this Option, (b) deliver to Issuer for cancellation Option Shares previously
purchased by Grantee, (c) pay cash to Issuer, or (d) do any combination thereof,
so that Grantee's actually realized Total Profit shall not exceed $25 million
after taking into account the foregoing actions.
(ii) Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as defined below) of more than $25 million,
PROVIDED that nothing in this sentence shall restrict any exercise of the Option
permitted hereby on any subsequent date.
(iii) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to Section 7, (ii) (x) the amount received by Grantee pursuant to Issuer's
repurchase of Option Shares pursuant to Section 7, less (y) the Grantee's
purchase price for such Option Shares, (iii) (x) the net cash amounts received
by Grantee pursuant to the sale of Option Shares (or any other securities into
which such Option Shares are converted or exchanged) to any unaffiliated party,
less (y) the Grantee's purchase price of such Option Shares, (iv) any amounts
received by Grantee on the transfer of the Option (or any portion thereof) to
any unaffiliated party, and (v) any amount equivalent to the foregoing with
respect to the Substitute Option.
(iv) As used herein, the term "Notional Total Profit" with respect to any
number of shares as to which Grantee may propose to exercise this Option shall
be the Total Profit determined as of the date of such proposed exercise assuming
that this Option were exercised on such date for such number of shares and
assuming that such shares, together with all other Option Shares held by Grantee
and its affiliates as of such date, were sold for cash at the closing market
price for the Common Stock as of the close of business on the preceding trading
day (less customary brokerage commissions).
(b) (i) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price; PROVIDED, HOWEVER, that Grantee may not exercise its
rights pursuant to this Section 14 (b) if Issuer has repurchased the Option (or
any portion thereof) or any Option Shares pursuant to Section 7. The "Surrender
Price" shall be equal to $15.0 million (i) plus, if applicable, Grantee's
purchase price with respect to any Option Shares and (ii) minus, if applicable,
the excess of (B) the net cash amounts, if any, received by Grantee pursuant to
the arms' length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any unaffiliated party, over (B)
Grantee's purchase price of such Option Shares.
(ii) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14(b) by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for Option
Shares, if any, accompanied by a written notice stating (i) that Grantee elects
to relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14(b) and (ii) the Surrender Price. The Surrender
Price shall be payable in immediately available funds on or before the second
business day following receipt of such notice by Issuer.
(iii) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (ii) of this Section 14(b) is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from paying to Grantee the Surrender Price in full, (i)
Issuer shall (A) use its reasonable best efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to make such payments, (B) within five days of the
submission or receipt of any documents relating to any such regulatory and legal
approvals, provide Grantee with copies of the same, and (C) keep Grantee
B-10
<PAGE>
advised of both the status of any such request for regulatory and legal
approvals, as well as any discussions with any relevant regulatory or other
third party reasonably related to the same and (ii) Grantee may revoke such
notice of surrender by delivery of a notice of revocation to Issuer and, upon
delivery of such notice of revocation, the Exercise Termination Date shall be
extended to a date six months from the date on which the Exercise Termination
Date would have occurred if not for the provisions of this Section 14(b) (iii)
(during which period Grantee may exercise any of its rights hereunder, including
any and all rights pursuant to this Section 14(b)).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law or of the VSCL are applicable).
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
B-11
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
JEFFERSON BANKSHARES, INC.
By: /s/ O. KENTON MCCARTNEY
Name: O. Kenton McCartney
Title: President and
Chief Executive Officer
WACHOVIA CORPORATION
By: /s/ L.M. BAKER, JR.
Name: L.M. Baker, Jr.
Title: President and
Chief Executive Officer
B-12
<PAGE>
APPENDIX C
[LETTERHEAD OF GOLDMAN, SACHS & CO.]
PERSONAL AND CONFIDENTIAL
September 11, 1997
Board of Directors
Jefferson Bankshares, Inc.
123 East Main Street
Charlottesville, Virginia 22902
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $2.50 per share (the "Jefferson
Common Stock"), of Jefferson Bankshares, Inc. (the "Company") of the exchange
ratio of .625 shares of Common Stock, par value $5.00 per share (the "Wachovia
Common Stock"), of Wachovia Corporation ("Wachovia") to be received for each
share of Jefferson Common Stock (the "Exchange Ratio") pursuant to the Agreement
and Plan of Merger dated as of June 9, 1997 between Wachovia and the Company
(the "Agreement").
Goldman, Sachs & Co. ("Goldman Sachs"), as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. We are familiar with the Company, having acted as its financial
advisor in connection with, and having participated in certain of the
negotiations leading to, the Agreement. We also have provided certain investment
banking services to Wachovia from time to time and may provide investment
banking services to Wachovia in the future.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Registration Statement on Form S-4, including the Proxy
Statement-Prospectus relating to the Special Meeting of Stockholders of the
Company to be held in connection with the Agreement; Annual Reports to
Stockholders and Annual Reports on Form 10-K of the Company and Wachovia for the
five years ended December 31, 1996; certain interim reports to stockholders and
Quarterly Reports on Form 10-Q of the Company and Wachovia; certain other
communications from the Company and Wachovia to their respective stockholders;
and certain internal financial analyses and forecasts for the Company and
Wachovia prepared by their respective managements. We also have held discussions
with members of the senior managements of the Company and Wachovia regarding the
strategic rationale for, and the potential benefits of, the transaction
contemplated by the Agreement and the past and current business operations,
financial condition and future prospects of their respective companies. In
addition, we have reviewed the reported price and trading activity for the
Jefferson Common Stock and the Wachovia Common Stock, compared certain financial
and stock market information for the Company and Wachovia with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the commercial banking industry and performed such other studies and analyses as
we considered appropriate. In addition, we have reviewed the Agreement and Plan
of Merger (the "Central Fidelity Merger Agreement"), dated as of June 23, 1997
by and between Wachovia and Central Fidelity Banks, Inc. ("Central Fidelity"),
and certain other information with respect to the proposed merger of Central
Fidelity with and into Wachovia (the "Central Fidelity Merger"); the Annual
Reports to Stockholders and Annual Reports on Form 10-K of Central Fidelity for
the five years ended December 31, 1996; certain interim reports to stockholders
and Quarterly Reports on Form 10-Q of Central Fidelity; and certain other
financial information concerning the business and operations of Wachovia and
Central Fidelity prepared by and furnished to Goldman Sachs by the senior
management of Wachovia including certain internal financial analyses and pro
forma financial statements giving effect to the Central Fidelity Merger and the
transaction contemplated by the Central Fidelity Merger Agreement. We have also
held discussions with members of the senior management of Central Fidelity
regarding its past and current business operations, financial condition and
future prospects and have held discussions with members of the senior
managements of the Company, Wachovia and Central Fidelity regarding the
strategic rationale for, and the potential benefits of, the Central Fidelity
Merger.
C-1
<PAGE>
Jefferson Bankshares, Inc.
September 11, 1997
Page Two
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In that regard, we have
assumed, with your consent, that the financial forecasts, including, without
limitation, projections regarding under-performing and non-performing assets and
net charge-offs, have been reasonably prepared on a basis reflecting the best
currently available judgments and estimates of the Company and Wachovia and that
such forecasts will be realized in the amounts and at the times contemplated
thereby. We are not experts in the evaluation of loan or lease portfolios for
purposes of assessing the adequacy of the allowances for losses with respect
thereto and have assumed, with your consent, that such allowances for each of
the Company, Wachovia and Central Fidelity are in the aggregate adequate to
cover all such losses. In addition, we have not reviewed individual credit files
nor have we made an independent evaluation or appraisal of the assets and
liabilities of the Company, Wachovia or Central Fidelity or any of their
respective subsidiaries and we have not been furnished with any such evaluation
or appraisal.
Our opinion is directed to the Board of Directors of the Company and does
not constitute a recommendation to any stockholder of the Company as to how such
stockholder should vote at the stockholders' meeting to be held in connection
with the transaction contemplated by the Agreement.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the
Exchange Ratio pursuant to the Agreement is fair to the holders of Jefferson
Common Stock.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
(Goldman, Sachs & Co.)
C-2
<PAGE>
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
<C> <S>
2.1 -- Agreement and Plan of Merger, dated as of June 9, 1997, by and between Wachovia Corporation and
Jefferson Bankshares, Inc. (included as Appendix A to the Proxy Statement/Prospectus and
incorporated by reference herein).
2.2 -- Amendment No. 1, dated as of September 2, 1997, to the Agreement and Plan of Merger, dated as of
June 9, 1997, by and between Wachovia Corporation and Jefferson Bankshares, Inc. (included as
Appendix A to the Proxy Statement/Prospectus and incorporated by reference herein).
2.3 -- Agreement and Plan of Merger, dated as of June 23, 1997, by and between Wachovia Corporation and
Central Fidelity Banks, Inc. (Exhibit 2 to Wachovia Corporation's Form 13D dated August 15, 1997,
File No. 1-9021*).
2.4 -- Agreement and Plan of Merger, dated as of August 6, 1997, by and between Wachovia Corporation and
1st United Bancorp (Exhibit 2 to Wachovia Corporation's Form 13D dated July 3, 1997, File No.
1-9021*).
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-Q for the quarter ended March 31, 1997, File
No. 1-9021*).
4.1 -- 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*).
4.2 -- Bylaws (Exhibit 3.2 to Wachovia Corporation's Form 10-Q for the quarter ended March 31, 1997, File
No. 1-9021*).
4.3 -- All instruments defining the rights of holders of long-term debt of Wachovia Corporation and its
subsidiaries. (Not filed pursuant to (4) (iii) of Item 601(b) of Regulation S-K; to be furnished
upon request of the Commission.)
5.1 -- Opinion of Kenneth W. McAllister, including consent.
8.1 -- Opinion of Sullivan & Cromwell, including consent.
10.1 -- Stock Option Agreement, dated as of June 10, 1997, by and between Wachovia Corporation and Jefferson
Bankshares, Inc. (included as Appendix B to the Proxy Statement/Prospectus and incorporated by
reference herein).
23.1 -- Consent of Kenneth W. McAllister (appears in Legal Opinion, Exhibit 5.1)
23.2 -- Consent of Sullivan & Cromwell (appears in Legal Opinion, Exhibit 8.1)
23.3 -- Consent of Ernst & Young LLP
23.4 -- Consent of KPMG Peat Marwick LLP
23.5 -- Consent of KPMG Peat Marwick LLP
23.6 -- Consent of Goldman, Sachs & Co.
24.1 -- Power of Attorney
99.1 -- Form of Proxy
</TABLE>
II-1
<PAGE>
* 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 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
II-2
<PAGE>
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-3
<PAGE>
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 September 11, 1997.
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 September 11, 1997
L.M. BAKER, JR. Chief Executive Officer
/s/ PETER C. BROWNING* Director September 11, 1997
PETER C. BROWNING
/s/ JOHN L. CLENDENIN* Director September 11, 1997
JOHN L. CLENDENIN
/s/ LAWRENCE M. GRESSETTE, JR.* Director September 11, 1997
LAWRENCE M. GRESSETTE, JR.
/s/ THOMAS K. HEARN, JR.* Director September 11, 1997
THOMAS K. HEARN, JR.
/s/ GEORGE W. HENDERSON, III* Director September 11, 1997
GEORGE W. HENDERSON, III
/s/ W. HAYNE HIPP* Director September 11, 1997
W. HAYNE HIPP
/s/ ROBERT M. HOLDER, JR.* Director September 11, 1997
ROBERT M. HOLDER, JR.
/s/ ROBERT A. INGRAM* Director September 11, 1997
ROBERT A. INGRAM
/s/ JAMES W. JOHNSTON* Director September 11, 1997
JAMES W. JOHNSTON
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ ROBERT S. MCCOY, JR. Executive Vice President and September 11, 1997
ROBERT S. MCCOY, JR. Chief Financial Officer
/s/ JOHN G. MEDLIN, JR. Director September 11, 1997
JOHN G. MEDLIN, JR.
/s/ WYNDHAM ROBERTSON* Director September 11, 1997
WYNDHAM ROBERTSON
/s/ HERMAN J. RUSSELL* Director September 11, 1997
HERMAN J. RUSSELL
/s/ SHERWOOD H. SMITH, JR.* Director September 11, 1997
SHERWOOD H. SMITH, JR.
/s/ DONALD K. TRUSLOW Comptroller September 11, 1997
DONALD K. TRUSLOW
/s/ JOHN C. WHITAKER, JR.* Director September 11, 1997
JOHN C. WHITAKER, JR.
</TABLE>
<TABLE>
<S> <C> <C>
* By: /s/ ALICE WASHINGTON GROGAN
(SIGNATURE)
ALICE WASHINGTON GROGAN
(PRINT NAME)
ATTORNEY-IN-FACT
(TITLE)
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated as of June 9, 1997, by and between Wachovia Corporation
and Jefferson Bankshares, Inc. (included as Appendix A to the Proxy Statement/Prospectus and
incorporated by reference herein).
2.2 Amendment No. 1, dated as of September 2, 1997, to the Agreement and Plan of Merger, dated
as of June 9, 1997, by and between Wachovia Corporation and Jefferson Bankshares, Inc.
(included as Appendix A to the Proxy Statement/Prospectus and incorporated by reference
herein).
2.3 Agreement and Plan of Merger, dated as of June 23, 1997, by and between Wachovia Corporation
and Central Fidelity Banks, Inc. (Exhibit 2 to Wachovia Corporation's Form 13D dated August
15, 1997, File No. 1-9021*).
2.4 Agreement and Plan of Merger, dated as of August 6, 1997, by and between Wachovia
Corporation and 1st United Bancorp (Exhibit 2 to Wachovia Corporation's Form 13D dated July
3, 1997, File No. 1-9021*).
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-Q for the quarter ended March 31,
1997, File No. 1-9021*)
4.1 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*)
4.2 Bylaws (Exhibit 3.2 to Wachovia Corporation's Form 10-Q for the quarter ended March 31,
1997, File No. 1-9021*)
4.3 All instruments defining the rights of holders of long-term debt of Wachovia Corporation and
its subsidiaries. (Not filed pursuant to (4) (iii) of Item 601(b) of Regulation S-K; to be
furnished upon request of the Commission.)
5.1 Opinion of Kenneth W. McAllister, including consent
8.1 Opinion of Sullivan & Cromwell, including consent
10.1 Stock Option Agreement, dated as of June 10, 1997, by and between Wachovia Corporation and
Jefferson Bankshares, Inc. (included as Appendix B to the Proxy Statement/Prospectus and
incorporated by reference herein)
23.1 Consent of Kenneth W. McAllister (appears in Legal Opinion, Exhibit 5.1)
23.2 Consent of Sullivan & Cromwell (appears in Legal Opinion, Exhibit 8.1)
23.3 Consent of Ernst & Young LLP
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of KPMG Peat Marwick LLP
23.6 Consent of Goldman, Sachs & Co.
24.1 Power of Attorney
99.1 Form of Proxy
</TABLE>
* Incorporated herein by reference
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF WACHOVIA CORPORATION]
September 8, 1997
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 8,950,000 shares of the Company's Common Stock, par value
$5.00 per share (the "Shares"), pursuant to the terms of the Agreement and Plan
of Merger, dated as of June 9, 1997, as amended as of September 2, 1997, by and
between the Company and Jefferson Bankshares, Inc. (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 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 and to the listing of my name in the Prospectus.
Sincerely,
/s/ KENNETH W. MCALLISTER
Kenneth W. McAllister
<PAGE>
SULLIVAN & CROMWELL
125 Broad Street o New York o New York 10004
Telephone: (212) 558-4000 o Facsimile: (212) 558-3588
September 11, 1997
Wachovia Corporation,
301 North Main Street,
Winston-Salem, North Carolina 27101
Ladies and Gentlemen:
We have acted as special counsel in connection with the planned merger
(the "Merger") of Jefferson Bankshares, Inc., a Virginia corporation
("Jefferson"), with and into Wachovia Corporation, a North Carolina corporation
("Wachovia"), pursuant to the Agreement and Plan of Merger (the "Agreement"),
dated as of June 9, 1997, by and between Wachovia and Jefferson. Capitalized
terms used but not defined herein shall have the meanings specified in the
Registration Statement or the appendices thereto (including the Agreement).
We have assumed with your consent that (1) the Merger will be effected in
accordance with the Agreement and will qualify as a merger under applicable
law and (2) the representations contained in the letters of representation from
Wachovia and Jefferson to us dated September 8, 1997, and September 9, 1997
respectively, were true and correct when made and will be true and correct at
the Effective Time.
On the basis of the foregoing, and our consideration of such other matters
of fact and law as we have deemed necessary or appropriate, it is our opinion,
<PAGE>
Wachovia Corporation -2-
under presently applicable federal income tax law, that the Merger will
constitute a reorganization under Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and that:
(i) neither Wachovia nor Jefferson will recognize any gain or loss as
as result of the consummation of the Merger:
(ii) no gain or loss will be recognized for federal income tax purposes
by Jefferson stockholders upon the exchange in the Merger of shares of
Jefferson stock solely for Wachovia stock (except with respect to cash
received in lieu of a fractional share interest in Wachovia stock);
(iii) the basis of Wachovia stock received in the Merger by Jefferson
stockholders (including the basis of any fractional share interest in
Wachovia stock) will be the same as the basis of the shares of Jefferson
stock surrendered in exchange therefor;
(iv) the holding period of Wachovia stock received in the Merger by
Jefferson stockholders (including the holding period of any fractional share
interest in Wachovia stock) will include the period during which the shares
of Jefferson stock surrendered in exchange therefor were held by the
Jefferson stockholder, provided such shares of Jefferson stock were held
as capital assets; and
(v) the payment of cash to a Jefferson stockholder in lieu of a
fractional share interest in Wachovia Common Stock will be treated as if
the fractional share had been distributed as part of the exchange and then
<PAGE>
Wachovia Corporation -3-
redeemed by Wachovia. The cash payment will be treated as having been
received as a distribution in payment for the Wachovia Common Stock
hypothetically redeemed as provided in Section 302 of the Code and, to the
extent that such redemption is not treated as "essentially equivalent to a
dividend" after giving effect to the relevant constructive ownership rules
of the Code, generally should result in the recognition of capital gain or
loss measured by the difference between the amount of cash received and
the tax basis of the fractional share of Wachovia Common Stock
hypothetically redeemed.
We express no opinion as to the effect of the Merger on Wachovia, Jefferson
or any shareholder in respect of any asset as to which unrealized gain is
required to be recognized for U.S. Federal income tax purposes at the end of
each taxable year under a mark-to-market system.
This opinion deals with only Jefferson stockholders who are (i) citizens or
residents of the United States, (ii) domestic corporations, or (iii) otherwise
subject to United States federal income tax on a net income basis in respect
of shares of Jefferson common stock. The federal income tax consequences
described herein may not apply to certain classes of taxpayers, including,
without limitation, insurance companies, tax-exempt organizations, financial
institutions, dealers in securities, persons who acquired or acquire shares of
Jefferson common stock pursuant to the exercise of employee stock options or
rights or otherwise as compensation and persons who hold shares of Jefferson
common stock in a hedging transaction or as part of a straddle or conversion
transaction.
<PAGE>
Wachovia Corporation -4-
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this opinion in the Registration
Statement. In giving this consent, we do not hereby admit that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Sullivan & Cromwell
<PAGE>
<PAGE>
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 September 8, 1997) and
related Prospectus of Wachovia Corporation for the registration of 8,950,000 of
its common stock and to the incorporation by reference therein of our report
dated January 15, 1997, 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, 1996, filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
Winston-Salem, North Carolina
September 8, 1997
<PAGE>
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Jefferson Bankshares, Inc.:
We consent to the inclusion of our report dated January 21, 1997, with
respect to the consolidated balance sheets of Jefferson Bankshares, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the years in the three-year period ended December 31, 1996, which report is
incorporated by reference in the Registration Statement on Form S-4 of Wachovia
Corporation dated September 11, 1997, and to the reference to our firm under the
heading "Experts" in the Proxy Statement/Prospectus.
/s/ KPMG PEAT MARWICK LLP
Richmond, Virginia
September 5, 1997
<PAGE>
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Central Fidelity Banks, Inc.:
We consent to the inclusion of our report dated January 15, 1997, with
respect to the consolidated balance sheet of Central Fidelity Banks, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the related statements of
consolidated income, consolidated cash flows and changes in consolidated
shareholders' equity for each of the years in the three-year period ended
December 31, 1996, which report is incorporated by reference in the Registration
Statement on Form S-4 of Wachovia Corporation dated September 11, 1997, and to
the reference to our firm under the heading "Experts" in the Proxy
Statement/Prospectus.
/s/ KPMG PEAT MARWICK LLP
Richmond, Virginia
September 5, 1997
<PAGE>
<PAGE>
EXHIBIT 23.6
[LETTERHEAD OF GOLDMAN, SACHS & CO.]
PERSONAL AND CONFIDENTIAL
September 11, 1997
Board of Directors
Jefferson Bankshares, Inc.
123 East Main Street
Charlottesville, VA 22902
Re: Proxy Statement on Schedule 14A of Jefferson Bankshares, Inc.
Gentlemen:
Attached is our opinion letter dated September 11, 1997 with respect to the
fairness to the holders of the outstanding shares of Common Stock, par value
$2.50 per share (the "Jefferson Common Stock"), of Jefferson Bankshares, Inc.
(the "Company") of the exchange ratio of .625 shares of Common Stock, par value
$5.00 per share, of Wachovia Corporation ("Wachovia") to be received for each
share of Jefferson Common Stock (the "Exchange Ratio") pursuant to the Agreement
and Plan of Merger dated as of June 9, 1997 between Wachovia and the Company.
The foregoing opinion letter is for the information and assistance of the
Board of Directors of the Company in connection with its consideration of the
transaction contemplated therein and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that the Company has determined to include our
opinion in the above referenced Proxy Statement.
In that regard, we hereby consent to the reference to the opinion of our
Firm in the Letter, dated September 11, 1997, to shareholders of the Company and
under the captions "The Merger -- Background of, and Reasons for, the Merger"
and "The Merger -- Opinion of Jefferson's Financial Advisor" and to the
inclusion of the foregoing opinion as Appendix C to the above-mentioned Proxy
Statement. In providing such consent, except as may be required by the federal
securities laws, we do not intend that any person other than the Board of
Directors rely on such opinion. In giving such consent, we do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ GOLDMAN, SACHS, & CO.
(GOLDMAN, SACHS, & CO.)
<PAGE>
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ PETER C. BROWNING
PETER C. BROWNING
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ JOHN L. CLENDENIN
JOHN L. CLENDENIN
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ LAWRENCE M. GRESSETTE, JR.
LAWRENCE M. GRESSETTE, JR.
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ THOMAS K. HEARN, JR.
THOMAS K. HEARN, JR.
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ GEORGE W. HENDERSON, III
GEORGE W. HENDERSON, III
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ W. HAYNE HIPP
W. HAYNE HIPP
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ ROBERT M. HOLDER, JR.
ROBERT M. HOLDER, JR.
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ ROBERT A. INGRAM
ROBERT A. INGRAM
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ JAMES W. JOHNSTON
JAMES W. JOHNSTON
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ WYNDHAM ROBERTSON
WYNDHAM ROBERTSON
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ HERMAN J. RUSSELL
HERMAN J. RUSSELL
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ SHERWOOD H. SMITH, JR.
SHERWOOD H. SMITH, JR.
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned director of Wachovia Corporation, 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), my attorneys-in-fact and agents with full power of substitution for me
and in my 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 I 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, I have executed this Power of Attorney this 2nd day of
September, 1997.
/s/ JOHN C. WHITAKER, JR.
JOHN C. WHITAKER, JR.
<PAGE>
<PAGE>
EXHIBIT 99.1
JEFFERSON BANKSHARES, INC.
123 EAST MAIN STREET,
CHARLOTTESVILLE, VIRGINIA
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
SPECIAL MEETING OF SHAREHOLDERS ON OCTOBER 22, 1997
The undersigned, a holder of shares of common stock, par value $2.50 per
share ("Jefferson Common Stock"), of Jefferson Bankshares, Inc., a Virginia
corporation ("Jefferson"), appoints JAMES S. KENNAN, ROBERT E. STROUD, and
HOWARD B. WATKINS, or any of them, as proxy, with power of substitution to each,
to vote the undersigned's shares of Jefferson Common Stock at the special
meeting of Jefferson shareholders to be held on October 22, 1997, and at any
adjournment of such meeting. The undersigned revokes any previous proxies with
respect to matters covered in this proxy.
WHEN THIS PROXY IS PROPERLY EXECUTED, THE PROXIES WILL VOTE AS SPECIFICALLY
INDICATED ON THE REVERSE SIDE. THE PROXIES WILL VOTE "FOR"APPROVAL OF THE
AGREEMENT AND PLAN OF MERGER DATED JUNE 9, 1997, AS AMENDED, AND THE RELATED
PLAN OF MERGER SET FORTH IN PROPOSAL 1, UNLESS ANOTHER CHOICE IS INDICATED.
(Continued and to be signed on the reverse side)
<PAGE>
<PAGE>
[Reverse of Proxy Card]
THE BOARD OF DIRECTORS OF JEFFERSON RECOMMENDS A VOTE FOR PROPOSAL 1.
1. Approval of the Agreement and Plan of Merger, dated June 9, 1997,
as amended, and the related Plan of Merger, pursuant to which
Jefferson will be merged with and into Wachovia Corporation.
( ) FOR ( ) AGAINST ( ) ABSTAIN
2. In their discretion, upon any other business that may properly come
before the meeting or any adjournment thereof.
The undersigned acknowledges receipt of a Notice of Special Meeting of
Shareholders of Jefferson called for October 22, 1997 and a Proxy
Statement/Prospectus for the special meeting dated September 11, 1997, prior to
the signing of this proxy.
<TABLE>
<S> <C>
Date: , 1997 Please sign your name exactly as it appears on this
Proxy. When shares of Jefferson Common Stock are held
Signature (Title, if any) jointly, each joint tenant should sign. When signing in
Signature (Title, if any) a representative capacity, please give title.
</TABLE>
