EXHIBIT 2.1
EXECUTION VERSION
===============================================================================
AGREEMENT AND PLAN OF MERGER
dated May 7, 2006
among
WACHOVIA CORPORATION,
BURR FINANCIAL CORPORATION
and
GOLDEN WEST FINANCIAL CORPORATION
===============================================================================
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS; INTERPRETATION
1.01.
DEFINITIONS...........................................................2
1.02.
INTERPRETATION........................................................9
ARTICLE II
THE MERGER
2.01. THE
MERGER..........................................................
10
2.02.
CLOSING..............................................................10
2.03. EFFECTIVE
TIME.......................................................10
2.04. EFFECTS OF THE
MERGER................................................11
2.05. CONSTITUENT
DOCUMENTS................................................11
2.06. GOLDEN WEST
BOARD OF DIRECTORS.......................................11
2.07. WACHOVIA
BOARD.......................................................11
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01.
CONSIDERATION........................................................11
3.02. CANCELLATION OF
SHARES...............................................12
3.03. RIGHTS AS
SHAREHOLDERS; STOCK TRANSFERS..............................12
3.04. EXCHANGE
PROCEDURES..................................................12
3.05. FRACTIONAL
SHARES....................................................14
3.06. ANTI-DILUTION
ADJUSTMENTS............................................14
3.07. DISSENTING
SHAREHOLDERS..............................................14
3.08. EFFECT ON MERGER
SUB COMMON STOCK....................................14
3.09. EFFECT ON
WACHOVIA STOCK.............................................14
3.10. STOCK
OPTIONS........................................................14
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.01. FOREBEARANCES OF
GOLDEN WEST.........................................15
4.02. FOREBEARANCES OF
WACHOVIA............................................18
4.03. COORDINATION OF
DIVIDENDS............................................18
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. DISCLOSURE
SCHEDULES.................................................19
5.02.
STANDARD.............................................................19
5.03. REPRESENTATIONS
AND WARRANTIES.......................................19
5.04. MERGER
SUB...........................................................30
ARTICLE VI
COVENANTS
6.01. REASONABLE BEST
EFFORTS..............................................30
6.02. SHAREHOLDER
APPROVALS................................................31
6.03. SEC
FILINGS..........................................................32
6.04. PRESS
RELEASES.......................................................33
6.05. ACCESS;
INFORMATION..................................................33
6.06. ACQUISITION
PROPOSALS................................................34
6.07. AFFILIATE
AGREEMENTS.................................................35
6.08. TAKEOVER LAWS
AND PROVISIONS.........................................35
6.09. EXCHANGE
LISTING.....................................................35
6.10. REGULATORY
APPLICATIONS..............................................35
6.11.
INDEMNIFICATION......................................................36
6.12. EMPLOYEE
MATTERS.....................................................37
6.13. NOTIFICATION OF
CERTAIN MATTERS......................................39
6.14. EXEMPTION FROM
LIABILITY UNDER SECTION 16(B).........................39
6.15. CERTAIN
MODIFICATIONS; RESTRUCTURING CHARGES.........................39
ARTICLE VII
CONDITIONS TO THE MERGER
7.01. CONDITIONS TO
EACH PARTY'S OBLIGATION TO EFFECT THE MERGER...........39
7.02. CONDITIONS TO
GOLDEN WEST'S OBLIGATION...............................41
7.03. CONDITIONS TO
WACHOVIA'S AND MERGER SUB'S OBLIGATION.................41
ARTICLE VIII
TERMINATION
8.01.
TERMINATION..........................................................42
8.02. EFFECT OF
TERMINATION AND ABANDONMENT................................43
8.03. TERMINATION
FEE......................................................43
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE IX
MISCELLANEOUS
9.01.
SURVIVAL.............................................................44
9.02. WAIVER;
AMENDMENT....................................................44
9.03.
COUNTERPARTS.........................................................44
9.04. GOVERNING
LAW........................................................45
9.05.
EXPENSES.............................................................45
9.06.
NOTICES..............................................................45
9.07. ENTIRE
UNDERSTANDING; NO THIRD PARTY
BENEFICIARIES...................46
9.08.
SEVERABILITY.........................................................46
9.09. ALTERNATIVE
STRUCTURE................................................47
Annex 1 Form of Voting
Agreement
Annex 2 Form of Golden
West Affiliate Letter
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AGREEMENT AND PLAN OF MERGER, dated May 7, 2006 (this
"AGREEMENT"),
among Wachovia Corporation, a North Carolina corporation
("WACHOVIA"), Burr
Financial Corporation, a North Carolina corporation and a wholly
owned
subsidiary of Wachovia ("MERGER SUB"), and Golden West Financial
Corporation, a
Delaware corporation ("GOLDEN WEST").
RECITALS
A. THE PROPOSED
TRANSACTION. The parties intend to effect a strategic
business combination through the merger of Golden West with and
into Merger Sub
(the "MERGER"), with Merger Sub the surviving corporation (the
"SURVIVING
CORPORATION").
B. BOARD DETERMINATIONS. The respective boards of directors of
Wachovia, Merger Sub and Golden West 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. APPROVAL OF STOCKHOLDER OF MERGER SUB. Wachovia, as the sole
stockholder of Merger Sub, has approved this Agreement, the Merger
and the other
transactions contemplated hereby.
D. 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, as amended (the "CODE"), and the rules and regulations
thereunder, and
intend for this Agreement to constitute a "plan of reorganization"
within the
meaning of the Code.
E. VOTING AGREEMENTS. As an inducement to and condition of
Wachovia's
willingness to enter into this Agreement, each of Herbert M.
Sandler, Marion O.
Sandler and Bernard A. Osher (each of whom is a member of the
Golden West Board)
will enter (each in his or her capacity as a stockholder of Golden
West) into
voting and support agreements (each, a "VOTING AGREEMENT"), the
form of which is
attached as ANNEX 1. The Voting Agreements will be entered
immediately prior to
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, Merger Sub and Golden West agree as
follows:
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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 Golden West or any of its
Significant
Subsidiaries, a proposal for a merger, consolidation or other
business
combination involving Golden West 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,
Golden West
or any of its Significant Subsidiaries, other than the transactions
contemplated
hereby and other than any sale of whole loans and securitizations
in the
ordinary course; PROVIDED, HOWEVER, that for purposes of Section
8.03(a),
references in this definition to "more than 15%" shall be deemed to
be
references to "25% or more".
"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.
"BENEFIT ARRANGEMENT" means, with respect to each of Wachovia and
Golden
West, 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 to any
Employee or
any of its current or former directors: 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
6.12(a).
"BHC
ACT" means the Bank Holding Company Act of 1956.
"CASH AMOUNT" has the
meaning assigned in Section 3.01.
"CASH CONSIDERATION" has the meaning assigned in Section 3.01.
"CERTIFICATE OF MERGER" has the meaning assigned in Section
2.03.
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"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 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 6.11(a).
"COVERED EMPLOYEES" has the meaning assigned in Section
6.12(a).
"DISCLOSURE SCHEDULE" has the meaning assigned in Section 5.01.
"DISSENTING SHAREHOLDER" has the meaning assigned in Section
3.07.
"DISSENTING SHARES" means shares of Golden West Common Stock the
holders of
which have perfected and not withdrawn or lost their right to
dissent with
respect to such shares under Section 262 of the GCL.
"EFFECTIVE TIME" has the meaning assigned in Section 2.03.
"EMPLOYEES" means current and former employees of each of Wachovia
and
Golden West, 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).
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"EXCHANGE FUND" 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.
"GOLDEN WEST" has the meaning assigned in the preamble to this
Agreement.
"GOLDEN WEST AFFILIATE" has the meaning assigned in Section
6.07.
"GOLDEN WEST BOARD" means the Board of Directors of Golden
West.
"GOLDEN WEST COMMON STOCK" means the common stock, par value $.10
per
share, of Golden West.
"GOLDEN WEST DIRECTOR APPOINTEES" has the meaning assigned in
Section 2.07.
"GOLDEN WEST INSIDERS" means
those officers and directors of Golden West
subject to the reporting requirements of Section 16(a) of the
Exchange Act and
who are listed in the Section 16 Information.
"GOLDEN WEST MEETING" has the meaning assigned in Section
6.02(c).
"GOLDEN WEST PREFERRED STOCK" means the preferred stock, par value
$1.00
per share, of Golden West.
"GOLDEN WEST STOCK OPTION" has the meaning assigned in Section
3.10(a).
"GOLDEN WEST STOCK PLANS" means (a) Golden West's 1996 Stock Option
Plan,
as amended and restated as of February 2, 1996 and as further
amended as of May
2, 2001 and (b) Golden West's 2005 Stock Incentive Plan.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency
or
commission or other governmental authority or instrumentality,
domestic or
foreign, or any industry self-regulatory authority.
"HOLA" means the Home Owners' Loan Act.
"HSR
ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976
and the rules and regulations thereunder.
"INDEMNIFIED PARTY" has the meaning assigned in Section
6.11(a).
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"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.
"MARKET PRICE" means the average of the last reported sale prices
of
Wachovia Common Stock, as reported by the NYSE Composite
Transactions Reporting
System (as reported in THE WALL STREET JOURNAL or, if not reported
therein, in
another authoritative source), for the last ten NYSE trading days
preceding the
Closing Date.
"MATERIAL ADVERSE EFFECT" means, with respect to Wachovia or Golden
West,
any effect that
(a)
has a material adverse effect on the financial condition, results
of
operations or business of Wachovia and its Subsidiaries, taken as a
whole, or
Golden West and its Subsidiaries, taken as a whole, respectively,
excluding
(with respect to each of clause (1), (3) and (5), only to the
extent that the
effect of a change on it is not disproportionate to the effect of
such change on
comparable U.S. banking 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 organizations generally,
(3) changes in
prevailing interest rates or other general economic or market
conditions
affecting U.S. banking 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, (5) changes in global or national
political
conditions (including the outbreak of war or acts of terrorism) or
due to
natural disasters, and (6) 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 Golden West, as
the case may
be, in connection with the Merger; or
(b)
would materially impair the ability of Wachovia or Golden West,
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.
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"MERGER CONSIDERATION" has the meaning assigned in Section
3.01.
"MERGER SUB" has the meaning assigned in the preamble to this
Agreement.
"MERGER SUB COMMON STOCK" means the common stock, par value $0.01
share, of
Merger Sub.
"NEW CERTIFICATES" has
the meaning assigned in Section 3.04(a).
"NEW
OPTION" has the meaning assigned in Section 3.10(a).
"NYSE" means the New York Stock Exchange.
"OLD
CERTIFICATES" has the meaning assigned in Section 3.04(a).
"OTHER PERSONS" has the meaning assigned in Section 6.06(a).
"OTS" means the Office of Thrift Supervision.
"PARTY" means Wachovia, Merger Sub or Golden West.
"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 in another
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
6.10(a).
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"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.
"SARBANES-OXLEY ACT" means the Sarbanes-Oxley 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.
"SECTION 16 INFORMATION" means information regarding the Golden
West
Insiders, including the number of shares of Golden West Common
Stock held or to
be held by a Golden West Insider expected to be exchanged for
Wachovia Common
Stock in the Merger, and the number and description of the options
to purchase
shares of Golden West Common Stock held by a Golden West 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.
"STOCK CONSIDERATION" has the meaning assigned in Section 3.01.
"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 Golden West 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 and timing 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
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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.
"TAX
RETURNS" means any return, amended return or other report
(including
elections, declarations, disclosures, schedules, estimates and
information
returns) required to be filed with any taxing authority with
respect to any Tax.
"VOTING AGREEMENTS" has the meaning assigned in the Recitals.
"WACHOVIA" has the meaning assigned in the preamble to this
Agreement.
"WACHOVIA BOARD" means the Board of Directors of Wachovia.
"WACHOVIA COMMON STOCK" means the common stock, par value $3.33 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.
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"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
3.10.
"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
1996 Master Stock Compensation Plan and the Wachovia 1992 Master
Stock
Compensation Plan, as amended.
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;
(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 and the Voting
Agreements as executed and delivered), 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;
and
(5) to any Governmental Authority include any successor to that
Governmental Authority; and
(6) to the date of this Agreement or the date hereof are to May
7, 2006.
(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.
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(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, Golden West will merge with and into Merger Sub at
the Effective
Time. At the Effective Time, the separate corporate existence of
Golden West
will terminate. Merger Sub 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 Sullivan & Cromwell LLP, 125 Broad Street, New
York, New York, 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, Golden West and Merger Sub 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 Golden
West agree and specify in the Articles of Merger and the
Certificate of Merger
(the time the Merger becomes effective being THE "EFFECTIVE
TIME").
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2.04. EFFECTS OF THE MERGER. The Merger will have the effects
prescribed by
the BCA, the GCL and other applicable law.
2.05. CONSTITUENT DOCUMENTS. (a) The certificate of incorporation
of Merger
Sub, as in effect immediately before the Effective Time, will be
the articles of
incorporation of the Surviving Corporation as of the Effective
Time.
(b) The by-laws of Merger Sub, as in effect immediately before
the
Effective Time, will be the by-laws of the Surviving Corporation as
of the
Effective Time.
2.06. GOLDEN WEST BOARD OF DIRECTORS. The board of directors of
the
Surviving Corporation shall consist of the members of the Merger
Sub board of
directors immediately before the Effective Time.
2.07. WACHOVIA BOARD. Wachovia agrees to cause two current members
of the
Golden West Board designated by Golden West and reasonably
acceptable to
Wachovia (the "GOLDEN WEST DIRECTOR APPOINTEES") to be appointed to
the Wachovia
Board immediately after the Effective Time.
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
Golden West Stock
and subject to Sections 3.04(c) and 3.05, the shares of Golden West
Common Stock
issued and outstanding immediately prior to the Effective Time,
with respect to
each holder of record of such shares, will be converted into the
right to
receive:
(1) a number of 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) equal
to
the product of (i) 1.365 (the "EXCHANGE RATIO"), multiplied by
(ii)
the number of shares of Golden West Common Stock held by such
holder
of record, multiplied by (iii) 77 percent (such product, the
"STOCK
CONSIDERATION"); and
(2) an amount in cash equal to the product of (i) $81.07 (the
"CASH AMOUNT"), multiplied by (ii) the number of shares of Golden
West
Common Stock held by such holder of record, multiplied by (iii)
23
percent (such product, the "CASH CONSIDERATION" and, together with
the
Stock Consideration, the "MERGER CONSIDERATION").
Notwithstanding anything in this Section 3.01 to the contrary, at
the Effective
Time and by virtue of the Merger, each share of Golden West Common
Stock
beneficially owned
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by Wachovia (other than shares held in a trust, fiduciary, or
nominee capacity
or as a result of debts previously contracted) or held in Golden
West'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
Golden
West Common Stock will no longer be outstanding and will
automatically be
canceled and will cease to exist. Certificates that represented
Golden West
Common Stock before the Effective Time will be deemed for all
purposes to
represent the number of shares of Wachovia Common Stock or cash
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 Golden West Common Stock will cease to be, and will have
no rights
as, shareholders of Golden West, other than rights to (a) receive
any then
unpaid dividend or other distribution with respect to such Golden
West 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 Golden West Common Stock on the
stock transfer
books of Golden West or the Surviving Corporation, and shares of
Golden West
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. 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 Golden
West (in such capacity, the "EXCHANGE AGENT"), for the benefit of
the holders of
certificates formerly representing shares of Golden West Common
Stock ("OLD
CERTIFICATES"), (1) certificates or, at Wachovia's option, evidence
of shares in
book entry form, representing the number of shares of Wachovia
Common Stock
("NEW CERTIFICATES") issuable to holders of Old Certificates under
this Article
III, (2) the aggregate Cash Consideration payable to holders of Old
Certificates
under this Article III and (3) cash payable pursuant to Section
3.05 (the
"EXCHANGE FUND").
(b) Promptly after the Effective Time, Wachovia will send or cause
to
be
sent to each person who was a recordholder of Golden West Common
Stock
immediately before the Effective Time transmittal materials, in
form
reasonably acceptable to Golden West, 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
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taking into account all shares of Golden West Common Stock then
held by
such
holder) and any check in respect of the Cash Consideration payable
to
the
holder of such Old Certificates, 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) If, on or after the date of this Agreement and prior to the
Closing Date, any holder of record (or group of related holders of
record)
of
shares of Golden West Common Stock (a "TRANSFEROR") transfers
or
conveys, in one or more transactions, a number of shares of Golden
West
Common Stock to one or more charitable organizations (as defined in
Section
170(c) of the Code) (each, a "TRANSFEREE" and together, the
"TRANSFEREES")
such
that the aggregate number of shares of Golden West Common Stock
so
transferred or conveyed by the Transferor to the Transferees
represents
more
than 0.1 percent of the issued and outstanding shares of Golden
West
Common Stock as of the date of this Agreement, then the Transferor
and the
Transferees may jointly and irrevocably elect by providing written
notice
to
Wachovia of such election (and proper provision shall be made on
the
transmittal materials to give effect to such election) that the
Transferor
and
the Transferees be treated as though they were a single holder
of
record for purposes of Section 3.01 and may designate in such
written
notice to Wachovia and the transmittal materials the manner in
which the
aggregate Stock Consideration and aggregate Cash Consideration that
the
Transferor and Transferees are entitled to receive under this
Article III
shall be allocated, and distributed by the Exchange Agent, among
the
Transferor and Transferees.
(d) None of Wachovia, Golden West or the Exchange Agent will be
liable
to
any former holder of Golden West 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.
(e) Each of Wachovia and the Surviving Corporation shall be
entitled
to
deduct and withhold, or cause the Exchange Agent to deduct and
withhold,
from
the consideration otherwise payable pursuant to this Agreement to
any
holder of Golden West Common Stock such amounts as it may be
required to
deduct and withhold with respect to the making of such payment
under the
Code, or any provision of state, local or foreign Tax law. To the
extent
that
amounts are so withheld by the Wachovia, the Surviving Corporation,
or
the
Exchange Agent, as the case may be, the withheld amounts shall
be
treated for all purposes of this Agreement as having been paid to
the
holders of Golden West Common Stock in respect of which the
deduction and
withholding was made by Wachovia, the Surviving Corporation or the
Exchange
Agent, as the case may be.
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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 Golden West 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 Market Price.
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 and
the Cash
Amount will be adjusted proportionately to account for such
change.
3.07. DISSENTING SHAREHOLDERS. (a) Each Dissenting Share shall not
be
converted into or represent a right to receive Merger Consideration
hereunder,
and the holder thereof shall be entitled only to such rights as are
granted by
Section 262 of the GCL. Golden West shall give Wachovia prompt
notice upon
receipt by the Golden West of any demand for payment pursuant to
Section 262 of
the GCL and of withdrawals of such notice and any other instruments
provided
pursuant to applicable law (any stockholder duly making such demand
being
hereinafter called a "DISSENTING SHAREHOLDER"), and Wachovia shall
have the
right to participate in all negotiations and proceedings with
respect to any
such demands. Any payments made in respect of Dissenting Shares
shall be made by
Wachovia.
(b) If any Dissenting Shareholder shall effectively withdraw or
lose
(through failure to perfect or otherwise) his or her right to
dissent under
Section 262 of the GCL at or prior to the Effective Time, such
holder's
shares of Golden West Common Stock shall be converted into a right
to
receive the Merger Consideration in accordance with the
applicable
provisions of this Agreement.
3.08. EFFECT ON MERGER SUB COMMON STOCK. Each share of Merger Sub
Common
Stock outstanding immediately prior to the Effective Time will
remain
outstanding.
3.09. EFFECT ON WACHOVIA STOCK. Each share of Wachovia Stock
outstanding
immediately prior to the Effective Time will remain
outstanding.
3.10. STOCK OPTIONS. At the Effective Time, by virtue of the Merger
and
without any action on the part of any holder of any outstanding
option to
purchase shares of Golden West Common Stock under the Golden West
Stock Plans
and any other Benefit Arrangement, whether vested or unvested,
exercisable or
unexercisable (each, a "GOLDEN WEST STOCK OPTION"), each Golden
West Stock
Option that is outstanding and unexercised immediately prior
thereto shall
immediately and fully vest and be deemed to constitute an option (a
"NEW
OPTION") to purchase, on the same terms and conditions as
14
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were applicable under the terms of the stock option plan under
which the Golden
West Stock Option was granted and the applicable award agreement
thereunder
(taking into account the accelerated vesting provided in this
Section 3.10 and
the amendments to the Golden West Stock Options as Previously
Disclosed), such
number of shares of Wachovia Common Stock and at such an exercise
price per
share determined as follows:
(1) NUMBER OF SHARES. The number of shares of Wachovia Common
Stock subject to a New Option shall be equal to the product of (A)
the
number of shares of Golden West Common Stock purchasable upon
exercise
of the Golden West Stock Option and (B) the Exchange Ratio, the
product being rounded down to the nearest whole share; and
(2) EXERCISE PRICE. The exercise price per share of Wachovia
Common Stock purchasable upon exercise of a New Option shall be
equal
to (A) the exercise price per share of Golden West Common Stock
under
the Golden West Stock Option divided by (B) the Exchange Ratio,
the
quotient being rounded up to the nearest cent.
For the avoidance of doubt, the foregoing adjustments shall be
effected in a
manner consistent with Section 424(a) of the Code.
(b) Before the Effective Time, Golden West, or its Board of
Directors or an appropriate committee thereof, shall take all
action
necessary on its part to give effect to the provisions of
Section
3.10(a) and shall take such other actions reasonably requested
by
Wachovia to give effect to the foregoing. Before the Effective
Time,
Wachovia shall take all corporate action necessary to reserve
for
future issuance a sufficient additional number of shares of
Wachovia
Common Stock to provide for the satisfaction of its obligations
with
respect to the New Options. As soon as practicable, but in no
event
later than the Effective Time, Wachovia shall file a
registration
statement on Form S-8 (or any successor or other appropriate
form)
with respect to the Wachovia Common Stock issuable upon exercise
of
the New Options and shall maintain the effectiveness of such
registration statement (and to maintain the current status of
the
prospectus or prospectuses contained therein) for so long as such
New
Options remain outstanding.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.01. FOREBEARANCES OF GOLDEN WEST. Golden West agrees that from
the date
hereof until the Effective Time, except as expressly contemplated
by this
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:
15
<PAGE>
(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 its business
organizations and
assets and maintain its 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 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, (1) issue, sell or
otherwise
permit to become outstanding, 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 or (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 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 (which shall be deemed to include
asset
sales, including sales of whole loans and securitizations, in the
ordinary
course) 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 or
otherwise in
the
ordinary and usual course of business consistent with past
practice)
all
or any portion of the assets, business, deposits or properties of
any
other entity in an amount that is material to Golden West.
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<PAGE>
(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
financial
or
regulatory accounting principles, practices or methods or change
any
actuarial or other assumptions used to calculate funding
obligations with
respect to any Benefit Arrangement, other than (with prior notice
to
Wachovia) 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 (with
prior
notice to Wachovia) as may be required by applicable law or
regulation.
(j) COMPENSATION AND
BENEFITS. 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,
but
not
to exceed in the aggregate 5% of the aggregate annual salaries of
the
employees of Golden West and its Subsidiaries, taken as a whole, 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 Benefit
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 Golden West Stock Options or other
compensation or benefits payable under any Benefit Arrangement,
fund or in
any
other way secure the payment of compensation or benefits under
any
Benefit Arrangement, change the manner in which contributions to
any
Benefit Arrangement are made or determined, or add any new
participants to
or
increase the principal sum of 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.
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<PAGE>
(l) TAXES. Make or change any material Tax elections, change or
consent to any material change in its or its Subsidiaries' method
of
accounting for Tax purposes (except as required by applicable Tax
law),
settle or compromise any material Tax liability, claim or
assessment, or
file
any material amended Tax Return.
(m) 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
as Previously Disclosed, without the prior written consent of
Golden West, it
will not, and will cause each of its Subsidiaries not to:
(a) CONSTITUENT DOCUMENTS. Amend its Constituent Documents in a
manner
that
would materially and adversely affect the rights and privileges
of
holders of Wachovia Common Stock or prevent or materially impede
or
materially delay consummation of the transactions contemplated
hereby.
(b) 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 (with
prior
notice to Golden West) as may be required by applicable law or
regulation.
(c) COMMITMENTS. Enter into any contract with respect to, or
otherwise
agree or commit to do, any of the foregoing.
Notwithstanding anything in paragraphs (a), (b) or (c) 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 delayed or
that the Requisite Regulatory Approvals will be materially more
difficult to
obtain.
4.03. COORDINATION OF DIVIDENDS. Until the Effective Time, Golden
West will
coordinate with Wachovia regarding the declaration of any dividends
or other
distributions with respect to Golden West Common Stock and the
related record
dates and payment dates, it being intended that Golden West
shareholders will
not receive more than one dividend, or fail to receive one
dividend, for any
single calendar quarter on their shares of Golden West Common Stock
(including
any shares of Wachovia Common Stock received in exchange therefor
in the
Merger).
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. DISCLOSURE SCHEDULES. Before entry into this Agreement,
Wachovia
delivered to Golden West a schedule and Golden West 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 Golden West or Wachovia contained in Section 5.03 or
5.04 (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 or 5.04, has had or is reasonably likely
to have a
Material Adverse Effect with respect to Golden West or Wachovia, as
the case may
be.
5.03. REPRESENTATIONS AND WARRANTIES. Except as Previously
Disclosed or as
set forth in its Regulatory Filings filed or furnished with the SEC
on or after
January 1, 2003 and prior to the date of this Agreement, Golden
West represents
and warrants to Wachovia, and Wachovia hereby represents and
warrants to Golden
West, 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) GOLDEN WEST STOCK. In the case of Golden West:
The
authorized capital stock of Golden West consists of 600,000,000
shares
of Golden West Common Stock and 20,000,000 shares of Golden West
Preferred
Stock. As of the date of this Agreement, no more than 309,000,000
shares of
Golden West Common Stock and no shares of Golden West Preferred
Stock were
outstanding. As of the date of this Agreement, no more than
34,600,000 shares of
Golden West Common Stock were reserved for issuance under the
Golden West Stock
Plans (of which no more than 9,600,000 shares were reserved for
issuance in
respect of awards outstanding as of such date). The outstanding
shares of Golden
West Common Stock have been duly
19
<PAGE>
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). Except for shares issuable pursuant to the
Golden West Stock
Plans, as of the date of this Agreement, there are no shares of
Golden West
Stock reserved for issuance, Golden West does not have any Rights
outstanding
with respect to Golden West Stock, and Golden West does not have
any commitment
to authorize, issue or sell any Golden West Stock or Rights, except
pursuant to
this Agreement, outstanding Golden West Stock Options and the
Golden West Stock
Plans. As of the date of this Agreement, Golden West has no
commitment to
redeem, repurchase or otherwise acquire, or to register with the
SEC, any shares
of Golden West 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 Pr
