<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 15, 1997
WACHOVIA CORPORATION
---------------------------------------------------
(Exact Name of Registrant as specified in its charter)
NORTH CAROLINA No. 1-9021 No. 56-1473727
- ----------------------------------- -------------- ------------------
(State or other jurisdiction of (Commission (IRS employer
incorporation) File Number) Identification No.)
100 NORTH MAIN STREET, WINSTON-SALEM, NC 27101
191 PEACHTREE STREET NE, ATLANTA, GA 30303
- ------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
WINSTON-SALEM 336-770-5000
ATLANTA 404-332-5000
Not applicable
(Registrant's former address of principal executive offices)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On December 15, 1997, Wachovia Corporation, a North Carolina
corporation (the "Registrant"), consummated a tax-free merger by and between the
Registrant and Central Fidelity Banks, Inc., a Virginia corporation ("Central"),
pursuant to which each outstanding share of common stock, par value $5.00 per
share, of Central was converted into 0.63 shares of common stock, par value
$5.00 per share, of the Registrant (the "Merger").
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
Consolidated Financial Statements of Central at September 30, 1997
(unaudited) and December 31, 1996 and for the three and nine month
periods ended September 30, 1997 and 1996 are included with this
report. Audited Consolidated Financial Statements of Central at
December 31, 1996 and 1995 and for the three years ended December
31, 1996, were filed by the Registrant on Form 8-K dated September
8, 1997.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Combined Financial Information for the
Registrant and Central are included with this report. The pro forma
financial information includes the Combined Statement of Condition
at September 30, 1997, and the Combined Statements of Income for
the nine months ended September 30, 1997 and for the years ended
December 31, 1996, 1995 and 1994. Such pro forma financial
information is not necessarily indicative of the future financial
condition or results of operations of the Registrant.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of June 23, 1997, by
and between the Registrant and Central.
99.1 Press release dated December 15, 1997, announcing the
consummation of the Merger.
-2-
<PAGE>
FINANCIAL INFORMATION
-----------------------------------------
CENTRAL FIDELITY BANKS, INC.
FINANCIAL STATEMENTS
THE CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997, THE STATEMENT OF
CONSOLIDATED INCOME, THE STATEMENT OF CONSOLIDATED CASH FLOWS AND THE STATEMENT
OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1997 AND 1996 ARE UNAUDITED AND DO NOT INCLUDE ALL OF THE
INFORMATION INCLUDED IN THE CENTRAL'S ANNUAL FINANCIAL STATEMENTS. IN THE
OPINION OF MANAGEMENT, ALL ADJUSTMENTS (CONSISTING ONLY OF NORMAL RECURRING
ACCRUALS) CONSIDERED NECESSARY FOR A FAIR PRESENTATION HAVE BEEN INCLUDED.
OPERATING RESULTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30,
1997 AND 1996 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS THAT MAY BE EXPECTED
FOR THE ENTIRE YEAR. FOR FURTHER INFORMATION, REFER TO THE CONSOLIDATED
FINANCIAL STATEMENTS AND FOOTNOTES INCLUDED IN THE CENTRAL'S ANNUAL REPORT FOR
THE YEAR ENDED DECEMBER 31, 1996 WHICH IS THE SOURCE OF THE COMPANY'S BALANCE
SHEET AS OF THAT DATE.
3
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
- ------------------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
<S> <C> <C>
- ------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------
CASH AND DUE FROM BANKS $298,752 $304,661
TEMPORARY INVESTMENTS:
FEDERAL FUNDS SOLD AND SECURITIES PURCHASED
UNDER AGREEMENTS TO RESELL 39,377 96,515
OTHER MONEY MARKET INVESTMENTS 50,000 50,000
TRADING ACCOUNT SECURITIES 6,538 4,061
- ------------------------------------------------------------------
TOTAL TEMPORARY INVESTMENTS 95,915 150,576
- ------------------------------------------------------------------
ASSETS AVAILABLE FOR SALE:
SECURITIES 2,725,064 3,069,624
LOANS 28,226 26,085
- ------------------------------------------------------------------
TOTAL ASSETS AVAILABLE FOR SALE 2,753,290 3,095,709
- ------------------------------------------------------------------
LOANS 6,964,541 6,690,751
ALLOWANCE FOR LOAN LOSSES (110,000) (110,000)
- ------------------------------------------------------------------
NET LOANS 6,854,541 6,580,751
- ------------------------------------------------------------------
ACCRUED INTEREST RECEIVABLE 62,268 61,819
PREMISES AND EQUIPMENT, NET 165,390 157,119
DUE FROM CUSTOMERS ON ACCEPTANCES 15,032 11,009
OTHER ASSETS 205,479 178,716
- ------------------------------------------------------------------
TOTAL ASSETS $10,450,667 $10,540,360
- ------------------------------------------ ========== ==========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
LIABILITIES 1997 1996
<S> <C> <C>
- ------------------------------------------------------------------
DEPOSITS:
DEMAND $1,211,889 $1,189,808
SAVINGS AND OTHER TIME 6,209,603 6,393,420
CERTIFICATES OF DEPOSIT $100,000 AND OVER 397,813 488,226
- ------------------------------------------------------------------
TOTAL DEPOSITS 7,819,305 8,071,454
- ------------------------------------------------------------------
BORROWINGS:
FEDERAL FUNDS PURCHASED AND SECURITIES SOLD
UNDER AGREEMENTS TO REPURCHASE 1,073,794 907,875
OTHER SHORT-TERM BORROWINGS 58,823 72,274
FEDERAL HOME LOAN BANK BORROWINGS 309,686 400,080
LONG-TERM DEBT 249,418 150,324
CAPITALIZED LEASE OBLIGATIONS 6,994 7,334
- ------------------------------------------------------------------
TOTAL BORROWINGS 1,698,715 1,537,887
- ------------------------------------------------------------------
DIVIDENDS PAYABLE 13,715 13,059
ACCRUED INTEREST PAYABLE 31,529 29,160
BANK ACCEPTANCES OUTSTANDING 15,032 11,009
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 32,385 31,292
- ------------------------------------------------------------------
TOTAL LIABILITIES 9,610,681 9,693,861
- ------------------------------------------------------------------
SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------
PREFERRED STOCK, NONE ISSUED -- --
COMMON STOCK, PAR VALUE $5 PER SHARE, AUTHORIZED
100,000,000 SHARES, SHARES ISSUED: 57,245,209
AND 59,378,319, RESPECTIVELY 286,226 296,892
CAPITAL SURPLUS 119,933 171,926
UNAMORTIZED DEFERRED COMPENSATION (614) --
RETAINED EARNINGS 421,478 368,457
UNREALIZED GAINS ON SECURITIES AVAILABLE
FOR SALE, NET OF INCOME TAXES 12,963 9,224
- ------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 839,986 846,499
- ------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $10,450,667 $10,540,360
- ------------------------------------------ ========== ==========
- ------------------------------------------------------------------
</TABLE>
5
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CONSOLIDATED INCOME
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
- -----------------------------------------------------------------------------------
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE
DATA) 1997 1996 1997 1996
- -----------------------------------------------------------------------------------
INCOME FROM EARNING ASSETS
- -----------------------------------------------------------------------------------
INTEREST AND FEES ON LOANS $156,644 $144,103 $457,020 $422,638
INTEREST ON SECURITIES AVAILABLE FOR SALE:
U.S. GOVERNMENT AND AGENCIES 28,155 32,753 88,035 102,770
STATES AND POLITICAL SUBDIVISIONS 1,152 1,386 3,752 4,284
OTHER 16,874 17,599 49,697 55,076
INTEREST ON LOANS AVAILABLE FOR SALE 331 135 879 677
INTEREST ON MONEY MARKET INVESTMENTS 1,840 996 4,121 3,876
INTEREST ON TRADING ACCOUNT SECURITIES 109 63 243 97
- -----------------------------------------------------------------------------------
TOTAL INCOME FROM EARNING ASSETS 205,105 197,035 603,747 589,418
- -----------------------------------------------------------------------------------
INTEREST EXPENSE
- -----------------------------------------------------------------------------------
INTEREST ON DEPOSITS 77,573 80,754 233,441 241,488
INTEREST ON FEDERAL FUNDS PURCHASED AND SECURITIES
SOLD UNDER AGREEMENTS TO REPURCHASE 15,108 11,815 38,431 36,686
INTEREST ON OTHER SHORT-TERM BORROWINGS 786 842 2,317 2,774
INTEREST ON MEDIUM-TERM NOTES -- 91 -- 3,932
INTEREST ON FEDERAL HOME LOAN BANK
BORROWINGS 4,694 6,386 16,434 18,815
INTEREST ON LONG-TERM DEBT 4,398 2,559 10,803 7,594
INTEREST ON CAPITALIZED LEASE OBLIGATIONS 157 166 475 504
- -----------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 102,716 102,613 301,901 311,793
- -----------------------------------------------------------------------------------
NET INTEREST INCOME 102,389 94,422 301,846 277,625
PROVISION FOR LOAN LOSSES 12,412 11,062 39,977 32,013
- -----------------------------------------------------------------------------------
NET INCOME FROM EARNING ASSETS 89,977 83,360 261,869 245,612
- -----------------------------------------------------------------------------------
NONINTEREST INCOME
- -----------------------------------------------------------------------------------
TRUST INCOME 4,819 4,181 14,111 12,949
DEPOSIT FEES AND CHARGES 10,641 9,349 31,332 28,170
PROFITS (LOSSES) ON SECURITIES AVAILABLE FOR SALE AND
TRADING ACCOUNT SECURITIES 939 (196) 2,820 (197)
OTHER INCOME 10,012 7,959 27,916 21,950
- -----------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 26,411 21,293 76,179 62,872
- -----------------------------------------------------------------------------------
NONINTEREST EXPENSE
- -----------------------------------------------------------------------------------
PERSONNEL EXPENSE 39,316 35,211 114,240 104,050
OCCUPANCY AND EQUIPMENT EXPENSE 12,730 11,504 37,402 34,370
FDIC INSURANCE EXPENSE 385 729 1,179 2,063
OTHER REAL ESTATE EXPENSE 731 403 1,361 1,711
SPECIAL SAIF ASSESSMENT -- 6,412 -- 6,412
OTHER EXPENSE 16,143 13,797 45,493 39,984
- -----------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 69,305 68,056 199,675 188,590
- -----------------------------------------------------------------------------------
EARNINGS
- -----------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 47,083 36,597 138,373 119,894
INCOME TAX EXPENSE 15,417 11,465 45,132 37,972
- -----------------------------------------------------------------------------------
NET INCOME $31,666 $25,132 $93,241 $81,922
- ----------------------------------------- ======= ======= ======= =======
EARNINGS PER SHARE
- -----------------------------------------------------------------------------------
NET INCOME $0.56 $0.42 $1.62 $1.37
AVERAGE SHARES OUTSTANDING 56,951,984 59,586,194 57,692,069 59,888,903
- -----------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CONSOLIDATED CASH FLOWS
- -----------------------------------------------------------------------
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
(IN THOUSANDS) FOR THE NINE MONTHS ENDED SEPTEMBER 30,
<CAPTION>
1997 1996
<S> <C> <C>
- -----------------------------------------------------------------------
OPERATING ACTIVITIES
- -----------------------------------------------------------------------
NET INCOME $93,241 $81,922
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
PROVISION FOR LOAN LOSSES 39,977 32,013
DEPRECIATION OF PREMISES AND EQUIPMENT 13,395 12,140
NET AMORTIZATION OF PREMIUM AND ACCRETION OF DISCOUNT
ON SECURITIES AVAILABLE FOR SALE (1,131) (632)
GAINS ON SECURITIES AVAILABLE FOR SALE (2,065) (398)
DEFERRED INCOME TAXES (2,828) (1,517)
INCREASE IN TRADING ACCOUNT SECURITIES (2,477) (7,154)
ORIGINATIONS OF LOANS AVAILABLE FOR SALE (100,208) (90,079)
PURCHASES OF LOANS AVAILABLE FOR SALE (66,901) (69,866)
PROCEEDS FROM SALES OF LOANS AVAILABLE FOR SALE 165,040 167,952
(INCREASE) DECREASE IN ACCRUED INTEREST
RECEIVABLE (449) 5,348
INCREASE (DECREASE) IN ACCRUED INTEREST PAYABLE 2,369 (7,606)
OTHER, NET (26,504) (6,765)
- -----------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 111,459 115,358
- -----------------------------------------------------------------------
INVESTING ACTIVITIES
- -----------------------------------------------------------------------
PURCHASES OF SECURITIES AVAILABLE FOR SALE (472,748) (281,782)
PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR
SALE 270,848 194,067
PROCEEDS FROM MATURITIES AND REPAYMENTS OF SECURITIES
AVAILABLE FOR SALE 555,408 524,209
NET INCREASE IN LOANS (321,085) (347,512)
PURCHASES OF PREMISES AND EQUIPMENT (22,647) (15,395)
PROCEEDS FROM THE DISPOSITION OF PREMISES AND
EQUIPMENT 1,212 1,519
PROCEEDS FROM THE DISPOSITION OF FORECLOSED
PROPERTIES 8,957 7,917
- -----------------------------------------------------------------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 19,945 83,023
- -----------------------------------------------------------------------
FINANCING ACTIVITIES
- -----------------------------------------------------------------------
NET INCREASE (DECREASE) IN DEMAND, INTEREST CHECKING
AND REGULAR SAVINGS DEPOSITS (15,079) 114,892
NET INCREASE (DECREASE) IN MONEY MARKET ACCOUNTS 60,118 (6,087)
NET DECREASE IN CONSUMER CERTIFICATES (206,775) (159,218)
NET INCREASE (DECREASE) IN CERTIFICATES OF DEPOSIT
$100,000 AND OVER (90,413) 31,274
NET INCREASE (DECREASE) IN SHORT-TERM BORROWINGS 152,468 (74,749)
PROCEEDS FROM MEDIUM-TERM NOTES AND FHLB BORROWINGS 80,506 101,000
PAYMENTS ON MEDIUM-TERM NOTES AND FHLB BORROWINGS (170,900) (299,950)
PROCEEDS FROM LONG-TERM DEBT 99,134 --
PAYMENTS ON LONG-TERM DEBT AND CAPITALIZED LEASE
OBLIGATIONS (469) (355)
PROCEEDS FROM ISSUANCE OF COMMON STOCK 20,077 9,213
COMMON STOCK PURCHASED (83,554) (38,283)
CASH IN LIEU OF FRACTIONAL SHARES FOR STOCK SPLIT -- (78)
CASH DIVIDENDS (39,564) (37,150)
- -----------------------------------------------------------------------
NET CASH USED BY FINANCING ACTIVITIES (194,451) (359,491)
- -----------------------------------------------------------------------
DECREASE IN CASH AND CASH EQUIVALENTS (63,047) (161,110)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 451,176 571,314
- -----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $388,129 $410,204
- --------------------------------------------------- ======== ========
- -----------------------------------------------------------------------
</TABLE>
7
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------------------------------------------------------
UNREALIZED
GAINS (LOSSES)
UNAMORTIZED ON SECURITIES TOTAL
(IN THOUSANDS) COMMON COMMON CAPITAL DEFERRED RETAINED AVAILABLE SHAREHOLDERS'
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 SHARES STOCK SURPLUS COMPENSATION EARNINGS FOR SALE EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT BEGINNING OF PERIOD 40,193 $200,964 $195,151 $-- $406,567 $23,865 $826,547
NET INCOME -- -- -- -- 81,922 -- 81,922
COMMON STOCK ISSUED UNDER PLANS 406 2,034 7,179 -- -- -- 9,213
COMMON STOCK PURCHASED (1,296) (6,484) (31,799) -- -- -- (38,283)
CASH DIVIDENDS DECLARED ON COMMON STOCK -- -- -- -- (38,221) -- (38,221)
COMMON STOCK ISSUED FOR 3-FOR-2 STOCK
SPLIT 19,890 99,452 -- -- (99,530) -- (78)
CHANGE IN UNREALIZED LOSSES ON SECURITIES AVAILABLE
FOR SALE, NET OF INCOME TAXES OF $14,05 -- -- -- -- -- (26,101) (26,101)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF PERIOD 59,193 $295,966 $170,531 $-- $350,738 ($2,236) $814,999
- ----------------------------------------- ====== ======== ======== ======= ======== ======== ========
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT BEGINNING OF PERIOD 59,378 $296,892 $171,926 $-- $368,457 $9,224 $846,499
NET INCOME -- -- -- -- 93,241 -- 93,241
COMMON STOCK ISSUED UNDER PLANS 824 4,122 15,955 -- -- -- 20,077
GRANT OF SHARES OF RESTRICTED STOCK AWARDS 32 158 660 (818) -- -- --
AMORTIZATION OF DEFERRED COMPENSATION -- -- -- 204 -- -- 204
COMMON STOCK PURCHASED (2,989) (14,946) (68,608) -- -- -- (83,554)
CASH DIVIDENDS DECLARED ON COMMON STOCK -- -- -- -- (40,220) -- (40,220)
CHANGE IN UNREALIZED GAINS ON SECURITIES AVAILABLE
FOR SALE, NET OF INCOME TAXES OF $2,013 -- -- -- -- -- 3,739 3,739
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF PERIOD 57,245 $286,226 $119,933 ($614)$421,478 $12,963 $839,986
- ----------------------------------------- ====== ======== ======== ======= ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<PAGE>
WACHOVIA AND CENTRAL FIDELITY UNAUDITED
PRO FORMA COMBINED FINANCIAL INFORMATION
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 September 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 will 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. 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.
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF CONDITION
AS OF SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
(IN THOUSANDS)
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks..............................$ 3,209,780 $ 298,752 $ - $ 3,508,532
Federal funds sold and other money market
investments..................................... 1,391,178 95,915 - 1,487,093
Securities available for sale........................ 5,808,714 2,725,064 - 8,533,778
Securities held to maturity.......................... 1,217,798 - - 1,217,798
Loans................................................ 33,753,558 6,992,767 - 40,746,325
Allowance for loan losses....................... (409,356) (110,000) - (519,356)
----------------- ----------------- ----------------- -----------------
Net loans............................................ 33,344,202 6,882,767 - 40,226,969
Premises and equipment............................... 652,180 165,390 - 817,570
Other assets......................................... 2,046,110 282,779 89,950(2) 2,418,839
----------------- ----------------- ----------------- -----------------
TOTAL ASSETS..............................$ 47,669,962 $ 10,450,667 $ 89,950 $ 58,210,579
================= ================= ================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand...............................................$ 9,561,291 $ 1,211,889 $ - $ 10,773,180
Large denomination certificates...................... 2,504,976 397,813 - 2,902,789
Other................................................ 17,024,811 6,209,603 - 23,234,414
----------------- ----------------- ----------------- -----------------
Total deposits............................ 29,091,078 7,819,305 - 36,910,383
Federal funds purchased and securities sold
under repurchase agreements..................... 6,144,033 1,073,794 - 7,217,827
Other liabilities.................................... 8,757,884 717,582 257,000(2) 9,732,466
----------------- ----------------- ----------------- -----------------
Total liabilities......................... 43,992,995 9,610,681 257,000 53,860,676
Shareholders' Equity:
Preferred stock...................................... - - - -
Common stock......................................... 788,863 286,226 (105,903)(1) 969,186
Capital surplus...................................... 72,742 119,933 105,903 (1) 298,578
Retained earnings.................................... 2,759,668 420,864 (167,050)(2) 3,013,482
Unrealized gains (losses) on securities available
for sale, net of tax............................ 55,694 12,963 - 68,657
----------------- ----------------- ----------------- -----------------
Total shareholders' equity...................... 3,676,967 839,986 (167,050) 4,349,903
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......$ 47,669,962 $ 10,450,667 $ 89,950 $ 58,210,579
================= ================= ================= =================
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 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...........................$ 2,081,427 $ 457,899 $ - $ 2,539,326
Securities available for sale........................ 336,195 141,484 - 477,679
Securities held to maturity.......................... 76,901 - - 76,901
Other interest income................................ 50,393 4,364 - 54,757
---------------- ---------------- ---------------- ----------------
Total interest income...................... 2,544,916 603,747 - 3,148,663
INTEREST EXPENSE
Total deposits....................................... 728,527 233,441 - 961,968
Short-term borrowings................................ 310,256 40,748 - 351,004
Other................................................ 264,186 27,712 - 291,898
---------------- ---------------- ---------------- ----------------
Total interest expense..................... 1,302,969 301,901 - 1,604,870
Net interest income.................................. 1,241,947 301,846 - 1,543,793
Provision for loan losses............................ 148,057 39,977 - 188,034
---------------- ---------------- ---------------- ----------------
Net interest income after provision for loan losses.. 1,093,890 261,869 - 1,355,759
OTHER INCOME
Fees for trust services.............................. 114,059 14,111 - 128,170
Service charges on deposit accounts.................. 193,295 31,332 - 224,627
Investment securities gains (losses)................. 1,082 2,820 - 3,902
Other income......................................... 355,679 27,916 - 383,595
---------------- ---------------- ---------------- ----------------
Total non-interest income.................. 664,115 76,179 - 740,294
OTHER EXPENSE
Salaries and employee benefits....................... 545,853 114,240 - 660,093
Net occupancy and equipment expense.................. 157,518 37,402 - 194,920
Other expense........................................ 331,592 48,033 - 379,625
---------------- ---------------- ---------------- ----------------
Total non-interest expense................. 1,034,963 199,675 - 1,234,638
Income before income taxes........................... 723,042 138,373 - 861,415
Income taxes......................................... 227,081 45,132 - 272,213
---------------- ---------------- ---------------- ----------------
NET INCOME...........................................$ 495,961 $ 93,241 $ - $ 589,202
================ ================ ================ ================
Net income per primary share.........................$ 3.04 $ 1.62 $ 2.95
Weighted average primary shares outstanding.......... 163,327 57,692 199,673
Net income per fully diluted share...................$ 3.03 $ 1.57 $ 2.93
Weighted average fully diluted shares outstanding.... 163,876 59,216 201,182
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
<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
---------------- ---------------- ---------------- ----------------
INTEREST INCOME
<S> <C> <C> <C> <C>
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
Fees for trust services.............................. 242,368 37,832 - 280,200
Service charges on deposit accounts.................. 137,841 16,780 - 154,621
Investment securities gains (losses)................. 3,736 99 - 3,835
Other income......................................... 403,705 31,204 - 434,909
---------------- ---------------- ---------------- ----------------
Total non-interest 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 non-interest expense................. 1,257,549 251,941 - 1,509,490
Income before income taxes........................... 934,902 165,376 - 1,100,278
Income taxes......................................... 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."
<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
Fees for trust services................................ 209,113 35,150 - 244,263
Service charges on deposit accounts.................... 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 non-interest 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 non-interest expense................... 1,203,596 238,165 - 1,441,761
Income before income taxes............................. 868,868 154,422 - 1,023,290
Income taxes........................................... 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."
<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
Fees for trust services.............................. 196,149 34,557 - 230,706
Service charges on deposit accounts.................. 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 non-interest 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 non-interest expense................. 1,098,413 245,065 - 1,343,478
Income before income taxes........................... 761,482 123,920 - 885,402
Income taxes......................................... 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."
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(1) Pursuant to the Central Fidelity Merger Agreement, each outstanding share of
the Central Fidelity Common Stock (57,245,209 shares at September 30, 1997)
will be converted into 0.63 of a share of Wachovia Common Stock (36,064,482
at September 30, 1997), subject to adjustment in the event of stock
dividends, stock splits or similar changes in Wachovia's capitalization.
(2) Reflects Wachovia management's current estimate, for purposes of pro forma
presentation, of the aggregate estimated merger and restructuring costs of
$257 million ($167 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:
(in millions)
Personnel........................................... $ 115
Systems and operations.............................. 70
Business unit integration and branch conversions.... 41
Other............................................... 31
----
$257
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 in future developments differ from the underlying assumptions used by
management in determining its current estimate of these costs.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date December 30, 1997
WACHOVIA CORPORATION
By: /s/ Kenneth W. McAllister
Name: Kenneth W. McAllister
---------------------------
Title: Senior Executive Vice President
-3-
<PAGE>
Exhibit Index
2.1 Agreeement and Plan of Merger, dated as of June 23, 1997, by and between
the Registrant and Central.
99.1 Press release dated December 15, 1997, announcing the consummation of the
Merger.
-4-
<PAGE>
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of June 23, 1997
by and between
Wachovia Corporation
and
Central Fidelity Banks, Inc.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
RECITALS........................................................................................................ A-1
</TABLE>
ARTICLE I
<TABLE>
<S> <C> <C> <C>
Certain Definitions............................................................................................. A-1
1.01 CERTAIN DEFINITIONS.......................................................................... A-1
</TABLE>
ARTICLE II
<TABLE>
<S> <C> <C> <C>
The Merger...................................................................................................... A-4
2.01 THE MERGER................................................................................... A-4
2.02 EFFECTIVE DATE AND EFFECTIVE TIME............................................................ A-4
2.03 PLAN OF MERGER............................................................................... A-4
</TABLE>
ARTICLE III
<TABLE>
<S> <C> <C> <C>
Consideration; Exchange Procedures.............................................................................. A-5
3.01 MERGER CONSIDERATION......................................................................... A-5
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS...................................................... A-5
3.03 FRACTIONAL SHARES............................................................................ A-5
3.04 EXCHANGE PROCEDURES.......................................................................... A-5
3.05 ANTI-DILUTION PROVISIONS..................................................................... A-6
3.06 OPTIONS...................................................................................... A-6
</TABLE>
ARTICLE IV
<TABLE>
<S> <C> <C> <C>
Actions Pending Acquisition..................................................................................... A-6
4.01 FOREBEARANCES OF CENTRAL..................................................................... A-6
4.02 FOREBEARANCES OF WACHOVIA.................................................................... A-8
</TABLE>
ARTICLE V
<TABLE>
<S> <C> <C> <C>
Representations and Warranties.................................................................................. A-8
5.01 DISCLOSURE SCHEDULES......................................................................... A-8
5.02 STANDARD..................................................................................... A-8
5.03 REPRESENTATIONS AND WARRANTIES OF CENTRAL.................................................... A-8
5.04 REPRESENTATIONS AND WARRANTIES OF WACHOVIA................................................... A-14
</TABLE>
ARTICLE VI
<TABLE>
<S> <C> <C> <C>
Covenants....................................................................................................... A-17
6.01 REASONABLE BEST EFFORTS...................................................................... A-17
6.02 STOCKHOLDER APPROVALS........................................................................ A-17
6.03 REGISTRATION STATEMENT....................................................................... A-17
6.04 PRESS RELEASES............................................................................... A-18
6.05 ACCESS; INFORMATION.......................................................................... A-18
6.06 ACQUISITION PROPOSALS........................................................................ A-18
6.07 AFFILIATE AGREEMENTS......................................................................... A-19
6.08 TAKEOVER LAWS................................................................................ A-19
6.09 CERTAIN POLICIES............................................................................. A-19
6.10 NYSE LISTING................................................................................. A-19
6.11 REGULATORY APPLICATIONS...................................................................... A-19
6.12 INDEMNIFICATION.............................................................................. A-19
6.13 BENEFIT PLANS................................................................................ A-20
6.14 ACCOUNTANTS' LETTERS......................................................................... A-21
6.15 NOTIFICATION OF CERTAIN MATTERS.............................................................. A-21
6.16 DIRECTORS.................................................................................... A-21
6.17 DIVIDEND COORDINATION........................................................................ A-21
</TABLE>
i
<PAGE>
ARTICLE VII
<TABLE>
<S> <C> <C> <C>
Conditions to Consummation of the Merger........................................................................ A-21
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER................................... A-21
7.02 CONDITIONS TO OBLIGATION OF CENTRAL.......................................................... A-22
7.03 CONDITIONS TO OBLIGATION OF WACHOVIA......................................................... A-22
</TABLE>
ARTICLE VIII
<TABLE>
<S> <C> <C> <C>
Termination..................................................................................................... A-23
8.01 TERMINATION.................................................................................. A-23
8.02 EFFECT OF TERMINATION AND ABANDONMENT........................................................ A-23
</TABLE>
ARTICLE IX
<TABLE>
<S> <C> <C> <C>
Miscellaneous................................................................................................... A-24
9.01 SURVIVAL..................................................................................... A-24
9.02 WAIVER; AMENDMENT............................................................................ A-24
9.03 COUNTERPARTS................................................................................. A-24
9.04 GOVERNING LAW................................................................................ A-24
9.05 EXPENSES..................................................................................... A-24
9.06 NOTICES...................................................................................... A-24
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES........................................... A-25
9.08 INTERPRETATION; EFFECT....................................................................... A-25
</TABLE>
EXHIBIT A Form of Stock Option Agreement [See APPENDIX B of this Proxy
Statement/Prospectus]
EXHIBIT B Rights Agreement Amendment
EXHIBIT C Form of Central Affiliate Agreement
EXHIBIT D Form of Wachovia Affiliate Agreement
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of June 23, 1997 (this "AGREEMENT"),
by and between Central Fidelity Banks, Inc. ("CENTRAL") and Wachovia Corporation
("WACHOVIA").
RECITALS
A. CENTRAL FIDELITY BANKS, INC.. Central Fidelity Banks, Inc. is a Virginia
corporation, having its principal place of business in Richmond, Virginia.
B. WACHOVIA CORPORATION. Wachovia Corporation is a North Carolina
corporation, having its principal place of business in both Winston-Salem, North
Carolina and Atlanta, Georgia.
C. STOCK OPTION AGREEMENT. As an inducement to the willingness of Wachovia
to continue to pursue the transactions contemplated by this Agreement , Central
expects (but is not obligated) to grant to Wachovia an option pursuant to a
stock option agreement, in substantially the form of Exhibit A.
D. INTENTIONS OF THE PARTIES. It is the intention of the parties to this
Agreement that the business combination contemplated hereby be accounted for
under the "pooling-of-interests" accounting method and be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 as
amended (the "CODE").
E. BOARD ACTION. The respective Boards of Directors of each of Wachovia and
Central have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:
"ACQUISITION PROPOSAL" means any tender or exchange offer, proposal for a
merger, consolidation or other business combination involving Central or any of
its Subsidiaries or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets or deposits of,
Central or any of its Subsidiaries, other than the transactions contemplated by
this Agreement.
"AGREEMENT" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"CENTRAL" has the meaning set forth in the preamble to this Agreement.
"CENTRAL AFFILIATE" has the meaning set forth in Section 6.07(a).
"CENTRAL BOARD" means the Board of Directors of Central.
"CENTRAL BY-LAWS" means the By-laws of Central.
"CENTRAL CERTIFICATE" means the Amended and Restated Articles of
Incorporation of Central.
"CENTRAL COMMON STOCK" means the common stock, par value $5.00 per share,
of Central.
"CENTRAL MEETING" has the meaning set forth in Section 6.02.
"CENTRAL RIGHTS" means the preferred share purchase rights issued under the
Central Rights Agreement.
"CENTRAL RIGHTS AGREEMENT" means the Amended and Restated Rights Agreement,
dated as of November 9, 1994, between Central and Central Fidelity National
Bank.
"CENTRAL 1983 PREFERRED STOCK" means the 1983 Preferred Stock, par value
$25.00 per share, of Central.
"CENTRAL PREFERRED STOCK" means the preferred stock, par value $100.00 per
share, of Central.
A-1
<PAGE>
"CENTRAL STOCK" means, collectively, Central Common Stock, Central 1983
Preferred Stock and Central Preferred Stock.
"CENTRAL STOCK PLANS" means, the 1995 Stock Incentive Plan, 1986 Incentive
Stock Option Plan, 1988 Incentive Stock Option Plan, 1991 Incentive Stock Option
Plan, 1993 Incentive Stock Option Plan and the 1982 Stock Option Plan.
"CODE" has the meaning set forth in the recitals.
"COMPENSATION AND BENEFIT PLANS" has the meaning set forth in Section
5.03(m).
"CORPORATION COMMISSION" has the meaning set forth in Section 2.01(b).
"COSTS" has the meaning set forth in Section 6.12(a).
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"EFFECTIVE DATE" means the date on which the Effective Time occurs.
"EFFECTIVE TIME" means the effective time of the Merger, as provided for in
Section 2.02.
"ENVIRONMENTAL LAWS" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Federal Clean Air Act, and the Occupational Safety and Health Act, each as
amended, regulations promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" has the meaning set forth in Section 5.03(m).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.04.
"EXCHANGE FUND" has the meaning set forth in Section 3.04.
"EXCHANGE RATIO" has the meaning set forth in Section 3.01.
"FDIC" means the Federal Deposit Insurance Corporation.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.12(a).
"INSURANCE AMOUNT" has the meaning set forth in Section 6.12(b).
"INSURANCE POLICY" has the meaning set forth in Section 5.03(t).
"LIENS" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.
"MATERIAL ADVERSE EFFECT" means, with respect to Wachovia or Central, any
effect that (i) is material and adverse to the financial position, results of
operations or business of Wachovia and its Subsidiaries taken as a whole or
Central and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Wachovia or Central to perform its
obligations under this Agreement or otherwise materially threaten or materially
impede the consummation of the Merger and the other transactions contemplated by
this Agreement; provided, however, that Material Adverse Effect shall not be
deemed to include the impact of (a) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to banks and their holding
companies generally and (c) any modifications or changes to valuation policies
and practices in connection with the Merger or restructuring charges taken in
connection with the Merger, in each case in accordance with generally accepted
accounting principles.
"MERGER" has the meaning set forth in Section 2.01.
A-2
<PAGE>
"MERGER CONSIDERATION" has the meaning set forth in Section 2.01.
"MULTIEMPLOYER PLANS" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"NCBCA" means the North Carolina Business Corporation Act.
"NEW CERTIFICATE" has the meaning set forth in Section 3.04.
"NORTH CAROLINA SECRETARY" means the North Carolina Secretary of State.
"NYSE" means the New York Stock Exchange, Inc.
"OLD CERTIFICATE" has the meaning set forth in Section 3.04.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means any individual, bank, corporation, partnership, association,
joint-stock company, business trust or unincorporated organization.
"PENSION PLAN" has the meaning set forth in Section 5.03(m).
"PLANS" has the meaning set forth in Section 5.03(m).
"PREVIOUSLY DISCLOSED" by a party shall mean information set forth in its
Disclosure Schedule.
"PROXY STATEMENT" has the meaning set forth in Section 6.03.
"REGISTRATION STATEMENT" has the meaning set forth in Section 6.03.
"REGULATORY AUTHORITY" has the meaning set forth in Section 5.03(i).
"REPRESENTATIVES" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"RIGHTS" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENTS" has the meaning set forth in Section 5.03(g).
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"STOCK OPTION AGREEMENT" has the meaning set forth in Recital C.
"SUBSIDIARY" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.01.
"TAKEOVER LAWS" has the meaning set forth in Section 5.03 (o).
"TAX" and "TAXES" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority whether
arising before, on or after the Effective Date.
"TAX RETURNS" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with respect to any Tax.
A-3
<PAGE>
"TREASURY STOCK" shall mean shares of Central Stock held by Central or any
of its Subsidiaries or by Wachovia or any of its Subsidiaries, in each case
other than in a fiduciary (including custodial or agency) capacity or as a
result of debts previously contracted in good faith.
"VSCA" means the Virginia Stock Corporation Act.
"WACHOVIA" has the meaning set forth in the preamble to this Agreement.
"WACHOVIA BOARD" means the Board of Directors of Wachovia.
"WACHOVIA COMMON STOCK" means the common stock, par value $5.00 per share,
of Wachovia.
"WACHOVIA MEETING" has the meaning set forth in Section 6.02.
"WACHOVIA PREFERRED STOCK" means the preferred stock, par value $5.00 per
share, of Wachovia.
"WACHOVIA STOCK" means, collectively, Wachovia Common Stock and Wachovia
Preferred Stock.
ARTICLE II
THE MERGER
2.01 THE MERGER. (a) At the Effective Time, Central shall merge with and
into Wachovia (the "MERGER"), the separate corporate existence of Central shall
cease and Wachovia shall survive and continue to exist as a North Carolina
corporation (Wachovia, as the surviving corporation in the Merger, sometimes
being referred to herein as the "SURVIVING CORPORATION"). Wachovia may at any
time prior to the Effective Time change the method of effecting the combination
with Central (including, without limitation, the provisions of this Article II)
if and to the extent it deems such change to be necessary, appropriate or
desirable; provided, however, that no such change shall (i) alter or change the
amount or kind of consideration to be issued to holders of Central Stock as
provided for in this Agreement (the "MERGER CONSIDERATION"), (ii) adversely
affect the tax treatment of Central's stockholders as a result of receiving the
Merger Consideration or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
(b) Subject to the satisfaction or waiver of the conditions set forth in
Article VII, the Merger shall become effective upon the occurrence of the filing
in the office of the Virginia State Corporation Commission (the "Corporation
Commission") of articles of merger in accordance with Section 13.1-720 of the
VSCA and the filing in the Office of the Secretary of State of the State of
North Carolina (the "North Carolina Secretary") of articles of merger in
accordance with Section 55-11-05 of the NCBCA or such later date and time as may
be set forth in such articles and the issuance of certificates of merger by the
Corporation Commission and the North Carolina Secretary under the VSCA and the
NCBCA, respectively. The Merger shall have the effects prescribed in the NCBCA
and the VSCA.
(c) ARTICLES OF INCORPORATION AND BY-LAWS. The articles of incorporation
and by-laws of Wachovia immediately after the Merger shall be those of Wachovia
as in effect immediately prior to the Effective Time.
(d) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors and
officers of Wachovia immediately after the Merger shall be the directors and
officers of Wachovia (except as provided in Section 6.16) immediately prior to
the Effective Time, until such time as their successors shall be duly elected
and qualified.
2.02 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Merger (the "EFFECTIVE DATE") to occur on (i) the fifth
business day to occur after the last of the conditions set forth in Article VII
shall have been satisfied or waived in accordance with the terms of this
Agreement (or, at the election of Wachovia, on the last business day of the
month in which such day occurs or, if such last business day occurs on one of
the last five business days of such month, on the last business day of the
succeeding month) or (ii) such other date to which the parties may agree in
writing. The time on the Effective Date when the Merger shall become effective
is referred to as the "EFFECTIVE TIME."
2.03 PLAN OF MERGER. At the request of Wachovia, Wachovia and Central shall
enter into a separate plan of merger reflecting the terms hereof for purposes of
any filing requirement of the VSCA or NCBCA.
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ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement, at
the Effective Time, automatically by virtue of the Merger and without any action
on the part of any Person:
(a) OUTSTANDING CENTRAL COMMON STOCK AND CENTRAL RIGHTS. Each share,
excluding Treasury Stock, of Central Common Stock issued and outstanding
immediately prior to the Effective Time, together with each associated
Central Right, shall become and be converted into 0.63 of a share of
Wachovia Common Stock (the "EXCHANGE RATIO"). The Exchange Ratio shall be
subject to adjustment as set forth in Section 3.05.
(b) OUTSTANDING WACHOVIA STOCK. Each share of Wachovia Stock issued
and outstanding immediately prior to the Effective Time shall remain issued
and outstanding and unaffected by the Merger.
(c) TREASURY SHARES. Each share of Central Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired
at the Effective Time and no consideration shall be issued in exchange
therefor.
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of Central Stock shall cease to be, and shall have no rights as,
stockholders of Central, other than to receive any dividend or other
distribution with respect to such Central Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock transfer
books of Central or the Surviving Corporation of shares of Central Stock.
3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Wachovia Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Wachovia shall pay to each holder of Central Common Stock who would
otherwise be entitled to a fractional share of Wachovia Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash (without interest) determined by multiplying such fraction by the average
of the last sale prices of Wachovia Common Stock, as reported by the NYSE
Composite Transactions Reporting System (as reported in THE WALL STREET JOURNAL
or, if not reported therein, in another authoritative source), for the five NYSE
trading days immediately preceding the Effective Date.
3.04 EXCHANGE PROCEDURES. (a) At or prior to the Effective Time, Wachovia
shall deposit, or shall cause to be deposited, with Wachovia Bank, N.A. (in such
capacity, the "EXCHANGE AGENT"), for the benefit of the holders of certificates
formerly representing shares of Central Common Stock and the associated Central
Rights ("OLD CERTIFICATES"), for exchange in accordance with this Article III,
certificates representing the shares of Wachovia Common Stock ("NEW
CERTIFICATES") and an estimated amount of cash (such cash and New Certificates,
together with any dividends or distributions with a record date occurring after
the Effective Date with respect thereto (without any interest on any such cash,
dividends or distributions), being hereinafter referred to as the "EXCHANGE
FUND") to be paid pursuant to this Article III in exchange for outstanding
shares of Central Common Stock.
(b) As promptly as practicable after the Effective Date, Wachovia shall
send or cause to be sent to each former holder of record of shares of Central
Common Stock immediately prior to the Effective Time transmittal materials for
use in exchanging such stockholder's Old Certificates for the consideration set
forth in this Article III. Wachovia shall cause the New Certificates into which
shares of a stockholder's Central Common Stock are converted on the Effective
Date and/or any check in respect of any fractional share interests or dividends
or distributions which such person shall be entitled to receive to be delivered
to such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Central Common Stock (or indemnity reasonably
satisfactory to Wachovia and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such stockholder. No interest will be paid
on any such cash to be paid in lieu of fractional share interests or in respect
of dividends or distributions which any such person shall be entitled to receive
pursuant to this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to any former holder of Central Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) At the election of Wachovia, no dividends or other distributions with
respect to Wachovia Common Stock with a record date occurring after the
Effective Time shall be paid to the holder of any unsurrendered Old
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Certificate representing shares of Central Common Stock converted in the Merger
into the right to receive shares of such Wachovia Common Stock until the holder
thereof shall be entitled to receive New Certificates in exchange therefor in
accordance with the procedures set forth in this Section 3.04, and no such
shares of Central Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.04. After becoming so entitled in
accordance with this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Wachovia Common Stock such holder had the right to receive upon surrender of the
Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Central for six months after the Effective Time shall be paid to
Wachovia. Any stockholders of Central who have not theretofore complied with
this Article III shall thereafter look only to Wachovia for payment of the
shares of Wachovia Common Stock, cash in lieu of any fractional shares and
unpaid dividends and distributions on Wachovia Common Stock deliverable in
respect of each share of Central Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon.
3.05 ANTI-DILUTION PROVISIONS. In the event Wachovia changes (or
establishes a record date for changing) the number of shares of Wachovia Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Wachovia Common Stock and the record date therefor shall be
prior to the Effective Date, the Exchange Ratio shall be proportionately
adjusted.
3.06 OPTIONS. At the Effective Time, each outstanding option to purchase
shares of Central Common Stock under the Central Stock Plans (each, a "CENTRAL
STOCK OPTION"), whether vested or unvested, shall be converted into an option to
acquire, on the same terms and conditions as were applicable under such Central
Stock Option, the number of shares of Wachovia Common Stock equal to (a) the
number of shares of Central Common Stock subject to the Central Stock Option,
multiplied by (b) the Exchange Ratio (such product rounded down to the nearest
whole number) (a "REPLACEMENT OPTION"), at an exercise price per share (rounded
up to the nearest whole cent) equal to (y) the aggregate exercise price for the
shares of Central Common Stock which were purchasable pursuant to such Central
Stock Option divided by (z) the number of full shares of Wachovia Common Stock
subject to such Replacement Option in accordance with the foregoing.
Notwithstanding the foregoing, each Central Stock Option which is intended to be
an "incentive stock option" (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code. At or
prior to the Effective Time, Central shall take all action, if any, necessary
with respect to the Central Stock Plans to permit the replacement of the
outstanding Central Stock Options by Wachovia pursuant to this Section. At the
Effective Time, Wachovia shall assume the Central Stock Plans; PROVIDED, that
such assumption shall be only in respect of the Replacement Options and that
Wachovia shall have no obligation with respect to any awards under the Central
Stock Plans other than the Replacement Options and shall have no obligation to
make any additional grants or awards under such assumed Central Stock Plans.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 FOREBEARANCES OF CENTRAL. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Wachovia, Central will not, and will cause each of its
Subsidiaries not to:
(a) ORDINARY COURSE. Conduct the business of Central and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action
reasonably likely to have an adverse affect upon Central's ability to
perform any of its material obligations under this Agreement.
(b) CAPITAL STOCK. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Central Stock or any Rights, (ii) enter into any agreement with respect to
the foregoing, or
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(iii) permit any additional shares of Central Stock to become subject to
new grants of employee or director stock options, other Rights or similar
stock-based employee rights.
(c) DIVIDENDS, ETC. (a) Make, declare, pay or set aside for payment
any dividend (other than (A) quarterly cash dividends on Central Stock in
an amount not to exceed $0.24 per share with record and payment dates
consistent with past practice and (B) dividends from wholly owned
Subsidiaries to Central or another wholly owned Subsidiary of Central) on
or in respect of, or declare or make any distribution on any shares of
Central Stock or (b) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock.
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Central or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof, or (iv) for grants
of awards to newly hired employees consistent with past practice.
(e) BENEFIT PLANS. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law or (ii) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof) any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any
director, officer or employee of Central or its Subsidiaries, or take any
action to accelerate the vesting or exercisability of stock options,
restricted stock or other compensation or benefits payable thereunder.
(f) DISPOSITIONS. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business and in a transaction that is not material to it and its
Subsidiaries taken as a whole.
(g) ACQUISITIONS. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith,
in each case in the ordinary and usual course of business consistent with
past practice) all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business
and in a transaction that is not material to it and its Subsidiaries taken
as a whole.
(h) GOVERNING DOCUMENTS. Amend the Central Certificate, Central
By-laws or the certificate of incorporation or by-laws (or similar
governing documents) of any of Central's Subsidiaries.
(i) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(j) CONTRACTS. Amend, or take any action adverse to Wachovia with
respect to, the Central Rights Agreement or, except in the ordinary course
of business consistent with past practice, enter into or terminate any
material contract (as defined in Section 5.03(k)) or amend or modify in any
material respect any of its existing material contracts.
(k) CLAIMS. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually or in the aggregate for all such settlements, that is not
material to Central and its Subsidiaries, taken as a whole.
(l) ADVERSE ACTIONS. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
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(m) RISK MANAGEMENT. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure
to interest rate risk.
(n) INDEBTEDNESS. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(o) COMMITMENTS. Agree or commit to do any of the foregoing.
4.02 FOREBEARANCES OF WACHOVIA. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Central, Wachovia will not, and will cause each of its
Subsidiaries not to:
(a) EXTRAORDINARY DIVIDENDS. Make, declare, pay or set aside for
payment any extraordinary dividend.
(b) ADVERSE ACTIONS. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation; provided, however, that nothing contained
herein shall limit the ability of Wachovia to exercise its rights under the
Stock Option Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 DISCLOSURE SCHEDULES. On or prior to the date hereof, Wachovia has
delivered to Central a schedule and Central has delivered to Wachovia a schedule
(respectively, its "DISCLOSURE SCHEDULE") setting forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section 5.03
or 5.04 or to one or more of its covenants contained in Article IV; PROVIDED,
that (a) no such item is required to be set forth in a Disclosure Schedule as an
exception to a representation or warranty if its absence would not be reasonably
likely to result in the related representation or warranty being deemed untrue
or incorrect under the standard established by Section 5.02, and (b) the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect.
5.02 STANDARD. No representation or warranty of Central or Wachovia
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had or is reasonably likely to have a
Material Adverse Effect on the party making such representation or warranty.
5.03 REPRESENTATIONS AND WARRANTIES OF CENTRAL. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Central hereby
represents and warrants to Wachovia:
(a) ORGANIZATION, STANDING AND AUTHORITY. Central is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Central is duly qualified to do business and is
in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
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(b) CENTRAL STOCK. As of the date hereof, the authorized capital stock
of Central consists solely of (i) 100,000,000 shares of Central Common
Stock, of which no more than 56,800,000 shares were outstanding as of the
date hereof, (ii) 200,000 shares of Central Preferred Stock, of which no
shares are outstanding and (iii) 4,000,000 shares of Central 1983 Preferred
Stock, of which no shares are outstanding as of the date hereof. As of the
date hereof, no shares of Central Common Stock and no shares of Central
Preferred Stock were held in treasury by Central or otherwise owned by
Central or its Subsidiaries. The outstanding shares of Central Stock have
been duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). As of the date hereof, except as
Previously Disclosed in its Disclosure Schedule, there are no shares of
Central Stock authorized and reserved for issuance, Central does not have
any Rights issued or outstanding with respect to Central Stock, and Central
does not have any commitment to authorize, issue or sell any Central Stock
or Rights, except pursuant to this Agreement and the Stock Option
Agreement. The number of shares of Central Common Stock which are issuable
and reserved for issuance upon exercise of Central Stock Options as of the
date hereof are Previously Disclosed in Central's Disclosure Schedule.
(c) SUBSIDIARIES. (i)(A) Central has Previously Disclosed in its
Disclosure Schedule a list of all of its Subsidiaries together with the
jurisdiction of organization of each such Subsidiary, (B) except as
Previously Disclosed, it owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Subsidiaries, (C) no equity
securities of any of its Subsidiaries are or may become required to be
issued (other than to it or its wholly-owned Subsidiaries) by reason of any
Right or otherwise, (D) there are no contracts, commitments, understandings
or arrangements by which any of such Subsidiaries is or may be bound to
sell or otherwise transfer any equity securities of any such Subsidiaries
(other than to it or its wholly-owned Subsidiaries), (E) there are no
contracts, commitments, understandings, or arrangements relating to its
rights to vote or to dispose of such securities and (F) all the equity
securities of each Subsidiary held by Central or its Subsidiaries are fully
paid and nonassessable (except pursuant to 12 U.S.C. (section mark)55) and
are owned by Central or its Subsidiaries free and clear of any Liens.
(ii) Central does not own beneficially, directly or indirectly, any
equity securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of Central's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified.
(d) CORPORATE POWER. Central and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Central has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to
receipt of the requisite approval of the agreement of merger set forth in
this Agreement by the holders of more than two-thirds of the outstanding
shares of Central Common Stock entitled to vote thereon (which is the only
shareholder vote required thereon), this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of Central and the Central
Board on or prior to the date hereof. This Agreement is a valid and legally
binding obligation of Central, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles). The Central Board of Directors has received
the written opinion of Keefe, Bruyette & Woods, Inc. to the effect that as
of the date hereof the consideration to be received by the holders of
Central Common Stock in the Merger is fair to the holders of Central Common
Stock from a financial point of view.
(f) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with
any third party are required to be made or obtained by Central or any of
its Subsidiaries in connection with the execution, delivery or performance
by Central of this Agreement or the Stock Option Agreement or to consummate
the Merger except for (A) filings of applications or notices with federal
and Virginia banking authorities, (B) filings with the SEC and state
securities authorities and
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the approval of this Agreement by the stockholders of Central, and (C) the
filing of articles of merger with the Corporation Commission pursuant to
the VSCA and the North Carolina Secretary pursuant to the NCBA and the
issuance of related certificates of merger. As of the date hereof, Central
is not aware of any reason why the approvals set forth in Section 7.01(b)
will not be received without the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the Stock Option Agreement
and the consummation of the transactions contemplated hereby and thereby do
not and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any right
of termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of Central or of any of its Subsidiaries or to which Central or
any of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the Central Certificate or the
Central By-Laws, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS. (i) Central's Annual Reports
on Form 10-K for the fiscal years ended December 31, 1994, 1995 and 1996,
and all other reports, registration statements, definitive proxy statements
or information statements filed or to be filed by it or any of its
Subsidiaries subsequent to December 31, 1994 under the Securities Act, or
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form
filed or to be filed (collectively, Central's "SEC DOCUMENTS") with the
SEC, as of the date filed, (A) complied or will comply in all material
respects as to form with the applicable requirements under the Securities
Act or the Exchange Act, as the case may be, and (B) did not and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and each of the balance sheets contained in or incorporated by
reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of Central and its Subsidiaries as of its date, and each of the
statements of income and changes in stockholders' equity and cash flows or
equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and changes in cash flows,
as the case may be, of Central and its Subsidiaries for the periods to
which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
(ii) Except as Previously Disclosed in its Disclosure Schedule, since
December 31, 1996, Central and its Subsidiaries have not incurred any
liability other than in the ordinary course of business consistent with
past practice.
(iii) Since December 31, 1996, (A) Central and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no
event has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in any
paragraph of Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to Central.
(h) LITIGATION. No litigation, claim or other proceeding before any court
or governmental agency is pending against Central or any of its Subsidiaries
and, to Central's knowledge, no such litigation, claim or other proceeding has
been threatened.
(i) REGULATORY MATTERS. (i) Neither Central nor any of its Subsidiaries or
properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any federal
or state governmental agency or authority charged with the supervision or
regulation of financial institutions or issuers of securities or engaged in the
insurance of deposits (including, without limitation, the Office of the
Comptroller of the Currency, the Federal Reserve Board and the FDIC) or the
supervision or regulation of it or any of its Subsidiaries (collectively, the
"REGULATORY AUTHORITIES").
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(ii) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(j) COMPLIANCE WITH LAWS. Central and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Central's knowledge, no
suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that Central or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations, or ordinances which such Governmental Authority enforces or
(B) threatening to revoke any license, franchise, permit, or governmental
authorization (nor, to Central's knowledge, do any grounds for any of the
foregoing exist).
(k) MATERIAL CONTRACTS; DEFAULTS. Except for those agreements and other
documents filed as exhibits to its SEC Documents, neither it nor any of its
Subsidiaries is a party to, bound by or subject to any agreement, contract,
arrangement, commitment or understanding (whether written or oral) (i) that is a
"material contract" within the meaning of Item 601(b)(10) of the SEC's
Regulation S-K or (ii) that materially restricts the conduct of business by it
or any of its Subsidiaries. Neither it nor any of its Subsidiaries is in default
under any contract, agreement, commitment, arrangement, lease, insurance policy
or other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default.
(l) NO BROKERS. No action has been taken by Central that would give rise to
any valid claim against any party hereto for a brokerage commission, finder's
fee or other like payment with respect to the transactions contemplated by this
Agreement, excluding a Previously Disclosed fee to be paid to Keefe, Bruyette &
Woods, Inc.
(m) EMPLOYEE BENEFIT PLANS. (i) Section 5.03(m)(i) of Central's Disclosure
Schedule contains a complete and accurate list of all existing bonus, incentive,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock, stock
option, severance, welfare and fringe benefit plans, employment or severance
agreements and all similar practices, policies and arrangements in which any
employee or former employee (the "EMPLOYEES"), consultant or former consultant
(the "CONSULTANTS") or director or former director (the "DIRECTORS") of Central
or any of its Subsidiaries participates or to which any such Employees,
Consultants or Directors are a party (the "COMPENSATION AND BENEFIT PLANS").
Neither Central nor any of its Subsidiaries has any commitment to create any
additional Compensation and Benefit Plan or to modify or change any existing
Compensation and Benefit Plan.
(ii) Each Compensation and Benefit Plan has been operated and administered
in all material respects in accordance with its terms and with applicable law,
including, but not limited to, ERISA, the Code, the Securities Act, the Exchange
Act, the Age Discrimination in Employment Act, or any regulations or rules
promulgated thereunder, and all filings, disclosures and notices required by
ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely made. Each
Compensation and Benefit Plan which is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a "PENSION PLAN") and which is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter (including a determination that the related trust under
such Compensation and Benefit Plan is exempt from tax under Section 501(a) of
the Code) from the Internal Revenue Service
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("IRS") for "TRA" (as defined in Rev. Proc. 93-39), or will file for such
determination letter prior to the expiration of the remedial amendment period
for such Compensation and Benefit Plan, and Central is not aware of any
circumstances likely to result in revocation of any such favorable determination
letter. There is no material pending or, to the knowledge of Central, threatened
legal action, suit or claim relating to the Compensation and Benefit Plans.
Neither Central nor any of its Subsidiaries has engaged in a transaction, or
omitted to take any action, with respect to any Compensation and Benefit Plan
that would reasonably be expected to subject Central or any of its Subsidiaries
to a tax or penalty imposed by either Section 4975 of the Code or Section 502 of
ERISA, assuming for purposes of Section 4975 of the Code that the taxable period
of any such transaction expired as of the date hereof.
(iii) No liability (other than for payment of premiums to the PBGC which
have been made or will be made on a timely basis) under Title IV of ERISA has
been or is expected to be incurred by Central or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or any single-employer plan of any entity (an "ERISA AFFILIATE") which
is considered one employer with Central under Section 4001(a)(14) of ERISA or
Section 414(b) or (c) of the Code (an "ERISA AFFILIATE PLAN"). None of Central,
any of its Subsidiaries or any ERISA Affiliate has contributed, or has been
obligated to contribute, to a multiemployer plan under Subtitle E of Title IV of
ERISA at any time since September 26, 1980. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
Compensation and Benefit Plan or by any ERISA Affiliate Plan within the 12-month
period ending on the date hereof, and no such notice will be required to be
filed as a result of the transactions contemplated by this Agreement. The PBGC
has not instituted proceedings to terminate any Pension Plan or ERISA Affiliate
Plan and, to Central's knowledge, no condition exists that presents a material
risk that such proceedings will be instituted. To the knowledge of Central,
there is no pending investigation or enforcement action by the PBGC, the
Department of Labor (the "DOL") or IRS or any other governmental agency with
respect to any Compensation and Benefit Plan. Under each Pension Plan and ERISA
Affiliate Plan, as of the date of the most recent actuarial valuation performed
prior to the date of this Agreement, the actuarially determined present value of
all "benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA
(as determined on the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate Plan), did not
exceed the then current value of the assets of such Pension Plan or ERISA
Affiliate Plan and since such date there has been neither an adverse change in
the financial condition of such Pension Plan or ERISA Affiliate Plan nor any
amendment or other change to such Pension Plan or ERISA Affiliate Plan that
would increase the amount of benefits thereunder which in either case reasonably
could be expected to change such result.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any employee benefit
arrangements under any collective bargaining agreement to which Central or any
of its Subsidiaries is a party have been timely made or have been reflected on
Central's financial statements to the extent required by generally accepted
accounting principles. Neither any Pension Plan nor any ERISA Affiliate Plan has
an "accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and all required payments to
the PBGC with respect to each Pension Plan or ERISA Affiliate Plan have been
made on or before their due dates. None of Central, any of its Subsidiaries or
any ERISA Affiliate (x) has provided, or would reasonably be expected to be
required to provide, security to any Pension Plan or to any ERISA Affiliate Plan
pursuant to Section 401(a)(29) of the Code, and (y) has taken any action, or
omitted to take any action, that has resulted, or would reasonably be expected
to result, in the imposition of a lien under Section 412(n) of the Code or
pursuant to ERISA.
(v) Neither Central nor any of its Subsidiaries has any obligations to
provide retiree health and life insurance or other retiree death benefits under
any Compensation and Benefit Plan, other than benefits mandated by Section 4980B
of the Code, and each such Compensation and Benefit Plan may be amended or
terminated without incurring liability thereunder. There has been no
communication to Employees by Central or any of its Subsidiaries that would
reasonably be expected to promise or guarantee such Employees retiree health or
life insurance or other retiree death benefits on a permanent basis.
(vi) Central and its Subsidiaries do not maintain any Compensation and
Benefit Plans covering foreign Employees.
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(vii) With respect to each Compensation and Benefit Plan, if applicable,
Central has provided or made available to Wachovia, true and complete copies of
its existing (A) Compensation and Benefit Plan documents and amendments thereto
and (B) trust instruments and insurance contracts.
(viii) The consummation of the transactions contemplated by this Agreement
would not, directly or indirectly (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time)
reasonably be expected to (A) entitle any Employee, Consultant or Director to
any payment (including severance pay or similar compensation) or any increase in
compensation, (B) result in the vesting or acceleration of any benefits under
any Compensation and Benefit Plan or (C) result in any material increase in
benefits payable under any Compensation and Benefit Plan.
(ix) Neither Central nor any of its Subsidiaries maintains any compensation
plans, programs or arrangements the payments under which would not reasonably be
expected to be deductible as a result of the limitations under Section 162(m) of
the Code and the regulations issued thereunder.
(x) As a result, directly or indirectly, of the transactions contemplated
by this Agreement (including, without limitation, as a result of any termination
of employment prior to or following the Effective Time), none of Wachovia,
Central or the Surviving Corporation, or any of their respective Subsidiaries
will be obligated to make a payment that would be characterized as an "excess
parachute payment" to an individual who is a "disqualified individual" (as such
terms are defined in Section 280G of the Code), without regard to whether such
payment is reasonable compensation for personal services performed or to be
performed in the future.
(n) LABOR MATTERS. Neither Central nor any of its Subsidiaries is a party
to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
Central or any of its Subsidiaries the subject of a proceeding asserting that it
or any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel Central or any
such Subsidiary to bargain with any labor organization as to wages or conditions
of employment, nor is there any strike or other labor dispute involving it or
any of its Subsidiaries pending or, to Central's knowledge, threatened, nor is
Central aware of any activity involving its or any of its Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in other
organizational activity.
(o) TAKEOVER LAWS; DISSENTERS RIGHTS. Central has taken all action required
to be taken by it in order to exempt this Agreement, the Stock Option Agreement
and the transactions contemplated hereby and thereby from, and this Agreement,
the Stock Option Agreement and the transactions contemplated hereby and thereby
(the "Covered Transactions") are exempt from, the requirements of any
"moratorium", "control share" , "fair price", "affiliate transaction", "business
combination" or other antitakeover laws and regulations of any state
(collectively, "TAKEOVER LAWS"), including, without limitation, the Commonwealth
of Virginia, and including, without limitation, Sections 13.1-725 through
13.1-728 of the VSCA (because a majority of Central's disinterested directors
approved such transactions for such purposes prior to any "determination date"
with respect to Wachovia) and Sections 13.1-728.1 through 13.1-728.9 of the
VSCA. The provisions of Article VIII of the Central Certificate do not apply to
the Covered Transactions as they have been approved by a majority of the
Disinterested Directors (as defined in Article VIII). Holders of Central Common
Stock do not have dissenters rights in connection with the Merger.
(p) ENVIRONMENTAL MATTERS. Neither the conduct nor operation of Central or
its Subsidiaries nor any condition of any property presently or previously
owned, leased or operated by any of them (including, without limitation, in a
fiduciary or agency capacity), or on which any of them holds a Lien, violates or
violated Environmental Laws and no condition has existed or event has occurred
with respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. Neither Central nor any of its Subsidiaries has received any
notice from any person or entity that Central or its Subsidiaries or the
operation or condition of any property ever owned, leased, operated, or held as
collateral or in a fiduciary capacity by any of them are or were in violation of
or otherwise are alleged to have liability under any Environmental Law,
including, but not limited to, responsibility (or potential responsibility) for
the cleanup or other remediation of any pollutants, contaminants, or hazardous
or toxic wastes, substances or materials at, on, beneath, or originating from
any such property.
(q) TAX MATTERS. (i) (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or with
respect to Central and its Subsidiaries have been duly filed, (B) all Taxes
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shown to be due on the Tax Returns referred to in clause (A) have been paid in
full, (C) the 1994 federal income Tax Returns referred to in clause (A) have
been examined by the Internal Revenue Service or the period for assessment of
the Taxes in respect of which such Tax Returns were required to be filed has
expired, (D) all deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (E) no issues that have been raised by the
relevant taxing authority in connection with the examination of any of the Tax
Returns referred to in clause (A) are currently pending, and (F) no waivers of
statutes of limitation have been given by or requested with respect to any Taxes
of Central or its Subsidiaries. Central has made available to Wachovia true and
correct copies of the United States federal income Tax Returns filed by Central
and its Subsidiaries for each of the three most recent fiscal years ended on or
before December 31, 1996. Neither Central nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes that accrued on or
before the end of the most recent period covered by Central's SEC Documents
filed prior to the date hereof in excess of the amounts accrued with respect
thereto that are reflected in the financial statements included in Central's SEC
Documents filed on or prior to the date hereof. As of the date hereof, neither
Central nor any of its Subsidiaries has any reason to believe that any
conditions exist that might prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the Code
as a result of the transfer contemplated by this Agreement.
(r) RISK MANAGEMENT INSTRUMENTS. All interest rate swaps, caps, floors,
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for Central's own account, or for
the account of one or more of Central's Subsidiaries or their customers (all of
which are listed on Central's Disclosure Schedule), were entered into (i) in
accordance with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and (ii) with counterparties believed to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of Central or one of its Subsidiaries, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and are in full force and effect. Neither
Central nor its Subsidiaries, nor to Central's knowledge, any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement.
(s) BOOKS AND RECORDS. The books and records of Central and its
Subsidiaries have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present the financial position
of Central and its Subsidiaries.
(t) INSURANCE. Central's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by Central or its Subsidiaries
("INSURANCE POLICIES"). Central and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of Central
reasonably has determined to be prudent in accordance with industry practices.
All the Insurance Policies are in full force and effect; Central and its
Subsidiaries are not in material default thereunder; and all claims thereunder
have been filed in due and timely fashion.
(u) ACCOUNTING TREATMENT. As of the date hereof, it is aware of no reason
why the Merger will fail to qualify for "pooling of interests" accounting
treatment.
(v) RIGHTS AGREEMENT. Central has duly adopted an amendment to the Central
Rights Agreement in the form of Exhibit B, as a result of which neither Wachovia
nor any affiliate or associate will become an "Acquiring Person" and no
"Distribution Date" (as such terms are defined in the Central Rights Agreement)
will occur, and the rights issued under the Rights Agreement will not become
separable, distributable, unredeemable or exercisable as a result of the
approval, execution or delivery of this Agreement or the Stock Option Agreement
or the consummation of the transactions contemplated hereby or thereby.
(w) DISCLOSURE. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
5.04 REPRESENTATIONS AND WARRANTIES OF WACHOVIA. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Wachovia hereby
represents and warrants to Central as follows:
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(a) ORGANIZATION, STANDING AND AUTHORITY. Wachovia is duly organized,
validly existing and in good standing under the laws of the State of North
Carolina. Wachovia is duly qualified to do business and is in good standing in
the states of the United States and foreign jurisdictions where its ownership or
leasing of property or assets or the conduct of its business requires it to be
so qualified. Wachovia has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now conducted.
(b) WACHOVIA STOCK. (i) As of the date hereof, the authorized capital stock
of Wachovia consists solely of 500,000,000 shares of Wachovia Common Stock, of
which no more than 162,000,000 shares were outstanding as of the date hereof and
50,000,000 shares of Wachovia Preferred Stock, of which no shares were
outstanding as of the date hereof. As of the date hereof, except as set forth in
its Disclosure Schedule, Wachovia does not have any Rights issued or outstanding
with respect to Wachovia Stock and Wachovia does not have any commitment to
authorize, issue or sell any Wachovia Stock or Rights, except pursuant to this
Agreement.
(ii) The shares of Wachovia Common Stock to be issued in exchange for
shares of Central Common Stock in the Merger, when issued in accordance with the
terms of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
(c) SUBSIDIARIES. Each of Wachovia's Significant Subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and in
good standing in the jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and it owns, directly
or indirectly, all the issued and outstanding equity securities of each of its
Significant Subsidiaries.
(d) CORPORATE POWER. Wachovia and each of its Significant Subsidiaries has
the corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Wachovia has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
(e) CORPORATE AUTHORITY. This Agreement and the transactions contemplated
hereby have been authorized by all necessary corporate action of Wachovia and
its Board of Directors. This Agreement is a valid and legally binding agreement
of Wachovia enforceable in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).
(f) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or approvals of, or
filings or registrations with, any court, administrative agency or commission or
other governmental authority or instrumentality or with any third party are
required to be made or obtained by Wachovia or any of its Subsidiaries in
connection with the execution, delivery or performance by Wachovia of this
Agreement or to consummate the Merger except for (A) the filing of applications
and notices, as applicable, with the federal and state banking authorities; (B)
approval of the listing on the NYSE of Wachovia Common Stock to be issued in the
Merger and, if required to consummate the Merger, the adoption and approval by
the shareholders of Wachovia of this Agreement; (C) the filing and declaration
of effectiveness of the Registration Statement; (D) the filing of articles of
merger with the Corporation Commission pursuant to the VSCA and the North
Carolina Secretary pursuant to the NCBCA and the issuance of related
certificates of merger; (E) such filings as are required to be made or approvals
as are required to be obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of Wachovia Stock in the Merger;
and (F) receipt of the approvals set forth in Section 7.01(b). As of the date
hereof, Wachovia is not aware of any reason why the approvals set forth in
Section 7.01(b) will not be received without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph and expiration of the related waiting periods, and required
filings under federal and state securities laws, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (A) constitute a breach or violation of,
or a default under, or give rise to any Lien, any acceleration of remedies or
any right of termination under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement, indenture or
instrument of Wachovia or of any of its Subsidiaries or to which Wachovia or any
of its Subsidiaries or properties is subject or bound, (B) constitute a breach
or violation of, or a default under, the certificate of incorporation or by-laws
(or similar governing documents) of Wachovia
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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 it.
(h) LITIGATION; REGULATORY ACTION. (i) Other than as set forth in its SEC
Documents filed on or before the date hereof, no litigation, claim or other
proceeding before any Governmental Authority is pending against Wachovia or any
of its Subsidiaries and, to the best of Wachovia's knowledge, no such
litigation, claim or other proceeding has been threatened.
(ii) Neither Wachovia nor any of its Subsidiaries or properties is a party
to or is subject to any order, decree, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter or similar submission to, or
extraordinary supervisory letter from a Regulatory Authority, nor has Wachovia
or any of its Subsidiaries been advised by a Regulatory Authority that such
agency is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or similar
submission.
(i) COMPLIANCE WITH LAWS. Wachovia and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and other
laws relating to discriminatory business practices; and
(ii) has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all Governmental
Authorities that are required in order to permit them to conduct their
businesses substantially as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect
and, to the best of its knowledge, no suspension or cancellation of any of them
is threatened.
(j) NO BROKERS. No action has been taken by Wachovia that would give rise
to any valid claim against any party hereto for a brokerage commission, finder's
fee or other like payment with respect to the transactions contemplated by this
Agreement, excluding a fee to be paid to Credit Suisse First Boston Corporation.
(k) TAX MATTERS. (A) All Tax Returns that are required to be filed (taking
into account any extensions of time within which to file) by or with respect to
Wachovia and its Subsidiaries have been duly filed, (B) all Taxes shown to be
due on the Tax Returns referred to in clause (A) have been paid in full, (C) the
federal income Tax Returns referred to in clause (A) have been examined by the
Internal Revenue Service or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired, (D) all
deficiencies asserted or assessments made as a result of such examinations have
been paid in full, (E) no issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns referred
to in
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clause (A) are currently pending, and (F) no waivers of statutes of limitation
have been given by or requested with respect to any Taxes of Wachovia or its
Subsidiaries. Neither Wachovia nor any of its Subsidiaries has any liability
with respect to income, franchise or similar Taxes that accrued on or before the
end of the most recent period covered by Wachovia's SEC Documents filed prior to
the date hereof in excess of the amounts accrued with respect thereto that are
reflected in the financial statements included in Wachovia's SEC Documents filed
on or prior to the date hereof. As of the date hereof, neither Wachovia nor any
of its Subsidiaries has any reason to believe that any conditions exist that
might prevent or impede the Merger from qualifying as a reorganization within
the meaning of Section 368 of the Code.
(l) ACCOUNTING TREATMENT. As of the date hereof, it is aware of no reason
why the Merger will fail to qualify for "pooling of interests" accounting
treatment.
(m) DISCLOSURE. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading.
ARTICLE VI
COVENANTS
6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of Central and Wachovia agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end.
6.02 STOCKHOLDER APPROVALS. Wachovia, to the extent required to consummate
the Merger, and Central agree to take, in accordance with applicable law or NYSE
or NASDAQ rules and their respective articles of incorporation and by-laws, all
action necessary to convene an appropriate meeting of their respective
stockholders to consider and vote upon, (i) in the case of Wachovia, the
approval and adoption of this Agreement and any other matter required to be
approved by Wachovia's stockholders for consummation of the Merger (including
any adjournment or postponement, the "WACHOVIA MEETING") and, (ii) in the case
of Central, the approval and adoption of this Agreement and any other matters
required to be approved by Central's stockholders for consummation of the Merger
(including any adjournment or postponement, the "CENTRAL MEETING"), in each case
as promptly as practicable after the Registration Statement is declared
effective. The Wachovia Board, to the extent required to consummate the Merger,
and the Central Board shall each recommend such approval, and Wachovia, to the
extent required to consummate the Merger, and Central shall each take all
reasonable, lawful action to solicit such approval by their respective
stockholders.
6.03 REGISTRATION STATEMENT. (a) Wachovia agrees to prepare a registration
statement on Form S-4 or other applicable form (the "REGISTRATION STATEMENT") to
be filed by Wachovia with the SEC in connection with the issuance of Wachovia
Common Stock in the Merger (including the proxy statement and prospectus and
other proxy solicitation materials of Wachovia and Central constituting a part
thereof (the "PROXY STATEMENT") and all related documents). Central agrees to
cooperate, and to cause its Subsidiaries to cooperate, with Wachovia, its
counsel and its accountants, in preparation of the Registration Statement and
the Proxy Statement; and PROVIDED that Central and its Subsidiaries have
cooperated as required above, Wachovia agrees to file the Proxy Statement in
preliminary form with the SEC as promptly as reasonably practicable, and to file
the Registration Statement with the SEC as soon as reasonably practicable after
any SEC comments with respect to the preliminary Proxy Statement are resolved.
Each of Central and Wachovia agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. Wachovia also agrees to
use all reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. Central agrees to furnish to Wachovia all information
concerning Central, its Subsidiaries, officers, directors and stockholders as
may be reasonably requested in connection with the foregoing.
(b) Each of Central and Wachovia agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any,
becomes effective
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under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (ii) the Proxy Statement and any
amendment or supplement thereto will, at the date of mailing to stockholders and
at the time of the Wachovia Meeting or the Central Meeting, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading or any statement which, in the light of the circumstances under
which such statement is made, will be false or misleading with respect to any
material fact, or which will omit to state any material fact necessary in order
to make the statements therein not false or misleading or necessary to correct
any statement in any earlier statement in the Proxy Statement or any amendment
or supplement thereto. Each of Central and Wachovia further agrees that if it
shall become aware prior to the Effective Date of any information furnished by
it that would cause any of the statements in the Proxy Statement to be false or
misleading with respect to any material fact, or to omit to state any material
fact necessary to make the statements therein not false or misleading, to
promptly inform the other party thereof and to take the necessary steps to
correct the Proxy Statement.
(c) Wachovia agrees to advise Central, promptly after Wachovia receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of Wachovia Stock for offering or sale in
any jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
6.04 PRESS RELEASES. Each of Central and Wachovia agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NYSE or NASDAQ rules.
6.05 ACCESS; INFORMATION. (a) Each of Central and Wachovia agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, it shall afford the other party and the other party's officers,
employees, counsel, accountants and other authorized representatives, such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as any party may reasonably request and, during such period, it
shall furnish promptly to such other party (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of federal
or state securities or banking laws, and (ii) all other information concerning
the business, properties and personnel of it as the other may reasonably
request.
(b) Each agrees that it will not, and will cause its representatives not
to, use any information obtained pursuant to this Section 6.05 (as well as any
other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement. Subject to the requirements
of law, each party will keep confidential, and will cause its representatives to
keep confidential, all information and documents obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the date hereof
in connection with the entering into of this Agreement) unless such information
(i) was already known to such party, (ii) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the party to
which such information pertains or (iv) is or becomes readily ascertainable from
published information or trade sources. In the event that this Agreement is
terminated or the transactions contemplated by this Agreement shall otherwise
fail to be consummated, each party shall promptly cause all copies of documents
or extracts thereof containing information and data as to another party hereto
to be returned to the party which furnished the same. No investigation by either
party of the business and affairs of the other shall affect or be deemed to
modify or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
6.06 ACQUISITION PROPOSALS. Central agrees that it shall not, and shall
cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any Acquisition Proposal. It shall immediately cease and cause to
be terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than Wachovia with respect to any
of the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal.
Central shall promptly
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(within 24 hours) advise Wachovia following the receipt by Central of any
Acquisition Proposal and the substance thereof (including the identity of the
person making such Acquisition Proposal), and advise Wachovia of any
developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
6.07. AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, (i) Wachovia shall deliver to Central a schedule
of each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the Wachovia Meeting or if there is no Wachovia Meeting,
the Central Meeting, deemed to be an "affiliate" of Wachovia (each, a "Wachovia
Affiliate") as that term is used in SEC Accounting Series Releases 130 and 135;
and (ii) Central shall deliver to Wachovia a schedule of each person that, to
the best of its knowledge, is or is reasonably likely to be, as of the date of
the Central Meeting, deemed to be an "affiliate" of Central (each, a "Central
Affiliate") as that term is used in Rule 145 under the Securities Act or SEC
Accounting Series Releases 130 and 135.
(b) Each of Central and Wachovia shall use its respective reasonable best
efforts to cause each person who may be deemed to be a Central Affiliate or a
Wachovia Affiliate, as the case may be, to execute and deliver to Central and
Wachovia on or before the date of mailing of the Proxy Statement an agreement in
the form attached hereto as Exhibit C or Exhibit D, respectively.
6.08 TAKEOVER LAWS. No party hereto shall take any action that would cause
the transactions contemplated by this Agreement or the Stock Option Agreement to
be subject to requirements imposed by any Takeover Law and each of them shall
take all necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 CERTAIN POLICIES. Prior to the Effective Date, Central shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it and Wachovia, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of Wachovia; PROVIDED, HOWEVER, that Central shall not be obligated to take any
such action pursuant to this Section 6.09 unless and until Wachovia acknowledges
that all conditions to its obligation to consummate the Merger have been
satisfied.
6.10 NYSE LISTING. Wachovia agrees to use its reasonable best efforts to
list, prior to the Effective Date, on the NYSE, subject to official notice of
issuance, the shares of Wachovia Common Stock to be issued to the holders of
Central Common Stock in the Merger.
6.11 REGULATORY APPLICATIONS. (a) Wachovia and Central and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary to consummate the transactions contemplated by this
Agreement. Each of Wachovia and Central shall have the right to review in
advance, and to the extent practicable each will consult with the other, in each
case subject to applicable laws relating to the exchange of information, with
respect to all material written information submitted to any third party or any
Governmental Authority in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto agrees
to act reasonably and as promptly as practicable. Each party hereto agrees that
it will consult with the other party hereto with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party appraised of the status of material matters relating to completion of the
transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 INDEMNIFICATION. (a) Following the Effective Date and for a period of
six years thereafter, Wachovia shall indemnify, defend and hold harmless the
present directors and officers of Central and its Subsidiaries (each, an
"INDEMNIFIED PARTY") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "COSTS") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or
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omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) to the fullest
extent that Central is permitted to indemnify (and advance expenses to) its
directors and officers under the laws of the Commonwealth of Virginia, the
Central Certificate and the Central By-Laws as in effect on the date hereof;
PROVIDED that any determination required to be made with respect to whether an
officer's or director's conduct complies with the standards set forth under
Virginia law, the Central Certificate and the Central By-Laws shall be made by
independent counsel (which shall not be counsel that provides material services
to Wachovia) selected by Wachovia and reasonably acceptable to such officer or
director; and PROVIDED, FURTHER, that in the absence of applicable Virginia
judicial precedent to the contrary, such counsel, in making such determination,
shall presume such officer's or director's conduct complied with such standard
and Wachovia shall have the burden to demonstrate that such officer's or
director's conduct failed to comply with such standard.
(b) For a period of five years from the Effective Time, Wachovia shall use
its reasonable best efforts to provide that portion of director's and officer's
liability insurance that serves to reimburse the present and former officers and
directors of Central or any of its Subsidiaries (determined as of the Effective
Time) (as opposed to Central) with respect to claims against such directors and
officers arising from facts or events which occurred before the Effective Time,
which insurance shall contain at least the same coverage and amounts, and
contain terms and conditions no less advantageous, as that coverage currently
provided by Central; PROVIDED, HOWEVER, that in no event shall Wachovia be
required to expend more than 200 percent of the current amount expended by
Central (the "INSURANCE AMOUNT") to maintain or procure such directors and
officers insurance coverage; PROVIDED, FURTHER, that if Wachovia is unable to
maintain or obtain the insurance called for by this Section 6.12(b), Wachovia
shall use its reasonable best efforts to obtain as much comparable insurance as
is available for the Insurance Amount; PROVIDED, FURTHER, that officers and
directors of Central or any Subsidiary may be required to make application and
provide customary representations and warranties to Wachovia's insurance carrier
for the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under Section
6.12(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall promptly notify Wachovia thereof; PROVIDED that the
failure so to notify shall not affect the obligations of Wachovia under Section
6.12(a) unless and to the extent that Wachovia is actually prejudiced as a
result of such failure.
(d) If Wachovia or any of its successors or assigns shall consolidate with
or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any other entity, then and in each case, proper provision
shall be made so that the successors and assigns of Wachovia shall assume the
obligations set forth in this Section 6.12.
6.13 BENEFIT PLANS. Wachovia shall, from and after the Effective Time, (a)
except as provided in clause (h), honor the Compensation and Benefit Plans in
accordance with their terms, (b) except as provided in clauses (e) and (h)
below, provide former employees of Central who remain as employees of Wachovia
with employee benefit plans no less favorable in the aggregate than those
provided to similarly situated employees of Wachovia, (c) provide employees of
Central who remain as employees of Wachovia credit for years of service with
Central or any of its subsidiaries prior to the Effective Time for the purpose
of eligibility and vesting, (d) cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under comparable Compensation and Benefit Plans) and eligibility
waiting periods under group health plans of Wachovia to be waived with respect
to former employees of Central who remain as employees of Wachovia (and their
eligible dependents) and who become participants in such group health plans, (e)
provide, to any employee of the Surviving Corporation who participated in the
Central Executive Supplemental Retirement Plan immediately prior to the
Effective Time, benefits under such plan, or, if more favorable to such
employee, pursuant to (f) below, (f) offer any employee of the Surviving
Corporation who is a member of the Central Management Committee and who is
covered by an employment agreement, a replacement agreement in the form afforded
to similarly situated executives of Wachovia; PROVIDED, HOWEVER, that such
executives agree to terminate their existing employment agreement and waive any
rights they have thereunder; PROVIDED, FURTHER, that such executives who execute
the replacement employment agreements with Wachovia will be provided with an
Executive Retirement Agreement, Supplemental Retirement Agreement or
participation under the Wachovia Retirement Income Benefit Enhancement Plan, as
determined by the Chief Executive Officers of Wachovia and Central, in
replacement of, but no less favorable than, their benefits under the Central
Executive Supplemental Retirement Plan, (g) Wachovia shall make the contribution
contemplated by Section 10(b) of the Central Executive Supplemental
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Retirement Plan to either the Wachovia Grantor Trust or the Central Grantor
Trust in accordance with such Section 10(b) and (h) honor the Central Special
Severance Policy, as amended effective June 23, 1997, as reflected on Schedule
4.01(d), the Central Special Executive Severance Policy, as amended effective
June 23, 1997, as reflected on Schedule 4.01(d), and any other Central severance
or change of control agreements, plans or policies as Previously Disclosed in
accordance with their terms.
6.14 ACCOUNTANTS' LETTERS. Each of Central and Wachovia shall use its
reasonable best efforts to cause to be delivered to the other party, and to
Wachovia's directors and officers who sign the Registration Statement, a letter
of KPMG Peat Marwick LLP and Ernst & Young, LLP, respectively, independent
auditors, dated (i) the date on which the Registration Statement shall become
effective and (ii) a date shortly prior to the Effective Date, and addressed to
such other party, and such directors and officers, in form and substance
customary for "comfort" letters delivered by independent accountants in
accordance with Statement of Accounting Standards No. 72.
6.15 NOTIFICATION OF CERTAIN MATTERS. Each of Central and Wachovia shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (ii) would cause or constitute a material breach of
any of its representations, warranties, covenants or agreements contained
herein.
6.16 DIRECTORS. Wachovia agrees to cause three members of the Central Board
on the date hereof (selected by Wachovia after consultation with Central) who
are still members of the Central Board immediately prior to the Effective Time
and willing and eligible to serve to be elected or appointed as a director of
Wachovia at, or as promptly as practicable after, the Effective Time.
6.17 DIVIDEND COORDINATION. The Board of Directors of Central shall cause
its regular quarterly dividend record dates and payment dates for Central Common
Stock to be the same as Wachovia's regular quarterly dividend record dates and
payment dates for Wachovia Common Stock (e.g., Central shall move its next
dividend record and payment dates from September and October to August and
September, respectively), and Central shall not thereafter change its regular
dividend payment dates and record dates.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of Wachovia and Central to consummate the Merger
is subject to the fulfillment or written waiver by Wachovia and Central prior to
the Effective Time of each of the following conditions:
(a) STOCKHOLDER APPROVALS. This Agreement and the Merger shall have
been duly adopted by the requisite vote of the stockholders of Central and
duly adopted by the requisite vote, if any, of the stockholders of
Wachovia.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby, shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
in respect thereof shall have expired and no such approvals shall contain
any conditions, restrictions or requirements which the Wachovia Board
reasonably determines would (i) following the Effective Time, have a
Material Adverse Effect on the Surviving Corporation and its Subsidiaries
taken as a whole or (ii) reduce the benefits of the transactions
contemplated hereby to such a degree that Wachovia would not have entered
into this Agreement had such conditions, restrictions or requirements been
known at the date hereof.
(c) NO INJUNCTION. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
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(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 CENTRAL. The obligation of Central to
consummate the Merger is also subject to the fulfillment or written waiver by
Central prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Wachovia set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Effective Date as though made on and
as of the Effective Date (except that representations and warranties that
by their terms speak as of the date of this Agreement or some other date
shall be true and correct as of such date), and Central shall have received
a certificate, dated the Effective Date, signed on behalf of Wachovia by
the Chief Executive Officer and the Chief Financial Officer of Wachovia to
such effect.
(b) PERFORMANCE OF OBLIGATIONS OF WACHOVIA. Wachovia shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and Central
shall have received a certificate, dated the Effective Date, signed on
behalf of Wachovia by the Chief Executive Officer and the Chief Financial
Officer of Wachovia to such effect.
(c) OPINION OF CENTRAL'S COUNSEL. Central shall have received an
opinion of Wachtell, Lipton, Rosen & Katz, special counsel to Central,
dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, (i) the Merger
constitutes a "reorganization" within the meaning of Section 368 of the
Code and (ii) no gain or loss will be recognized by stockholders of Central
who receive shares of Wachovia Common Stock in exchange for shares of
Central Common Stock, except with respect to cash received in lieu of
fractional share interests. In rendering its opinion, Wachtell, Lipton,
Rosen & Katz, may require and rely upon representations contained in
letters from Central, Wachovia and stockholders of Central.
(d) ACCOUNTANTS' LETTERS. Central shall have received the letters
referred to in Section 6.14 from Ernst & Young, LLP, Wachovia's independent
auditors.
(e) ACCOUNTING TREATMENT. Central shall have received from KPMG Peat
Marwick LLP, Central's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
7.03 CONDITIONS TO OBLIGATION OF WACHOVIA. The obligation of Wachovia to
consummate the Merger is also subject to the fulfillment or written waiver by
Wachovia prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Central set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Effective Date as though made on and
as of the Effective Date (except that representations and warranties that
by their terms speak as of the date of this Agreement or some other date
shall be true and correct as of such date) and Wachovia shall have received
a certificate, dated the Effective Date, signed on behalf of Central by the
Chief Executive Officer and the Chief Financial Officer of Central to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF CENTRAL. Central shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and Wachovia
shall have received a certificate, dated the Effective Date, signed on
behalf of Central by the Chief Executive Officer and the Chief Financial
Officer of Central to such effect.
(c) OPINION OF WACHOVIA'S COUNSEL. Wachovia shall have received an
opinion of Sullivan & Cromwell, special counsel to Wachovia, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
Sullivan & Cromwell may require and rely upon representations contained in
letters from Central, Wachovia and stockholders of Central.
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(d) ACCOUNTANTS' LETTERS. Wachovia and its directors and officers who
sign the Registration Statement shall have received the letters referred to
in Section 6.14 from KPMG Peat Marwick LLP, Central's independent auditors.
(e) ACCOUNTING TREATMENT. Wachovia shall have received from Ernst &
Young, LLP, Wachovia's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
(f) CENTRAL RIGHTS. No person shall have become an "Acquiring Person"
and no "Distribution Date" (as such terms are defined in the Central Rights
Agreement) shall have occurred, and the Central Rights shall not have
become separable, distributable, redeemable or exercisable.
ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated, and the Acquisition may
be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the
mutual consent of Wachovia and Central, if the Board of Directors of each
so determines by vote of a majority of the members of its entire Board.
(b) BREACH. At any time prior to the Effective Time, by Wachovia or
Central, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (i) a breach by
the other party of any representation or warranty contained herein (subject
to the standard set forth in Section 5.02), which breach cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under
(i) or (ii)) would be reasonably likely, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect.
(c) DELAY. At any time prior to the Effective Time, by Wachovia or
Central, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event that the Acquisition is not
consummated by June 30, 1998, except to the extent that the failure of the
Acquisition then to be consummated arises out of or results from the
knowing action or inaction of the party seeking to terminate pursuant to
this Section 8.01(c).
(d) NO APPROVAL. By Central or Wachovia, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in
the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or (ii) any stockholder approval required by Section
7.01(a) herein is not obtained at the Central Meeting or the Wachovia
Meeting.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to the Central
Meeting, by Wachovia if the Central Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of Wachovia; or at any time prior to the Wachovia
Meeting, by Central, if the Wachovia Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of Central.
(f) FAILURE TO EXECUTE AND DELIVER STOCK OPTION AGREEMENT. At any time
prior to June 26, 1997, by Wachovia if Central shall not have executed and
delivered the Stock Option Agreement to Wachovia.
8.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article VIII,
no party to this Agreement shall have any liability or further obligation to any
other party hereunder except (i) as set forth in Section 9.01 and (ii) that
termination will not relieve a breaching party from liability for any willful
breach of this Agreement giving rise to such termination.
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ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than Section
6.12 and this Article IX which shall survive the Effective Time) or the
termination of this Agreement if this Agreement is terminated prior to the
Effective Time (other than Sections 6.03(b), 6.05, 6.16, 8.02, and this Article
IX which shall survive such termination).
9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of this
Agreement may be (i) waived by the party benefitted by the provision, or (ii)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that (A) after the
Central Meeting, this Agreement may not be amended if it would violate the VSCA
or reduce the consideration to be received by Central stockholders in the Merger
and (B) after the Wachovia Meeting, this Agreement may not be amended if it
would violate the NCBCA.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of North Carolina applicable to contracts
made and to be performed entirely within such State (except to the extent that
mandatory provisions of Federal law or of the NCBCA or VSCA are applicable).
9.05 EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing expenses and SEC fees shall be shared equally between Central and
Wachovia.
9.06 NOTICES. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
If to Central, to:
Central Fidelity Banks, Inc.
1021 East Cary Street
Richmond, Virginia 23219
Attention: Chairman of the Board
Facsimile: (804) 697-7345
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Edward D. Herlihy, Esq.
Facsimile: (212) 403-2000
With a copy to:
William H. Schwarzchild, III
Williams, Mullen, Christian & Dobbins
1021 East Cary Street, 16th Floor
Richmond, Virginia 23219
Facsimile: (804) 783-6507
If to Wachovia, to:
Wachovia Corporation
100 North Main Street
Winston-Salem, North Carolina 27150
Attention: Chairman of the Board
Facsimile: (910) 770-5959
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With a copy to:
Wachovia Corporation
100 North Main Street
Winston-Salem, North Carolina 27150
Attention: Kenneth W. McAllister
Facsimile: (910) 770-5959
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004-2498
Attention: H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
Facsimile: (212) 558-3588
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement and
any Stock Option Agreement entered into represent the entire understanding of
the parties hereto with reference to the transactions contemplated hereby and
thereby and this Agreement supersedes any and all other oral or written
agreements heretofore made (other than any such Stock Option Agreement). Except
for Section 6.12 and as set forth in Central's Disclosure Schedule, nothing in
this Agreement expressed or implied, is intended to confer upon any person,
other than the parties hereto or their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
9.08 INTERPRETATION; EFFECT. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require Central, Wachovia or any of their respective
Subsidiaries, affiliates or directors to take any action which would violate
applicable law (whether statutory or common law), rule or regulation.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
CENTRAL FIDELITY BANKS, INC.
By: /s/ Lewis N. Miller, Jr.
Name: Lewis N. Miller, Jr.
Title: President and
Chief Executive Officer
WACHOVIA CORPORATION
By: /s/ L. M. Baker, Jr.
Name: L. M. Baker, Jr.
Title: President and
Chief Executive Officer
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PLAN OF MERGER
PLAN OF MERGER (this "PLAN") of Central Fidelity Banks, Inc. ("CENTRAL
FIDELITY"), 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:
"CENTRAL FIDELITY COMMON STOCK" means the common stock, par value
$5.00 per share, of Central Fidelity.
"CENTRAL FIDELITY STOCK PLANS" means the 1995 Stock Incentive Plan,
1986 Incentive Stock Option Plan, 1988 Incentive Stock Option Plan, 1991
Incentive Stock Option Plan, 1993 Incentive Stock Option Plan and the 1982
Stock Option Plan.
"CODE" 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.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as of
June 23, 1997 by and between Central Fidelity 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 Central Fidelity Banks, Inc. At the Effective Time, Central
Fidelity shall merge with and into Wachovia (the "MERGER"), the separate
corporate existence of Central Fidelity 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 shall cause
three members of the Central Fidelity board of directors (selected by Wachovia
after consultation with Central Fidelity) who are members of the Central
Fidelity board of directors immediately prior to the Effective Time and willing
and eligible to
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serve, to be elected or appointed as directors of Wachovia at, or as promptly as
practicable after, the Effective Time.
ARTICLE III
MANNER AND BASIS OF
CONVERTING SHARES
3.1 BASIS FOR CONVERSION OF SHARES. At the Effective Time, automatically by
virtue of the Merger and without any action on the part of any person:
(a) OUTSTANDING CENTRAL FIDELITY COMMON STOCK. Each share of Central
Fidelity Common Stock issued and outstanding immediately prior to the
Effective Time, excluding shares of Central Fidelity Stock held by Central
Fidelity's Subsidiaries or by Wachovia or any of its Subsidiaries, in each
case other than in a fiduciary capacity or as a result of a debt previously
contracted in good faith, shall become and be converted into 0.63 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.
Central Fidelity Common Stock is the only class of stock of Central
Fidelity 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 the Merger.
(c) OTHER SHARES. Each share of Central Fidelity Common Stock held by
Central Fidelity 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 a debt 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 Central Fidelity Common Stock shall cease to be, and shall have no rights as,
stockholders of Central Fidelity, other than to receive any dividend or other
distribution with respect to such Central Fidelity 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 Central Fidelity or the Surviving Corporation of shares of
Central Fidelity 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 Central Fidelity 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 Central Fidelity 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 Central Fidelity Common Stock.
(b) As promptly as practicable after the Effective Date, Wachovia
shall send or cause to be sent to each former holder of record of shares of
Central Fidelity 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 Central Fidelity Common Stock are converted on the
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<PAGE>
Effective Date and/or any check in respect of any fractional share
interests or dividends or distributions which such person shall be entitled
to receive to be delivered to such stockholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of Central
Fidelity 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 upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor
Wachovia or Central Fidelity shall be liable to any former holder of
Central Fidelity 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 Central Fidelity 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 Central Fidelity
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 Central Fidelity for six months after the Effective Time
shall be paid to Wachovia. Any stockholders of Central Fidelity 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 Central
Fidelity 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 Central Fidelity Common Stock under the Central Fidelity Stock Plans
(each, a "CENTRAL FIDELITY STOCK OPTION"), whether vested or unvested, shall be
converted into an option to acquire, on the same terms and conditions as were
applicable under such Central Fidelity Stock Option, the number of shares of
Wachovia Common Stock equal to (a) the number of shares of Central Fidelity
Common Stock subject to the Central Fidelity Stock Option, multiplied by (b) the
Exchange Ratio (such product rounded down to the nearest whole number) (a
"REPLACEMENT OPTION"), at an exercise price per share (rounded up to the nearest
whole cent) equal to (y) the aggregate exercise price for the shares of Central
Fidelity Common Stock which were purchasable pursuant to such Central Fidelity
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 Central Fidelity 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 the Effective Time, Wachovia shall assume the Central Fidelity
Stock Plans; PROVIDED, that such assumption shall be only in respect of the
Replacement Options and that Wachovia shall have no obligation with respect to
any awards under the Central Fidelity Stock Plans other than the Replacement
Options and shall have no obligation to make any additional grants or awards
under such assumed Central Fidelity Stock Plans.
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<PAGE>
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 requisite
vote of the stockholders of Central Fidelity;
(b) Receipt of required regulatory approvals;
(c) Absence of governmental action prohibiting consummation;
(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 Wachovia and Central
Fidelity are true and correct as of the Effective Time and receipt by
Wachovia and Central Fidelity of appropriate officers' certificates to such
effect;
(h) Performance of all required obligations by Wachovia and Central
Fidelity and receipt by Wachovia and Central Fidelity of appropriate
officers' certificates to such effect; and
(i) Receipt by Wachovia and Central Fidelity of appropriate opinions
of counsel and letters 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.
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WACHOVIA
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News Announcement Wachovia Corporation
For Additional Information: Atlanta, GA 30383
Paul E. Mason, Wachovia, 910-732-6387 Winston-Salem, NC 27150
December 16, 1997
FOR RELEASE: Immediately
Wachovia, Central Fidelity Merger Completed
Wachovia Corporation today announced that it has completed its merger with
Central Fidelity Banks Inc. in Richmond, Va. The merger was completed following
the close of business Monday. Central Fidelity's principal banking subsidiary,
Central Fidelity National Bank, will continue to operate as a separate bank
until March 20, 1998, when its merger and integration with Wachovia Bank, N.A.,
is expected to be completed, subject to the receipt of all required regulatory
approvals. Wachovia Corporation, an interstate bank holding company with dual
headquarters in Winston-Salem, N.C., and Atlanta, had assets totaling $47.7
billion at Sept. 30, 1997. With the completion of its mergers with Central
Fidelity, Jefferson Bankshares of Charlottesville, Va., and 1st United Bancorp
of Boca Raton, Fla., Wachovia ranks as the 18th largest bank holding company in
the country with assets exceeding $60 billion.
