Exhibit 2
================================================================================
AGREEMENT AND PLAN OF MERGER
dated as of June 20, 2004
between
WACHOVIA CORPORATION
and
SOUTHTRUST CORPORATION
================================================================================
Restated on July 9, 2004
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS; INTERPRETATION
1.01. DEFINITIONS....................................................... 1
1.02. INTERPRETATION.................................................... 8
ARTICLE II
THE MERGER
2.01. THE MERGER........................................................ 9
2.02. CLOSING........................................................... 10
2.03. EFFECTIVE TIME.................................................... 10
2.04. EFFECTS OF THE MERGER............................................. 10
2.05. ARTICLES OF INCORPORATION AND BY-LAWS............................. 10
2.06. WACHOVIA BOARD OF DIRECTORS....................................... 10
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01. CONSIDERATION..................................................... 11
3.02. CANCELLATION OF SHARES............................................ 11
3.03. RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS........................... 11
3.04. EXCHANGE PROCEDURES............................................... 11
3.05. FRACTIONAL SHARES................................................. 12
3.06. ANTI-DILUTION ADJUSTMENTS......................................... 12
3.07. STOCK OPTIONS..................................................... 12
3.08. EFFECT ON WACHOVIA STOCK.......................................... 13
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.01. FOREBEARANCES OF SOUTHTRUST....................................... 13
4.02. FOREBEARANCES OF WACHOVIA......................................... 16
4.03. COORDINATION OF DIVIDENDS......................................... 16
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. DISCLOSURE SCHEDULES.............................................. 17
5.02. STANDARD.......................................................... 17
-i-
TABLE OF CONTENTS
(continued)
Page
----
5.03. REPRESENTATIONS AND WARRANTIES.................................... 17
ARTICLE VI
COVENANTS
6.01. REASONABLE BEST EFFORTS........................................... 28
6.02. SHAREHOLDER APPROVALS............................................. 28
6.03. SEC FILINGS....................................................... 29
6.04. PRESS RELEASES.................................................... 30
6.05. ACCESS; INFORMATION............................................... 31
6.06. ACQUISITION PROPOSALS............................................. 31
6.07. AFFILIATE AGREEMENTS.............................................. 32
6.08. TAKEOVER LAWS AND PROVISIONS...................................... 32
6.09. SOUTHTRUST RIGHTS AGREEMENT....................................... 32
6.10. EXCHANGE LISTING.................................................. 33
6.11. REGULATORY APPLICATIONS........................................... 33
6.12. INDEMNIFICATION................................................... 33
6.13. EMPLOYEE MATTERS.................................................. 35
6.14. NOTIFICATION OF CERTAIN MATTERS................................... 36
6.15. EXEMPTION FROM LIABILITY UNDER SECTION 16(B)...................... 36
6.16. CERTAIN MODIFICATIONS; RESTRUCTURING CHARGES...................... 36
ARTICLE VII
CONDITIONS TO THE MERGER
7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER........ 36
7.02. CONDITIONS TO SOUTHTRUST'S OBLIGATION............................. 38
7.03. CONDITIONS TO WACHOVIA'S OBLIGATION............................... 38
ARTICLE VIII
TERMINATION
8.01. TERMINATION....................................................... 39
8.02. EFFECT OF TERMINATION AND ABANDONMENT............................. 40
ARTICLE IX
MISCELLANEOUS
9.01. SURVIVAL.......................................................... 40
9.02. WAIVER; AMENDMENT................................................. 40
9.03. COUNTERPARTS...................................................... 40
-ii-
TABLE OF CONTENTS
(continued)
Page
----
9.04. GOVERNING LAW..................................................... 41
9.05. EXPENSES.......................................................... 41
9.06. NOTICES........................................................... 41
9.07. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES................ 42
9.08. SEVERABILITY...................................................... 42
9.09. ALTERNATIVE STRUCTURE............................................. 43
Annex 1 Form of Stock Option Agreement
Annex 2 Form of Amendment to SouthTrust Rights Agreement
Annex 3 Form of SouthTrust Affiliate Letter
-iii-
AGREEMENT AND PLAN OF MERGER, dated as of June 20, 2004 (this
"Agreement"), between Wachovia Corporation, a North Carolina corporation
("Wachovia"), and SouthTrust Corporation, a Delaware corporation ("SouthTrust").
RECITALS
A.The Proposed Transaction. The parties intend to effect a strategic
business combination through the merger of SouthTrust with and into Wachovia
(the "Merger"), with Wachovia the surviving corporation (the "Surviving
Corporation").
B. Board Determinations. The respective boards of directors of Wachovia
and SouthTrust have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and will further, their respective
business strategies and goals, and are in the best interests of their respective
stockholders and, therefore, have approved the Merger, this Agreement and the
plan of merger contained in this Agreement.
C. Intended Tax Treatment. The parties intend the Merger to be treated as
a reorganization under Section 368(a) of the Internal Revenue Code of 1986 and
the rules and regulations thereunder (the "Code") and intend for this Agreement
to constitute a "plan of reorganization" within the meaning of the Code.
D. Stock Option Agreement. As an inducement to and condition of Wachovia's
willingness to enter into this Agreement, SouthTrust will grant to Wachovia an
option to acquire shares of SouthTrust Common Stock pursuant to a Stock Option
Agreement (the "Stock Option Agreement"), the form of which is attached hereto
as Annex 1. The Stock Option Agreement will be entered into immediately after
the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the mutual
representations, warranties, covenants and agreements contained in this
Agreement, Wachovia and SouthTrust agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
1.01. Definitions. This Agreement uses the following definitions:
"Acquisition Proposal" means a tender or exchange offer to acquire
more than 15% of the voting power in SouthTrust or any of its Significant
Subsidiaries, a proposal for a merger, consolidation or other business
combination involving SouthTrust or any of its Significant Subsidiaries or
any other proposal or offer to acquire in any manner more than 15% of the
voting power in, or more than 15% of the business, assets or deposits of,
SouthTrust or any of its Significant Subsidiaries, other than the
transactions contemplated hereby.
"Acquisition Transaction" means (a) the merger or consolidation of
Wachovia with or into another person or a reorganization or
recapitalization of Wachovia, the consummation of which results in the
stockholders of Wachovia immediately prior to such transaction not
immediately thereafter owning more than 50% of the total voting power of
the merged, consolidated, reorganized or recapitalized entity's voting
securities entitled to vote generally for the election of directors, or
(b) the direct or indirect acquisition by a person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act) not
theretofore an Affiliate of Wachovia of (1) more than 50% of the voting
securities of Wachovia, (2) the right to elect more than 50% of the
Wachovia Board or (3) all or substantially all of Wachovia's assets.
"Agreement" has the meaning assigned in the Preamble.
"Articles of Merger" has the meaning assigned in Section 2.03.
"BCA" means the Business Corporation Act of the State of North
Carolina.
"BHC Act" means the Bank Holding Company Act of 1956.
"Benefit Arrangement" means, with respect to each of Wachovia and
SouthTrust, each of the following (a) under which any Employee or any of
its current or former directors has any present or future right to
benefits, (b) that is sponsored or maintained by it or its Subsidiaries,
or (c) under which it or its Subsidiaries has had or has any present or
future liability: each "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) and each stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, bonus, incentive, deferred
compensation, paid time off benefits and other employee benefit plan,
agreement, program, policy or other arrangement (with respect to any of
preceding, whether or not subject to ERISA).
"Benefits Transition Date" has the meaning assigned in Section
6.13(a).
"Certificate of Merger" has the meaning assigned in Section 2.03.
"Closing" has the meaning assigned in Section 2.02.
"Closing Date" has the meaning assigned in Section 2.02.
"Code" has the meaning assigned in the Recitals.
"Confidentiality Agreement" has the meaning assigned in Section
6.05(b).
"Constituent Documents" means the charter or articles or certificate
of incorporation and by-laws of a corporation or banking organization, the
certificate
2
of partnership and partnership agreement of a general or limited
partnership, the certificate of formation and limited liability company
agreement of a limited liability company, the trust agreement of a trust
and the comparable documents of other entities.
"Costs" has the meaning assigned in Section 6.12(a).
"Covered Employees" has the meaning assigned in Section 6.13(a).
"Disclosure Schedule" has the meaning assigned in Section 5.01.
"Effective Time" has the meaning assigned in Section 2.03.
"Employees" means current and former employees of each of Wachovia
and SouthTrust, as the context requires.
"Environmental Laws" means the statutes, rules, regulations,
ordinances, codes, orders, decrees, and any other laws (including common
law) of any foreign, federal, state, local, and any other governmental
authority, regulating, relating to or imposing liability or standards of
conduct concerning pollution, or protection of human health and safety or
of the environment, as in effect on or prior to the date of this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" has the meaning assigned in Section 5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934 and the
rules and regulations thereunder.
"Exchange Agent" has the meaning assigned in Section 3.04(a).
"Exchange Ratio" has the meaning assigned in Section 3.01.
"GAAP" means United States generally accepted accounting principles.
"GCL" means the General Corporation Law of the State of Delaware.
"Governmental Authority" means any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, or any industry self-regulatory authority.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976 and the rules and regulations thereunder.
"Indemnified Party" has the meaning assigned in Section 6.12(a).
3
"Joint Proxy Statement" has the meaning assigned in Section 6.03(a).
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to Wachovia or
SouthTrust, any effect that
(a) is material and adverse to the financial condition, results of
operations or business of Wachovia and its Subsidiaries, taken as a whole,
or SouthTrust and its Subsidiaries, taken as a whole, respectively,
excluding (with respect to each of clause (1), (2) or (3), only to the
extent that the effect of a change on it is not materially different than
on comparable U.S. banking or financial services organizations) the impact
of (1) changes in banking and other laws of general applicability or
changes in the interpretation thereof by Governmental Authorities, (2)
changes in GAAP or regulatory accounting requirements applicable to U.S.
banking or financial services organizations generally, (3) changes in
prevailing interest rates or other general economic conditions affecting
U.S. banking or financial services organizations generally, (4) actions or
omissions of a party to this Agreement required by this Agreement or taken
with the prior written consent of the other party to this Agreement, in
contemplation of the transactions contemplated hereby, and (5) to the
extent consistent with GAAP, any modifications or changes to valuation
policies or practices, or restructuring charges, in each case taken with
the prior approval of Wachovia or SouthTrust, as the case may be, in
connection with the Merger; or
(b) would materially impair the ability of Wachovia or SouthTrust,
respectively, to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby on a timely basis.
"Materials of Environmental Concern" means any hazardous or toxic
substances, materials, wastes, pollutants, or contaminants, including
without limitation those defined or regulated as such under any
Environmental Law, and any other substance the presence of which may give
rise to liability under Environmental Law.
"Merger" has the meaning assigned in the Recitals.
"NASDAQ" means The Nasdaq Stock Market, Inc.
"New Certificates" has the meaning assigned in Section 3.04(a).
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificates" has the meaning assigned in Section 3.04(a).
4
"Other Persons" has the meaning assigned in Section 6.06(a).
"party" means Wachovia or SouthTrust.
"Pension Plan" has the meaning assigned in Section 5.03(m).
"person" is to be interpreted broadly to include any individual,
savings association, bank, trust company, corporation, limited liability
company, partnership, association, joint-stock company, business trust or
unincorporated organization.
"Previously Disclosed" means information set forth by a party in the
applicable paragraph of its Disclosure Schedule, or any other paragraph of
its Disclosure Schedule (so long as it is reasonably clear from the
context that the disclosure in such other paragraph of its Disclosure
Schedule is also applicable to the section of this Agreement in question).
"Registration Statement" has the meaning assigned in Section
6.03(a).
"Regulatory Filings" has the meaning assigned in Section 5.03(h).
"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.
"Requisite Regulatory Approvals" has the meaning assigned in Section
6.11(a).
"Rights" means, with respect to any person, securities or
obligations convertible into or exercisable or exchangeable for, or giving
any other 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
first person.
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act" means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
rules and regulations thereunder.
"SEC" means the United States Securities and Exchange Commission.
"Secretary of State (Del)" means the Secretary of State of the State
of Delaware.
"Secretary of State (NC)" means the Secretary of State of the State
of North Carolina.
5
"Section 16 Information" means information regarding the SouthTrust
Insiders, including the number of shares of SouthTrust Common Stock held
or to be held by a SouthTrust Insider expected to be exchanged for
Wachovia Common Stock in the Merger, and the number and description of the
options to purchase shares of SouthTrust Common Stock held by a SouthTrust
Insider and expected to be converted into options to purchase shares of
Wachovia Common Stock in connection with the Merger.
"Securities Act" means the Securities Act of 1933 and the rules and
regulations thereunder.
"SouthTrust" has the meaning assigned in the preamble to this
Agreement.
"SouthTrust Affiliate" has the meaning assigned in Section 6.07.
"SouthTrust Board" means the Board of Directors of SouthTrust.
"SouthTrust Common Stock" means the common stock, par value $2.50
per share, of SouthTrust.
"SouthTrust Director Appointees" has the meaning assigned in Section
2.06.
"SouthTrust DRIP" means the SouthTrust Dividend Reinvestment and
Common Stock Purchase Plan.
"SouthTrust Insiders" means those officers and directors of
SouthTrust subject to the reporting requirements of Section 16(a) of the
Exchange Act and who are listed in the Section 16 Information.
"SouthTrust Meeting" has the meaning assigned in Section 6.02(c).
"SouthTrust Preferred Stock" means the preferred stock, par value
$1.00 per share, of SouthTrust.
"SouthTrust Rights" means rights to purchase shares of SouthTrust
Stock issued under the SouthTrust Rights Agreement.
"SouthTrust Rights Agreement" means the Amended and Restated Rights
Agreement, dated as of August 1, 2000, between SouthTrust and American
Stock Transfer & Trust Company, as Rights Agent.
"SouthTrust Stock Option" has the meaning assigned in Section 3.07.
"SouthTrust Stock Plans" means the 2004 SouthTrust Long-Term
Incentive Plan, the SouthTrust Long-Term Incentive Plan, the SouthTrust
Discount Stock Payroll Purchase Plan, the SouthTrust Director's Stock
Purchase
6
Plan, the SouthTrust DRIP, the SouthTrust 1993 Stock Option Plan, the
Cenit Bancorp, Inc. 2001 Stock Option Plan and the Tidewater 2001
Director's Stock Option Plan.
"Stock Option Agreement" has the meaning assigned in the Recitals.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed
to those terms in Rule 1-02 of Regulation S-X promulgated by the SEC.
"Superior Proposal" means a bona fide written Acquisition Proposal
which the SouthTrust Board concludes in good faith to be more favorable
from a financial point of view to its shareholders than the Merger and the
other transactions contemplated hereby (1) after receiving the advice of
its financial advisors (which shall be a nationally recognized investment
banking firm), (2) after taking into account the likelihood of
consummation of the proposed transaction on the terms set forth therein
(as compared to, and with due regard for, the terms herein) and (3) after
taking into account all legal (with the advice of outside counsel),
financial (including the financing terms of any such proposal), regulatory
(including the advice of outside counsel regarding the potential for
regulatory approval of any such proposal) and other aspects of such
proposal and any other relevant factors permitted under applicable law;
provided that for purposes of the definition of "Superior Proposal", the
references to "more than 15%" in the definition of Acquisition Proposal
shall be deemed to be references to "25% or more".
"Surviving Corporation" has the meaning assigned in the Recitals.
"Takeover Laws" has the meaning assigned in Section 5.03(p).
"Takeover Provisions" has the meaning assigned in Section 5.03(p).
"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 Time.
"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.
7
"Wachovia" has the meaning assigned in the preamble to this
Agreement.
"Wachovia Articles" means the Restated Articles of Incorporation of
Wachovia, as amended.
"Wachovia Board" means the Board of Directors of Wachovia.
"Wachovia Bylaws" means the Amended and Restated Bylaws of Wachovia.
"Wachovia Common Stock" means the common stock, par value $3.33 1/3
per share, of Wachovia.
"Wachovia DRIP" means the Wachovia Dividend Reinvestment and Stock
Purchase Plan.
"Wachovia Meeting" has the meaning assigned in Section 6.02(c).
"Wachovia Preferred Stock" means, collectively, the Preferred Stock,
no-par value, the Class A Preferred Stock, no-par value, and the Dividend
Equalization Preferred Shares, no-par value, of Wachovia.
"Wachovia Rights" means rights to purchase shares of Wachovia Stock
issued under the Wachovia Rights Agreement.
"Wachovia Rights Agreement" means the Shareholder Protection Rights
Agreement, dated as of December 19, 2000, between Wachovia and Wachovia
Bank, National Association, as Rights Agent.
"Wachovia Stock" means, collectively, the Wachovia Common Stock and
the Wachovia Preferred Stock.
"Wachovia Stock Option" has the meaning assigned in Section 3.07.
"Wachovia Stock Plans" means the Wachovia 2003 Stock Incentive Plan,
the Wachovia 2001 Stock Incentive Plan, the Wachovia Employee Retention
Stock Plan, the Wachovia Stock Plan, the Wachovia 1998 Stock Incentive
Plan, the Wachovia 1999 Employee Stock Plan, the Wachovia 1996 Master
Stock Compensation Plan and the Wachovia 1992 Master Stock Compensation
Plan.
1.02. Interpretation. (a) In this Agreement, except as context may
otherwise require, references:
(1) to the Preamble, Recitals, Sections, Annexes or Schedules
are to the Preamble to, a Recital or Section of, or Annex or
Schedule to, this Agreement;
8
(2) to this Agreement are to this Agreement, and the Annexes
and Schedules to it, taken as a whole;
(3) to any agreement (including this Agreement), contract,
statute or regulation are to the agreement, contract, statute or
regulation as amended, modified, supplemented, restated or replaced
from time to time (in the case of an agreement or contract, to the
extent permitted by the terms thereof); and to any section of any
statute or regulation include any successor to the section;
(4) to the "transactions contemplated hereby" includes the
transactions provided for in this Agreement and the Annexes to it
(including, to avoid doubt, the Stock Option Agreement); and
(5) to any Governmental Authority include any successor to
that Governmental Authority; and
(6) to the date of this Agreement are to June 20, 2004.
(b) The table of contents and article and section headings are for
reference purposes only and do not limit or otherwise affect any of the
substance of this Agreement.
(c) The words "include," "includes" or "including" are to be deemed
followed by the words "without limitation."
(d) The words "herein", "hereof" or "hereunder", and similar terms
are to be deemed to refer to this Agreement as a whole and not to any
specific Section.
(e) This Agreement is the product of negotiation by the parties,
having the assistance of counsel and other advisers. The parties intend
that this Agreement not be construed more strictly with regard to one
party than with regard to the other.
(f) No provision of this Agreement is to be construed to require,
directly or indirectly, any person to take any action, or omit to take any
action, to the extent such action or omission would violate applicable law
(including statutory and common law), rule or regulation.
ARTICLE II
THE MERGER
2.01. The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, SouthTrust will merge with and into Wachovia at the Effective
Time. At the
9
Effective Time, the separate corporate existence of SouthTrust will terminate.
Wachovia will be the Surviving Corporation, and will continue its corporate
existence under the laws of the State of North Carolina.
2.02. Closing. The closing of the Merger (the "Closing") will take place
in the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
at 10:00 a.m. on the third business day (unless the parties agree to another
time or date) after satisfaction or waiver of the conditions set forth in
Article VII, other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions (the "Closing Date").
2.03. Effective Time. Subject to the provisions of this Agreement, in
connection with the Closing Wachovia will duly execute and deliver (1) articles
of merger (the "Articles of Merger") to the Secretary of State (NC) for filing
under Section 55-11-05 of the BCA and (2) a certificate of merger (the
"Certificate of Merger") to the Secretary of State (Del) for filing under
Section 252 of the GCL. The parties will make all other filings or recordings
required under the BCA and the GCL, and the Merger will become effective when
the Articles of Merger are filed in the office of the Secretary of State (NC)
and the Certificate of Merger is filed in the office of the Secretary of State
(Del), or at such later date or time as Wachovia and SouthTrust agree and
specify in the Articles of Merger and the Certificate of Merger (the time the
Merger becomes effective being the "Effective Time").
2.04. Effects of the Merger. The Merger will have the effects prescribed
by the BCA, the GCL and other applicable law.
2.05. Articles of Incorporation and By-laws. (a) The Wachovia Articles, as
in effect immediately before the Effective Time, will be the articles of
incorporation of the Surviving Corporation as of the Effective Time.
(a) The Wachovia By-Laws, as in effect immediately before the
Effective Time, will be the by-laws of the Surviving Corporation as of the
Effective Time.
2.06. Wachovia Board of Directors. Wachovia agrees to cause three current
members of the SouthTrust Board (the "SouthTrust Director Appointees") to be
appointed to the Wachovia Board immediately after the Effective Time. The
SouthTrust Director Appointees will include ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and two
other current members of the SouthTrust Board who are agreed to by Wachovia and
SouthTrust. At the first annual meeting of Wachovia's shareholders after the
Effective Time, Wachovia will take all corporate action necessary to, and will,
nominate two of the SouthTrust Director Appointees for election to the Wachovia
Board for a three-year term and one of the SouthTrust Director Appointees for
election to the Wachovia Board for a two-year term, and Wachovia will recommend
that the Wachovia shareholders vote for the election of the SouthTrust Director
Appointees to the Wachovia Board.
10
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01. Consideration. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares of SouthTrust Stock,
each share of SouthTrust Common Stock outstanding immediately prior to the
Effective Time will be converted into 0.89 (the "Exchange Ratio") fully paid and
nonassessable shares of Wachovia Common Stock and the requisite number of
Wachovia Rights issued and attached to such shares under the Wachovia Rights
Agreement. Notwithstanding anything in this Section 3.01 to the contrary, at the
Effective Time and by virtue of the Merger, each share of SouthTrust Common
Stock beneficially owned by Wachovia (other than shares held in a trust,
fiduciary, or nominee capacity or as a result of debts previously contracted) or
held in SouthTrust's treasury will be canceled and no shares of Wachovia Stock
and no Wachovia Rights or other consideration will be issued or paid in exchange
therefor.
3.02. Cancellation of Shares. At the Effective Time, the shares of
SouthTrust Common Stock will no longer be outstanding and will automatically be
canceled and will cease to exist. Certificates that represented SouthTrust
Common Stock before the Effective Time will be deemed for all purposes to
represent the number of shares of Wachovia Common Stock into which they were
converted pursuant to Section 3.01, and, as contemplated by the Wachovia Rights
Agreement, attached Wachovia Rights.
3.03. Rights as Shareholders; Stock Transfers. At the Effective Time,
holders of SouthTrust Common Stock will cease to be, and will have no rights as,
shareholders of SouthTrust, other than rights to (a) receive any then unpaid
dividend or other distribution with respect to such SouthTrust Common Stock
having a record date before the Effective Time and (b) receive the merger
consideration provided under this Article III. After the Effective Time, there
will be no transfers of shares of SouthTrust Common Stock on the stock transfer
books of SouthTrust or the Surviving Corporation, and shares of SouthTrust
Common Stock presented to the Surviving Corporation for any reason will be
canceled and exchanged in accordance with this Article III.
3.04. Exchange Procedures. (a) As of the Effective Time, Wachovia will
deposit with Wachovia's transfer agent or with a depository or trust institution
of recognized standing selected by Wachovia and reasonably satisfactory to
SouthTrust (in such capacity, the "Exchange Agent"), for the benefit of the
holders of certificates formerly representing shares of SouthTrust Common Stock
("Old Certificates"), (1) certificates or, at Wachovia's option, evidence of
shares in book entry form, representing the shares of Wachovia Common Stock
("New Certificates") issuable to holders of Old Certificates under this Article
III and (2) cash payable pursuant to Section 3.05 (the "Exchange Fund").
11
(b) Promptly after the Effective Time, Wachovia will send or cause
to be sent to each person who was a recordholder of SouthTrust Common
Stock immediately before the Effective Time transmittal materials for
exchanging Old Certificates. Upon surrender of an Old Certificate for
cancellation to the Exchange Agent together with the transmittal
materials, duly executed, and such other documents as the Exchange Agent
may reasonably require (including customary indemnity if any of such
certificates are lost, stolen, or destroyed), the holder of such Old
Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of New Certificates which such holder
has the right to receive in respect of the Old Certificates surrendered
pursuant to the provisions of this Article III (after taking into account
all shares of SouthTrust Common Stock then held by such holder) and any
check in respect of dividends or distributions or for fractional shares
that the shareholder will be entitled to receive, and the Old Certificates
so surrendered shall forthwith be cancelled. No interest will be paid on
any such cash or other consideration deliverable pursuant to this Article
III.
(c) Neither Wachovia, SouthTrust nor the Exchange Agent will be
liable to any former holder of SouthTrust Common Stock for any shares of
Wachovia Common Stock (or dividends or distributions with respect thereto)
or cash from the Exchange Fund properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
3.05. 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 will pay to each holder of SouthTrust 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 of a share of
Wachovia Common Stock by the last reported sale price 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 last NYSE trading day preceding the Effective Time.
3.06. Anti-Dilution Adjustments. If Wachovia changes (or the Wachovia
Board sets a related record date that will occur before the Effective Time for a
change in) the number or kind of shares of Wachovia Common Stock outstanding by
way of a stock split, stock dividend, recapitalization, reclassification,
reorganization or similar transaction, then the Exchange Ratio will be adjusted
proportionately to account for such change.
3.07. Stock Options. At the Effective Time, all outstanding and
unexercised employee and director options to purchase shares of SouthTrust
Common Stock (each, a "SouthTrust Stock Option") will cease to represent an
option to purchase SouthTrust
12
Common Stock and will be converted automatically into options to purchase
Wachovia Common Stock (each, a "Wachovia Stock Option"), and Wachovia will
assume each SouthTrust Stock Option subject to its terms, according to the
instruments governing the SouthTrust Stock Option, it being acknowledged and
agreed that each such automatically converted SouthTrust Stock Option shall
immediately vest at the Effective Time; provided that after the Effective Time:
(a) the number of shares of Wachovia Common Stock purchasable upon
exercise of each SouthTrust Stock Option will equal the product of (1) the
number of shares of SouthTrust Common Stock that were purchasable under
the SouthTrust Stock Option immediately before the Effective Time and (2)
the Exchange Ratio, rounded to the nearest whole share; and
(b) the per share exercise price for each SouthTrust Stock Option
will equal the quotient of (1) the per share exercise price of the
SouthTrust Stock Option in effect immediately before the Effective Time
and (2) the Exchange Ratio, rounded to the nearest cent.
Notwithstanding the foregoing, each SouthTrust Stock Option that is
intended to be an "incentive stock option" (as defined in Section 422 of the
Code) will be adjusted in accordance with the requirements of Section 424 of the
Code. Accordingly, with respect to any incentive stock options, fractional
shares will be rounded down to the nearest whole number of shares and, where
necessary, the per share exercise price will be rounded up to the nearest cent.
Before the Effective Time, Wachovia will take all corporate action necessary to
reserve for issuance a sufficient number of shares of Wachovia Common Stock for
delivery upon exercise of Wachovia Stock Options in accordance with this Section
3.07. As soon as practicable after the Effective Time, Wachovia will file one or
more appropriate registration statements (on Form S-3 or Form S-8 or any
successor or other appropriate forms) with respect to the Wachovia Common Stock
underlying the Wachovia Stock Options described in this Section 3.07, and will
use all reasonable best efforts to maintain the effectiveness of those
registration statements and the current status of the related prospectuses for
so long as the SouthTrust Stock Options remain outstanding.
3.08. Effect on Wachovia Stock. Each share of Wachovia Stock outstanding
immediately prior to the Effective Time will remain outstanding.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.01. Forebearances of SouthTrust. SouthTrust agrees that from the date
hereof until the Effective Time, except as expressly contemplated by this
Agreement or the Stock Option Agreement or as Previously Disclosed, without the
prior written consent of Wachovia (which consent will not be unreasonably
withheld or delayed), it will not, and will cause each of its Subsidiaries not
to:
13
(a) Ordinary Course. Conduct its business and the business of its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable best efforts to preserve intact their business organizations
and assets and maintain their rights, franchises and authorizations and
their existing relations with customers, suppliers, employees and business
associates, or take any action reasonably likely to materially impair its
ability to perform its obligations under this Agreement or the Stock
Option Agreement or to consummate the transactions contemplated hereby.
(b) Operations. Enter into any new material line of business or
change its material lending, investment, underwriting, risk and asset
liability management and other material banking and operating policies,
except as required by applicable law, regulation or policies imposed by
any Governmental Authority.
(c) Capital Stock. Other than pursuant to Rights Previously
Disclosed and outstanding on the date of this Agreement or pursuant to the
Stock Option Agreement, (1) issue, sell or otherwise permit to become
outstanding (including pursuant to the SouthTrust DRIP, the operation of
which has been suspended), or dispose of or encumber or pledge, or
authorize or propose the creation of, any additional shares of its stock,
or (2) permit any additional shares of its stock to become subject to new
grants, except issuances of employee or director stock options or other
stock-based employee Rights in the ordinary course of business consistent
with past practice.
(d) Dividends, Distributions, Repurchases. (1) Make, declare, pay or
set aside for payment any dividend on or in respect of, or declare or make
any distribution on any shares of its stock (other than (A) dividends from
its wholly owned Subsidiaries to it or another of its wholly owned
Subsidiaries, (B) regular quarterly dividends on its common stock,
provided that any such dividend shall be at a rate equal to the rate paid
by it during the fiscal quarter immediately preceding the date hereof, or
required dividends on preferred stock, (C) pursuant to the SouthTrust
Rights Agreement) or (2) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its
stock.
(e) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or
properties, except for sales, transfers, mortgages, encumbrances or other
dispositions or discontinuances in the ordinary course of business
consistent with past practice and in a transaction that, together with
other such transactions, is not material to it and its Subsidiaries, taken
as a whole.
(f) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a fiduciary or similar capacity or in
satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course
14
of business consistent with past practice) all or any portion of the
assets, business, deposits or properties of any other entity.
(g) Constituent Documents. Amend its Constituent Documents or the
Constituent Documents (or similar governing documents) of any of its
Significant Subsidiaries.
(h) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by GAAP or applicable regulatory accounting requirements.
(i) Adverse Actions. Notwithstanding anything herein to the
contrary, (1) knowingly take, or knowingly omit to take, any action that
would, or is reasonably likely to, prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code or (2) knowingly take, or knowingly omit to take, any action that is
reasonably likely to result in any of the conditions to the Merger set
forth in Article VII not being satisfied in a timely manner, except as may
be required by applicable law or regulation.
(j) Compensation; Employment Agreements; Etc. Enter into, amend,
modify (including by way of interpretation) or renew any employment,
officer, consulting, severance or similar contract, agreement or
arrangement with any director or employee, or grant any salary or wage
increase or increase any employee benefit, including incentive or bonus
payments (or, with respect to any of the preceding, communicate any
intention to take such action), except (1) to make changes that are
required by applicable law, (2) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof, (3) for
merit-based or annual salary increases in the ordinary course of business
and in accordance with past practice or (4) for employment arrangements
for, or grants of awards to, newly hired employees in the ordinary and
usual course of business consistent with past practice.
(k) Benefit Plans. Enter into, establish, adopt, amend, modify
(including by way of interpretation) or renew 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, take any action to accelerate the vesting
or exercisability of stock options, restricted stock or other compensation
or benefits payable thereunder or add any new participants to any
non-qualified retirement plans (or, with respect to any of the preceding,
communicate any intention to take such action), except (1) as may be
required by applicable law, (2) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof or (3) amendments
that do not increase benefits or result in increased administrative costs.
15
(l) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
4.02. Forebearances of Wachovia. Wachovia agrees that from the date hereof
until the Effective Time, except as expressly contemplated by this Agreement or
the Stock Option Agreement or as Previously Disclosed, without the prior written
consent of SouthTrust, it will not, and will cause each of its Subsidiaries not
to:
(a) Adverse Actions. Notwithstanding anything herein to the
contrary, (1) knowingly take, or knowingly omit to take, any action that
would, or is reasonably likely to, prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code or (2) knowingly take, or knowingly omit to take, any action that is
reasonably likely to result in any of the conditions to the Merger set
forth in Article VII not being satisfied in a timely manner, except as may
be required by applicable law or regulation; provided that nothing in this
Section 4.02(a) shall preclude Wachovia from exercising its rights under
the Stock Option Agreement.
(b) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
Notwithstanding anything in paragraphs (a) or (b) of this Section
4.02 to the contrary, Wachovia may make dispositions and acquisitions and
agree to issue capital stock in connection therewith, provided that such
actions do not present a material risk that the Closing Date will be
materially delayed or that the Requisite Regulatory Approvals will be
materially more difficult to obtain.
4.03. Coordination of Dividends. Until the Effective Time, Wachovia and
SouthTrust will coordinate on the declaration of any dividends or other
distributions with respect to Wachovia Common Stock and SouthTrust Common Stock
and the related record dates and payment dates, it being intended that
SouthTrust shareholders will not receive more than one dividend, or fail to
receive one dividend, for any single calendar quarter on their shares of
SouthTrust Common Stock (including any shares of Wachovia Common Stock received
in exchange therefor in the Merger). Notwithstanding anything in Section 4.01(d)
to the contrary, if the Effective Time does not occur before the record date for
the dividend on Wachovia Common Stock for the fourth quarter of 2004, then, for
that quarter and thereafter until the Effective Time occurs, SouthTrust may
increase the quarterly cash dividend on SouthTrust Common Stock to an amount per
share equal to the product of the then-current dividend per share on Wachovia
Common Stock multiplied by the Exchange Ratio. For purposes of this Section
4.03, the parties acknowledge and agree that the dividend payable on SouthTrust
Common Stock on October 1, 2004 is the quarterly dividend on SouthTrust Common
Stock for the third quarter of 2004.
16
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules. Before entry into this Agreement, Wachovia
delivered to SouthTrust a schedule and SouthTrust delivered to Wachovia a
schedule (respectively, each schedule a "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 to one or more of its covenants contained in Article IV;
provided that the inclusion of an item in a Disclosure Schedule as an exception
to a representation or warranty will not by itself be deemed an admission by a
party that such item is material or was required to be disclosed therein.
5.02. Standard. For all purposes of this Agreement, no representation or
warranty of SouthTrust or Wachovia contained in Section 5.03 (other than the
representations and warranties contained in Section 5.03(b) and 5.03(c), which
shall be true in all material respects) will be deemed untrue, and no party will
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, has had or is reasonably likely to have a Material Adverse Effect
with respect to SouthTrust or Wachovia, as the case may be.
5.03. Representations and Warranties. Except as Previously Disclosed,
SouthTrust hereby represents and warrants to Wachovia, and Wachovia hereby
represents and warrants to SouthTrust, to the extent applicable, as follows:
(a) Organization, Standing and Authority. It is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. It is duly qualified to do business and
is in good standing in all jurisdictions where its ownership or leasing of
property or assets or its conduct of business requires it to be so
qualified.
(b) SouthTrust Stock. In the case of SouthTrust:
The authorized capital stock of SouthTrust consists of
1,000,000,000 shares of SouthTrust Common Stock and 5,000,000 shares
of SouthTrust Preferred Stock. As of May 31, 2004, no more than
333,000,000 shares of SouthTrust Common Stock and no shares of
SouthTrust Preferred Stock were outstanding. As of the date of this
Agreement, no more than 30,800,000 shares of SouthTrust Common Stock
were reserved for issuance under the SouthTrust Stock Plans (of
which no more than 19,500,000 were reserved for issuance in respect
of awards outstanding as of such date). The outstanding shares of
SouthTrust Common Stock have been duly authorized and are validly
issued and
17
outstanding, fully paid and nonassessable, and subject to no
preemptive rights (and were not issued in violation of any
preemptive rights). Except as set forth above or in the Stock Option
Agreement and except for shares issuable pursuant to the SouthTrust
Stock Plans, as of the date of this Agreement, there are no shares
of SouthTrust Stock reserved for issuance, SouthTrust does not have
any Rights outstanding with respect to SouthTrust Stock, and
SouthTrust does not have any commitment to authorize, issue or sell
any SouthTrust Stock or Rights, except pursuant to this Agreement,
the Stock Option Agreement, outstanding SouthTrust Stock Options,
the SouthTrust Stock Plans, the SouthTrust Rights Agreement and the
SouthTrust DRIP. As of the date of this Agreement, SouthTrust has no
commitment to redeem, repurchase or otherwise acquire, or to
register with the SEC, any shares of SouthTrust Stock.
(c) Wachovia Stock. In the case of Wachovia:
The authorized capital stock of Wachovia consists of
3,000,000,000 shares of Wachovia Common Stock and 550,000,000 shares
of Wachovia Preferred Stock. As of the date of this Agreement, no
more than 1,320,000,000 shares of Wachovia Common Stock and
100,000,000 shares of Wachovia Preferred Stock were outstanding. As
of the date of this Agreement, no more than 151,000,000 shares of
Wachovia Common Stock were subject to Wachovia Stock Options granted
under the Wachovia Stock Plans. As of the date of this Agreement,
there were no more than 95,000,000 shares of Wachovia Common Stock
reserved for issuance under the Wachovia Stock Plans. The
outstanding shares of Wachovia Common 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). The shares of
Wachovia stock to be issued in the Merger have been duly authorized
and, if and when issued in the Merger, will be fully paid and
nonassessable. Except as set forth above, as of the date of this
Agreement, there are no shares of Wachovia Stock reserved for
issuance, 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, outstanding Wachovia Stock
Options, the Wachovia Stock Plans, the Wachovia Rights Agreement and
the Wachovia DRIP. As of the date of this Agreement, Wachovia has no
commitment to redeem, repurchase or otherwise acquire, or to
register with the SEC, any shares of Wachovia Stock.
(d) Significant Subsidiaries. (1) (A) It owns, directly or
indirectly, all the outstanding equity securities of each of its
Significant Subsidiaries free and clear of any Liens, (B) no equity
securities of any of its Significant Subsidiaries
18
are or may become required to be issued (other than to it or its
wholly owned Subsidiaries) by reason of any Right or otherwise, (C)
there are no contracts, commitments, understandings or arrangements
by which any of such Significant Subsidiaries is or may be bound to
sell or otherwise transfer any equity securities of any such
Significant Subsidiaries (other than to it or its wholly-owned
Subsidiaries), (D) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to
dispose of such securities, (E) all the equity securities of each
Significant Subsidiary held by it or its Subsidiaries have been duly
authorized and are validly issued and outstanding, fully paid and
nonassessable (except as provided in 12 U.S.C.Section 55 or
comparable state laws in the case of bank Subsidiaries), and (F)
each Significant Subsidiary that is a bank (as defined in the BHC
Act) is an "insured bank" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder.
(2) Each of its 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 all jurisdictions where its
ownership or leasing of property or its conduct of business requires
it to be so qualified.
(e) Power. It and each of its Subsidiaries has the corporate (or
comparable) power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and it has the
corporate (or comparable) 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.
(f) Authority. It has duly authorized, executed and delivered this
Agreement and has taken all corporate action necessary in order to execute
and deliver the Stock Option Agreement. Subject only to receipt of the
affirmative vote of the holders of a majority of the outstanding shares of
Wachovia Common Stock or SouthTrust Common Stock, as the case may be, to
approve the plan of merger contained in this Agreement, this Agreement and
the transactions contemplated hereby have been authorized by all necessary
respective corporate action. This Agreement is its valid and legally
binding obligation, enforceable in accordance with its terms (except as
enforcement 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).
(g) Regulatory Approvals; No Defaults. (1) 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 it or any of its
Subsidiaries in connection with the execution, delivery or performance by
it of this Agreement and the Stock Option Agreement or to consummate the
Merger, except for
19
(A) filings of applications and notices with, receipt of approvals or
nonobjections from, and expiration of related waiting periods required by
foreign, federal and state banking authorities, including applications and
notices under the BHC Act, the Bank Merger Act and the Federal Reserve Act
and an application to the Alabama State Banking Department, (B) filing of
notices, and expiration of the related waiting period, under the HSR Act,
(C) filings of applications and notices with, and receipt of approvals or
nonobjections from, the SEC and state securities authorities, the National
Association of Securities Dealers, Inc., applicable securities exchanges
and self-regulatory organizations, the Small Business Administration and
state insurance authorities, (D) filing of the Registration Statement and
Joint Proxy Statement with the SEC, and declaration by the SEC of the
Registration Statement's effectiveness under the Securities Act, (E)
receipt of the applicable shareholder approvals described in Section
5.03(f), (F) the filing of the Articles of Merger and Certificate of
Merger, and (G) such filings with applicable securities exchanges to
obtain the authorizations for listing contemplated by this Agreement.
(2) Subject to receipt of the consents and approvals referred
to in the preceding paragraph, and the expiration of 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 or any acceleration of remedies,
penalty, increase in material benefit payable or right of
termination under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement,
indenture or instrument of it or of any of its Subsidiaries or to
which it or any of its Subsidiaries or properties is subject or
bound, (B) constitute a breach or violation of, or a default under,
its Constituent Documents or (C) require any consent or approval
under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(3) As of the date of this Agreement, it is not aware of any
reason why the necessary regulatory approvals and consents will not
be received in order to permit consummation of the Merger on a
timely basis.
(h) Financial Reports and Regulatory Filings; Material Adverse
Effect. (1) Its Annual Reports on Form 10-K for the fiscal years ended
December 31, 2001, 2002 and 2003, and all other reports, registration
statements, definitive proxy statements or information statements filed by
it or any of its Subsidiaries subsequent to December 31, 2000 under the
Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act, in the form filed (collectively, its "Regulatory Filings") with the
SEC as of the date filed, (A) complied in all material respects as to form
with the applicable requirements
20
under the Securities Act or the Exchange Act, as the case may be, and (B)
did 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 statements of financial
position contained in or incorporated by reference into any such
Regulatory Filing (including the related notes and schedules) fairly
presented in all material respects its financial position and that of its
Subsidiaries as of the date of such statement, and each of the statements
of income and changes in shareholders' equity and cash flows or equivalent
statements in such Regulatory Filings (including any related notes and
schedules thereto) fairly presented in all material respects, the results
of operations, changes in shareholders' equity and changes in cash flows,
as the case may be, of it and its Subsidiaries for the periods to which
those statements relate, in each case in accordance with GAAP consistently
applied during the periods involved, except in each case as may be noted
therein, and subject to normal year-end audit adjustments and as permitted
by Form 10-Q in the case of unaudited statements.
(2) Since December 31, 2003, it and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
(3) Since December 31, 2003, (A) it 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), has had or is reasonably likely to have a Material
Adverse Effect with respect to it.
(i) Litigation. Except as set forth in its Annual Report on Form
10-K for the fiscal year ended December 31, 2003 or its Quarterly Report
on Form 10-Q for the quarter ended March 31, 2004, (without giving effect
to any amendment filed after the date of this Agreement), there is no
suit, action, investigation or proceeding pending or, to its knowledge,
threatened against or affecting it or any of its Subsidiaries (and it is
not aware of any basis for any such suit, action or proceeding), nor is
there any judgment, decree, injunction, rule or order of any governmental
entity or arbitration outstanding against it or any of its Subsidiaries.
(j) Regulatory Matters. It is a financial holding company, as
defined in Section 2(p) of the BHC Act. Except as set forth in its Annual
Report on Form 10-K for the fiscal year ended December 31, 2003 or its
Quarterly Report on Form 10-Q for the quarter ended March 31, 2004
(without giving effect to any amendment filed after the date of this
Agreement), neither it nor any of its Subsidiaries is subject to, or has
been advised that it is reasonably likely to
21
become subject to, any written order, decree, agreement, memorandum of
understanding or similar arrangement (including an agreement under Section
4(m) of the BHC Act) with, or a commitment letter or similar submission
to, or extraordinary supervisory letter from, or adopted any extraordinary
board resolutions at the request of, any Governmental Authority charged
with the supervision or regulation of financial institutions or issuers of
securities or engaged in the insurance of deposits or the supervision or
regulation of it or any of its Subsidiaries.
(k) Compliance with Laws. Except as set forth in its Annual Report
on Form 10-K for the fiscal year ended December 31, 2003 or its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2004, (without giving
effect to any amendment filed after the date of this Agreement), it and
each of its Subsidiaries:
(1) conducts its business 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;
(2) 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 its knowledge, no suspension or
cancellation of any of them is threatened;
(3) has received, since December 31, 2000, no written
notification from any Governmental Authority (A) asserting that it
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; and
(4) is in compliance with all applicable listing standards, in
the case of Wachovia, of the NYSE, and, in the case of SouthTrust,
of the NASDAQ.
(l) Material Contracts; Defaults. (1) Except for those agreements
and other documents filed as exhibits to its Annual Report on Form 10-K
for the fiscal year ended December 31, 2003, 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) (A) that is a "material contract" within the meaning of Item
601(b)(10) of the SEC's Regulation S-K, (B) that restricts the conduct of
business by it or any of its Subsidiaries or its or their ability to
22
compete in any line of business or (C) with respect to employment of an
officer, director or consultant.
(2) Neither it nor any of its Subsidiaries is in default under
any material 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.
(m) Employee Benefit Plans. (1) All of its Benefit Arrangements are
Previously Disclosed, other than those Benefit Arrangements that are not
material. True and complete copies of all Benefit Arrangements, including,
but not limited to, any trust instruments and insurance contracts forming
a part of any Benefit Arrangements, and all amendments thereto, have been
made available to the other party.
(2) All of its Benefit Arrangements, other than "multiemployer
plans" within the meaning of Section 3(37) of ERISA, are in
compliance with ERISA, the Code and other applicable laws. Each of
its Benefit Arrangements which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan"), and
which is intended to be qualified under Section 401(a) of the Code,
has received a favorable determination letter from the Internal
Revenue Service covering all tax law changes prior to the Economic
Growth and Tax Relief Reconciliation Act of 2001 or has applied to
the IRS for such letter within the applicable remedial amendment
period under Section 401(b) of the Code, and it is not aware of any
circumstances reasonably likely to result in revocation of any such
favorable determination letter. Each Benefit Arrangement which is
intended to be part of a voluntary employees' beneficiary
association within the meaning of Section 501(c)(9) of the Code has
(A) received an opinion letter from the Internal Revenue Service
recognizing its exempt status under Section 501(c)(9) of the Code
and (B) filed a timely notice with the Internal Revenue Service
pursuant to Section 505(c) of the Code, and it is not aware of
circumstances likely to result in the loss of the exempt status of
such Benefit Arrangement under Section 501(c)(9) of the Code. There
is no pending or, to the knowledge of SouthTrust or Wachovia, as the
case may be, threatened litigation relating to its Benefit
Arrangements. Neither it nor any of its Subsidiaries has engaged in
a transaction with respect to any of its Benefit Arrangements that,
assuming the taxable period of such transaction expired as of the
date hereof, could subject it or any of its Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i)
of ERISA in an amount which would be material. Neither
23
it nor any of its Subsidiaries has incurred or reasonably expects to
incur a tax or penalty imposed by Section 4980F of the Code or
Section 502 of ERISA.
(3) No liability under Subtitle C or D of Title IV of ERISA
has been or is reasonably expected to be incurred by it 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 the
single-employer plan of any entity which is considered one employer
with it under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). None of it, any of its Subsidiaries or any of
its ERISA Affiliates has contributed to a "multiemployer plan",
within the meaning of Section 3(37) of ERISA, at any time within the
last six years. 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, other than pursuant to Pension
Benefit Guaranty Corporation Reg. Section 4043.66, has been required
to be filed for any of its Pension Plans or by any of its ERISA
Affiliates within the 12-month period ending on the date hereof.
(4) All contributions required to be made under the terms of
any of its Benefit Arrangements have been timely made or have been
reflected on its consolidated financial statements included in its
Regulatory Filings. None of its Pension Plans or any single-employer
plan of any of its ERISA Affiliates has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section
412 of the Code or Section 302 of ERISA and none of its ERISA
Affiliates has an outstanding funding waiver. Neither it nor any of
its Subsidiaries has provided, or is required to provide, security
to any of its Pension Plans or to any single-employer plan of any of
its ERISA Affiliates pursuant to Section 401(a)(29) of the Code.
(5) Under each Pension Plan which is a single-employer plan,
as of the last day of the most recent plan year ended prior to the
date hereof, 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 Pension Plan's most recent actuarial valuation),
did not exceed the then current value of the assets of such Pension
Plan, and there has been no change in the financial condition of
such Pension Plan since the last day of the most recent plan year.
(6) Neither it nor any of its Subsidiaries has any obligations
for retiree health and life benefits under any Benefit Arrangement
or collective bargaining agreement. Either it or its Subsidiaries
may amend
24
or terminate any such plan at any time without incurring any
liability thereunder other than in respect of claims incurred prior
to such amendment or termination.
(7) There has been no amendment to, announcement by it or any
of its subsidiaries relating to, or change in employee participation
or coverage under, any Benefit Arrangement which would increase the
expense of maintaining such Benefit Arrangement above the level of
the expense incurred therefor for the most recent fiscal year.
Neither its execution of this Agreement or the Stock Option
Agreement, the performance of its obligations hereunder or under the
Stock Option Agreement, the consummation of the transactions
contemplated hereby, the termination of the employment of any of its
employees within a specified time of the Effective Time nor
shareholder approval of the transactions covered by this Agreement,
will (A) limit its right, in its sole discretion, to administer or
amend in any respect or terminate any of its Benefit Arrangements or
any related trust, (B) entitle any of its employees or any employees
of its Subsidiaries to severance pay or any increase in severance
pay, or (C) accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of its
Benefit Arrangements. Without limiting the foregoing, as a result of
the consummation of the transactions contemplated hereby (including
as a result of the termination of the employment of any of its
employees within a specified time of the Effective Time) neither it
nor any of its Subsidiaries will be obligated to make a payment to
an individual that would be a "parachute payment" to a "disqualified
individual" as those 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) Taxes. (1) 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 it and its Subsidiaries have been duly, timely and accurately
filed, (2) all Taxes shown to be due on the Tax Returns referred to in
clause (1) have been paid in full, (3) all Taxes that it or any of its
Subsidiaries is obligated to withhold from amounts owing to any employee,
creditor or third party have been paid over to the proper Governmental
Authority in a timely manner, to the extent due and payable, and (4) no
extensions or waivers of statutes of limitation have been given by or
requested with respect to any of its U.S. federal income taxes or those of
its Subsidiaries. It has made provision in accordance with GAAP, in the
financial statements included in the Regulatory Filings filed before the
date hereof, for all Taxes that accrued on or before the end of the most
recent period covered by its Regulatory Filings filed before the date
hereof. As of the date hereof, neither it nor any of its Subsidiaries has
any reason to believe that any conditions exist that
25
could reasonably be expected to prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code. No Liens for Taxes exist with respect to any of its assets or
properties or those of its Subsidiaries, except for statutory Liens for
Taxes not yet due and payable or that are being contested in good faith
and reserved for in accordance with GAAP. Neither it nor any of its
Subsidiaries has been a party to any distribution occurring during the
two-year period prior to the date of this Agreement in which the parties
to such distribution treated the distribution as one to which Section 355
of the Code applied, except for distributions occurring among members of
the same group of affiliated corporations filing a consolidated federal
income tax return.
(o) Books and Records. Its books and records and those of 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.
(p) Takeover Laws and Provisions. It has taken all action required
to be taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions
contemplated hereby 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 Section 203 of the GCL and
Articles 9 and 9A of the BCA. It has taken all action required to be taken
by it in order to make this Agreement and the transactions contemplated
hereby comply with, and this Agreement and the transactions contemplated
hereby do comply with, the requirements of any Articles, Sections or
provisions of its Constituent Documents concerning "business combination,"
"fair price," "voting requirement," "constituency requirement" or other
related provisions (collectively, "Takeover Provisions"). In the case of
SouthTrust, the approval of the Merger and this Agreement by the
SouthTrust Board exempts this Agreement and the transactions contemplated
hereby from Article Eleventh of SouthTrust's Restated Certificate of
Incorporation.
(q) SouthTrust Rights Agreement. In the case of SouthTrust, it has
taken all action necessary or appropriate so that the entering into of
this Agreement and the consummation of the transactions contemplated
hereby (individually or in connection with any other event), do not and
will not result in Wachovia or any affiliate or associate of Wachovia
being deemed an "Acquiring Person" for purposes of the SouthTrust Rights
Agreement, will not result in a "Distribution Date" or "Stock Acquisition
Date" or "Triggering Event" under the SouthTrust Rights Agreement being
deemed to occur and will not result in the ability of any Person to
exercise any SouthTrust Rights under the SouthTrust Rights Agreement or
enable or require the SouthTrust Rights to separate from the shares of
SouthTrust Common Stock to which they are attached or to become
distributable, unredeemable or exercisable. SouthTrust has duly adopted an
26
amendment to the SouthTrust Rights Agreement substantially in the form of
Annex 2.
(r) Financial Advisors. None of it, its Subsidiaries or any of their
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated herein, except that,
in connection with this Agreement and the Stock Option Agreement, Wachovia
has retained UBS Securities LLC as its financial advisor, and SouthTrust
has retained ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. as its financial advisor, the
arrangements with which have been disclosed to Wachovia prior to the date
hereof. As of the date of this Agreement, (1) SouthTrust has received an
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., issued to SouthTrust, to the effect that
the Exchange Ratio is fair from a financial point of view to holders of
SouthTrust Common Stock, and (2) Wachovia has received an opinion of UBS
Securities LLC, issued to Wachovia, to the effect that, as of the date of
the opinion, the Exchange Ratio is fair from a financial point of view to
Wachovia.
(s) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. It is in compliance with the provisions of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and the certifications provided and to be provided
pursuant to Sections 302 and 906 thereof are accurate. It has initiated
procedures for compliance with Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and
it expects to be in full compliance with such Section by the mandated
compliance date.
(t) Labor Matters. Neither it 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 it 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 it or such subsidiary to bargain with any labor organization as to
wages and conditions of employment, nor is there any strike or other labor
dispute involving it or any of its subsidiaries, pending or, to the best
of its knowledge, threatened, nor it is aware, as of the date of this
Agreement, of any activity involving it or any of its subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in
any other organization activity.
(u) Environmental Matters. There are no proceedings, claims,
actions, or investigations of any kind, pending or threatened, in any
court, agency, or other governmental authority or in any arbitral body,
arising under any Environmental Law; there is no reasonable basis for any
such proceeding, claim, action or investigation; there are no agreements,
orders, judgments or decrees by or with any court, regulatory agency or
other governmental authority, imposing liability or obligation under or in
respect of any Environmental Law; there are and have been no Materials of
Environmental Concern or other conditions at any property
27
(owned, operated, or otherwise used by, or the subject of a security
interest on behalf of, it or any of its subsidiaries); and there are no
reasonably anticipated future events, conditions, circumstances,
practices, plans, or legal requirements that could give rise to
obligations or liabilities under any Environmental Law.
ARTICLE VI
COVENANTS
6.01. Reasonable Best Efforts. (a) Subject to the terms and conditions of
this Agreement, Wachovia and SouthTrust will use reasonable best efforts to
take, or cause to be taken, in good faith, 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 each will cooperate fully with, and furnish information
to, the other party to that end.
(b) Wachovia will execute and deliver, or cause to be executed and
delivered, by or on behalf of the Surviving Corporation, at or prior to
the Effective Time, one or more supplemental indentures and other
instruments required for the due assumption of SouthTrust's outstanding
debt, guarantees, securities, and (to the extent informed of such
requirement by SouthTrust) other agreements to the extent required by the
terms of such debt, guarantees, securities or other agreements.
6.02. Shareholder Approvals. (a) The SouthTrust Board adopted this
Agreement and the plan of merger it contains and adopted resolutions
recommending as of the date hereof to SouthTrust's shareholders approval of the
plan of merger contained in this Agreement and any other matters required to be
approved or adopted in order to effect the Merger and other transactions
contemplated hereby.
(b) The Wachovia Board adopted this Agreement and the plan of merger
it contains and adopted resolutions recommending as of the date hereof to
Wachovia's shareholders the approval of the plan of merger contained in
this Agreement and any other matters required to be approved or adopted in
order to effect the Merger and other transactions contemplated hereby.
(c) The Wachovia Board and SouthTrust Board each will submit to its
shareholders the plan of merger contained in this Agreement and any other
matters required to be approved or adopted by shareholders in order to
carry out the intentions of this Agreement. In furtherance of that
obligation, Wachovia and SouthTrust each will take, in accordance with
applicable law and its respective Constituent Documents, all action
necessary to convene a meeting of its shareholders (including any
adjournment or postponement, the "Wachovia Meeting" and the "SouthTrust
Meeting", respectively), as promptly as practicable, to consider and vote
upon approval of the plan of merger as well as any other such
28
matters. The Wachovia Board and SouthTrust Board each will use all
reasonable best efforts to obtain from their respective shareholders a
vote approving the plan of merger contained in this Agreement, including a
recommendation that its respective shareholders vote in favor of the
Merger. However, if the SouthTrust Board, after consultation with (and
based on the advice of) counsel, determines in good faith that, because of
the receipt by SouthTrust of an Acquisition Proposal that the SouthTrust
Board concludes in good faith constitutes a Superior Proposal, it would
more likely than not result in a violation of its fiduciary duties under
applicable law to continue to recommend the plan of merger set forth in
this Agreement, or, if subsequent to the execution of this Agreement, the
SouthTrust Board, after consultation with (and based on the advice of)
counsel, determines in good faith that the continued recommendation of the
plan of merger set forth in this Agreement would more likely than not
result in a violation of its fiduciary duties under applicable law, then
in submitting the plan of merger to the SouthTrust Meeting, the SouthTrust
Board may submit the plan of merger to its shareholders without
recommendation (although the resolutions adopting this Agreement as of the
date hereof, described in Section 6.02(a), may not be rescinded or
amended), in which event the SouthTrust Board may communicate the basis
for its lack of a recommendation to the shareholders in the Joint Proxy
Statement or an appropriate amendment or supplement thereto to the extent
required by law; provided that the SouthTrust Board may not take any
actions under this sentence until after giving Wachovia at least 10
business days to respond to such Acquisition Proposal (and after giving
Wachovia notice of the latest material terms, conditions and third party
in the Acquisition Proposal) and then taking into account any amendment or
modification to this Agreement proposed by Wachovia (it being agreed that
the eighth paragraph of the Confidentiality Agreement will not preclude
such a response or proposal).
6.03. SEC Filings. (a) Wachovia and SouthTrust will cooperate in ensuring
that all filings required under SEC Rules 165, 425 and 14a-12 are timely and
properly made. Wachovia also will 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, and the parties will jointly prepare the joint proxy statement and
prospectus and other proxy solicitation materials of Wachovia and SouthTrust
constituting a part thereof (the "Joint Proxy Statement") and all related
documents. Each party will cooperate, and will cause its Subsidiaries to
cooperate, with the other party, its counsel and its accountants, in the
preparation of the Registration Statement and the Joint Proxy Statement, and,
provided that both parties and their respective Subsidiaries have cooperated as
required above, Wachovia and SouthTrust agree to file the Registration
Statement, including the Joint Proxy Statement in preliminary form, with the SEC
as promptly as reasonably practicable. Each of Wachovia and SouthTrust will use
all reasonable best efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as reasonably practicable after
filing thereof and to maintain the effectiveness of such Registration Statement
until the Effective Time. Each party shall cooperate and
29
provide the other party with a reasonable opportunity to review and comment on
any amendment or supplement to the Joint Proxy Statement and the Registration
Statement prior to filing such with the SEC, and each party will provide the
other party with a copy of all such filings with the SEC. Wachovia also agrees
to use reasonable best efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated hereby. SouthTrust agrees to furnish to Wachovia all information
concerning SouthTrust, its Subsidiaries, officers, directors and shareholders as
may be reasonably requested in connection with the foregoing.
(b) Wachovia and SouthTrust each 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 (1) the Registration
Statement will, at the time the Registration Statement and each amendment
or supplement thereto, if any, becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and (2) the Joint Proxy Statement and
any amendment or supplement thereto will, at the date of mailing to
shareholders and at the time of the Wachovia Meeting or the SouthTrust
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, in the light of the
circumstances under which such statement was made, not misleading.
Wachovia and SouthTrust each further agrees that if it becomes aware that
any information furnished by it would cause any of the statements in the
Joint Proxy Statement or the Registration 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
appropriate steps to correct the Joint Proxy Statement or the Registration
Statement.
(c) Wachovia will advise SouthTrust, 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 Common 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. Wachovia and SouthTrust will consult with each other
before issuing any press release, written employee communication or other
written shareholder communication with respect to the Merger or this Agreement
and will not issue any such communication or make any such public statement
without the prior consent of the other party, which will not be unreasonably
withheld or delayed; provided that a party may, without the prior consent of the
other party (but after prior consultation, to the extent practicable in the
circumstances), issue such communication or make such public statement as may be
required by applicable law or securities exchange rules.
30
Wachovia and SouthTrust will cooperate to develop all public communications and
make appropriate members of management available at presentations related to the
transactions contemplated hereby as reasonably requested by the other party.
6.05. Access; Information. (a) Each of Wachovia and SouthTrust agrees that
upon reasonable notice and subject to applicable laws relating to the exchange
of information, it will (and will cause its Subsidiaries to) 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 before 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 the other party may reasonably
request and, during such period, it will furnish promptly to the other party (1)
a copy of each report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, and (2) all other
information concerning the business, properties and personnel of it as the other
may reasonably request. Neither Wachovia nor SouthTrust will be required to
afford access or disclose information that would jeopardize attorney-client
privilege or contravene any binding agreement with any third party. The parties
will make appropriate substitute arrangements in circumstances where the
previous sentence applies.
(b) Each party will hold any information which is nonpublic and
confidential to the extent required by, and in accordance with, the
Confidentiality Agreement between Wachovia and SouthTrust (the
"Confidentiality Agreement").
(c) No investigation by Wachovia of the business and affairs of
SouthTrust, pursuant to this Section 6.05 or otherwise, will affect or be
deemed to modify or waive any representation, warranty, covenant or
agreement in this Agreement, or the conditions to Wachovia's obligation to
consummate the transactions contemplated hereby.
6.06. Acquisition Proposals. (a) SouthTrust will not, and will cause its
Subsidiaries and its and its Subsidiaries' officers, directors, agents, advisors
and affiliates not to, initiate, solicit, encourage or knowingly facilitate
inquiries or proposals with respect to, or engage in any negotiations
concerning, or provide any confidential or nonpublic information or data to, or
have any discussions with, any person relating to, any Acquisition Proposal, or
waive any provision of or amend the terms of the SouthTrust Rights Agreement, in
respect of an Acquisition Proposal; provided that, in the event SouthTrust
receives an unsolicited bona fide Acquisition Proposal, including from an Other
Person (as defined below) after the execution of this Agreement, and the
SouthTrust Board concludes in good faith that such Acquisition Proposal
constitutes a Superior Proposal, SouthTrust may, and may permit its Subsidiaries
and its and its Subsidiaries' Representatives to, furnish or cause to be
furnished nonpublic information and participate in such negotiations or
discussions to the extent that the SouthTrust Board concludes in good faith (and
based on the advice of counsel) that failure to take such
31
actions would more likely than not result in a violation of its fiduciary duties
under applicable law; provided that prior to providing any nonpublic information
permitted to be provided pursuant to the foregoing proviso, it shall have
entered into a confidentiality agreement with such third party on terms no less
favorable to it than the Confidentiality Agreement (without regard to any
modification thereof pursuant hereto). SouthTrust will immediately cease and
cause to be terminated any activities, discussions or negotiations conducted
before the date of this Agreement with any persons other than Wachovia ("Other
Persons") with respect to any Acquisition Proposal and will use its reasonable
best efforts to enforce any confidentiality or similar agreement relating to an
Acquisition Proposal. SouthTrust will promptly (within one business day) advise
Wachovia following receipt of any Acquisition Proposal and the substance thereof
(including the identity of the person making such Acquisition Proposal), and
will keep Wachovia apprised of any related developments, discussions and
negotiations (including the terms and conditions of the Acquisition Proposal) on
a current basis.
(b) Nothing contained in this Agreement shall prevent SouthTrust or
the SouthTrust Board from complying with Rule 14d-9 and Rule 14e-2 under
the Exchange Act with respect to an Acquisition Proposal, provided that
such Rules will in no way eliminate or modify the effect that any action
pursuant to such Rules would otherwise have under this Agreement.
6.07. Affiliate Agreements. Not later than the 15th day before the mailing
of the Joint Proxy Statement, SouthTrust will 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 SouthTrust Meeting, deemed to be an "affiliate" of
SouthTrust (each, a "SouthTrust Affiliate") as that term is used in Rule 145
under the Securities Act. SouthTrust will use its reasonable best efforts to
cause each person who may be deemed to be a SouthTrust Affiliate to execute and
deliver to Wachovia and SouthTrust on or before the date of mailing of the Joint
Proxy Statement an agreement in substantially the form attached hereto as Annex
3.
6.08. Takeover Laws and Provisions. Neither party will take any action
that would cause the transactions contemplated hereby to be subject to
requirements imposed by any Takeover Law and each of them will take all
necessary steps within its control to exempt (or ensure the continued exemption
of) those transactions from, or if necessary challenge the validity or
applicability of, any applicable Takeover Law, as now or hereafter in effect.
Neither party will take any action that would cause the transactions
contemplated hereby not to comply with any Takeover Provisions and each of them
will take all necessary steps within its control to make those transactions
comply with (or continue to comply with) the Takeover Provisions.
6.09. SouthTrust Rights Agreement. SouthTrust agrees that it will take all
actions necessary or appropriate to ensure that the entering into of this
Agreement and the consummation of the transactions contemplated hereby
(individually or in connection with any other event) will not result in Wachovia
or any affiliate or associate of
32
Wachovia being deemed an "Acquiring Person" for purposes of the SouthTrust
Rights Agreement, as amended pursuant to Section 5.03(q), will not result in a
"Distribution Date" or "Stock Acquisition Date" or "Triggering Event" under the
SouthTrust Rights Agreement, as amended pursuant to Section 5.03(q), being
deemed to occur, and will not result in the ability of any Person to exercise
any SouthTrust Rights under the SouthTrust Rights Agreement or enable or require
the SouthTrust Rights to separate from the shares of SouthTrust Common Stock to
which they are attached or to become distributable, unredeemable or exercisable.
SouthTrust further agrees that it will not take any action to declare Wachovia
to be an "Adverse Person" under the SouthTrust Rights Agreement.
6.10. Exchange Listing. Wachovia will use all reasonable best efforts to
cause the shares of Wachovia Common Stock to be issued in the Merger and shares
reserved for issuance pursuant to Section 3.07 hereof to be approved for listing
on the NYSE, subject to official notice of issuance, as promptly as practicable,
and in any event before the Effective Time.
6.11. Regulatory Applications. (a) Wachovia and SouthTrust and their
respective Subsidiaries will cooperate and use all reasonable best efforts to
prepare as promptly as possible 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 hereby, including the merger of their subsidiary banks (the
"Requisite Regulatory Approvals"), and will make all necessary filings in
respect of those Requisite Regulatory Approvals as soon as practicable. Each of
Wachovia and SouthTrust will 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 Requisite Regulatory Approvals. In exercising
the foregoing right, each of the parties will act reasonably and as promptly as
practicable. Each party agrees that it will consult with the other party with
respect to obtaining all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated hereby and each party will
keep the other party appraised of the status of material matters relating to
completion of the transactions contemplated hereby.
(b) Wachovia and SouthTrust will, upon request, furnish the other
party with all information concerning itself, its Subsidiaries, directors,
officers and shareholders 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 with or to any third party or Governmental Authority in
connection with the transactions contemplated hereby.
6.12. Indemnification. (a) Following the Effective Time, the Surviving
Corporation will indemnify, defend and hold harmless the present and former
directors, officers and employees of SouthTrust and its Subsidiaries (each, an
"Indemnified Party")
33
against all costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") as
incurred, in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of actions or omissions occurring at or before the Effective Time (including
the transactions contemplated hereby), (1) to the same extent as such persons
are indemnified or have the right to advancement of expenses pursuant to the
Constituent Documents and indemnification agreements, if any, in effect on the
date of this Agreement with SouthTrust and its Subsidiaries, and (2) without
limitation of clause (1), to the fullest extent permitted by law.
(b) For a period of six years following the Effective Time, Wachovia
will use all reasonable best efforts to provide director's and officer's
liability insurance that serves to reimburse the present and former
officers and directors of SouthTrust or any of their respective
Subsidiaries (determined as of the Effective Time) (as opposed to
SouthTrust or such Subsidiary) with respect to claims against such
directors and officers arising from facts or events occurring before the
Effective Time (including the transactions contemplated hereby), which
insurance will contain at least the same coverage and amounts, and contain
terms and conditions no less advantageous to the Indemnified Party as that
coverage currently provided by SouthTrust; provided that if Wachovia is
unable to maintain or obtain the insurance called for by this Section
6.12(b), Wachovia will use all reasonable best efforts to obtain as much
comparable insurance as is reasonably available; and provided, further,
that officers and directors of SouthTrust 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, will promptly notify Wachovia; provided
that failure so to notify will not affect the obligations of Wachovia
under Section 6.12(a) unless and to the extent that Wachovia is actually
and materially prejudiced as a consequence.
(d) If Wachovia or any of its successors or assigns consolidates
with or merges into any other entity and is not the continuing or
surviving entity of such consolidation or merger or transfers all or
substantially all of its assets to any other entity, then and in each
case, Wachovia will cause proper provision to be made so that the
successors and assigns of Wachovia will assume the obligations set forth
in this Section 6.12.
(e) The provisions of this Section 6.12 shall survive the Effective
Time and are intended to be for the benefit of, and will be enforceable
by, each Indemnified Party and his or her heirs and Representatives.
34
6.13. Employee Matters. (a) From the Effective Time through December 31,
2004 or such later date as Wachovia shall determine to the extent December 31,
2004 is not practicable in the reasonable judgment of Wachovia based on the
occurrence of the Effective Time (such date being referred to herein as the
"Benefits Transition Date"), Wachovia shall provide the employees of SouthTrust
and its Subsidiaries as of the Effective Time (the "Covered Employees") with
employee benefits and compensation plans, programs and arrangements that are
substantially similar, in the aggregate, to the employee benefits and
compensation plans, programs and arrangements provided by SouthTrust or its
Subsidiaries, as the case may be, to such employees immediately prior to the
Effective Time. From and after the Benefits Transition Date, Wachovia shall
provide the Covered Employees with employee benefits and compensation plans,
programs and arrangements that are substantially identical to those provided to
similarly situated employees of Wachovia and its Subsidiaries. Notwithstanding
anything contained herein to the contrary, from and after the Effective Time, a
Covered Employee who is displaced, within the meaning of the Wachovia Severance
Pay Plan, as a result of the Merger shall be entitled to receive severance
payments and benefits under the Wachovia Severance Pay Plan. Such plan shall not
be amended until at least 30 days after completion of the final system
conversion in connection with the Merger.
(b) From and after the Benefits Transition Date, Wachovia shall (1)
provide all Covered Employees with service credit for purposes of
eligibility, participation, vesting and levels of benefits (but not for
benefit accruals under any defined benefit pension plan), under any
employee benefit or compensation plan, program or arrangement adopted,
maintained or contributed to by Wachovia or any of its Subsidiaries in
which Covered Employees are eligible to participate, for all periods of
employment with SouthTrust or any of its Subsidiaries (or their
predecessor entities) prior to the Effective Time to the extent credited
by SouthTrust for purposes of a comparable plan and (2) cause any
pre-existing conditions, limitations, eligibility waiting periods or
required physical examinations under any welfare benefit plans of Wachovia
or any of its Subsidiaries to be waived with respect to the Covered
Employees and their eligible dependents, to the extent waived under the
corresponding plan (for a comparable level of coverage) in which the
applicable Covered Employee participated immediately prior to the
Effective Time. If SouthTrust's medical and/or dental benefit plans for
Covered Employees are terminated in the middle of a plan year, Covered
Employees and their dependents who are then participating in a
deductible-based medical and/or dental plan sponsored by SouthTrust will
be given credit for deductibles and eligible out-of-pocket expenses
incurred towards deductibles and out-of-pocket maximums during the portion
of the plan year preceding the Benefits Transition Date in a comparable
deductible-based medical and/or dental plan of Wachovia or any of its
Subsidiaries for the Wachovia benefit plan year that begins with or
includes the Benefits Transition Date.
35
(c) Wachovia and SouthTrust shall take all necessary action to
effectuate all agreements listed in Section 6.13(c) of the SouthTrust
Disclosure Schedule.
6.14. Notification of Certain Matters. Wachovia and SouthTrust will give
prompt notice to the other of any fact, event or circumstance known to it that
(a) 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 (b) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein that
reasonably could be expected to give rise, individually or in the aggregate, to
the failure of a condition in Article VII.
6.15. Exemption from Liability Under Section 16(b). Assuming that
SouthTrust delivers to Wachovia the Section 16 Information in a timely and
accurate manner, before the Effective Time, the Wachovia Board, or a committee
of "non-employee directors" thereof (as such term is defined for purposes of
Rule 16b-3(d) under the Exchange Act), will reasonably promptly thereafter and
in any event before the Effective Time adopt a resolution providing that the
receipt by the SouthTrust Insiders of Wachovia Common Stock in exchange for
shares of SouthTrust Common Stock, and of options to purchase shares of Wachovia
Common Stock upon conversion of options to purchase shares of SouthTrust Common
Stock, in each case pursuant to the transactions contemplated hereby and to the
extent such securities are listed in the Section 16 Information, are approved by
the Wachovia Board or by such committee thereof, and are intended to be exempt
from liability pursuant to Section 16(b) under the Exchange Act, such that any
such receipt will be so exempt.
6.16. Certain Modifications; Restructuring Charges. SouthTrust and
Wachovia shall consult with respect to their loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) and SouthTrust shall make such modifications or changes to its
policies and practices, if any, and at such date prior to the Effective Time, as
may be mutually agreed upon. SouthTrust and Wachovia shall also consult with
respect to the character, amount and timing of restructuring charges to be taken
by each of them in connection with the transactions contemplated hereby and
shall take such charges in accordance with GAAP, as may be mutually agreed upon.
No party's representations, warranties and covenants contained in this Agreement
shall be deemed to be untrue or breached in any respect for any purpose as a
consequence of any modifications or changes to such policies and practices which
may be undertaken on account of this Section 6.16.
ARTICLE VII
CONDITIONS TO THE MERGER
7.01. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of Wachovia and SouthTrust to consummate the
Merger is
36
subject to the fulfillment or written waiver by Wachovia and SouthTrust before
the Effective Time of each of the following conditions:
(a) Shareholder Approvals. The plan of merger contained in this
Agreement shall have been duly approved by the requisite vote of the
shareholders of Wachovia and SouthTrust.
(b) Regulatory Approvals. All Requisite Regulatory Approvals (1)
shall have been obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired and (2)
shall not have imposed a condition on such approval that would reasonably
be expected, after the Effective Time, to have a Material Adverse Effect
on the Surviving Corporation and its Subsidiaries.
(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
precludes consummation of the Merger. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Authority which prohibits or makes illegal
the consummation of the Merger.
(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 be
in effect and no proceedings for that purpose shall have been initiated by
the SEC and not withdrawn.
(e) NYSE Listing. The shares of Wachovia Common Stock to be issued
in the Merger and shares reserved for issuance pursuant to Section 3.07
hereof shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(f) Opinions of Tax Counsel. Wachovia shall have received an opinion
of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, and SouthTrust shall have received an opinion
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Rose & White LLP, each dated the Closing Date and based
on facts, representations and assumptions described in each such opinion,
to the effect that (1) the Merger will be treated as a reorganization
within the meaning of Section 368(a) of the Code, (2) Wachovia and
SouthTrust will each be a party to that reorganization within the meaning
of Section 368(b) of the Code and (3) no gain or loss will be recognized
by shareholders of SouthTrust who receive shares of Wachovia Common Stock
in exchange for all of their SouthTrust Common Stock, except with respect
to any cash received in lieu of fractional shares. In rendering such
opinions, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Rose & White LLP each
will be entitled to receive and rely upon
37
customary certificates and representations of officers of Wachovia and
SouthTrust.
7.02. Conditions to SouthTrust's Obligation. SouthTrust's obligation to
consummate the Merger is also subject to the fulfillment or written waiver by
SouthTrust before the Effective Time of each of the following conditions:
(a) Wachovia's Representations and Warranties. The representations
and warranties of Wachovia in this Agreement shall be true and correct as
of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date subject to the
standard set forth in Section 5.02; and SouthTrust shall have received a
certificate, dated the Closing Date, signed on behalf of Wachovia by the
Chief Executive Officer or Chief Financial Officer of Wachovia to that
effect.
(b) Performance of Wachovia's Obligations. Wachovia shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or before the Effective Time; and
SouthTrust shall have received a certificate, dated the Closing Date,
signed on behalf of Wachovia by the Chief Executive Officer or Chief
Financial Officer of Wachovia to that effect.
7.03. Conditions to Wachovia's Obligation. Wachovia's obligation to
consummate the Merger is also subject to the fulfillment, or written waiver by
Wachovia, before the Effective Time of each of the following conditions:
(a) SouthTrust's Representations and Warranties. The representations
and warranties of SouthTrust in this Agreement shall be true and correct
as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date subject to the
standard set forth in Section 5.02; and Wachovia shall have received a
certificate, dated the Closing Date, signed on behalf of SouthTrust by the
Chief Executive Officer or Principal Accounting Officer of SouthTrust to
that effect.
(b) Performance of SouthTrust's Obligations. SouthTrust shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or before the Effective Time; and
Wachovia shall have received a certificate, dated the Closing Date, signed
on behalf of SouthTrust by the Chief Executive Officer or Principal
Accounting Officer of SouthTrust to that effect.
38
ARTICLE VIII
TERMINATION
8.01. Termination. This Agreement may be terminated, and the Merger may be
abandoned, at any time before the Effective Time, by Wachovia or SouthTrust:
(a) Mutual Agreement. With the mutual agreement of the other party.
(b) Breach. Upon 60 days' prior written notice of termination, if
there has occurred and is continuing: (1) a breach by the other party of
any representation or warranty contained herein, or (2) a breach by the
other party of any of the covenants or agreements in this Agreement;
provided that such breach (under either clause (1) or (2)) would entitle
the non-breaching party not to consummate the Merger under Article VII.
(c) Adverse Action. If (1) the other party's board of directors
submits this Agreement (or the plan of merger contained herein) to its
shareholders without a recommendation for approval or with special and
materially adverse conditions on or qualifications of such approval; or
(2) the other party's board of directors otherwise withdraws or materially
and adversely modifies (or discloses its intention to withdraw or
materially and adversely modify) its recommendation referred to in Section
6.02. In addition, this Agreement may be terminated by Wachovia if (1) the
SouthTrust Board recommends to its shareholders an Acquisition Proposal
other than the Merger; or (2) the SouthTrust Board negotiates or
authorizes the conduct of negotiations (and three business days have
elapsed without such negotiations being discontinued) with a third party
(it being understood and agreed that "negotiate" shall not be deemed to
include the request and receipt of information from, any person that
submits an Acquisition Proposal or discussions regarding such information
for the sole purpose of ascertaining the terms of such Acquisition
Proposal and determining whether the SouthTrust Board will in fact engage
in, or authorize, negotiations) regarding an Acquisition Proposal other
than the Merger.
(d) Delay. If the Effective Time has not occurred by the close of
business on March 31, 2005; provided that the right to terminate this
Agreement under this Section 8.01(d) shall not be available to any party
whose failure to comply with any provision of this Agreement has been the
cause of, or materially contributed to, the failure of the Effective Time
to occur on or before such date.
(e) Denial of Regulatory Approval. If the approval of any
Governmental Authority required for consummation of the Merger and the
other transactions contemplated hereby is denied by final, nonappealable
action of such Governmental Authority; provided that the right to
terminate this Agreement under this Section 8.01(e) shall not be available
to any party whose failure to
39
comply with any provision of this Agreement has been the cause of, or
materially contributed to, such action.
(f) SouthTrust Termination Right. In the case of SouthTrust, it will
have the right to terminate this Agreement for a period of 10 days
beginning on the date of the first public announcement that Wachovia has
agreed to enter into or become the subject of an Acquisition Transaction;
provided that the right to terminate this Agreement under this Section
8.01(f) shall expire immediately after the SouthTrust Meeting.
8.02. Effect of Termination and Abandonment. (a) If this Agreement is
terminated and the Merger is abandoned, neither party will have any liability or
further obligation under this Agreement, except that termination will not
relieve a party from liability for any breach by it of this Agreement and except
that the first sentence of Section 5.03(r), Section 6.05(b), this Section 8.02
and Article IX will survive termination of this Agreement. Notwithstanding the
foregoing, in the event of any termination of this Agreement, the Stock Option
Agreement shall remain in full force and effect in accordance with its terms,
and, so long as the Stock Option Agreement remains in full force and effect,
Section 6.09 will survive termination of this Agreement.
(b) If SouthTrust terminates this Agreement pursuant to Section
8.01(f), Wachovia will reimburse SouthTrust for the reasonable expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby and will pay to SouthTrust a cash termination fee of
$100,000,000.
ARTICLE IX
MISCELLANEOUS
9.01. Survival. The representations, warranties, agreements and covenants
contained in this Agreement will not survive the Effective Time (other than
Section 2.06, Article III, Sections 6.05(b), 6.12 and this Article IX).
9.02. Waiver; Amendment. Before the Effective Time, any provision of this
Agreement may be (a) waived by the party benefited by the provision, but only in
writing, or (b) amended or modified at any time, but only by a written agreement
executed in the same manner as this Agreement, except to the extent that any
such amendment would violate North Carolina or Delaware law or require
resubmission of this Agreement or the plan of merger contained herein to the
shareholders of Wachovia or SouthTrust.
9.03. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to constitute an original.
40
9.04. Governing Law. This Agreement is governed by, and will be
interpreted in accordance with, the laws of the State of North Carolina
applicable to contracts made and to be performed entirely within that State.
9.05. Expenses. Except as set forth in Section 8.02(b), each party will
bear all expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby, except that Wachovia and SouthTrust will each
bear and pay one-half of the following expenses: (a) the costs (excluding the
fees and disbursements of counsel, financial advisors and accountants) incurred
in connection with the preparation (including copying and printing and
distributing) of the Registration Statement, the Joint Proxy Statement and
applications to Governmental Authorities for the approval of the Merger and (b)
all listing, filing or registration fees, including, without limitation, fees
paid for filing the Registration Statement with the SEC, filing fees for the HSR
Act notices and any other fees paid for filings with Governmental Authorities.
9.06. Notices. All notices, requests and other communications given or
made under this Agreement must be in writing and will be deemed given when
personally delivered, facsimile transmitted (with confirmation) or mailed by
registered or certified mail (return receipt requested) to the persons and
addresses set forth below or such other place as such party may specify by
notice.
If to Wachovia, to:
Wachovia Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Senior Executive Vice President,
General Counsel and Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: H. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
41
If to SouthTrust, to:
SouthTrust Corporation
3400 SouthTrust Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Principal Accounting Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & White LLP ▇▇▇▇ & ▇▇▇▇▇▇ LLP
One Federal Place 3100 SouthTrust Tower
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq. Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.07. Entire Understanding; No Third Party Beneficiaries. This Agreement
and the Stock Option Agreement represent the entire understanding of Wachovia
and SouthTrust regarding the transactions contemplated hereby and supersede any
and all other oral or written agreements previously made or purported to be
made, other than the Confidentiality Agreement, which will survive the execution
and delivery of this Agreement (provided that the Confidentiality Agreement is
hereby amended to provide that the eighth paragraph of the Confidentiality
Agreement will (1) no longer be binding on a party, and each party hereby waives
the other party's obligations under the eighth paragraph, once a Triggering
Event (as defined in the Stock Option Agreement) has occurred with respect to
the other party and this Agreement has been terminated) and (2) not impair the
rights of a party to make a response or propose amendments or modifications as
contemplated by the final proviso to Section 6.02(c). No representation,
warranty, inducement, promise, understanding or condition not set forth in this
Agreement has been made or relied on by any party in entering into this
Agreement. Except for Section 6.12, which is intended to benefit the Indemnified
Parties to the extent stated, nothing expressed or implied in this Agreement is
intended to confer any rights, remedies, obligations or liabilities upon any
person other than Wachovia and SouthTrust.
9.08. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions, or
the application of such provision to persons or circumstances other than those
as to which it has been held invalid or unenforceable, will remain in full force
and effect and will in no way be affected, impaired or invalidated thereby, so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such
determination, the parties will negotiate in good faith in an effort
42
to agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
9.09. Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement or the Confidentiality Agreement, before the
Effective Time, Wachovia may revise the structure of the Merger or otherwise
revise the method of effecting the Merger and related transactions, provided
that (1) such revision does not alter or change the kind or amount of
consideration to be delivered to the shareholders of SouthTrust and the holders
of SouthTrust Stock Options, (2) such revision does not adversely affect the tax
consequences to the shareholders of SouthTrust, (3) such revised structure or
method is reasonably capable of consummation without significant delay in
relation to the structure contemplated herein, and (4) such revision does not
otherwise cause any of the conditions set forth in Article VII not to be capable
of being fulfilled (unless duly waived by the party entitled to the benefits
thereof). This Agreement and any related documents will be appropriately amended
in order to reflect any such revised structure or method.
43
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
WACHOVIA CORPORATION
By: /s/ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
SOUTHTRUST CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Chairman and
Chief Executive Officer
ANNEX 1
FORM OF STOCK OPTION AGREEMENT
Please See Exhibit 10(a)
ANNEX 2
FORM OF AMENDMENT TO SOUTHTRUST RIGHTS AGREEMENT
AMENDMENT, dated as of June 20, 2004 (this "Amendment"), to the
Amended and Restated Rights Agreement, dated as of August 1, 2000 (the "Rights
Agreement"), between SouthTrust Corporation, a Delaware corporation
("SouthTrust"), and American Stock Transfer & Trust Company, a New York
corporation, as Rights Agent (the "Rights Agent").
RECITALS
A. Rights Agreement. SouthTrust and the Rights Agent have heretofore
executed and entered into the Rights Agreement.
B. Merger Agreement. SouthTrust contemplates entering into an Agreement
and Plan of Merger, dated as of June 20, 2004 (the "Merger Agreement"), with
Wachovia Corporation, a North Carolina corporation ("Wachovia"), pursuant to
which SouthTrust will merge with and into Wachovia. The Board of Directors of
SouthTrust has approved the Merger Agreement.
C. Stock Option Agreement. As an inducement to and condition of Wachovia's
willingness to enter into the Merger Agreement, SouthTrust will grant to
Wachovia an option to acquire shares of SouthTrust's common stock, par value
$2.50 per share, pursuant to a Stock Option Agreement, dated as of June 20, 2004
(the "Stock Option Agreement"), between SouthTrust and Wachovia. The Board of
Directors of SouthTrust has approved the Stock Option Agreement, which will be
entered into immediately following the execution and delivery of the Merger
Agreement.
D. Amendment. Pursuant to Section 27 of the Rights Agreement, SouthTrust
and the Rights Agent may from time to time supplement or amend any provision of
the Rights Agreement, and, in connection with the Merger Agreement and the Stock
Option Agreement and the consummation of the transactions contemplated thereby,
the Board of Directors of SouthTrust has determined that an amendment to the
Rights Agreement as set forth herein is necessary and desirable. All acts and
things necessary to make this Amendment a valid agreement, enforceable in
accordance with its terms, have been done and performed, and the execution and
delivery of this Amendment by SouthTrust and the Rights Agent have been in all
respects duly authorized by SouthTrust and the Rights Agent.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties agree as follows:
1. Amendment to Section 1. Section 1 of the Rights Agreement is amended to
add the following definitions as Sections 1(pp), 1(qq) and 1(rr):
"(pp) `Wachovia' shall mean Wachovia Corporation, a North Carolina
corporation."
"(qq) `Wachovia Merger Agreement' shall mean the Agreement and Plan
of Merger, dated as of June 20, 2004, between Wachovia and the Company, as
it may be amended or modified from time to time."
"(rr) `Wachovia Stock Option Agreement' shall mean the Stock Option
Agreement, dated as of June 20, 2004, between Wachovia, as grantee, and
the Company, as issuer, as it may be amended or modified from time to
time."
2. Amendment to the Definition of "Adverse Person". The definition of
"Adverse Person" in Section 1(d) of the Rights Agreement is amended to read in
its entirety as follows:
"(d) "Adverse Person" shall mean any person declared to be an
Adverse Person by the Board upon a determination that the criteria set
forth in Section 11(a)(ii)(B) apply to such Person, provided, however,
that Wachovia or any Affiliate or Associate of Wachovia shall not be
deemed to be an Adverse Person."
3. Amendment to the Definition of "Beneficial Owner". The definition of
"Beneficial Owner" in Section 1(g) of the Rights Agreement is amended by adding
the following sentence at the end thereof:
"Notwithstanding the foregoing or anything in this Agreement to the
contrary, Wachovia or any Affiliate or Associate of Wachovia shall not be
deemed to be the Beneficial Owner of, and shall not be deemed to
beneficially own, (A) any shares of Common Stock by reason of the
approval, execution, or delivery of the Wachovia Stock Option Agreement or
the Wachovia Merger Agreement, or by reason of the consummation of any
transaction contemplated by the Wachovia Stock Option Agreement or the
Wachovia Merger Agreement, (B) any shares of Common Stock of which
Wachovia or any Affiliate or Associate of Wachovia is a Beneficial Owner
or is deemed to beneficially own on June 20, 2004, (C) any shares of
Common Stock of which Wachovia or any Affiliate or Associate of Wachovia
inadvertently becomes the Beneficial Owner, or is inadvertently deemed to
beneficially own, after June 20, 2004, provided that Wachovia or any such
Affiliate or Associate, as the case may be, divests such inadvertently
acquired shares of Common Stock as promptly as practicable after it
becomes aware of such inadvertent acquisition and (D) any shares of Common
Stock of which Wachovia or any Affiliate or Associate of Wachovia holds or
acquires in a bona fide fiduciary or agency capacity or in satisfaction of
debts previously contracted."
2
4. Amendment to Section 7. Section 7 of the Rights Agreement is amended to
add the following sentence at the end thereof as Section 7(g):
"Nothing in this Agreement shall be construed to give any holder of Rights
or any other Person any legal or equitable rights, remedies or claims
under this Rights Agreement by reason of the approval, execution, or
delivery of the Wachovia Stock Option Agreement or the Wachovia Merger
Agreement, or by reason of the consummation of any transaction
contemplated by the Wachovia Stock Option Agreement or the Wachovia Merger
Agreement."
5. Effectiveness. This Amendment shall be deemed to be in force and
effective immediately prior to the execution and delivery of the Merger
Agreement. Except as amended hereby, the Rights Agreement shall remain in full
force and effect and shall otherwise be unaffected hereby.
6. Severability. If any term, provision, covenant or restriction contained
in this Amendment is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Amendment
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated.
7. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed entirely in that State.
8. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
9. Capitalized Terms. Capitalized terms used in this Amendment and not
defined herein shall have the meanings assigned thereto in the Rights Agreement.
3
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: SOUTHTRUST CORPORATION
By:___________________________ By:____________________________
Name: Name:
Title: Title:
Attest: AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:___________________________ By:____________________________
Name: Name:
Title: Title:
4
ANNEX 3
FORM OF SOUTHTRUST AFFILIATE LETTER
_______________, 2004
SouthTrust Corporation
3400 SouthTrust Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Wachovia Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
I have been advised that I may be deemed to be an "affiliate" of
SouthTrust Corporation ("SouthTrust"), as that term is defined for purposes of
Rule 145 promulgated by the Securities and Exchange Commission (the "SEC") under
the Securities Act of 1933, as amended (the "Securities Act"). I understand that
pursuant to the terms of the Agreement and Plan of Merger, dated as of June 20,
2004 (as amended or modified from time to time, the "Merger Agreement"), between
SouthTrust and Wachovia Corporation ("Wachovia"), SouthTrust plans to merge with
and into Wachovia (the "Merger"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Merger
Agreement.
I further understand that as a result of the Merger, I may receive common
stock of Wachovia (the "Wachovia Common Stock") in exchange for shares of common
stock of SouthTrust (the "SouthTrust Common Stock"), or as a result of the
exercise of SouthTrust Stock Options or similar Rights.
I have carefully read this letter and reviewed the Merger Agreement and
discussed their requirements and other applicable limitations upon my ability to
sell, transfer, or otherwise dispose of Wachovia Common Stock and SouthTrust
Common Stock, to the extent I felt necessary, with my counsel or counsel for
SouthTrust.
I represent, warrant and covenant with and to Wachovia that in the event I
receive any Wachovia Common Stock as a result of the Merger:
1. I will not make any sale, transfer, or other disposition of such
Wachovia Common Stock unless (a) such sale, transfer or other disposition has
been registered under the Securities Act, (b) such sale, transfer or other
disposition is made in conformity
with the provisions of Rule 145 under the Securities Act, or (c) in the opinion
of counsel in form and substance reasonably satisfactory to Wachovia, or under a
"no-action" letter obtained by me from the staff of the SEC, such sale, transfer
or other disposition will not violate or is otherwise exempt from registration
under the Securities Act.
2. I understand that, except as provided in Section 3.07 of the Merger
Agreement, Wachovia is under no obligation to register the sale, transfer or
other disposition of shares of Wachovia Common Stock by me or on my behalf under
the Securities Act or to take any other action necessary in order to make
compliance with an exemption from such registration available, except the
obligation to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, as more fully described below.
3. I understand that stop transfer instructions will be given to
Wachovia's transfer agent with respect to the shares of Wachovia Common Stock
issued to me as a result of the Merger and that there will be placed on the
certificates for such shares, or any substitutions therefor, a legend stating in
substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act of 1933 applies.
The shares represented by this certificate may be transferred only in
accordance with the terms of a letter agreement between the registered
holder hereof and Wachovia Corporation, a copy of which agreement is on
file at the principal offices of Wachovia Corporation."
4. I understand that, unless transfer by me of the Wachovia Common Stock
issued to me as a result of the Merger has been registered under the Securities
Act or such transfer is made in conformity with the provisions of Rule 145(d)
under the Securities Act, Wachovia reserves the right, in its sole discretion,
to place the following legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who
received such shares in a transaction to which Rule 145 under the
Securities Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933 and
may not be offered, sold, pledged or otherwise transferred except in
accordance with an exemption from the registration requirements of the
Securities Act of 1933."
I understand and agree that the legends set forth in paragraph 3 or 4
above, as the case may be, will be removed by delivery of substitute
certificates without such legend if I deliver to Wachovia (a) a copy of a
"no-action" letter from the staff of the SEC, or an opinion of counsel in form
and substance reasonably satisfactory to Wachovia, to the effect that such
legend is not required for purposes of the Securities Act, or (b) evidence
2
or representations reasonably satisfactory to Wachovia that Wachovia Common
Stock represented by such certificates is being or has been sold in conformity
with the provisions of Rule 145(d).
By its acceptance hereof, Wachovia agrees, for a period of two years after
the Effective Time, that it, as the Surviving Corporation, will file on a timely
basis all reports required to be filed by it pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, so that the public information
provisions of Rule 144(c) promulgated under the Securities Act are satisfied and
the resale provisions of Rule 145(d)(1) and (2) promulgated under the Securities
Act are therefore available to me in the event I desire to transfer any Wachovia
Common Stock issued to me in the Merger.
By signing this letter agreement, without limiting or abrogating the
agreements that I have made as set forth above, I do not admit that I am an
"affiliate" of SouthTrust within the meaning of the Securities Act or the rules
and regulations promulgated thereunder, and I do not waive any right that I may
have to object to any assertion that I am an affiliate.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of North Carolina. This letter agreement shall
terminate if and when the Merger Agreement is terminated according to its terms.
Very truly yours,
_______________________________
Name:
Accepted this _____ day of
_______________, 2004.
SOUTHTRUST CORPORATION
By: _________________________
Name:
Title:
WACHOVIA CORPORATION
By: _________________________
Name:
Title:
3