EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
WACHOVIA CORPORATION,
a North Carolina corporation
WESTERN FINANCIAL BANK,
a federal savings bank
WESTCORP,
a California corporation
and
WFS FINANCIAL INC,
a California corporation
Dated as of September 12, 2005
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND TERMS........................................................................ 2
Section 1.1 Definitions............................................................................ 2
Section 1.2 Other Terms............................................................................ 10
Section 1.3 Other Definitional Provisions.......................................................... 10
ARTICLE II THE MERGERS................................................................................. 10
Section 2.1 The Parent Merger...................................................................... 10
Section 2.2 The Subsidiary Merger.................................................................. 10
Section 2.3 The Closing............................................................................ 11
Section 2.4 Effective Times........................................................................ 11
Section 2.5 Effect of Mergers...................................................................... 11
Section 2.6 Exchange of Certificates............................................................... 18
Section 2.7 Actions Following the Subsidiary Effective Time........................................ 22
Section 2.8 Further Action......................................................................... 22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................. 21
Section 3.1 Due Incorporation; Organization........................................................ 22
Section 3.2 Capitalization......................................................................... 22
Section 3.3 Due Authorization of Transaction; Binding Obligation................................... 24
Section 3.4 Non-Contravention...................................................................... 25
Section 3.5 Approvals, Consents and Filings........................................................ 25
Section 3.6 Litigation; Regulatory Matters......................................................... 25
Section 3.7 Brokers' Fees.......................................................................... 26
Section 3.8 Reports and Financial Information...................................................... 26
Section 3.9 Absence of Certain Changes or Events................................................... 27
Section 3.10 Taxes................................................................................. 28
Section 3.11 Employee Matters...................................................................... 29
Section 3.12 Material Contracts.................................................................... 30
Section 3.13 Regulatory Compliance................................................................. 31
Section 3.14 Title to Properties; Leases........................................................... 31
Section 3.15 Intellectual Property................................................................. 31
Section 3.16 Environmental Matters................................................................. 32
Section 3.17 Labor Matters......................................................................... 33
Section 3.18 Opinions of Financial Advisors........................................................ 33
Section 3.19 Takeover Statutes..................................................................... 33
Section 3.20 Information in Registration Statement and Joint Proxy Statement....................... 33
Section 3.21 Insurance............................................................................. 34
Section 3.22 Assets and Activities................................................................. 34
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER............................................. 34
Section 4.1 Due Incorporation; Organization........................................................ 34
Section 4.2 Capitalization......................................................................... 34
Section 4.3 Due Authorization of Transaction; Binding Obligation................................... 35
Section 4.4 Non-Contravention...................................................................... 35
Section 4.5 Approvals, Consents, and Filings....................................................... 35
Section 4.6 Litigation; Regulatory Matters......................................................... 36
Section 4.7 Brokers' Fees.......................................................................... 36
Section 4.8 Reports and Financial Information...................................................... 36
Section 4.9 Absence of Certain Changes or Events................................................... 37
Section 4.10 Taxes................................................................................. 38
Section 4.11 Information in Registration Statement and Joint Proxy Statement....................... 39
Section 4.12 Regulatory Compliance................................................................. 39
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGERS...................................................... 39
Section 5.1 Conduct of Business of the Company and WFS Pending the Mergers......................... 39
Section 5.2 Compensation Plans..................................................................... 41
Section 5.3 No Solicitation........................................................................ 42
Section 5.4 Conduct of Business by the Purchaser Pending the Mergers............................... 43
Section 5.5 Tax Free Reorganization................................................................ 43
ARTICLE VI ADDITIONAL AGREEMENTS....................................................................... 44
Section 6.1 Shareholder Approvals.................................................................. 44
Section 6.2 Registration Statement; Disclosure Document............................................ 45
Section 6.3 Confidentiality; Access to Information................................................. 46
Section 6.4 Consents; Approvals.................................................................... 47
Section 6.5 Advice of Changes...................................................................... 48
Section 6.6 Public Announcements................................................................... 48
Section 6.7 Conveyance Taxes....................................................................... 48
Section 6.8 Director and Officer Liability......................................................... 48
Section 6.9 Section 16 of the Exchange Act......................................................... 50
Section 6.10 Employee Matters...................................................................... 50
Section 6.11 Affiliates............................................................................ 51
Section 6.12 NYSE Listing.......................................................................... 52
Section 6.13 Reservation, Registration and Listing of Options and Other Stock-Based Awards......... 52
Section 6.14 Dividends............................................................................. 52
Section 6.15 Certain Modifications; Restructuring Charges.......................................... 52
ARTICLE VII CONDITIONS TO THE MERGERS.................................................................. 53
Section 7.1 Conditions to Obligations of Each Party to Effect the Mergers.......................... 53
Section 7.2 Additional Conditions to Obligations of the Purchaser.................................. 54
Section 7.3 Additional Conditions to Obligation of the Company and WFS............................. 54
ARTICLE VIII TERMINATION............................................................................... 56
Section 8.1 Termination............................................................................ 56
Section 8.2 Effect of Termination.................................................................. 57
Section 8.3 Fees and Expenses...................................................................... 57
ARTICLE IX GENERAL PROVISIONS.......................................................................... 59
Section 9.1 Effectiveness of Representations, Warranties and Agreements........................... 59
Section 9.2 Notices............................................................................... 59
Section 9.3 Amendment............................................................................. 61
Section 9.4 Waiver................................................................................ 61
Section 9.5 Headings.............................................................................. 62
Section 9.6 Severability.......................................................................... 62
Section 9.7 Entire Agreement...................................................................... 62
Section 9.8 Assignment............................................................................ 62
Section 9.9 Parties in Interest................................................................... 62
Section 9.10 Governing Law......................................................................... 62
Section 9.11 Counterparts.......................................................................... 62
Section 9.12 Waiver of Jury Trial.................................................................. 62
Section 9.13 Alternative Structure................................................................. 63
Exhibits*
A. Form of Voting Agreement
B. Form of Noncompete Agreement
C. Form of Purchaser Representation Letter
D. Form of Company Representation Letter
E. Form of Affiliate Letter
F. Form of Bank Plan of Merger
* Schedules and similar attachments to this Agreement have been omitted pursuant
to Item 601(b)(2) of Regulation S-K. Any omitted schedule or similar
attachment will be furnished supplementally to the Commission upon request.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 12, 2005, (this
"Agreement"), by and among Westcorp, a California corporation (the "Company"),
Western Financial Bank, a federal savings bank and wholly owned subsidiary of
the Company ("WFB"), WFS Financial Inc, a California corporation ("WFS") and
majority-owned subsidiary of WFB, and Wachovia Corporation, a North Carolina
corporation (the "Purchaser"). The Company, WFB, WFS and the Purchaser are
sometimes collectively referred to herein as the "parties."
W I T N E S S E T H :
WHEREAS, the board of directors of the Company, upon the recommendation of
a committee of independent directors of the Company who are not also directors
of WFS (the "Company Special Committee") (i) has determined that it is fair to
and in the best interests of the Company and its shareholders for the Company to
enter into a strategic business combination with the Purchaser upon the terms
and subject to the conditions set forth herein, and (ii) has approved this
Agreement and the Parent Merger;
WHEREAS, the board of directors of WFB (i) has determined that it is fair
to and in the best interests of WFB and its shareholder for WFB to enter into a
strategic business combination with Purchaser upon the terms and subject to the
conditions set forth herein, and (ii) has approved this Agreement, the
Subsidiary Merger, the Bank Plan of Merger and the Bank Merger;
WHEREAS, the board of directors of WFS, upon the recommendation of a
committee of independent directors of WFS who are not also directors of the
Company (the "WFS Special Committee"), (i) has determined that it is fair to and
in the best interests of WFS and its shareholders (other than WFB and its
affiliates) for WFS to enter into a strategic business combination with the
Purchaser upon the terms and subject to the conditions set forth herein, and
(ii) has approved this Agreement and the Subsidiary Merger;
WHEREAS, the board of directors of the Purchaser (i) has determined that
it is fair to and in the best interests of the Purchaser and its shareholders
for the Purchaser to enter into a strategic business combination with the
Company and WFS upon the terms and subject to the conditions set forth herein,
and (ii) has approved this Agreement;
WHEREAS, for federal income tax purposes, it is intended that each of the
Parent Merger and the Subsidiary Merger constitute a reorganization under the
provisions of Section 368 of the Code, and that the Subsidiary Merger also
constitutes a complete liquidation under Section 332 of the Code;
WHEREAS, concurrently with the execution of this Agreement, the
shareholders of the Company set forth on Schedule 1 of the Company Disclosure
Letter are each entering into a voting agreement in the form of Exhibit "A"
attached hereto (each a "Voting Agreement") with the Purchaser;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Purchaser to enter into this Agreement, Xxxxxx Xxxxx, as a key
shareholder of the Company,
has entered into a noncompete agreement in the form of Exhibit "B" attached
hereto (the "Noncompete Agreement") with the Purchaser; and
WHEREAS, in connection with the execution of this Agreement and as an
inducement to the Purchaser to enter into this Agreement, certain other key
shareholders of the Company are entering into restrictive covenants agreements
with the Purchaser.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Purchaser, the Company, WFB and WFS hereby agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Definitions. The following terms, as used herein, have
the following meanings:
"Acquisition Proposal" has the meaning set forth in Section 5.3(a) hereof.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act.
"Agreement" means this Agreement and Plan of Merger, as the same may be
amended or supplemented from time to time in accordance with the terms hereof.
"Alternative Transaction" means any of the following: (i) a transaction
pursuant to which any Third Party (or group of Third Parties) seeks to acquire,
directly or indirectly, more than fifteen percent (15%) of (a) the outstanding
shares of Company Common Stock or (b) the capital stock of any of its
Subsidiaries, whether from the Company or pursuant to a tender offer or exchange
offer or otherwise; (ii) a merger, share exchange, consolidation or other
business combination involving the Company or any of its Subsidiaries pursuant
to which any Third Party acquires more than fifteen percent (15%) of the
outstanding equity securities of (a) the Company or (b) its Subsidiaries or (c)
the entity surviving such merger or business combination; or (iii) any other
transaction pursuant to which any Third Party acquires control of all or
substantially all of the assets of the Company or any of its Subsidiaries;
provided, however, that the term Alternative Transaction shall not include any
acquisition of (x) securities by a broker dealer in connection with a bona fide
public offering of such securities, or (y) securities or assets of the Company
or any Subsidiary by a Third Party (or group of Third Parties) in connection
with a divestiture required by applicable Governmental Authorities or required
in order to comply with Applicable Law.
"Applicable Law" means, with respect to any Person, any domestic, foreign,
federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority applicable to such Person or
any of its Affiliates or any of their respective properties, assets, officers,
directors, employees, consultants or agents (in connection with such officer's,
director's, employee's, consultant's or agent's activities on behalf of such
Person or any of its Affiliates).
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"Assumed Company Stock Options" has the meaning set forth in Section
2.5(f)(i) hereof.
"Assumed WFS Stock Options" has the meaning set forth in Section 2.5(f)(i)
hereof.
"Bank Conversion" means the conversion of WFB into a national banking
association under the name "Western Financial Bank, National Association" (or
other permissible name).
"Bank Merger" has the meaning set forth in Section 2.7 hereof.
"Bank Plan of Merger" has the meaning set forth in Section 2.7 hereof.
"Benefits Transition Date" has the meaning set forth in Section 6.10(a)
hereof.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York, are authorized or required by
Applicable Law to close.
"California Code" means the California Corporations Code and all
amendments and additions thereto.
"Closing" has the meaning set forth in Section 2.3 hereof.
"Closing Date" has the meaning set forth in Section 2.3 hereof.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto, and the rules and regulations thereunder.
"Company" has the meaning set forth in the preamble hereof.
"Company Balance Sheet" has the meaning set forth in Section 3.9(a)
hereof.
"Company Certificates" has the meaning set forth in Section 2.6(b) hereof.
"Company Common Stock" means the common stock, $1.00 par value, of the
Company.
"Company Disclosure Letter" means the written disclosure schedule
delivered by the Company to the Purchaser on the date of this Agreement.
"Company Dissenting Shares" has the meaning set forth in Section 2.5(g)(i)
hereof.
"Company Employee Plans" means all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
fringe or employee benefit plans, programs or arrangements, and any current or
former employment or executive compensation or severance agreements, written or
otherwise, for the benefit of, or relating to, any employee of the Company or
any of its Subsidiaries, and excluding agreements with former employees under
which the Company or any of its Subsidiaries has no remaining monetary
obligations or obligations to issue Company Common Stock or WFS Common Stock.
"Company Incentive Plan" means the Company 2001 Stock Incentive Plan.
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"Company Indemnified Parties" has the meaning set forth in Section 6.8(a)
hereof.
"Company Material Adverse Effect" means any event, occurrence,
circumstance or effect, individually or in the aggregate, which (i) is
materially adverse to the business, results of operations or condition
(financial or other) of the Company and its Subsidiaries taken as a whole, other
than any such effect to the extent attributable to or resulting from (but only
to the extent that the effect of a change on the Company and its Subsidiaries is
not materially different than on comparable banks, savings and loan holding
companies, federal savings banks or auto finance companies): (v) any change in
the laws, rules or regulations governing banks, savings and loan holding
companies, federal savings banks or auto finance companies of general
applicability or interpretations thereof by courts or any Governmental
Authority, (w) any change in GAAP, regulatory accounting principles or
interpretations thereof, in each case which affects savings and loan holding
companies, federal savings banks, auto finance companies or banks or their
holding companies generally, (x) events, conditions or trends in economic,
business or financial conditions affecting banks or their holding companies,
savings and loan holding companies, federal savings banks or auto financing
companies generally, or (y) changes, after the date hereof, in global or
national political conditions (including the outbreak of war or acts of
terrorism), or (ii) materially impairs the ability of the Company or any of its
Subsidiaries to timely perform its obligations under this Agreement or
consummate the transactions contemplated hereby on a timely basis. References in
this Agreement to dollar amount thresholds shall not be deemed to be evidence of
materiality or of a Company Material Adverse Effect.
"Company Material Contracts" has the meaning set forth in Section 3.12(a)
hereof.
"Company Permits" has the meaning set forth in Section 3.13(b) hereof.
"Company Preferred Stock" means the preferred stock, no par value, of the
Company.
"Company Restricted Shares" has the meaning set forth in Section
2.5(f)(iv) hereof.
"Company RSUs has the meaning set forth in Section 2.5(f)(v) hereof.
"Company SEC Reports" has the meaning set forth in Section 3.8(a) hereof.
"Company Shareholder Meeting" has the meaning set forth in Section 6.1(a)
hereof.
"Company Special Committee" has the meaning set forth in the recitals
hereto.
"Company Stock Options" means all options to purchase shares of Company
Common Stock under the Company Stock Plans.
"Company Stock Plans" means the Company Amended and Restated 1991 Stock
Option Plan and the Company Incentive Plan.
"Confidentiality Agreement" has the meaning set forth in Section 6.3(a)
hereof.
"Continuing Employees" has the meaning set forth in Section 6.10(a)
hereof.
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"Contract" means any contract, agreement, undertaking, indenture, note,
bond, loan, instrument, lease, mortgage, commitment or other binding agreement,
whether written or oral.
"Disclosure Document" has the meaning set forth in Section 6.2(a) hereof.
"Dissenting Shares" has the meaning set forth in Section 2.5(g)(i) hereof.
"Environmental Law" means any federal, state or local law, statute, rule
or regulation relating to the environment or occupational health and safety,
including any statute, regulation, administrative decision or order pertaining
to (i) treatment, storage, disposal, generation and transportation of
industrial, toxic or hazardous materials or substances or solid or hazardous
waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the unauthorized release or threatened release into the
environment of industrial, toxic or hazardous materials or substances, or solid
or hazardous waste, including emissions, discharges, injections, spills, escapes
or dumping of pollutants, contaminants or chemicals; (v) the protection of wild
life, marine life and wetlands, including all endangered and threatened species;
(vi) health and safety of employees and other persons; and (vii) manufacturing,
processing, using, distributing, treating, storing, disposing, transporting or
handling of materials regulated under any Environmental Law as pollutants,
contaminants, toxic or hazardous materials or substances or oil or petroleum
products or solid or hazardous waste. As used above, the terms "release" and
"environment" shall have the meaning set forth in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor thereto, and the rules and regulations thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 2.6(a) hereof.
"Exchange Fund" has the meaning set forth in Section 2.6(a) hereof.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"GAAP" means generally accepted accounting principles in the United States
applied on a consistent basis throughout the specified period.
"Governmental Authority" means any territorial, federal, state or local,
whether domestic, foreign or supranational governmental or quasi-governmental
authority, instrumentality, court, commission, tribunal or organization; any
regulatory, administrative or other agency, including the OTS, the Federal
Reserve Board, the OCC and the FDIC; any self-regulatory organization; or any
political or other subdivision, department or branch of any of the foregoing.
"Guarantor" has the meaning set forth in Section 8.3(e) hereof.
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"Hazardous Substance" means any substance listed, defined, designated or
classified as hazardous, toxic or radioactive under any applicable Environmental
Law, including petroleum and any derivative or by-products thereof.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
"Indemnified Parties" has the meaning set forth in Section 6.8(a) hereof.
"IRS" means the U.S. Internal Revenue Service.
"Joint Proxy Statement" has the meaning set forth in Section 6.2(a)
hereof.
"Liens" has the meaning set forth in Section 3.2(d) hereof.
"Mergers" means the Parent Merger and the Subsidiary Merger collectively.
"Non-Assumed Options" means all Company Stock Options that are held by
non-employee directors of the Company, WFB and WFS.
"North Carolina Code" means the North Carolina Business Corporation Act.
"NYSE" means the New York Stock Exchange.
"OCC" means the Office of the Comptroller of the Currency.
"OTS" means the Office of Thrift Supervision.
"Owned Real Property" has the meaning set forth in Section 3.14(a) hereof.
"Parent Agreements of Merger" has the meaning set forth in Section 2.4
hereof.
"Parent Effective Time" has the meaning set forth in Section 2.4 hereof.
"Parent Exchange Ratio" has the meaning set forth in Section 2.5(e)(i)(1)
hereof.
"Parent Merger" has the meaning set forth in Section 2.1 hereof.
"Parent Merger Consideration" has the meaning set forth in Section
2.5(e)(i)(1) hereof.
"Parent Surviving Corporation" has the meaning set forth in Section 2.1
hereof.
"Parties" has the meaning set forth in the preamble hereof.
"Person" means an individual, a corporation, a limited liability company,
a partnership, an association, a trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Permitted Liens" mean: (i) Liens for Taxes, assessments or similar
charges incurred in the ordinary course of business and consistent with past
practice that are not yet due and payable
6
or are being contested in good faith; (ii) pledges or deposits made in the
ordinary course of business and consistent with past practice; (iii) Liens of
mechanics, materialmen, warehousemen or other like Liens securing obligations
incurred in the ordinary course of business and consistent with past practice
that are not yet due and payable or are being contested in good faith; (iv)
Liens incurred in connection with capital leases and purchase money financings
solely with respect to properties so financed; and (v) similar Liens and
encumbrances which are incurred in the ordinary course of business and
consistent with past practice and which do not individually or in the aggregate
materially detract from the value of such assets or properties or materially
impair the use thereof in the operation of such business.
"Proportionate Termination Fee" has the meaning set forth in Section
8.3(c) hereof.
"Proprietary Asset" means any patent, patent application, trademark
(whether registered or unregistered), service xxxx application, copyright
(whether registered or unregistered), copyright application, maskwork, maskwork
application, computer software, internet domain registrations or other
internet-related assets such as websites, inventions or designs.
"Prospectus" has the meaning set forth in Section 6.2(a) hereof.
"Purchaser" has the meaning set forth in the preamble hereof.
"Purchaser Balance Sheet" has the meaning set forth in Section 4.9(a)
hereof.
"Purchaser Disclosure Letter" means the written disclosure schedule
delivered by the Purchaser to the Company and WFS on the date of this Agreement.
"Purchaser Material Adverse Effect" means any event, occurrence,
circumstance or effect, individually or in the aggregate, which (i) is
materially adverse to the business, results of operations or condition
(financial or other) of the Purchaser and its Subsidiaries taken as a whole,
other than any such effect to the extent attributable to or resulting from (but
only to the extent that the effect of a change on the Purchaser is not
materially different than on comparable United States banking or financial
services organizations): (v) any change in the laws, rules or regulations
governing banks or their holding companies of general applicability or
interpretations thereof by courts or any Governmental Authority, (w) any change
in GAAP, regulatory accounting principles or interpretations thereof, in each
case which affects banks or their holding companies, (x) events, conditions or
trends in economic, business or financial conditions affecting banks or their
holding companies, or (y) changes, after the date hereof, in global or national
political conditions (including the outbreak of war or acts of terrorism), or
(ii) materially impairs the ability of the Purchaser or its Subsidiaries to
timely perform its obligations under this Agreement or consummate the
transactions contemplated hereby on a timely basis. References in this Agreement
to dollar amount thresholds shall not be deemed to be evidence of materiality or
of a Purchaser Material Adverse Effect.
"Purchaser Permits" has the meaning set forth in Section 4.12(b) hereof.
"Purchaser 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 the Purchaser.
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"Purchaser Restricted Stock Right" has the meaning set forth in Section
2.5(f)(iv) hereof.
"Purchaser Rights" means the rights to purchase Purchaser Shares issued
under the Purchaser Rights Agreement.
"Purchaser Rights Agreement" means the Shareholder Protection Rights
Agreement, dated as of December 19, 2000, between Purchaser and Wachovia Bank,
National Association, as Rights Agent.
"Purchaser RSU" has the meaning set forth in Section 2.5(f)(v) hereof.
"Purchaser SEC Reports" has the meaning set forth in Section 4.8(a)
hereof.
"Purchaser Shares" means the shares of common stock, par value $3.33 1/3
per share, of the Purchaser (including the requisite number of Purchaser Rights
issued and attached thereto under the Purchaser Rights Agreement).
"Registration Statement" has the meaning set forth in Section 6.2(a)
hereof.
"Requisite WFS Approval" has the meaning set forth in Section 7.1(c)
hereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Section 16 Information" means information regarding those officers and
directors of the Company and WFS subject to the reporting requirements of
Section 16(a) of the Exchange Act, including the number of shares of Company
Common Stock or WFS Common Stock, as applicable, held or to be held by such
Persons expected to be exchanged for Purchaser Shares in the Parent Merger or
the Subsidiary Merger, as applicable, and the other transactions contemplated by
this Agreement, and the number and description of the options to purchase shares
of Company Common Stock or the options to purchase shares of WFS Common Stock,
as applicable, held by such Persons and expected to be converted into options to
purchase Purchaser Shares in connection with the Parent Merger or the Subsidiary
Merger, as applicable and the other transactions contemplated by this Agreement.
"SOX" has the meaning set forth in Section 3.8(a) hereof.
"Subsidiary" means, with respect to any Person, any bank, corporation,
partnership, limited liability company or other organization, whether
incorporated or unincorporated, that is, or required to be, consolidated with
such Person for financial reporting purposes under GAAP.
"Subsidiary Agreements of Merger" has the meaning set forth in Section 2.4
hereof.
"Subsidiary Effective Time" has the meaning set forth in Section 2.4
hereof.
"Subsidiary Exchange Ratio" has the meaning set forth in Section
2.5(e)(ii)(1) hereof.
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"Subsidiary Merger" has the meaning set forth in Section 2.2 hereof.
"Subsidiary Merger Consideration" has the meaning set forth in Section
2.5(e)(ii)(1) hereof.
"Subsidiary Surviving Corporation" has the meaning set forth in Section
2.2 hereof.
"Superior Proposal" means a bona fide written proposal made by a Third
Party relating to an Alternative Transaction on terms that each of the Company
Special Committee and board of directors of the Company, determines in good
faith and after consultation with outside counsel and a financial advisor (which
shall be a nationally recognized investment banking firm) would be more
favorable to the Company's shareholders from a financial point of view and
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 all legal, financial, regulatory and other aspects of the
proposal and any other relevant factors permitted under Applicable Law, than the
Parent Merger and the transactions contemplated by this Agreement; provided,
however, that for purposes of the definition of "Superior Proposal," the
references to "more than 15%" in the definition of Alternative Transaction shall
be deemed to be references to "50% or more" in each case.
"Tax" or "Taxes" means taxes, fees, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority,
including (i) income, franchise, profits, gross receipts, ad valorem, net worth,
goods and services, fringe benefits, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll, withholding,
employment, social security, accident compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premium, windfall
profits, transfer and gains taxes and (ii) interest, penalties, additional taxes
and additions to tax imposed with respect thereto.
"Tax Returns" means returns, reports and information statements with
respect to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including consolidated, combined and unitary tax
returns.
"Third Party" means any Person other than a party to this Agreement or an
Affiliate of such a party.
"WBNA" means Wachovia Bank, National Association, a national banking
association and wholly owned subsidiary of the Purchaser.
"WFB" has the meaning set forth in the preamble hereof.
"WFS" has the meaning set forth in the preamble hereof.
"WFS Certificates" has the meaning set forth in Section 2.6(b) hereof.
"WFS Common Stock" means the common stock, no par value, of WFS.
"WFS Dissenting Shares" has the meaning set forth in Section 2.5(g)(i)
hereof.
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"WFS Indemnified Parties" has the meaning set forth in Section 6.8(a)
hereof.
"WFS Preferred Stock" means the preferred stock, no par value, of the
Company.
"WFS Shareholder Meeting" has the meaning set forth in Section 6.1(b).
"WFS Special Committee" has the meaning set forth in the recitals hereto.
"WFS Stock Options" means all options to purchase shares of WFS Common
Stock under the WFS Stock Plan.
"WFS Stock Plan" means the WFS Amended and Restated 1996 Stock Option
Plan.
Section 1.2 Other Terms. Other terms may be defined elsewhere in
the text of this Agreement and, unless otherwise indicated, shall have such
meanings throughout this Agreement.
Section 1.3 Other Definitional Provisions.
(a) The words "herein," "hereof," "hereto" and "hereunder" and
words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The words "include," "includes" or "including" are to be
deemed followed by the words "without limitation."
(d) Except as context may otherwise require, references to
Sections or Exhibits are to the Sections of or Exhibits to this Agreement.
(e) The phrase "ordinary course of business" as used herein
with respect to the Company shall be understood to include the respective
securitization programs of the Company and WFS as conducted consistent with past
practice.
ARTICLE II
THE MERGERS
Section 2.1 The Parent Merger. Subject to and in accordance with the
terms and conditions of this Agreement, and in accordance with the California
Code, the North Carolina Code and other Applicable Law, the Company will merge
with and into the Purchaser (the "Parent Merger") at the Parent Effective Time.
The Purchaser shall be the corporation surviving the Parent Merger (the "Parent
Surviving Corporation"). Immediately following the Parent Merger, but prior to
the Subsidiary Merger, the Bank Conversion shall become effective.
Section 2.2 The Subsidiary Merger. Subject to and in accordance with
the terms and conditions of this Agreement, immediately following the Parent
Merger and the Bank Conversion in accordance with Section 2.1, and in accordance
with the California Code
10
and other Applicable Law, WFS will merge with and into WFB (the "Subsidiary
Merger") at the Subsidiary Effective Time. WFB shall be the entity surviving the
Subsidiary Merger (the "Subsidiary Surviving Corporation").
Section 2.3 The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxxxx & Xxxxxxxx LLP, in Irvine, California, commencing at 10:00 a.m.
local time on such date as the Purchaser, the Company and WFS shall mutually
agree following the satisfaction or waiver of all conditions to the obligations
of the parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective parties will take at the
Closing itself, but subject to the satisfaction or waiver of those conditions)
immediately prior to the filing of the Parent Agreements of Merger and the
Subsidiary Agreements of Merger, or if the parties do not so agree, the third
Business Day following the satisfaction or waiver of such conditions (the
"Closing Date").
Section 2.4 Effective Times. Subject to the provisions of this
Agreement, on the Closing Date the parties hereto shall cause the Parent Merger
to be consummated by filing articles of merger with the Secretary of State of
the State of North Carolina and an agreement of merger with the Secretary of
State of the State of California and an agreement of merger or other instrument
having similar effect with each other appropriate Governmental Authority as may
be necessary to effect the Parent Merger (collectively, the "Parent Agreements
of Merger"), each in such form as is required by the relevant respective
provisions of Applicable Law. Subject to the provisions of this Agreement, on
the Closing Date, immediately following the Parent Merger, the parties hereto
shall cause the Subsidiary Merger to be consummated by filing an agreement of
merger with the Secretary of State of the State of California and an agreement
of merger or other instrument having similar effect with each other appropriate
Governmental Authority as may be necessary to effect the Subsidiary Merger (the
"Subsidiary Agreements of Merger"), in such form as is required by the relevant
respective provisions of Applicable Law. Following the Subsidiary Effective
Time, the Purchaser will deliver or cause to be delivered the Exchange Fund to
the Exchange Agent in the manner provided in Section 2.6. The term "Parent
Effective Time" means the date and time of the filing of the last of the Parent
Agreements of Merger with the Secretary of State of the State of North Carolina,
the Secretary of State of the State of California and with each other
Governmental Authority as may be required under Applicable Law (or such later
time as may be agreed upon by each of the parties and specified in the Parent
Agreements of Merger) and the term "Subsidiary Effective Time" means the date
and time of the filing of the last of the Subsidiary Agreements of Merger with
the Secretary of State of the State of California and with each other
Governmental Authority as may be required under Applicable Law (or such later
time as may be agreed upon by each of the parties and specified in the
Subsidiary Agreements of Merger).
Section 2.5 Effect of Mergers.
(a) General.
(i) The Parent Merger shall have the effects set forth
in Sections 55-11-06 and 55-11-07 of the North Carolina Code and Sections 1107
and 1108 of the California Code. Without limiting the generality of the
foregoing, and subject thereto, at the Parent Effective Time all property,
rights, powers, privileges and franchises of the Company shall vest
11
in the Purchaser as the Parent Surviving Corporation, and all debts, liabilities
and duties of the Company shall become the debts, liabilities and duties of the
Parent Surviving Corporation. The Parent Surviving Corporation may, at any time
after the Parent Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either the Company or the
Purchaser in order to carry out and effectuate the transactions contemplated by
this Agreement.
(ii) The Subsidiary Merger shall have the effects set
forth in the applicable provisions of the California Code (including Section
1107 thereof). Without limiting the generality of the foregoing, and subject
thereto, at the Subsidiary Effective Time all property, rights, powers,
privileges and franchises of WFS shall vest in WFB as the Subsidiary Surviving
Corporation, and all debts, liabilities and duties of WFS shall become the
debts, liabilities and duties of the Subsidiary Surviving Corporation. The
Subsidiary Surviving Corporation may, at any time after the Subsidiary Effective
Time, take any action (including executing and delivering any document) in the
name and on behalf of either WFS or WFB in order to carry out and effectuate the
transactions contemplated by this Agreement.
(b) Articles of Incorporation; Articles of Association.
(i) The restated articles of incorporation, as amended,
of the Purchaser, as in effect immediately prior to the Parent Effective Time,
shall be the articles of incorporation of the Parent Surviving Corporation until
amended as provided by Applicable Law and such restated articles of
incorporation and the Parent Surviving Corporation's amended and restated
bylaws.
(ii) The articles of association of WFB, as in effect
immediately prior to the Subsidiary Effective Time, shall be the articles of
association of the Subsidiary Surviving Corporation until amended as provided by
Applicable Law and such articles of association and the Subsidiary Surviving
Corporation's bylaws.
(c) Bylaws.
(i) The amended and restated bylaws of the Purchaser, as
in effect immediately prior to the Parent Effective Time, shall be the bylaws of
the Parent Surviving Corporation until thereafter amended as provided by
Applicable Law and such amended and restated bylaws and the Parent Surviving
Corporation's restated articles of incorporation.
(ii) The bylaws of WFB, as in effect immediately prior
to the Subsidiary Effective Time, shall be the bylaws of the Subsidiary
Surviving Corporation until thereafter amended as provided by Applicable Law and
such bylaws and the Subsidiary Surviving Corporation's articles of
incorporation.
(d) Directors and Officers.
(i) The directors of the Purchaser immediately prior to
the Parent Effective Time shall be the directors of the Parent Surviving
Corporation, each to hold office in accordance with the articles of
incorporation and bylaws of the Parent Surviving Corporation. The officers of
the Purchaser at and after the Parent Effective Time shall be the officers of
the Parent Surviving Corporation, each to hold office in accordance with the
bylaws of the Parent Surviving Corporation.
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(ii) The directors of WFB immediately prior to the
Subsidiary Effective Time shall be the directors of the Subsidiary Surviving
Corporation, each to hold office in accordance with the articles of association
and bylaws of the Subsidiary Surviving Corporation. The officers of WFB at and
after the Subsidiary Effective Time shall be the officers of the Subsidiary
Surviving Corporation, each to hold office in accordance with the bylaws of the
Subsidiary Surviving Corporation.
(e) Conversion of Company Common Stock and WFS Common Stock.
(i) At the Parent Effective Time, by virtue of the
Parent Merger and without any action on the part of the Purchaser the Company,
WFB, WFS or the holders of any of the following securities:
(1) Other than any Company Dissenting Shares, and
any outstanding shares of Company Common Stock to be canceled
pursuant to Section 2.5(e)(i)(2), and subject to Section 2.6(e),
each share of Company Common Stock issued and outstanding
immediately prior to the Parent Effective Time shall be converted
into the right to receive 1.2749 (the "Parent Exchange Ratio")
Purchaser Shares (together with any cash in lieu of any fractional
Purchaser Shares to which such holder is entitled pursuant to
Section 2.6(e), the "Parent Merger Consideration"); provided,
however, that if between the date of this Agreement and the Parent
Effective Time the outstanding Purchaser Shares shall have been
changed into a different number of shares or a different class of
shares or securities as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split, combination or exchange of shares or other
similar change in capitalization, then an appropriate and
proportionate adjustment shall be made to the Parent Exchange Ratio.
At the Parent Effective Time, each share of Company Common Stock
issued and outstanding immediately prior to the Parent Effective
Time shall no longer be outstanding and shall automatically be
canceled and retired and cease to exist, and, other than
certificates evidencing shares of Company Common Stock to be
canceled pursuant to Section 2.5(e)(i)(2), each certificate
previously evidencing such share of Company Common Stock shall
evidence only the right to receive the Parent Merger Consideration,
as well as any dividends or other distributions to which such holder
is entitled pursuant to Section 2.6(c).
(2) Each outstanding share of Company Common Stock
and Company Preferred Stock held by the Purchaser, the Company, WFB,
WFS or any of their respective Subsidiaries (other than shares of
Company Common Stock held in trust accounts, managed accounts and
the like, or otherwise held in a fiduciary or agency capacity that
are beneficially owned by third parties, or held as a result of
debts previously contracted), if any, immediately prior to the
Parent Effective Time shall be canceled and extinguished without any
conversion thereof and no payment or distribution shall be made with
respect thereto.
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(ii) At the Subsidiary Effective Time, by virtue of the
Subsidiary Merger and without any action on the part of the Purchaser, the
Company, WFB, WFS or the holders of any of the following securities:
(1) Other than any WFS Dissenting Shares, and any
outstanding shares of WFS Common Stock to be canceled pursuant to
Section 2.5(e)(ii)(2), and subject to Section 2.6(e), each share of
WFS Common Stock issued and outstanding immediately prior to the
Subsidiary Effective Time shall be converted into the right to
receive 1.4661 (the "Subsidiary Exchange Ratio") Purchaser Shares
(together with any cash in lieu of any fractional Purchaser Shares
to which such holder is entitled pursuant to Section 2.6(e), the
"Subsidiary Merger Consideration"); provided, however, that if
between the date of this Agreement and the Subsidiary Effective Time
the outstanding Purchaser Shares shall have been changed into a
different number of shares or a different class of shares or
securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split,
combination or exchange of shares or other similar change in
capitalization, then an appropriate and proportionate adjustment
shall be made to the Subsidiary Exchange Ratio. At the Subsidiary
Effective Time, each share of WFS Common Stock issued and
outstanding immediately prior to the Subsidiary Effective Time shall
no longer be outstanding and shall automatically be canceled and
retired and cease to exist, and, other than certificates evidencing
shares of WFS Common Stock to be canceled pursuant to Section
2.5(e)(ii)(2), each certificate previously evidencing such share of
WFS Common Stock shall evidence only the right to receive the
Subsidiary Merger Consideration, as well as any dividends or other
distributions to which such holder is entitled pursuant to Section
2.6(c).
(2) Each outstanding share of WFS Common Stock and
WFS Preferred Stock held by the Purchaser the Company, WFB, WFS or
any of their respective Subsidiaries (other than shares of WFS
Common Stock held in trust accounts, managed accounts and the like,
or otherwise held in a fiduciary or agency capacity that are
beneficially owned by third parties, or held as a result of debts
previously contracted), if any, immediately prior to the Subsidiary
Effective Time shall be canceled and extinguished without any
conversion thereof and no payment shall be made with respect
thereto.
(iii) Each Company Dissenting Share and each WFS
Dissenting Share shall be treated as described in Section 2.5(g).
(f) Options and Other Stock-Based Awards.
(i) The Purchaser, the Company and WFS shall take all
actions necessary to provide that each Company Stock Option that is outstanding
immediately prior to the Parent Effective Time, other than Non-Assumed Options
(collectively, "Assumed Company Stock Options") and each WFS Stock Option that
is outstanding immediately prior to the Subsidiary Effective Time (collectively,
"Assumed WFS Stock Options"), whether or not then exercisable or vested, shall
be assumed by the Purchaser as of the Parent Effective Time or the Subsidiary
Effective Time, as applicable. As of the Parent Effective Time, each Assumed
Company Stock Option shall cease to represent a right to acquire shares of
Company Common
14
Stock and shall be converted automatically into an option to purchase Purchaser
Shares in an amount, at an exercise price and subject to such terms and
conditions determined as provided below. All unvested Non-Assumed Options shall
fully accelerate immediately prior to the Parent Effective Time. As of the
Subsidiary Effective Time, each Assumed WFS Stock Option shall cease to
represent a right to acquire shares of WFS Common Stock and shall be converted
automatically into an option to purchase Purchaser Shares in an amount, at an
exercise price and subject to such terms and conditions determined as provided
below. Each Assumed Company Stock Option and each Assumed WFS Stock Option
assumed by Purchaser as provided herein shall be subject to, and exercisable and
vest in accordance with, the same terms and conditions as under the Company
Stock Plans or the WFS Stock Plan, as applicable, and the applicable option and
other related agreements issued thereunder, except that:
(1) each Assumed Company Stock Option shall be
exercisable for, and represent the right to acquire, Purchaser
Shares, with the number of Purchaser Shares determined by
multiplying the number of unexercised shares of Company Common Stock
that were subject to the Assumed Company Stock Option immediately
before the Parent Effective Time by the Parent Exchange Ratio,
rounded down to the nearest whole share, at an exercise price per
Purchaser Share equal to (A) the per share exercise price for the
shares of Company Common Stock otherwise purchasable pursuant to
such Assumed Company Stock Option immediately before the Parent
Effective Time divided by (B) the Parent Exchange Ratio, rounded up
to the nearest cent.
(2) each Assumed WFS Stock Option shall be
exercisable for, and represent the right to acquire, Purchaser
Shares, with the number of Purchaser Shares determined by
multiplying the number of unexercised shares of WFS Common Stock
that were subject to the Assumed WFS Stock Option immediately before
the Subsidiary Effective Time by the Subsidiary Exchange Ratio,
rounded down to the nearest whole share, at an exercise price per
Purchaser Share equal to (A) the per share exercise price for the
shares of WFS Common Stock otherwise purchasable pursuant to such
Assumed WFS Stock Option immediately before the Subsidiary Effective
Time divided by (B) the Subsidiary Exchange Ratio, rounded up to the
nearest cent.
Following the assumption of the Assumed Company Stock Options and the Assumed
WFS Stock Options, all references to the Company in the Assumed Company Stock
Options and the Company Stock Plan and all references to WFS in the Assumed WFS
Stock Options and the WFS Stock Plans shall be deemed to refer to the Purchaser.
(ii) In the case of any Assumed Company Stock Options or
Assumed WFS Stock Options which are "incentive stock options" (as defined in
Section 422 of the Code), the exercise price, the number of shares purchasable
pursuant to such options and the terms and conditions of exercise of such
options shall be determined in order to comply with Section 424(a) of the Code
and to avoid a "modification" of any such option under Code Section 424(h). In
all events, Assumed Company Stock Options and Assumed WFS Stock Options shall be
converted into options to purchase Purchaser Shares in such a manner as to be
compliant with Section 409A of the Code.
15
(iii) Each Non-Assumed Option that is outstanding as of the
Parent Effective Time shall be canceled as of the Parent Effective Time and,
subject to the receipt of any necessary consents, each holder of such canceled
option shall be entitled to receive in consideration for such cancellation that
number of Purchaser Shares equal to the product of (x) the Parent Exchange Ratio
and (y) a number equal to the difference (if positive) between (A) the number of
shares of Company Common Stock that would have been issued under the Non-Assumed
Option had such option been exercised in full immediately prior to the Parent
Effective Time less (B) the number of shares of Company Common Stock with an
aggregate fair market value equal to the exercise price of such shares, with the
fair market value of each such share determined by using the 4:00 p.m. (New York
time) closing price for a share of Company Common Stock on the NYSE as reported
by The Wall Street Journal for the last NYSE trading day immediately preceding
the date on which the Parent Effective Time occurs.
(iv) As of the Parent Effective Time, each restricted share of
Company Common Stock granted to any employee or director of the Company or any
of its Subsidiaries under the Company Incentive Plan that is outstanding
immediately prior to the Parent Effective Time (collectively, the "Company
Restricted Shares") shall, by virtue of the Parent Merger and without any action
on the part of the holder thereof, be converted into the right to receive, on
the same terms and conditions as applied to each such Company Restricted Share
immediately prior to the Parent Effective Time (including, in the case of
Purchaser Shares received in respect of each Company Restricted Share, the same
transfer restrictions taking into account any accelerated vesting of such
Company Restricted Share in accordance with the terms thereof), a number of
restricted Purchaser Shares in an amount equal to the number of such Company
Restricted Shares multiplied by the Parent Exchange Ratio (rounded down to the
nearest whole share) (the "Purchaser Restricted Stock Right"); provided,
however, that, upon the lapsing of restrictions with respect to each such
Purchaser Restricted Stock Right in accordance with the terms applicable to the
corresponding Company Restricted Share immediately prior to the Parent Effective
Time, the Purchaser shall be entitled to deduct and withhold such amounts as may
be required to be deducted and withheld under the Code and any applicable state
or local tax law with respect to the lapsing of such restrictions; provided,
further, that, in the case of any Company Restricted Shares, the number of
Purchaser Shares subject to such award shall be determined in a manner as to be
compliant with the requirements of Section 409A of the Code.
(v) As of the Parent Effective Time, each restricted share
unit with respect to shares of Company Common Stock granted to any employee or
director of the Company or any of its Subsidiaries under the Company Stock Plan
that is outstanding immediately prior to the Parent Effective Time
(collectively, the "Company RSUs") shall, by virtue of the Parent Merger and
without any action on the part of the holder thereof, be converted into a
restricted share unit, on the same terms and conditions as applied to each such
Company RSU immediately prior to the Parent Effective Time (taking into account
any accelerated vesting of such Company RSU in accordance with the terms
thereof), with respect to the number of Purchaser Shares that is equal to the
number of shares of Company Common Stock subject to the Company RSU immediately
prior to the Parent Effective Time multiplied by the Parent Exchange Ratio
(rounded down to the nearest whole share) (a "Purchaser RSU"); provided,
however, that, in the case of any Company RSU, the number of Purchaser Shares
subject to such award shall be determined in a manner as to be compliant with
the requirements of Section 409A of the Code.
16
(vi) As soon as practicable after the Parent Effective Time
and the Subsidiary Effective Time, as applicable, the Purchaser shall deliver to
each holder of Company Stock Options, WFS Stock Options, Company Restricted
Shares or Company RSUs an appropriate notice setting forth such holder's rights
pursuant thereto after giving effect to the adjustments required by this Section
2.5(f).
(vii) Each of the Company and WFS shall, at or prior to the
Parent Effective Time or Subsidiary Effective Time, as applicable, take all
necessary actions so that, immediately following the Parent Effective Time or
the Subsidiary Effective Time, as applicable, none of the Company, WFS, the
Parent Surviving Corporation or the Subsidiary Surviving Corporation is or will
be bound by the Company Stock Plans, the WFS Stock Plan, any Company Stock
Option, any WFS Stock Option or any other options, warrants, rights or
agreements that would entitle any Person, other than the Purchaser or its
Affiliates, to own any capital stock of the Company, WFS, the Parent Surviving
Corporation or the Subsidiary Surviving Corporation or to receive any payment in
respect thereof, except as otherwise provided herein.
(g) Dissenting Shares.
(i) In the event that the applicable requirements of Section
1300(b) of the California Code have been satisfied, the holders of Company
Common Stock and WFS Common Stock outstanding immediately prior to the Parent
Effective Time and the Subsidiary Effective Time, as applicable, who shall have
voted against the Parent Merger or the Subsidiary Merger, as applicable, or did
not consent thereto in writing (if such action is taken by written consent) and
who shall have demanded properly in writing appraisal for such shares of Company
Common Stock or WFS Common Stock, as applicable, in accordance with Chapter 13
of Division 1 of the California Code (the "Company Dissenting Shares" or the
"WFS Dissenting Shares," as applicable, and collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Parent Merger Consideration or the Subsidiary Merger Consideration, as
applicable, as described in Section 2.5(e). Such shareholders shall be entitled
to receive payment of the appraised value of such shares held by them, except
that all Company Common Stock and WFS Common Stock, as applicable, held by
shareholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Dissenting Shares under
Chapter 13 of Division 1 of the California Code shall thereupon be deemed to
have been converted into and to have become exchangeable for, as of the Parent
Effective Time or the Subsidiary Effective Time, as applicable, the right to
receive Parent Merger Consideration or the Subsidiary Merger Consideration, as
applicable, for such Company Common Stock or WFS Common Stock in accordance with
Section 2.5(e), without any interest thereon, upon surrender of the certificate
or certificates that formerly evidenced such shares.
(ii) The Company and WFS shall give the Purchaser (i) prompt
notice of any demands for appraisal received thereby, withdrawals of such
demands, and any other instruments served pursuant to the California Code and
received by the Company or WFS, as applicable, and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under the California Code. Neither the Company nor WFS shall, except with the
prior written consent of the Purchaser, make any payment or settlement offer
with respect to any demands for appraisal or offer to settle or settle any such
demands. The Purchaser shall be responsible for any settlement claims with
respect to any Dissenting Shares, which
17
settlements may be paid in cash, capital stock of the Purchaser or such other
consideration as the Purchaser shall determine, except as otherwise required by
Applicable Law.
(h) Capital Stock of the Purchaser and WFB. At and as of the
Parent Effective Time, each outstanding Purchaser Share shall continue to remain
outstanding. At and as of the Subsidiary Effective Time, each outstanding share
of common stock of WFB shall continue to remain outstanding.
Section 2.6 Exchange of Certificates.
(a) Exchange Agent. The Purchaser shall deposit, or shall cause to
be deposited, with the Purchaser's transfer agent (Wachovia Bank, National
Association) or with a bank or trust company designated by the Purchaser and
reasonably acceptable to the Company and WFS (the "Exchange Agent"), for the
benefit of the holders of the outstanding shares of Company Common Stock and WFS
Common Stock, for exchange in accordance with the provisions of Article II
through the Exchange Agent, certificates or, at the Purchaser's option, evidence
of shares in book entry form, representing Purchaser Shares issuable pursuant to
Section 2.5(e) as of the Parent Effective Time and the Subsidiary Effective
Time, as well as cash, from time to time as required to make payments in lieu of
any fractional shares pursuant to Section 2.6(e) (such cash and certificates or
book entry evidence for Purchaser Shares, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Parent Merger Consideration and the Subsidiary Merger
Consideration contemplated to be paid pursuant to Section 2.5(e) out of the
Exchange Fund. Except as contemplated by Section 2.6(f), the Exchange Fund shall
not be used for any other purpose.
(b) Exchange Procedures.
(i) As promptly as practicable after the Parent Effective Time
and the Subsidiary Effective Time, as applicable, the Purchaser shall cause the
Exchange Agent to mail to each holder of record of one or more certificates that
immediately prior to the Parent Effective Time represented outstanding shares of
Company Common Stock (the "Company Certificates") and to each holder of record
of one or more certificates that immediately prior to the Subsidiary Effective
Time represented outstanding shares of WFS Common Stock (the "WFS Certificates")
the following: (x) a letter of transmittal (which shall be in customary form and
shall specify that delivery shall be effected, and risk of loss and title to the
Company Certificates or WFS Certificates, as applicable, shall pass, only upon
proper delivery of such certificates to the Exchange Agent) and (y) instructions
for use in effecting the surrender of the Company Certificates or WFS
Certificates, as applicable, in exchange for the Parent Merger Consideration or
the Subsidiary Merger Consideration, as applicable, together with any dividends
or distributions with respect thereto for which the record date for
determination of stockholders entitled to such dividends or distributions is on
or after the Parent Effective Time or the Subsidiary Effective Time, as
applicable.
(ii) Upon surrender to the Exchange Agent of a Company
Certificate or WFS Certificate, as applicable, for exchange and cancellation,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such certificate
18
shall, as promptly as practicable after the Parent Effective Time or the
Subsidiary Effective Time, as applicable, be paid, if applicable, and receive in
exchange therefor the Parent Merger Consideration or the Subsidiary Merger
Consideration, as applicable, to which such holder is entitled pursuant to
Section 2.5(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.6(c), and the Company Certificate or WFS
Certificate, as applicable, so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of shares of Company Common Stock or WFS Common
Stock which is not registered in the transfer records of the Company or WFS, as
applicable, the Parent Merger Consideration or the Subsidiary Merger
Consideration, as applicable, to which such hold is entitled pursuant to Section
2.5(e) and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.6(c), may be issued to a transferee if the Company
Certificate or WFS Certificate representing such shares of Company Common Stock
or WFS Common Stock, as applicable, is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence satisfactory to the Parent Surviving Corporation or the Subsidiary
Surviving Corporation that any applicable share transfer taxes have been paid.
Until surrendered as contemplated by this Section 2.6, each Company Certificate
shall be deemed at all times after the Parent Effective Time and each WFS
Certificate shall be deemed at all times after the Subsidiary Effective Time to
represent only the right to receive upon such surrender the Parent Merger
Consideration or the Subsidiary Merger Consideration, as applicable, to which
such holder is entitled pursuant to Section 2.5(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.6(c).
Company Certificates and WFS Certificates surrendered for exchange by any Person
constituting an "affiliate" of the Company or WFS, as applicable, shall not be
exchanged for certificates representing Purchaser Shares until the Purchaser has
received a written agreement from such Person as specified in Section 6.12.
(c) Distributions with Respect to Unexchanged Purchaser Shares. No
dividends or other distributions declared or made after the Parent Effective
Time or the Subsidiary Effective Time, as applicable, with respect to Purchaser
Shares with a record date after the Parent Effective Time or the Subsidiary
Effective Time, as applicable, shall be paid to the holder of any unsurrendered
Company Certificate or WFS Certificate, as applicable, with respect to Purchaser
Shares represented thereby, and no cash payment in lieu of any fractional shares
shall be paid to any such holder pursuant to Section 2.6(e), until the holder of
such Company Certificate or WFS Certificate shall surrender such Company
Certificates or WFS Certificates held of record by such stockholder as provided
in Section 2.6(b). Subject to the effect of escheat, tax or other Applicable
Laws, following surrender of any such Company Certificate or WFS Certificate,
there shall be paid to the holder of the certificates, or statement indicating
book entry ownership of Purchaser Shares, representing whole Purchaser Shares
issued in exchange therefor, without interest, (i) promptly, the amount of any
cash payable with respect to a fractional Purchaser Share to which such holder
is entitled pursuant to Section 2.6(e), and the amount of dividends or other
distributions with a record date after the Parent Effective Time or Subsidiary
Effective Time, as applicable, and theretofore paid with respect to such whole
Purchaser Shares, and (ii) at the appropriate payment date, the amount of
dividends or other distributions, with a record date after the Parent Effective
Time or Subsidiary Effective Time, as applicable, but prior to surrender and a
payment date occurring after surrender, payable with respect to such whole
Purchaser Shares.
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(d) No Further Rights in Company Common Stock or WFS Common Stock.
The Parent Merger Consideration and the Subsidiary Merger Consideration issued
or paid upon conversion of the outstanding shares of Company Common Stock or WFS
Common Stock in accordance with the terms hereof (including any cash paid
pursuant to Section 2.6(c) or (e)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock or
WFS Common Stock, as applicable.
(e) No Fractional Shares. No certificates or scrip representing
fractional Purchaser Shares shall be issued upon the surrender for exchange of
Company Certificates or WFS Certificates or upon cancellation of Non-Assumed
Options in accordance with Section 2.5(f)(iii), and such fractional share
interests will not entitle the owner thereof to vote or to any other rights of a
shareholder of the Purchaser. Each holder of a fractional share interest shall
be paid an amount in cash (without interest) equal to the product obtained by
multiplying (i) such fractional share interest to which such holder (after
taking into account all Company Certificates or WFS Certificates delivered by
such holder) would otherwise be entitled, by (ii) the 4:00 p.m. (New York time)
closing price for a Purchaser Share on the NYSE as reported by The Wall Street
Journal for the last NYSE trading day immediately preceding the date on which
the Parent Effective Time or Subsidiary Effective Time, as applicable, will
occur. From time to time after the Parent Effective Time or Subsidiary Effective
Time, as applicable, as promptly as practicable after the determination of the
amount of cash, if any, to be paid to holders of fractional share interests who
have surrendered their Company Certificates or WFS Certificates to the Exchange
Agent, the Exchange Agent shall so notify the Purchaser, and the Purchaser shall
deposit such amount with the Exchange Agent and shall cause the Exchange Agent
to forward payments to such holders of fractional share interests subject to and
in accordance with the terms of Sections 2.6(b) and (c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of outstanding shares of Company
Common Stock and WFS Common Stock for six (6) months after the Parent Effective
Time or Subsidiary Effective Time, as applicable, shall be delivered to the
Purchaser, and any holders of shares of Company Common Stock or WFS Common
Stock, as applicable, who have not theretofore complied with Section 2.6 shall
thereafter look only to the Purchaser for Purchaser Shares, any cash in lieu of
fractional Purchaser Shares to which they are entitled pursuant to Section
2.6(e) and any dividends or other distributions with respect to Purchaser Shares
to which they are entitled pursuant to Section 2.6(c), in each case, without any
interest thereon. Any portion of the Exchange Fund remaining unclaimed by
holders of shares of Company Common Stock and WFS Common Stock following the
passage of time specified in any applicable escheat laws shall be delivered to
the applicable public officials specified therein.
(g) No Liability. None of the Purchaser, the Company, WFB, WFS, the
Parent Surviving Corporation, the Subsidiary Surviving Corporation nor the
Exchange Agent shall be liable to any holder of shares of Company Common Stock
or WFS Common Stock for any Purchaser Shares (or dividends or distributions with
respect thereto) or cash from the Exchange Fund delivered to a public official
pursuant to any abandoned property, escheat or similar Applicable Law.
(h) Withholding Rights. Each of the Parent Surviving Corporation,
the Subsidiary Surviving Corporation and the Exchange Agent shall be entitled to
deduct and
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withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Company Common Stock or WFS Common Stock such amounts as
it is required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state or local tax law. To the extent that
amounts are so withheld by the Parent Surviving Corporation, the Subsidiary
Surviving Corporation, the Purchaser or the Exchange Agent, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of shares of Company Common Stock or WFS Common
Stock, as applicable, in respect of which such deduction and withholding was
made by the Parent Surviving Corporation, the Subsidiary Surviving Corporation,
the Purchaser or the Exchange Agent, as the case may be.
(i) Lost Certificates. If any Company Certificate or WFS
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed and, if required by the Exchange Agent, the Parent Surviving
Corporation or the Subsidiary Surviving Corporation, as applicable, the posting
by such Person of a bond, in such reasonable amount as the Parent Surviving
Corporation or the Subsidiary Surviving Corporation, as applicable, may direct,
as indemnity against any claim that may be made against it with respect to such
certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed certificate, Purchaser Shares, any cash in lieu of fractional
Purchaser Shares to which the holders thereof are entitled pursuant to Section
2.6(e) and any dividends or other distributions to which the holders thereof are
entitled pursuant to Section 2.6(c), in each case, without any interest thereon.
(j) Stock Transfer Books. At the Parent Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. At the Subsidiary Effective Time, the stock transfer
books of WFS shall be closed and there shall be no further registration of
transfers of shares of WFS Common Stock thereafter on the records of WFS. From
and after the Parent Effective Time, the holders of shares of Company Common
Stock outstanding immediately prior to the Parent Effective Time shall cease to
have any rights with respect to such shares, except as otherwise provided in
this Agreement or by Applicable Law. From and after the Subsidiary Effective
Time, the holders of shares of WFS Common Stock outstanding immediately prior to
the Subsidiary Effective Time shall cease to have any rights with respect to
such shares, except as otherwise provided in this Agreement or by Applicable
Law. On or after the Parent Effective Time, any Company Certificates presented
to the Exchange Agent or the Purchaser for any reason shall be converted into
the right to receive Parent Merger Consideration and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
2.6(c), in each case, without any interest thereon. On or after the Subsidiary
Effective Time, any WFS Certificates presented to the Exchange Agent or the
Purchaser for any reason shall be converted into the right to receive Subsidiary
Merger Consideration and any dividends or other distributions to which the
holders thereof are entitled pursuant to Section 2.6(c), in each case, without
any interest thereon.
Section 2.7 Actions Following the Subsidiary Effective Time. Subject to
and in accordance with the terms and conditions of this Agreement and the Bank
Plan of Merger (as defined below), following the Subsidiary Merger, WBNA will
merge with and into WFB (the "Bank Merger") pursuant to a plan of merger in
substantially the form attached hereto as Exhibit
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"F" (with such changes as the Purchaser may reasonably determine are necessary
or appropriate but not which entity survives the Bank Merger, the "Bank Plan of
Merger") with WFB as the survivor from the Bank Merger under the name and the
charter of WBNA.
Section 2.8 Further Action. If, at any time after the Parent
Effective Time or the Subsidiary Effective Time, as applicable, any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest the Parent Surviving Corporation or the Subsidiary Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of either the Company or WFS, as applicable,
the officers and directors of the Parent Surviving Corporation and the
Subsidiary Surviving Corporation are fully authorized to take, and will take,
all such lawful and necessary action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser, except with
respect to any particular subsection of this Article III to the extent
specifically described in the corresponding schedule of the Company Disclosure
Letter, as follows:
Section 3.1 Due Incorporation; Organization.
(a) The Company and each of its Subsidiaries is an entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has the corporate (or comparable) power and
authority to carry on its business as it is now being conducted and to own all
of its properties and assets. True and complete copies of the articles of
incorporation, bylaws or other applicable organizational documents of the
Company, WFS and WFB with all amendments and restatements thereto through the
date hereof have been provided to the Purchaser. The minute books of the Company
and each of its Subsidiaries contain true, complete and correct records of all
meetings and other corporate actions held or taken since December 31, 2002 of
their respective shareholders and Boards of Directors. The Company and each of
its Subsidiaries is duly qualified as a foreign corporation (or other relevant
organizational form) to do business, and is in good standing (to the extent the
concept of good standing exists), in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified has
not had, or would not reasonably be expected to result in, a Company Material
Adverse Effect.
(b) WFB is an "insured depository institution" as defined in
the Federal Deposit Insurance Act. The deposit accounts of WFB are insured by
the FDIC through the Savings Association Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of
65,000,000 shares of Company Common Stock and 20,000,000 shares of Company
Preferred Stock. As of August 31, 2005, (i) 52,225,647 shares of Company Common
Stock were issued and outstanding, all of which have been duly authorized,
validly issued and are fully paid and nonassessable, and
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subject to no preemptive rights (and were not issued in violation of any
preemptive rights), (ii) no shares of Company Preferred Stock were issued or
outstanding, (iii) Company Stock Options to acquire 1,882,248 shares of Company
Common Stock were outstanding under the Company Stock Plans, and (iv) 3,122,286
shares of Company Common Stock was reserved for future issuance pursuant to the
Company Incentive Plan.
(b) The authorized capital stock of WFS consists of 50,000,000
shares of WFS Common Stock and 10,000,000 shares of WFS Preferred Stock. As of
August 31, 2005, (i) 41,088,246 shares of WFS Common Stock were issued and
outstanding, all of which have been duly authorized, validly issued and are
fully paid and nonassessable, and subject to no preemptive rights (and were not
issued in violation of any preemptive rights), (ii) no shares of WFS Preferred
Stock were issued or outstanding, (iii) WFS Stock Options to acquire 134 shares
of WFS Common Stock were outstanding under the WFS Stock Plan, and (iv) 809,552
shares of WFS Common Stock was reserved for future issuance pursuant to the WFS
Stock Plan. 34,447,722 shares of WFS Common Stock are owned by WFB, free and
clear of any liens, pledges, charges and security interests and similar
encumbrances ("Liens").
(c) Other than as set forth above or in Schedule 3.2(c) of the
Company Disclosure Letter, there have been no issuances by the Company or WFS of
shares of capital stock of the Company or WFS other than issuances of shares of
Company Common Stock and WFS Common Stock pursuant to the exercise of Company
Stock Options and WFS Stock Options, respectively, or stock incentive rights
granted pursuant to the Company Stock Plans and arrangements outstanding on such
date or issuances of shares of Company Common Stock pursuant to the Company's
401(k) plans in the ordinary course of business and there have been no issuances
by the Company or WFS of options, warrants or other rights to acquire shares of
capital stock of the Company or WFS, respectively. Except as set forth in
Schedule 3.2(c) of the Company Disclosure Letter or except as otherwise
contemplated by or specified in this Agreement, including in Sections 3.2(a) and
3.2(b) hereof, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of, or other equity interests in, the Company or WFS. All shares
of capital stock of the Company and WFS subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its Subsidiaries or to provide funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Person.
(d) Schedule 3.2(d) of the Company Disclosure Letter sets forth a
list of all of the Subsidiaries of the Company. Except as set forth in Section
3.2(b) hereof or in Schedule 3.2(d) of the Company Disclosure Letter, all of the
issued and outstanding shares of capital stock or other equity ownership
interests of each Subsidiary of the Company are owned by the Company, directly
or indirectly, free and clear of any Liens, and all of such shares or equity
ownership interests are duly authorized and validly issued and are fully paid
and nonassessable and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). Except as set forth in Section 3.2(b)
hereof or in Schedule 3.2(d) of the Company Disclosure Letter, no Subsidiary of
the Company has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance
23
of any shares of capital stock or any other equity security of such Subsidiary
or any securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such Subsidiary.
(e) Schedule 3.2(e) of the Company Disclosure Letter sets forth a
list of all equity securities that the Company or its Subsidiaries holds for its
own account and not in a bona fide fiduciary capacity (other than equity
securities of the Company's subsidiaries held, directly or indirectly, by the
Company or its subsidiaries), as of the date hereof, involving, in the
aggregate, ownership or control of 5% or more of any class of the issuer's
voting securities or 25% or more of the issuer's equity (treating subordinated
debt as equity).
Section 3.3 Due Authorization of Transaction; Binding Obligation. The
Company has full corporate power and authority to execute and deliver this
Agreement and, subject to obtaining the approval and adoption of this Agreement
and the Parent Merger by the Company's shareholders, to perform its obligations
hereunder, and the execution, delivery and performance of this Agreement by the
Company has been duly authorized by all necessary corporate action on the part
of the Company (other than the approval and adoption of this Agreement and the
Parent Merger by the Company's shareholders), including unanimous approval by
the Company Special Committee. WFS has full corporate power and authority to
execute and deliver this Agreement and, subject to obtaining the approval and
adoption of this Agreement and the Subsidiary Merger by the Requisite WFS
Approval, to perform its obligations hereunder, and the execution, delivery and
performance of this Agreement by WFS has been duly authorized by all necessary
corporate action on the part of WFS (other than the Requisite WFS Approval),
including unanimous approval by the WFS Special Committee. WFB has full
corporate power and authority to execute and deliver this Agreement and the Bank
Plan of Merger and to perform its obligations hereunder, and the execution,
delivery and performance of this Agreement and the Bank Plan of Merger by WFB
has been duly authorized by all necessary corporate action on the part of WFB,
including the approval of its sole shareholder. This Agreement has been duly
executed and delivered by the Company, WFB and WFS and, assuming due
authorization, execution and delivery of this Agreement by the Purchaser, is the
legal, valid and binding obligation of each of the Company, WFB and WFS
enforceable against each of them in accordance with its terms, subject to the
qualification, however, that enforcement of the rights and remedies created
hereby is subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general application relating to
or affecting creditors' rights and to general principles of equity affecting the
availability of specific performance and other equitable remedies. Prior to the
Parent Effective Time, the Bank Plan of Merger will be duly executed and
delivered by WFB and, assuming due authorization, execution and delivery of the
Bank Plan of Merger by WBNA, will be a legal, valid and binding obligation of
WFB enforceable against WFB in accordance with its terms, subject to the
qualification, however, that enforcement of the rights and remedies created
hereby is subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general application relating to
or affecting creditors' rights and to general principles of equity affecting the
availability of specific performance and other equitable remedies. The Agreement
and Plan of Merger and Reorganization dated as of May 23, 2004, by and among the
Company, WFB and WFS, has been terminated by the boards of directors of each of
the Company, WFB and WFS and such termination has been approved by the WFS
Special Committee.
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Section 3.4 Non-Contravention. Assuming compliance with the HSR Act,
applicable bank regulatory laws, and any foreign or other antitrust or
combination laws, the Securities Act and any applicable state securities or
"blue sky" laws and the filing of the Parent Agreements of Merger and the
Subsidiary Agreements of Merger with the Secretary of State of the State of
California, the Secretary of State of the State of North Carolina and each other
appropriate Governmental Authority, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby do
not and will not (a) contravene the articles of incorporation or bylaws or other
charter or organizational documents of the Company or any of its Subsidiaries or
(b) constitute a breach or violation of, or 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 Applicable Law or agreement,
indenture, instrument, judgment, decree, order, ruling or license of the Company
or any of its Subsidiaries or to which the Company or any of their Subsidiaries
is a party or by which any of them or their respective assets or properties is
bound or affected, except in the case of subsection (b), for any such breaches,
violations, defaults, Liens or accelerations which have not had, or would not
reasonably be expected to result in, a Company Material Adverse Effect.
Section 3.5 Approvals, Consents and Filings. No approval, authorization,
consent, order, filing, registration or notification is required to be obtained
by the Company or their Subsidiaries from, or made or given by the Company or
its Subsidiaries to, any Governmental Authority or any other Person in
connection with the execution, delivery and performance of this Agreement by the
Company and WFS and the consummation of the transactions contemplated hereby
except for such approvals, authorizations, consents, orders, filings,
registrations or notifications (a) required by the HSR Act, any foreign or other
antitrust or combination laws, the Exchange Act, the Securities Act and any
applicable state securities or "blue sky" laws, the filing of the Parent
Agreements of Merger and the Subsidiary Agreements of Merger with the Secretary
of State of the State of California, the Secretary of State of the State of
North Carolina and each other appropriate Governmental Authority, the receipt of
necessary approvals for and consummation of the Bank Conversion, the NYSE, and
the filing of applications and notices with, and the receipt of approvals or
nonobjections from, federal and state banking authorities, including the Federal
Reserve Board, the FDIC, the OCC and the OTS and the expiration or early
termination of the required post-approval waiting period thereafter, and (b) of
which the failure to obtain would not reasonably be expected to result in a
Company Material Adverse Effect. As of the date of this Agreement, neither the
Company nor WFS knows of any reason related to the Company or any of its
Subsidiaries why the necessary regulatory approvals and consents will not be
received in order to permit consummation of the Parent Merger or the Subsidiary
Merger on a timely basis.
Section 3.6 Litigation; Regulatory Matters. Except as disclosed in
Schedule 3.6 of the Company Disclosure Letter or in the Company SEC Reports
(without giving effect to any Company SEC Report or amendment filed after the
date of this Agreement), neither the Company nor any of its Subsidiaries is
engaged in, a party to, or to the knowledge of the Company, threatened with, nor
is the Company's or its Subsidiaries' properties involved in, any legal action
or other suit, action, investigation or proceeding, nor is there any judgment,
decree, injunction, memorandum of understanding, commitment, rule or order of
any Governmental Authority outstanding against the Company or any of its
Subsidiaries, that (a) seeks to restrain, materially modify or invalidate the
transactions contemplated by this Agreement, or (b) would
25
reasonably be expected to result in a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is subject to, or has been advised by
the applicable Governmental Authority that it is reasonably likely to become
subject to, any written order, decree, agreement, memorandum of understanding or
similar arrangement 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 the
Company or any of its Subsidiaries.
Section 3.7 Brokers' Fees. Except for fees payable to Credit Suisse First
Boston LLC and to Deutsche Bank Securities Inc., neither the Company nor any of
its Subsidiaries has any liability or obligation to pay any fees or commissions
to any broker, finder or agent with respect to the transactions contemplated by
this Agreement for which the Purchaser could become liable or obligated.
Section 3.8 Reports and Financial Information.
(a) Except as provided on Schedule 3.8(a) of the Company
Disclosure Letter, the Company, WFS and each of their respective Subsidiaries
has filed, or furnished, as applicable, all reports, schedules and definitive
proxy statements or information statements required to be filed or furnished
with the SEC pursuant to the Exchange Act since December 31, 2003 (all such
reports, schedules and definitive proxy statements, and amendments thereto,
collectively, the "Company SEC Reports"). The Company SEC Reports were prepared
in accordance with the applicable requirements of the Exchange Act and with the
provisions of the Xxxxxxxx-Xxxxx Act of 2002 ("SOX") then in effect and
applicable to such filings when made. None of the Company SEC Reports nor any
report filed by the Company or its Subsidiaries with the FDIC, the OTS or other
banking regulatory agency, and no registration statement or offering materials
made or given by the Company or its Subsidiaries to shareholders of the Company,
WFS or any of their respective Subsidiaries since December 31, 2003, as of the
respective dates thereof (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such amendment or superseding
filing) 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 light of the circumstances under which they were made, not
misleading. The Company, WFB and WFS have timely filed all reports and other
documents required to be filed by them with the SEC, the FDIC and the OTS.
(b) Each of the balance sheets (including the related notes
thereto) included in the Company SEC Reports fairly present the financial
position of the Company and its Subsidiaries as of the date thereof, and the
other related financial statements (including the related notes thereto)
included therein fairly present the results of operations and the changes in
cash flows and stockholders' equity of the Company and its Subsidiaries for the
respective periods set forth therein, all in conformity with GAAP consistently
applied during the periods involved, except as otherwise noted therein and
subject, in the case of the unaudited interim financial statements, to (x)
normal year end adjustments which shall not be material in amount, and (y) the
permitted exclusion of all footnotes that would otherwise be required by GAAP.
(c) The Company has filed all reports required by the OTS, and
each such report has complied with Applicable Law in all material respects. All
reports (including the financial statements contained therein) filed by WFB with
the FDIC, the OTS or other banking regulatory agency complied with Applicable
Law in all material respects.
26
(d) Each of the Company and WFS maintains a system of internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act) sufficient to provide reasonable assurance (i) that
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP, consistently applied, (ii) that transactions
are executed only in accordance with the authorization of management and (iii)
regarding prevention or timely detection of the unauthorized acquisition, use or
disposition of the assets of it and its Subsidiaries.
(e) The disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) of the Company and WFS are
reasonably designed to ensure that all information (both financial and
non-financial) required to be disclosed by the Company and WFS in the Company
SEC Reports is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that all such
information is accumulated and communicated to the management of the Company and
WFS as appropriate to allow timely decisions regarding required disclosure and
to make the certifications of the chief executive officer and chief financial
officer of the Company and WFS, as applicable, required under the Exchange Act
with respect to such reports. As of the date of this Agreement, the Company
knows of no reason that the outside auditors and chief executive officer and
chief financial officer of the Company or WFS will not be able to give the
certifications and attestations required pursuant to the rules and regulations
adopted pursuant to Section 404 of SOX, without qualification, when next due.
(f) WFB complies in all material respects with the auditing,
reporting and control obligations with respect to its financial statements as
contained in Section 36 of the Federal Deposit Insurance Act (12 U.S.C. 1831m)
and the implementing regulations thereto.
(g) Neither the Company nor any of its Subsidiaries is a party to,
nor does the Company or any of its Subsidiaries have any commitment to become a
party to, any joint venture, off balance sheet partnership or any similar
contract (including any contract or arrangement relating to any transaction or
relationship between or among the Company or any of its Subsidiaries, as
applicable, on the one hand, and any unconsolidated Affiliate), including any
structured finance, special purpose or limited purpose entity or Person, on the
other hand, or any "off balance sheet arrangements" (as defined in Item 303(a)
of Regulation S-K under the Exchange Act), where the result, purpose or intended
effect of such contract is to avoid disclosure of any material transaction
involving, or material liabilities of, the Company or WFS in the Company SEC
Reports.
Section 3.9 Absence of Certain Changes or Events. Since December 31, 2004,
except as otherwise expressly contemplated by this Agreement or as otherwise
disclosed in Company SEC Reports filed prior to the date of this Agreement, none
of the Company or its Subsidiaries has:
(a) incurred any liabilities (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due) material to the
Company and its Subsidiaries on a consolidated basis, other than (i) in the case
of the Company and its Subsidiaries, those set forth
27
or adequately provided for in the balance sheet included in the Company's most
recently filed Quarterly Report on Form 10-Q (the "Company Balance Sheet"), (ii)
in the case of WFS and its Subsidiaries, those set forth or adequately provided
for in the balance sheet included in WFS's most recently filed Quarterly Report
on Form 10-Q (the "WFS Balance Sheet"), (iii) those incurred in the ordinary
course of business and not required to be set forth in the Company Balance Sheet
or the WFS Balance Sheet, as applicable, under GAAP, (iv) those incurred in the
ordinary course of business since the date of the Company Balance Sheet and the
WFS Balance Sheet and consistent with past practice, and (v) those incurred in
connection with the execution of this Agreement; or
(b) (i) conducted its business other than in the ordinary and
usual course consistent with past practice (excluding the incurrence of expenses
related to this Agreement and the transactions contemplated hereby), (ii)
suffered any change in its business, assets, financial condition or results of
operation which has had, or would reasonably be expected to result in, a Company
Material Adverse Effect, or (iii) prior to the date of this Agreement, taken any
action that, if taken after the date of this Agreement, would constitute or
cause a violation of Sections 5.1(c)(vii), (viii) or (ix) or Section 5.2(b).
Section 3.10 Taxes.
(a) The Company and each of its Subsidiaries has duly and timely
filed with the appropriate Tax authorities all Tax Returns that it has been
required to file. All such Tax Returns are true and complete in all material
respects. All Taxes due and owing by any of the Company and its Subsidiaries
(whether or not shown on any Tax Returns) have either been paid or otherwise
accrued as a reserve for Tax liability included on the face of the balance
sheets (rather than only in any notes thereto) contained in such financial
statements in the most recent Company SEC Reports.
(b) The unpaid Taxes of the Company and its Subsidiaries did not,
as of the date of the financial statements in the most recent Company SEC
Reports, materially exceed the reserve for Tax liability set forth on the face
of the balance sheets (rather than in any notes thereto) contained in such
financial statements. Since the date of the financial statements in the most
recent Company SEC Reports, neither the Company nor any of its Subsidiaries has
incurred any liability for Taxes outside the ordinary course of business or
otherwise inconsistent with past custom and practice.
(c) No pending deficiencies for Taxes with respect to any of the
Company and its Subsidiaries have been claimed in writing, proposed or assessed
by a Tax authority, except for such deficiencies which would not reasonably be
expected to result in a Company Material Adverse Effect. There are no pending
or, based on written notice, threatened audits, assessments, administrative
proceedings, court proceedings or other actions for or relating to any liability
in respect of material Taxes of any of the Company or its Subsidiaries. Neither
the Company nor any of its Subsidiaries has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency which waiver or extension is currently in effect.
(d) There are no Liens for Taxes upon the assets of any of the
Company and its Subsidiaries (other than with respect to Permitted Liens for
Taxes or Liens for Taxes that are being contested in good faith and for which an
adequate reserve under GAAP has been established).
28
(e) Neither the Company nor any of its Subsidiaries has any
liability for the Taxes of any other Person (other than the Company and any of
its Subsidiaries) under Treasury Regulation Section 1.1502 - 6 (or any similar
provision of state, local, or foreign law), as a transferee, by contract, or
otherwise, except for such liabilities which would not reasonably be expected to
result in a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has been a member of an affiliated group filing a consolidated
federal income Tax Return (other than a group the common parent of which is the
Company). Neither the Company nor any of its Subsidiaries is a party to, is
bound by or has any obligation under any Tax sharing, Tax allocation or Tax
indemnity agreement or similar Contract or arrangement which will not be
terminated on or before the Closing Date, except by and among the Company or its
Subsidiaries.
(f) Neither the Company nor any of its Subsidiaries has
distributed the stock of any corporation in a transaction satisfying the
requirements of Section 355 of the Code in the two (2) years prior to the date
of this Agreement, and neither the stock of the Company nor the stock of any of
its Subsidiaries has been distributed in a transaction satisfying the
requirements of Section 355 of the Code in the two (2) years prior to the date
of this Agreement.
(g) Any "listed transaction," as defined in Treasury Regulation
Section 1.6011-4(b)(2), entered into by the Company or any of its Subsidiaries,
has been properly identified and disclosed on all Tax Returns.
Section 3.11 Employee Matters.
(a) Schedule 3.11(a) of the Company Disclosure Letter sets forth a
true, complete and correct list of each Company Employee Plan, and true and
complete copies of all such Company Employee Plans, including any trust
instruments and insurance contracts forming a part of any Company Employee Plan,
and all amendments thereto, the most recent IRS determination letter, if
applicable, and any summary plan descriptions of the Company Employee Plans have
been made available to the Purchaser. None of the Company Employee Plans
promises or provides retiree medical or other retiree welfare benefits to any
Person other than coverage mandated by Applicable Law, the full cost of which is
borne by the retiree.
(b) Each Company Employee Plan has been established and
administered in accordance with its terms and in compliance with the applicable
provisions of ERISA, the Code and other Applicable Laws in all material
respects. Each Company Employee Plan which is intended to be qualified within
the meaning of Section 401(a) of the Code is so qualified and to the knowledge
of the Company, no event or circumstance has occurred that could reasonably be
expected to cause the loss of such qualification. To the knowledge of the
Company and WFS, no event has occurred and no condition exists that would
subject the Company or any other entities within common control (each, a
"Controlled Group Member") (as defined by Sections 414(b), (c), (m) or (o) of
the Code or Section 4001 of ERISA) to any penalty, fine or lien imposed by
ERISA, the Code or other Applicable Laws.
(c) With respect to each Company Employee Plan: (i) no litigation
(other than routine claims for benefits in the ordinary course of business) is
pending, or to the
29
knowledge of the Company, threatened, (ii) to the knowledge of the Company, no
facts or circumstances exist that could give rise to any litigation and (iii) no
administrative investigation, audit, or other administrative proceeding by the
Department of Labor, the Pension Benefit Guaranty Corporation, the IRS or other
governmental agencies is pending, in progress or, to the knowledge of the
Company, threatened.
(d) Neither the Company nor any of its Controlled Group Members,
sponsors, maintains, administers, contributes to (or is required to sponsor,
maintain, administer or contribute to) any plan subject to Title IV of ERISA,
Section 412 of the Code, or any multiemployer plan as defined in Section 3(37)
of ERISA, and neither the Company nor any of its Controlled Group Members (nor
any of their predecessors) has within the past six (6) years sponsored,
maintained, contributed to (or been required to sponsor, maintain, administer or
contribute to) any such plan.
(e) The Company has made or will accrue prior to the Closing Date
all payments and contributions (including insurance premiums) due and payable as
of the Closing Date to each Company Employee Plan.
(f) Neither the Company nor any of its Subsidiaries has any
obligations under any Company Employee Plan to provide post-retirement medical
benefits to any employee or any former employee of the Company or any of its
Subsidiaries, other than statutory liability for providing group health plan
continuation coverage under Part 6 of Title I of ERISA and Section 4980B of the
Code or applicable state law.
(g) Except as provided on Schedule 3.11(g) of the Company
Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) entitle any
employee or former employee of the Company or its Subsidiaries to severance pay,
(ii) accelerate the time of payment or vesting of, or increase the amount of,
compensation or benefits due to any employee of the Company or its Subsidiaries,
or (iii) result in the payment to any employee of the Company or any of its
Subsidiaries of an amount that will be an "excess parachute payment" (within the
meaning of Section 280G(b)(1) of the Code) except as may be required by
Applicable Law.
(h) To the knowledge of the Company, no oral or written
representation or communication with respect to any aspect of the Company
Employee Plans has been made to employees of the Company or any of its
Subsidiaries prior to the date hereof which is not in accordance with the
written or otherwise pre-existing terms and provisions of such Company Employee
Plans.
(i) No additional Tax under Section 409A(a)(1)(B) of the Code has
been or is reasonably expected to be incurred by a participant in a nonqualified
deferred compensation plan (within the meaning of Section 409(A)(d)(1) of the
Code) of the Company or any of its Subsidiaries.
Section 3.12 Material Contracts.
(a) Except as filed or furnished as exhibits to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed or
furnished as exhibits to
30
WFS's Annual Report on Form 10-K for the fiscal year ended December 31, 2004, or
as disclosed in Schedule 3.12(a) of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries is a party to, bound by or subject to any
agreement, contract, arrangement, commitment or understanding (whether written
or oral) (i) which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC), a "material definitive agreement"
within the meaning of Item 1.01(b) of the SEC's Form 8-K or a material "direct
financial obligation" within the meaning of Item 2.03(c) of the SEC's Form 8-K
or an "off-balance sheet arrangement" within the meaning of Item 303(a)(4)(ii)
of the SEC's Regulation S-K, (ii) that restricts the conduct or geography of any
line of business of the Company or any of its Subsidiaries or Affiliates, or
(iii) other than Company Employee Plans listed in Schedule 3.11(a) of the
Company Disclosure Letter and other than salaries of at-will employees, with
respect to employment of any officer, director, employee or consultant providing
for payments in excess of $250,000 annually. Each agreement, contract,
arrangement, commitment or understanding of the type described in this Section
3.12(a) is collectively referred to as a "Company Material Contract." Each of
the Company and WFS has made available to the Purchaser prior to the date
hereof, true, correct and complete copies in all material respects of each
Company Material Contract existing as of the date of this Agreement, and shall
make available to the Purchaser true, correct and complete copies in all
material respects, of each Company Material Contract entered into after the date
of this Agreement, if any.
(b) Neither the Company nor any of its Subsidiaries has breached
or is in default under, or has received written notice of any breach of or
default under, any Company Material Contract. To the knowledge of the Company,
no other party to any of the Company Material Contracts has breached or is in
default of any of its obligations thereunder. Each of the Company Material
Contracts is in full force and effect, except in any such case for breaches,
defaults or failures to be in full force that would not reasonably be expected
to result in a Company Material Adverse Effect.
Section 3.13 Regulatory Compliance.
(a) Except as provided on Schedule 3.13(a) of the Company
Disclosure Letter, the Company and each of its Subsidiaries is in compliance
with all Applicable Laws, except for instances of non-compliance that would not
reasonably be expected to result in a Company Material Adverse Effect.
(b) The Company and its Subsidiaries hold all permits, licenses,
variances, exemptions, consents, certificates, orders and approvals from
Governmental Authorities that are required to permit the operation of the
business of the Company and its Subsidiaries as it is now being conducted
(collectively, the "Company Permits"). The Company and its Subsidiaries are in
compliance with the terms of the Company Permits and the Company Permits are in
full force and effect, except where the failure to so comply or be in effect
would not reasonably be expected to result in a Company Material Adverse Effect.
Section 3.14 Title to Properties; Leases.
(a) Schedule 3.14(a) of the Company Disclosure Letter lists (i)
all material leases entered into by the Company or any of its Subsidiaries
during the Company's or Subsidiaries' period of ownership for any real property
to which the Company or any of its
31
Subsidiaries is a party as a lessee as of the date hereof, setting forth in the
case of any such lease, the location of such real property and (ii) all real
properties to which the Company or any of its Subsidiaries owns fee simple title
owned by the Company or any of its Subsidiaries as of the date hereof (the
"Owned Real Property").
(b) Neither the Company nor any of its Subsidiaries has breached
or is in default under, or has received written notice of any breach of or
default under, any lease under which the Company or any of its Subsidiaries is
the lessee of real or personal property, except for such breaches or defaults
that have been cured or that would not reasonably be expected to result in a
Company Material Adverse Effect.
(c) Each lease under which the Company or any of its Subsidiaries
is the lessee of real or personal property is in full force and effect and
constitutes a valid and binding obligation of the Company or such Subsidiary, as
applicable, except for any such failures that would not reasonably be expected
to result in a Company Material Adverse Effect.
(d) The Company and its Subsidiaries have good and marketable
title, free and clear of all Liens (other than Permitted Liens) to all of the
properties and assets, tangible and intangible, reflected in the most recent
balance sheets included in the Company SEC Reports as being owned by the Company
or its Subsidiaries as of the date thereof (except properties or assets sold or
otherwise disposed of since the date thereof in the ordinary course of
business).
Section 3.15 Intellectual Property.
(a) Each of the Company and its Subsidiaries owns or has the right
to use each Proprietary Asset necessary for the operation of the businesses of
the Company and its Subsidiaries as presently conducted, except where the
failure of the Company or any of its Subsidiaries to own or have the right to
use such Proprietary Assets would not reasonably be expected to result in a
Company Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is infringing,
and has not received any written notice of any actual or alleged infringement
of, any Proprietary Asset owned or used by any other Person, except for such
infringements that would not reasonably be expected to result in a Company
Material Adverse Effect. To the knowledge of the Company, no other Person is
infringing any Proprietary Asset owned or used by the Company or any of its
Subsidiaries, except for matters that would not reasonably be expected to result
in a Company Material Adverse Effect.
(c) There are no judgments, decrees or orders pending against or
affecting any Proprietary Asset, except for such judgments, decrees or orders
that would not reasonably be expected to result in a Company Material Adverse
Effect.
Section 3.16 Environmental Matters.
(a) The operations of the Company and its Subsidiaries have been
and are in compliance with all applicable Environmental Laws, other than such
non compliance that would not reasonably be expected to result in a Company
Material Adverse Effect.
32
(b) There are no writs, injunctions, decrees, orders or judgments
outstanding, relating to compliance by the Company or any of its Subsidiaries
with, or liability of the Company or any of its Subsidiaries under, any
applicable Environmental Law, except for such writs, injunctions, decrees,
orders or judgments that would not reasonably be expected to result in a Company
Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries (i) has
received any written notice from any Person alleging that the Company or any of
its Subsidiaries has disposed of any Hazardous Substance on any properties
currently leased by or operated by the Company or any of its Subsidiaries, and
(ii) has not disposed of any Hazardous Substance on Third Party sites in
violation of any Environmental Law or incurred any liability for the unlawful
generation, treatment, storage or disposal, of Hazardous Substances, except in
each case as would not reasonably be expected to result in a Company Material
Adverse Effect.
Section 3.17 Labor Matters. None of the Company or any of its Subsidiaries
is a party to any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization applicable to Persons
employed by the Company or any of its Subsidiaries, nor is the Company or any of
its Subsidiaries under any current obligation to bargain with any bargaining
agent on behalf of any such Persons. Neither the Company nor any of its
Subsidiaries is the subject of any material proceeding asserting that the
Company or any of its Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization nor
is there pending or, to the knowledge of the Company, threatened, nor has there
been for the past three (3) years, any labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving the Company or any of its Subsidiaries
which has had, or would reasonably be expected to result in, a Company Material
Adverse Effect.
Section 3.18 Opinions of Financial Advisors. Prior to the execution of
this Agreement, the Company Special Committee has received the opinion of Credit
Suisse First Boston LLC to the effect that, as of the date of such opinion, and
based upon and subject to the matters set forth therein, the Parent Exchange
Ratio is fair to the holders of Company Common Stock (excluding the controlling
shareholder and its affiliates) from a financial point of view. Prior to the
execution of this Agreement, the WFS Special Committee has received the opinion
of Deutsche Bank Securities Inc., to the effect that, as of the date of such
opinion, and based upon and subject to the matters set forth therein, the
Subsidiary Exchange Ratio is fair to the holders of WFS Common Stock, other than
WFB and its affiliates, from a financial point of view.
Section 3.19 Takeover Statutes. No "fair price," "business combination,"
"moratorium," "control share acquisition" or other similar antitakeover statute
is applicable to the Parent Merger or the Subsidiary Merger, except for such
statutes or regulations as to which all necessary action has been taken by the
Company and its board of directors, WFS and its board of directors and WFB and
its board of directors to permit the consummation of the Parent Merger and the
Subsidiary Merger in accordance with the terms hereof.
Section 3.20 Information in Registration Statement and Joint Proxy
Statement. The information relating to and provided by the Company and its
Subsidiaries, or their respective representatives, to be contained in the
Registration Statement and the Disclosure Document, shall not, (a) at the time
the Registration Statement is declared effective, (b) at the time the Disclosure
33
Document is first mailed to the shareholders of the Company and WFS, (c) at the
time of the Company Shareholder Meeting and the WFS Shareholder Meeting or (d)
at the Parent Effective Time and the Subsidiary Effective Time, contain any
untrue statement of material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not false or misleading. The
Disclosure Document shall comply in all material respects as to form with the
requirements of the Exchange Act and the Securities Act, as applicable.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by the Purchaser or any of its
Subsidiaries or representatives for inclusion in the Disclosure Document.
Section 3.21 Insurance. The Company and its Subsidiaries maintain
insurance coverage with reputable insurers in such amounts and covering such
risks as are in accordance with normal industry practice.
Section 3.22 Assets and Activities. Neither the Company nor any of its
Subsidiaries engages in any activities nor owns or controls any assets that
would not be permissible for a financial holding company, as such term is
defined in 12 U.S.C. Section 1841(p) or the implementing regulations of the
Federal Reserve Board.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company and WFS,
except with respect to any particular subsection of this Article IV to the
extent specifically described in the corresponding schedule of the Purchaser
Disclosure Letter, as follows:
Section 4.1 Due Incorporation; Organization. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has the corporate power to carry on its
business as it is now being conducted and to own all of its properties and
assets. True and complete copies of the Restated Articles of Incorporation of
the Purchaser, as amended, and Amended and Restated Bylaws of the Purchaser,
with all amendments and restatements thereto through the date hereof, have been
provided to the Company prior to the date hereof. Each of the Purchaser and its
Subsidiaries is duly qualified as a foreign corporation to do business, and is
in good standing (to the extent the concept of good standing exists), in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified has not had, or would not reasonably be expected
to result in, a Purchaser Material Adverse Effect. WBNA is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States and has the corporate power and authority to carry on its
business as it is now being conducted and to own all of its properties.
Section 4.2 Capitalization. The authorized capital stock of the Purchaser
consisted of 3,000,000,000 Purchaser Shares and 550,000,000 shares of Purchaser
Preferred Stock. As of July 31, 2005, (i) 1,566,403,546 Purchaser Shares were
issued and outstanding, all of which have been duly authorized, validly issued
and are fully paid and nonassessable, and subject to no preemptive rights (and
were not issued in violation of any preemptive rights), (ii) 100,000,000 shares
of Purchaser Preferred Stock were issued or outstanding, (iii)
34
139,701,535 Purchaser Shares were subject to outstanding options, subscriptions,
warrants, calls, rights, commitments or agreements of any character to acquire,
or convert into, Purchaser Shares, and (iv) 240,241,731 Purchaser Shares were
reserved for future issuance pursuant to stock option plans of the Purchaser.
All shares of Purchaser Stock issuable pursuant to this Agreement, subject to
issuance as aforesaid, upon issuance on the terms and conditions specified
herein, will be duly authorized, validly issued, fully paid and nonassessable.
At the Parent Effective Time, Purchaser will own directly all of the outstanding
equity interests of WBNA.
Section 4.3 Due Authorization of Transaction; Binding Obligation. The
Purchaser has full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, and the execution, delivery
and performance of this Agreement by the Purchaser have been duly authorized by
all necessary corporate action on the part of the Purchaser. This Agreement has
been duly executed and delivered by the Purchaser and, assuming due
authorization, execution and delivery of this Agreement by the Company and WFS,
is the legal valid and binding obligation of the Purchaser enforceable against
each of them in accordance with its terms, subject to the qualification,
however, that enforcement of the rights and remedies created hereby is subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general application relating to or affecting creditors' rights
and to general principles of equity affecting the availability of specific
performance and other equitable remedies. No further approval by the board of
directors, shareholders or other security holders of the Purchaser is required
for the execution, delivery and performance of this Agreement by the Purchaser,
including the consummation of the Mergers. WBNA has full corporate power and
authority to execute and deliver the Bank Plan of Merger and to perform its
obligations thereunder, and, prior to the Parent Effective Time, the execution,
delivery and performance of the Bank Plan of Merger by WBNA will be duly
authorized by all necessary corporate action on the part of WBNA, including the
approval of its sole shareholder. Prior to the Parent Effective Time, the Bank
Plan of Merger will be duly executed and delivered by WBNA and, assuming due
authorization, execution and delivery of the Bank Plan of Merger by WFB, will be
a legal, valid and binding obligation of WBNA enforceable against WBNA in
accordance with its terms, subject to the qualification, however, that
enforcement of the rights and remedies created hereby is subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general application relating to or affecting creditors' rights and to general
principles of equity affecting the availability of specific performance and
other equitable remedies.
Section 4.4 Non-Contravention. Assuming compliance with the HSR Act,
applicable bank regulatory laws, any foreign or other antitrust or combination
laws, the Securities Act, any applicable state securities or "blue sky" laws and
the filing of the Parent Agreements of Merger and the Subsidiary Agreements of
Merger with the Secretary of State of the State of California, the Secretary of
State of the State of North Carolina and each other appropriate Governmental
Authority, the execution, delivery and performance of this Agreement by the
Purchaser and the consummation of the transactions contemplated hereby do not
and will not (a) contravene the Restated Articles of Incorporation of the
Purchaser, as amended, and Amended and Restated Bylaws of the Purchaser or other
charter or organizational documents of its Subsidiaries, or (b) constitute a
breach or violation of, or 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 Applicable Law or agreement, indenture, instrument,
judgment, decree,
35
order, ruling or license of the Purchaser or any of its Subsidiaries or to which
the Purchaser or any of its Subsidiaries is a party or by which any of them or
their respective assets or properties is bound or affected, except in the case
of subsection (b), for any such breaches, violations, defaults, Liens or
accelerations which have not had, or would not reasonably be expected to result
in, a Purchaser Material Adverse Effect.
Section 4.5 Approvals, Consents, and Filings. No approval, authorization,
consent, order, filing, registration or notification is required to be obtained
by the Purchaser or any of its Subsidiaries from, or made or given by the
Purchaser or any of its Subsidiaries to, any Governmental Authority or any other
Person in connection with the execution, delivery and performance of this
Agreement by the Purchaser and the consummation of the transactions contemplated
hereby, except for such approvals, authorizations, consents, orders, filings,
registrations or notifications (a) required by the HSR Act, any foreign or other
antitrust or combination laws, the Exchange Act, the Securities Act and any
applicable state securities or "blue sky" laws, the filing of the Parent
Agreements of Merger and the Subsidiary Agreements of Merger with the Secretary
of State of the State of California, the Secretary of State of the State of
North Carolina and each other appropriate Governmental Authority, the receipt of
necessary approvals for and consummation of the Bank Conversion, the NYSE, and
the filing of applications and notices with, and the receipt of approvals or
nonobjections from, federal and state banking authorities, including the Federal
Reserve Board, the FDIC, the OCC and the OTS and the expiration or early
termination of the required post-approval waiting period thereafter, and (b) of
which the failure to obtain would not reasonably be expected to result in a
Purchaser Material Adverse Effect. As of the date of this Agreement, the
Purchaser does not know of any reason related to the Purchaser or any of its
Subsidiaries why the necessary regulatory approvals and consents will not be
received in order to permit consummation of the Parent Merger or the Subsidiary
Merger on a timely basis.
Section 4.6 Litigation; Regulatory Matters. Except as disclosed in the
Purchaser SEC Reports (without giving effect to any Purchaser SEC Report or
amendment filed after the date of this Agreement), neither the Purchaser nor any
of its Subsidiaries is engaged in, a party to, or to the knowledge of the
Purchaser, threatened with, nor is Purchaser's or its Subsidiaries' properties
involved in, any legal action or other suit, action, investigation or
proceeding, nor is there any judgment, decree, injunction, memorandum of
understanding, commitment, rule or order of any Governmental Authority
outstanding against the Purchaser or any of its Subsidiaries, that (a) seeks to
restrain, materially modify or invalidate the transactions contemplated by this
Agreement, or (b) would reasonably be expected to result in a Purchaser Material
Adverse Effect. Neither the Purchaser nor any of its Subsidiaries is subject to,
or has been advised by the applicable Governmental Authority that it is
reasonably likely to become subject to, any written order, decree, agreement,
memorandum of understanding or similar arrangement 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 the Purchaser or any of its Subsidiaries.
Section 4.7 Brokers' Fees. Except for fees payable to Wachovia Capital
Markets, LLC and Xxxxxxx, Xxxxx & Co., neither the Purchaser nor any of its
Subsidiaries has any
36
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement for which
the Company could become liable or obligated.
Section 4.8 Reports and Financial Information.
(a) The Purchaser has filed, or furnished, as applicable, all
reports, schedules and definitive proxy statements or information statements
required to be filed or furnished with the SEC pursuant to the Exchange Act
since December 31, 2003 (all such reports, schedules and definitive proxy
statements, and amendments thereto, collectively, the "Purchaser SEC Reports").
The Purchaser SEC Reports (i) were prepared in accordance with the applicable
requirements of the Exchange Act and with the provisions of SOX then in effect
and applicable to such filings when made. None of the Purchaser SEC Reports nor
any report filed by Purchaser with the FDIC, the Federal Reserve Board, the OCC
or other banking regulatory agency, and no registration statement or offering
materials made or given by Purchaser to stockholders of the Purchaser since
December 31, 2003, as of the respective dates thereof (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such amendment or superseding filing) 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 light of the circumstances under which they
were made, not misleading.
(b) Each of the balance sheets (including the related notes
thereto) included in the Purchaser SEC Reports fairly present the financial
position of the Purchaser and its Subsidiaries as of the date thereof, and the
other related financial statements (including the related notes thereto)
included therein fairly present the results of operations and the changes in
cash flows and stockholders' equity of the Purchaser and its Subsidiaries for
the respective periods set forth therein, all in conformity with GAAP
consistently applied during the periods involved, except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to (x) normal year-end adjustments, and (y) the permitted exclusion of all
footnotes that would otherwise be required by GAAP.
(c) The Purchaser maintains a system of internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) sufficient to provide reasonable assurance (i) that transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP, consistently applied, (ii) that transactions are executed
only in accordance with the authorization of management and (iii) regarding
prevention or timely detection of the unauthorized acquisition, use or
disposition of the assets of it and its Subsidiaries.
(d) The Purchaser's disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably designed to
ensure that all information (both financial and non-financial) required to be
disclosed by the Purchaser in the Purchaser SEC Reports is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC, and that all such information is accumulated and communicated to the
Purchaser's management as appropriate to allow timely decisions regarding
required disclosure and to make the certifications of the chief executive
officer and chief financial officer of the Purchaser required under the Exchange
Act with respect to such reports. As of the date of this Agreement, Purchaser
knows of no reason that the outside auditors and
37
chief executive officer and chief financial officer of the Purchaser will not be
able to give the certifications and attestations required pursuant to the rules
and regulations adopted pursuant to Section 404 of SOX, without qualification,
when next due.
(e) Neither the Purchaser nor any of its Subsidiaries is a party
to, or has any commitment to become a party to, any joint venture, off balance
sheet partnership or any similar contract (including any contract or arrangement
relating to any transaction or relationship between the Purchaser or among the
Purchaser, on the one hand, and any unconsolidated Affiliate), including any
structured finance, special purpose or limited purpose entity or Person, on the
other hand or any "off balance sheet arrangements" (as defined in Item 303(a) of
Regulation S-K under the Exchange Act), where the result, purpose or intended
effect of such contract is to avoid disclosure of any material transaction
involving, or material liabilities of, the Purchaser in the Purchaser SEC
Reports.
Section 4.9 Absence of Certain Changes or Events. Since December 31, 2004,
except as otherwise disclosed in the Purchaser SEC Reports prior to the date of
this Agreement, neither the Purchaser nor WBNA has:
(a) incurred any liabilities (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due) material to the
Purchaser and its Subsidiaries on a consolidated basis, other than (i) those set
forth or adequately provided for in the balance sheet included in the
Purchaser's most recently filed Quarterly Report on Form 10-Q (the "Purchaser
Balance Sheet"), (ii) those incurred in the ordinary course of business and not
required to be set forth in the Purchaser Balance Sheet under GAAP, (iii) those
incurred in the ordinary course of business since the date of the Purchaser
Balance Sheet and consistent with past practice, and (iv) those incurred in
connection with the execution of this Agreement; or
(b) suffered any change in its business, assets, financial
condition or results of operation which has had, or would reasonably be expected
to result in, a Purchaser Material Adverse Effect.
Section 4.10 Taxes.
(a) The Purchaser and each of its Subsidiaries has duly and timely
filed with the appropriate Tax authorities all Tax Returns that it has been
required to file. All such Tax Returns are true and complete in all material
respects. All Taxes due and owing by any of the Purchaser and its Subsidiaries
(whether or not shown on any Tax Returns) have either been paid or otherwise
accrued as a reserve for Tax liability included on the face of the balance
sheets (rather than only in any notes thereto) contained in such financial
statements in the most recent Purchaser SEC Reports.
(b) The unpaid Taxes of the Purchaser and its Subsidiaries did
not, as of the date of the financial statements in the most recent Purchaser SEC
Reports, exceed the reserve for Tax liability set forth on the face of the
balance sheets (rather than in any notes thereto) contained in such financial
statements. Since the date of the financial statements in the most recent
Purchaser SEC Reports, neither the Purchaser nor any of its Subsidiaries has
incurred any liability for Taxes outside the ordinary course of business or
otherwise inconsistent with past custom and practice.
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(c) No pending deficiencies for Taxes with respect to any of the
Purchaser and its Subsidiaries have been claimed in writing, proposed or
assessed by a Tax authority, except for such deficiencies which would not
reasonably be expected to result in a Purchaser Material Adverse Effect. There
are no pending or, based on written notice, threatened audits, assessments,
administrative proceedings, court proceedings or other actions for or relating
to any liability in respect of material Taxes of any of the Purchaser or its
Subsidiaries. Neither the Purchaser nor any of its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency which waiver or extension is
currently in effect.
(d) There are no Liens for Taxes upon the assets of any of the
Purchaser and its Subsidiaries (other than with respect to Permitted Liens for
Taxes or Liens for Taxes that are being contested in good faith and for which an
adequate reserve under GAAP has been established).
(e) Any "listed transaction" as defined in Treasury Regulation
Section 1.6011-4(b)(2), entered into by the Purchaser or any of its
Subsidiaries, has been properly identified and disclosed on all Tax Returns.
Section 4.11 Information in Registration Statement and Joint Proxy
Statement. The information relating to and provided by the Purchaser and its
Subsidiaries or representatives, to be contained in the Registration Statement
and the Disclosure Document, shall not, (a) at the time the Registration
Statement is declared effective, (b) at the time the Disclosure Document is
first mailed to the shareholders of the Company, (c) at the time of the Company
Shareholder Meeting and the WFS Shareholder Meeting, as applicable, or (d) at
the Parent Effective Time or the Subsidiary Effective Time, as applicable,
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not false or
misleading. The Disclosure Document shall comply in all material respects as to
form with the requirements of the Exchange Act and the Securities Act, as
applicable. Notwithstanding the foregoing, the Purchaser makes no representation
or warranty with respect to any information supplied by the Company, WFB, WFS,
their respective Subsidiaries or any of the Company's, WFB's or WFS's
representatives for inclusion in the Disclosure Document.
Section 4.12 Regulatory Compliance.
(a) The Purchaser and each of its Subsidiaries is in compliance
with all Applicable Laws, except for instances of non-compliance that would not
reasonably be expected to result in a Purchaser Material Adverse Effect.
(b) The Purchaser and its Subsidiaries hold all permits, licenses,
variances, exemptions, consents, certificates, orders and approvals from
Governmental Authorities which are required to permit the operation of the
Purchaser's business as it is now being conducted (collectively, the "Purchaser
Permits"). The Purchaser and its Subsidiaries are in compliance with the terms
of the Purchaser Permits and the Purchaser Permits are in full force and effect,
except where the failure to so comply or be in effect would not reasonably be
expected to result in a Purchaser Material Adverse Effect.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGERS
Section 5.1 Conduct of Business of the Company, WFB and WFS Pending the
Mergers. Each of the Company, WFB and WFS agrees that except as expressly
contemplated by this Agreement or the Company Disclosure Letter or as otherwise
consented to in writing by the Purchaser, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Parent Effective Time, in the case of the Company, and the
Subsidiary Effective Time, in the case of WFB and WFS:
(a) The Company, WFB, WFS and their respective Subsidiaries shall
conduct their respective businesses only in the ordinary and usual course of
business and consistent with past practices, and the Company, WFB, WFS and their
respective Subsidiaries shall use their commercially reasonable 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 and, in any case, will
not terminate any "named executive officer" (as defined in Item 402 of
Regulation S-K under the Securities Act) of the Company or WFS without (i)
cause, (ii) providing the Purchaser reasonable notice of its intention to
terminate a named executive officer and (iii) consulting with the Purchaser
prior to any such termination.
(b) The Company, WFB and WFS shall not, and shall cause each of
their respective Subsidiaries not to, (i) amend its articles of incorporation,
bylaws or similar governing documents (except, in the case of WFB, to the extent
required to effect the Bank Conversion), or (ii) directly or indirectly, split,
combine or reclassify any shares of its outstanding capital stock, make,
declare, set aside or pay any dividend (other than such dividends that have been
declared by the board of directors of the Company or WFS, as applicable, prior
to the date of this Agreement, or regular quarterly dividends on the Company
Common Stock or the WFS Common Stock, as applicable, declared by the board of
directors of the Company or the board of directors of WFS, as applicable, after
the date of this Agreement, provided, that any such dividend shall be at a rate
no greater than the rate paid by it during the fiscal quarter immediately
preceding the date hereof) or other distribution payable in cash, stock or
property in respect of its capital stock, or directly or indirectly redeem,
purchase or otherwise acquire any shares of its capital stock or other
securities.
(c) The Company, WFB and WFS shall not, and shall cause each of
their respective Subsidiaries not to, (i) authorize for issuance, issue, sell,
pledge, dispose of, encumber, deliver or agree or commit to issue, sell, or
pledge, or deliver any additional shares of, or rights of any kind to acquire
any shares of, its capital stock of any class (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase or
otherwise) other than (A) Company Stock Options, WFS Stock Options, Company
Restricted Shares and Company RSUs granted or issued in amounts not to exceed
those set forth in Schedule 5.1(c)(i) of the Company Disclosure Letter, (B)
shares of Company Common Stock issued to holders upon exercise of Company Stock
Options, and (C) shares of WFS Common Stock issued to holders upon exercise of
WFS Stock Options, (ii) acquire, dispose of, transfer, lease, license, mortgage,
pledge or encumber any fixed or other material assets, other than in the
ordinary course of business and consistent with past practices, (iii) incur,
assume or prepay any material indebtedness, liability or obligation or any other
material liabilities or issue any debt
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securities, other than in the ordinary course of business and consistent with
past practices, (iv) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any Person (other than a Subsidiary) in a material amount, other than in the
ordinary course of business and consistent with past practices, (v) make any
material loans, advances or capital contributions to, or investments in, any
Person, other than in the ordinary course of business and consistent with past
practices, (vi) fail to maintain insurance, other than in the ordinary course of
business and consistent with past practices, (vii) implement or adopt any change
in its accounting principles, practices or methods, other than as required by
GAAP or applicable regulatory accounting requirements, (viii) enter into any new
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 or policies imposed by any
Governmental Authority, (ix) commence or settle any material claim, action or
proceeding, (x) knowingly take, or knowingly omit to take, any action that
would, or is reasonably likely to, result in any of the conditions to the Parent
Merger or the Subsidiary Merger set forth in Article VII not being satisfied in
a timely manner, except as may be required by Applicable Law, or (xi) enter into
any contract, agreement, commitment or arrangement with respect to any of the
foregoing.
(d) Notwithstanding anything to the contrary in subsections (a)-(c)
above, the Company, WFB and WFS shall be permitted to take the following
actions: (i) pay any judgment of pending legal claims (including penalties,
fees, or taxes related thereto); (ii) repay any guarantors of the Company's,
WFB's or WFS's obligations or pledgors of collateral to secure the Company's
obligations, WFB's obligations or WFS's obligations (including collateral
pledged to secure letters of credit relating to such obligations) if and to the
extent such guarantors pay any amount under the guaranty, or such pledgors have
such collateral foreclosed upon, in connection with any of the Company's
obligations, WFB's obligations or WFS's obligations, on behalf of the Company,
WFB or WFS, as applicable; (iii) continue with the respective securitization
programs of the Company and WFS, in size, amount, frequency and with terms that
are not materially inconsistent with the size, amount, frequency and terms of
the Company's securitization transactions consummated prior to the date of this
Agreement; and (iv) subject to Section 5.1(c)(i)(A), pay compensation as
permitted under Section 5.2, below.
Section 5.2 Compensation Plans. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Subsidiary Effective Time, the Company, WFB and WFS each agree that it
will not, and will cause each of its Subsidiaries not to, except as (i)
contemplated by this Agreement or the Company Disclosure Letter, (ii) consented
to in writing by the Purchaser, (iii) required by Applicable Law, or (iv)
required pursuant to existing contractual arrangements or other plans or
commitments as otherwise disclosed in the Company Disclosure Letter:
(a) enter into, establish, adopt, amend, modify (including by way of
interpretation) or renew any Company Employee Plans or 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, restricted stock units or other compensation or benefits
payable thereunder or add any new
41
participants to any non-qualified retirement plans (or, with respect to any of
the preceding, communicate any intention to take such action), except amendments
that do not increase benefits or result in increased administrative costs (or
enter into any contract, commitment or arrangement to do any of the foregoing);
(b) grant or become obligated to grant any salary or wage increase
or increase any compensation, bonus or employee or fringe benefits (or, with
respect to any of the preceding, communicate any intention to take such action)
of directors, officers or employees (including any such increase pursuant to any
Company Employee Plans), except for increases in compensation in the ordinary
course of business and consistent with past practice (or enter into any
contract, commitment or arrangement to do any of the foregoing); or
(c) enter into, amend, modify (including by way of interpretation)
or renew (other than a renewal occurring in accordance with the terms thereof)
any employment, consulting, severance or similar agreement or arrangement with
any employee, officer or director (or enter into any contract, commitment or
arrangement to do any of the foregoing, except for employment arrangements for
newly hired employees in the ordinary and usual course of business consistent
with past practice).
Section 5.3 No Solicitation.
(a) Except as otherwise provided in this Section 5.3, neither the
Company, WFB nor WFS shall, and each of them will cause their respective
Subsidiaries and their Subsidiaries' officers, directors, employees, agents, and
advisors (collectively, "Representatives") not to, encourage, solicit,
participate in, initiate or knowingly facilitate inquiries or proposals with
respect to, or engage in any discussions or negotiations with, or provide any
information to, any Person (other than the Purchaser or its Subsidiaries, or any
of their respective Representatives) with respect to any offer or proposal
concerning an Alternative Transaction (an "Acquisition Proposal"); provided,
however, that the Company may, in response to a request for information or
access by any Person making a written Acquisition Proposal to the Company's
board of directors, made after the date hereof that was not encouraged,
solicited or initiated by the Company, WFB, WFS or any of their respective
Representatives on or after the date hereof, directly or indirectly, furnish
information and access pursuant to a confidentiality agreement with such Person
on terms no less favorable to the Company than the Confidentiality Agreement,
and may participate in discussions and negotiate with such Person concerning any
such Acquisition Proposal, in each case if and only if (i) such Acquisition
Proposal constitutes or may reasonably be expected to lead to a Superior
Proposal, and (ii) the Company's board of directors and the Company Special
Committee, after consultation with outside legal counsel, believes in good faith
that such action is necessary for the Company's board of directors to comply
with their fiduciary duties to the shareholders of the Company. The Company
shall immediately cease and cause to be terminated any activities, discussions
or negotiations conducted before the date of this Agreement with any Persons
other than the Purchaser with respect to any Acquisition Proposal and shall use
its reasonable best efforts to enforce any confidentiality or similar agreement
relating to an Acquisition Proposal. The Company shall promptly (and in any
event within one business day) notify the Purchaser and the WFS Special
Committee upon receipt of any written Acquisition Proposal, shall provide the
Purchaser and the WFS Special Committee with the material terms and conditions
of such proposal, and shall keep the Purchaser and the WFS Special Committee
apprised of any related developments,
42
discussions and negotiations on a current basis (but in no event, later than
twenty-four (24) hours of any material developments, discussions or negotiations
relating to such proposal).
(b) If, in response to an Acquisition Proposal that did not result
from a breach of Section 5.3(a) (an "Outside Proposal"), the Company's board of
directors and the Company Special Committee conclude in good faith (after
consultation with a financial advisor and outside legal counsel) that such
Outside Proposal is a Superior Proposal, the Company's board of directors may
(subject to this and the following two sentences) terminate this Agreement
pursuant to Section 8.1(g) but only at a time that is prior to the Company
Shareholder Meeting and after the fifth (5th) Business Day following delivery by
the Company to the Purchaser of a written notice advising the Purchaser that the
board of directors of the Company has authorized the Company to enter into a
definitive written agreement regarding such Outside Proposal, attaching the most
current version of such agreement to such notice, and the Purchaser does not
make, within such period, a valid and legally binding offer that the board of
directors of the Company and the Company Special Committee determine, in good
faith after consultation with a financial advisor, is at least as favorable,
from a financial point of view, to the shareholders of the Company as the
Outside Proposal (any such offer being referred to as an "Adjusted Purchaser
Proposal"). If requested by the Purchaser in response to a notice advising the
Purchaser that the board of directors of the Company have authorized the Company
to enter into a definitive written agreement regarding an Outside Proposal, the
Company, during such five (5) Business Day period, shall, and shall cause its
Representatives to, negotiate in good faith with the Purchaser with respect to
any Adjusted Purchaser Proposal.
(c) Nothing contained in this Agreement shall prohibit the Company
or its board of directors from otherwise complying with Rule 14e-2 or Rule 14d-9
promulgated 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.
Section 5.4 Conduct of Business by the Purchaser Pending the Mergers.
During the period from the date of this Agreement, and continuing until the
earlier of the termination of this Agreement or the Subsidiary Effective Time,
the Purchaser shall not, and shall cause each of its Subsidiaries not to,
knowingly take, or knowingly omit to take, any action that would, or is
reasonably likely to, result in any of the conditions to the Mergers set forth
in Article VII not being satisfied in a timely manner, except as may be required
by Applicable Law.
Section 5.5 Tax Free Reorganization.
(a) The parties hereto intend that the Mergers shall constitute
reorganizations within the meaning of Section 368(a) of the Code and the
Subsidiary Merger shall also constitute a complete liquidation under Section 332
of the Code, and the parties shall use their best efforts to cause the Mergers
to so qualify.
(b) None of the Purchaser, the Company, WFB, WFS or any of their
respective affiliates shall directly or indirectly knowingly take or agree to
take any action, or fail to take any action, at any time which action or failure
to act would prevent the Mergers from qualifying as reorganizations under
Section 368(a) of the Code or the Subsidiary Merger from also qualifying as a
complete liquidation under Section 332 of the Code, would prevent them
43
from providing representations required from them in Sections 7.2(d) or 7.3(d)
or that would prevent the opinions described in such sections from being
provided.
(c) The parties agree to report the Mergers as reorganizations
within the meaning of Section 368(a) of the Code and the Subsidiary Merger as a
complete liquidation under Section 332 of the Code. Following the Parent Merger
and the Subsidiary Merger, the Purchaser and WFB will comply with the
record-keeping and information filing requirements of Treasury Regulations
Section 1.368-3. The parties shall not take a position on any Tax Return
inconsistent with this Section 5.5.
(d) Each of the Purchaser and the Company will, upon the request of
Xxxxxxxx & Xxxxxxxx LLP and Xxxxxx & Bird LLP, provide customary representation
letters, substantially in the form attached hereto as Exhibits "C" and "D," each
dated on or about the date the Joint Proxy Statement is mailed to the
shareholders of the Company and reissued as of the Closing Date. Each of the
parties will, upon the request of Xxxxxx & Bird LLP and Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, provide customary representation letters reasonably
satisfactory in form and substance to such counsel each dated on or about the
date the Joint Proxy Statement is mailed to the shareholders of WFS and reissued
as of the Closing Date.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Shareholder Approvals.
(a) Company Shareholder Meeting. As soon as reasonably practicable
following the execution hereof, the Company, acting through its board of
directors, shall, in accordance with Applicable Law, and subject to the
requirements of the appropriate Governmental Authorities, and the Company's
articles of incorporation and bylaws, (i) duly call, give notice of, convene and
hold a special meeting of its shareholders as soon as reasonably practicable for
the purpose of considering and taking action on this Agreement (including any
adjournment or postponement, the "Company Shareholder Meeting"), and (ii)
subject to the terms of this Agreement, (x) include in the Disclosure Document,
and not subsequently withdraw or modify the recommendation of the Company
Special Committee and the board of directors of the Company that the
shareholders of the Company approve this Agreement and the Parent Merger;
provided, that if the Company's board or directors or the Company Special
Committee determines in good faith, after discussion with its outside legal
counsel, that the continued recommendation of this Agreement and the Parent
Merger would result in a violation of its fiduciary duties under applicable law,
then at or prior to the Company Shareholder Meeting, the Company's board of
directors or the Company Special Committee may amend, modify or withdraw its
recommendation, but the Company shall nonetheless submit this Agreement and the
Parent Merger to the Company's shareholders without such withdrawn
recommendation or with such amended or modified recommendation, and (y) subject
to Section 5.3(c) and the proviso to the foregoing clause (x) of this Section
6.1(a), use its commercially reasonable efforts to obtain such approval of the
Company's shareholders.
(b) WFS Shareholder Meeting. As soon as reasonably practicable
following the execution hereof, WFS, acting through its board of directors,
shall, in accordance with Applicable Law, and subject to the requirements of the
appropriate Governmental Authorities,
44
and WFS's articles of incorporation and bylaws, (i) duly call, give notice of,
convene and hold a special meeting of its shareholders as soon as reasonably
practicable for the purpose of considering and taking action on this Agreement
(including any adjournment or postponement, the "WFS Shareholder Meeting"), and
(ii) subject to the terms of this Agreement, (x) include in the Disclosure
Document, and not subsequently withdraw or modify the recommendation of the WFS
Special Committee and the board of directors of WFS that the shareholders of WFS
(other than WFB and its affiliates) approve this Agreement and the Subsidiary
Merger; provided, that if WFS's board or directors or the WFS Special Committee
determines in good faith, after discussion with its outside legal counsel, that
the continued recommendation of this Agreement and the Subsidiary Merger would
result in a violation of its fiduciary duties under applicable law, then at or
prior to the WFS Shareholder Meeting, WFS's board of directors or the WFS
Special Committee may amend, modify or withdraw its recommendation, but WFS
shall nonetheless submit this Agreement and the Subsidiary Merger to WFS's
shareholders without such withdrawn recommendation or with such amended or
modified recommendation, and (y) subject to the proviso to the foregoing clause
(x) of this Section 6.1(b), use its commercially reasonable efforts to obtain
such approval of WFS's shareholders other than WFB. In connection with the WFS
Shareholder Meeting, the Company shall cause WFB to vote all of its shares of
WFS Common Stock in favor of approval and adoption of this Agreement and the
Subsidiary Merger. Nothing contained in this Agreement shall prohibit WFS or its
board of directors from otherwise complying with Rule 14e-2 or 14d-d under the
Exchange Act; 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.
Section 6.2 Registration Statement; Disclosure Document.
(a) Registration Statement. As soon as reasonably practicable after
the execution of this Agreement, in accordance with Applicable Law and subject
to the requirements of the appropriate Governmental Authorities, (i) the
Purchaser, the Company WFB and WFS shall cooperate in preparing, and shall cause
to be filed with the SEC, a joint proxy statement (together with any amendments
thereof or supplements thereto, the "Joint Proxy Statement") to solicit proxies
from (x) the shareholders of the Company in favor of the approval of the Parent
Merger and the adoption of this Agreement and (y) the shareholders of WFS in
favor of the approval of the Subsidiary Merger and the adoption of this
Agreement; and (ii) the Purchaser shall prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments thereto, the
"Registration Statement," which shall include the Joint Proxy Statement and a
prospectus for Purchaser Shares to be issued in connection with the Mergers, the
"Prospectus"), in connection with the registration under the Securities Act of
Purchaser Shares to be issued to the shareholders of the Company and WFS
pursuant to the Mergers. The Joint Proxy Statement, together with the
Prospectus, are sometimes hereinafter referred to collectively as the
"Disclosure Document." Each of the Purchaser, the Company, WFB and WFS shall use
its commercially reasonable efforts to cause the Registration Statement to
become effective as promptly as practicable, and prior to the effective date of
the Registration Statement, the Purchaser shall take all or any action required
under any applicable federal or state securities laws in connection with the
issuance of Purchaser Shares pursuant to the Mergers. Each of the Purchaser, the
Company, WFB and WFS shall furnish all information concerning the Purchaser, the
Company, WFB and WFS as the other party may reasonably request in connection
with such actions and the preparation of the Disclosure Document and the
Registration Statement. As
45
promptly as practicable after the Registration Statement shall have become
effective, the Company and WFS shall mail the Disclosure Document to their
respective shareholders.
(b) Notice. Each of the Purchaser and the Company and WFS will
advise the other, promptly after it receives notice thereof, of the time at
which the Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the suspension
of the qualification of Purchaser Shares issuable in connection with the Mergers
for offering or sale in any jurisdiction, or of any request by the SEC for
amendment of the Disclosure Document or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
Each party shall cooperate and provide the other party with a reasonable
opportunity to review and comment on any amendment or supplement to the
Disclosure Document 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.
(c) Company, WFB and WFS Information. If, at any time prior to the
Parent Effective Time or the Subsidiary Effective Time, any event or
circumstance relating to the Company, WFB or WFS, or their respective officers
or directors, should be discovered by the Company, WFB or WFS which, pursuant to
the Securities Act or the Exchange Act, should be set forth in an amendment or a
supplement to the Registration Statement or Disclosure Document, the Company,
WFB and WFS shall promptly inform the Purchaser thereof. All documents that the
Company or WFS is responsible for filing with the SEC in connection with the
Mergers will comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
(d) Purchaser Information. If, at any time prior to the Parent
Effective Time or the Subsidiary Effective Time, any event or circumstance
relating to the Purchaser or its officers or directors, should be discovered by
the Purchaser which, pursuant to the Securities Act or the Exchange Act, should
be set forth in an amendment or a supplement to the Registration Statement or
Disclosure Document, the Purchaser shall promptly inform the Company, WFB and
WFS thereof. All documents that the Purchaser is responsible for filing with the
SEC in connection with the Mergers will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act.
(e) SEC Filings. The Company, WFS and the Purchaser will cooperate
in ensuring that all filings required under SEC Rules 165, 425 and 14a-12 are
timely and properly made.
Section 6.3 Confidentiality; Access to Information.
(a) The terms of that certain Confidentiality Agreement entered into
by and between the Company and the Purchaser, dated as of April 15, 2005 (the
"Confidentiality Agreement") are hereby incorporated herein by reference and
shall continue in full force and effect until the Closing Date. If this
Agreement is, for any reason, terminated prior to the Closing Date, the
Confidentiality Agreement shall continue in full force and effect. All
information and materials furnished pursuant to this Agreement shall be subject
to the provisions of the Confidentiality Agreement.
46
(b) Upon reasonable notice and subject to applicable laws relating
to the confidentiality of information, each of the Company, WFB and WFS, on the
one hand, and the Purchaser on the other hand, shall, and shall cause each of
their respective Subsidiaries to, afford to the Representatives of the
Purchaser, or Representatives of the Company, WFB or WFS, as the case may be,
reasonable access, during normal business hours during the period prior to the
Parent Effective Time, to all their respective properties, books, contracts,
commitments, records, and personnel and, during such period, each of the
Company, WFB and WFS on the one hand, and the Purchaser on the other hand,
shall, and shall cause each of their respective Subsidiaries to, make available
to the Purchaser, the Company, WFB or WFS, as applicable, (i) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws or
federal or state banking or insurance laws (other than reports or documents that
such party is not permitted to disclose under Applicable Law) and (ii) all other
information concerning its business, properties and personnel as the other party
may reasonably request. None of the Company, WFB, WFS or the Purchaser, or any
of their respective Subsidiaries, shall be required to provide access to or to
disclose information where such access or disclosure would jeopardize the
attorney-client privilege of such party or its Subsidiaries or contravene any
law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties shall
make appropriate substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply.
(c) No investigation pursuant to receipt of information or access to
property or personnel in accordance with the provisions of this Section 6.3, the
Confidentiality Agreement or otherwise shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto or any condition to the Mergers.
Section 6.4 Consents; Approvals.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties shall use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, as promptly as practicable, the
Parent Merger, the Bank Conversion, the Subsidiary Merger, the Bank Merger and
the other transactions to be performed or consummated by such party in
accordance with the terms of this Agreement, including obtaining (and shall each
refrain from taking any willful action that would impede obtaining) all
consents, waivers, approvals, authorizations or orders (including all rulings,
decisions or approvals by any Governmental Authority), making all filings
(including the pre-merger notification filings required under the HSR Act and
all other filings with Governmental Authorities) required in connection with the
authorization, execution and delivery of this Agreement by the Company, WFB,
WFS, and the Purchaser and the consummation by them of the transactions
contemplated hereby. The Company, WFB, WFS and the Purchaser shall furnish all
information required to be included in the Disclosure Document, or for any
application or other filing to be made pursuant to the rules and regulations of
any Governmental Authority in connection with the transactions contemplated by
this Agreement. Notwithstanding anything herein to the contrary, in satisfying
its obligations pursuant to this Section 6.4, none of the Company, WFB or WFS
shall be required to (a) make any payments to any Person other than Governmental
Authorities, or (b) take any action, or commit to take any action, or agree to
any condition or restriction, that would reasonably be expected to result in a
Company Material Adverse Effect.
47
(b) In addition, in connection with the filings and submissions made
by each party with any applicable Governmental Authority pursuant to this
Agreement or in connection with the transactions contemplated hereby and thereby
each party shall, subject to Applicable Law and except as prohibited by any
applicable representative of any applicable Governmental Authority, (i) promptly
notify the other parties of any written communication to that party from such
Governmental Authority; (ii) to the extent reasonably practicable, notify the
other parties in advance of any substantive meeting or discussion held in person
with any Governmental Authority in respect of any filings, investigation or
inquiry concerning this Agreement, the Parent Merger, the Bank Conversion, the
Subsidiary Merger or the other transactions contemplated hereby and give the
other parties the opportunity to attend and participate thereat; and (iii)
furnish the other parties with copies of all correspondence, filings, and
written communications (and memoranda setting forth the substance thereof)
between them and its affiliates and their respective representatives on the one
hand, and any Governmental Authority, or members or their respective staffs on
the other hand, with respect to this Agreement, the Parent Merger, the Bank
Conversion, the Subsidiary Merger or the other transactions contemplated hereby.
Section 6.5 Advice of Changes. Each of the Company, WFB, WFS and the
Purchaser shall promptly advise the other of any change or event (a) having or
reasonably likely to have a Company Material Adverse Effect or a Purchaser
Material Adverse Effect, as applicable, or (b) that it believes would or would
be reasonably likely to cause or constitute a breach of any of its
representations, warranties or covenants contained in this Agreement; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement; provided
further that a failure to comply with this Section 6.5 shall not constitute a
breach of this Agreement or the failure of any condition set forth in Article
VII to be satisfied unless the underlying Company Material Adverse Effect or
Purchaser Material Adverse Effect, as applicable, or breach would independently
result in the failure of a condition set forth in Article VII to be satisfied.
Section 6.6 Public Announcements. The Company, WFB, WFS and the Purchaser
shall consult with each other before issuing any press release with respect to
the Mergers or this Agreement and shall not issue any such press release or make
any such public statement without the prior consent of the other parties, which
consent shall not be unreasonably withheld or delayed; provided, however, that a
party may, without the prior consent of the other parties, issue such press
release or make such public statement or filing as may upon the advice of
counsel be required by Applicable Law or a Governmental Authority if it has used
reasonable efforts to consult with the other parties.
Section 6.7 Conveyance Taxes. The Company, WFB, WFS and the Purchaser
shall cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, and other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Parent
Effective Time or the Subsidiary Effective Time.
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Section 6.8 Director and Officer Liability.
(a) From and after the Parent Effective Time, the Purchaser shall,
to the fullest extent permitted under Applicable Law, indemnify and hold
harmless each member of the Company Special Committee and each present director
and officer of the Company (collectively, the "Company Indemnified Parties")
against all costs and expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and settlement amounts paid in connection
with any claim, action (whether threatened, pending or completed), suit,
proceeding or investigation (whether arising before or after the Parent
Effective Time and whether civil, criminal, administrative or investigative),
based on the fact that such Person is or was a director or officer of the
Company or any Subsidiary and arising out of or pertaining to any action or
omission occurring at or before the Parent Effective Time, including any action
or omission relating to, or arising out of, this Agreement, the Mergers or the
transactions contemplated hereby or thereby, (and shall pay any expenses in
advance of the final disposition of such action or proceeding to each Company
Indemnified Party to the fullest extent permitted under Applicable Law, upon
receipt from the Company Indemnified Party to whom expenses are advanced of an
undertaking to repay such advances if required under the California Code and
permitted under applicable federal law). From and after the Subsidiary Effective
Time, the Purchaser shall, to the fullest extent permitted under Applicable Law,
indemnify and hold harmless each member of the WFS Special Committee and each
present director and officer of WFS who is not also a director or officer of the
Company (collectively, the "WFS Indemnified Parties") against all costs and
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection with any claim, action
(whether threatened, pending or completed), suit, proceeding or investigation
(whether arising before or after the Subsidiary Effective Time and whether
civil, criminal, administrative or investigative), based on the fact that such
Person is or was a director or officer of WFS or any Subsidiary and arising out
of or pertaining to any action or omission occurring at or before the Subsidiary
Effective Time, including any action or omission relating to, or arising out of,
this Agreement, the Mergers or the transactions contemplated hereby or thereby,
(and shall pay any expenses in advance of the final disposition of such action
or proceeding to each WFS Indemnified Party to the fullest extent permitted
under Applicable Law, upon receipt from the Company Indemnified Party to whom
expenses are advanced of an undertaking to repay such advances if required under
the California Code and permitted under applicable federal law). In the event of
any such claim, action, suit, proceeding or investigation, (i) the Purchaser
shall pay the reasonable fees and expenses of counsel selected by the Company
Indemnified Parties or the WFS Indemnified Parties, as applicable (collectively,
"Indemnified Parties"), which counsel shall be reasonably satisfactory to the
Purchaser, promptly after statements therefor are received and (ii) the
Purchaser shall cooperate in the defense of any such matter; provided, however,
that the Purchaser shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld or delayed);
and provided further that the Purchaser shall not be obligated pursuant to this
Section 6.8(a): (i) to pay the fees and expenses of more than one counsel (plus
appropriate local counsel) for all Company Indemnified Parties in any single
action except to the extent, as determined by counsel to the Company Indemnified
Parties, that two (2) or more of such Company Indemnified Parties shall have
conflicting interests in the
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outcome of such action, in which case such additional counsel (including local
counsel) as may be required to avoid any such conflict or likely conflict may be
retained by the Company Indemnified Parties at the expense of the Indemnifying
Corporation; or (ii) to pay the fees and expenses of more than one counsel (plus
appropriate local counsel) for all WFS Indemnified Parties in any single action
except to the extent, as determined by counsel to the WFS Indemnified Parties,
that two (2) or more of such WFS Indemnified Parties shall have conflicting
interests in the outcome of such action, in which case such additional counsel
(including local counsel) as may be required to avoid any such conflict or
likely conflict may be retained by the WFS Indemnified Parties at the expense of
the Indemnifying Corporation.
(b) The Purchaser shall use its reasonable best efforts to maintain
in effect for a period of six (6) years from and after the Parent Effective Time
and the Subsidiary Effective Time directors' and officers' liability insurance
covering those persons who are currently covered by the Company's and WFS's
respective directors' and officers' liability insurance policy on terms
comparable to such existing insurance coverage; provided, however, that (i) in
no event shall the Purchaser be required to expend pursuant to this Section
6.8(b) more than an amount per year equal to 200% of current annual premiums
paid by the Company and WFS for such insurance as of the date hereof and (ii) if
the Purchaser is unable to maintain or obtain the insurance called for by this
Section 6.8(b), the Purchaser will use its reasonable best efforts to obtain as
much comparable insurance as is available; and provided, further, that officers
and directors of the Company or any Subsidiary may be required to make
application and provide customary representations and warranties to the
Purchaser's insurance carrier for the purpose of obtaining such insurance.
(c) In the event that the Purchaser or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then, and in each such case, proper provision shall be made so
that the successors and assigns of the Purchaser shall assume the obligations
set forth in this Section 6.8.
(d) The provisions of this Section 6.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
Section 6.9 Section 16 of the Exchange Act. Prior to the Parent Effective
Time (and assuming that the Company and WFS deliver to the Purchaser the Section
16 Information in a timely and accurate manner, before the Parent Effective
Time), the boards of directors of the Purchaser, the Company and WFS, or a
committee of "non-employee directors" thereof (as such term is defined for
purposes of Rule 16b-3(d) under the Exchange Act), shall adopt a resolution
providing that any dispositions and acquisitions of Company Common Stock and WFS
Common Stock (including, in each case, derivative securities with respect
thereto) resulting from the Mergers and the transactions contemplated by this
Agreement and reflected in the Section 16 Information by each individual who is
subject to the reporting requirements of Section 16(a) of the Exchange Act with
respect to the Company or WFS, and are intended to be exempt from liability
under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in
accordance with the SEC's no-action letter dated January 12, 1999, addressed to
Skadden, Arps, Slate, Xxxxxxx and Xxxx LLP.
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Section 6.10 Employee Matters.
(a) From the Parent Effective Time through a date no later than
December 31, 2006 (such date being referred to herein as the "Benefits
Transition Date"), the Purchaser shall provide the employees of the Company and
its Subsidiaries as of the Parent Effective Time (the "Continuing Employees")
with employee benefit and incentive compensation plans, programs and
arrangements (other than any severance plan, payment or arrangement) that are
substantially similar, in the aggregate, to the employee benefit and
compensation plans, programs and arrangements provided by the Company or its
Subsidiaries, as the case may be, to such employees immediately prior to the
Parent Effective Time, with such changes as may be required to comply with
Applicable Law or to be compliant with Section 409A of the Code. From and after
the Benefits Transition Date, the Purchaser shall provide the Continuing
Employees with employee benefits and compensation plans, programs and
arrangements that are substantially equivalent to those provided to similarly
situated employees of the Purchaser and its Subsidiaries. Notwithstanding
anything contained herein to the contrary and except as provided in Schedule
6.10(a) of the Company Disclosure Letter, from and after the Parent Effective
Time or the Subsidiary Effective Time, as applicable, the Continuing Employees
shall be covered by the Purchaser severance plan and shall be entitled, in the
event of a qualifying termination (as determined under such Purchaser severance
plan), to severance pay and benefits under such Purchaser severance plan that
are substantially similar to those provided to similarly situated employees of
the Purchaser and its Subsidiaries.
(b) From and after the Parent Effective Time, the Purchaser shall
(i) provide all Continuing Employees with service credit for purposes of
eligibility, participation, vesting (but only for purposes of Company Employee
Plans intended to satisfy Code Section 401(a)) and levels of benefits (but not
for purposes of benefit accrual under any defined benefit pension plan) under
any employee benefit or compensation plan, program or arrangement adopted,
maintained or contributed to by the Purchaser or any of its Subsidiaries in
which Continuing Employees are eligible to participate, for all periods of
employment with the Company or any of its Subsidiaries (or their predecessor
entities) prior to the Parent Effective Time, (ii) cause any pre-existing
conditions or limitations, eligibility waiting periods or required physical
examinations under any welfare benefit plans of the Purchaser or any of its
Subsidiaries to be waived with respect to the Continuing Employees and their
eligible dependents, to the extent waived under the corresponding plan in which
the applicable Continuing Employee participated immediately prior to the Parent
Effective Time and, with respect to life insurance coverage, up to the
Continuing Employee's current level of insurability, and (iii) give the
Continuing Employees and their eligible dependents credit for the plan year in
which the Parent Effective Time (or commencement of participation in a plan of
the Purchaser or any of its Subsidiaries) occurs towards applicable deductibles
and annual out-of-pocket limits for expenses incurred prior to the Parent
Effective Time (or the date of commencement of participation in a plan of the
Purchaser or any of its Subsidiaries).
(c) At the Parent Effective Time, the Purchaser will, or will cause
the Surviving Corporation or any Subsidiary thereof to, honor the severance
payments and benefits accrued and payable under the plans and agreements with
respect to the employees of the Company and its Subsidiaries as of the date
hereof and on the terms of such plans and agreements as in effect on the date
hereof. The Purchaser acknowledges and agrees that the
51
consummation of the Parent Merger and the transactions contemplated by this
Agreement will constitute a "change of control" of the Company for purposes of
such plans and agreements and agrees to honor the provisions under such plans
and agreements relating to a change of control.
(d) The Company shall undertake commercially reasonable efforts to
obtain the restrictive covenants agreements and employment arrangements with
certain shareholders and employees as contemplated by Schedule 6.10(d) of the
Company Disclosure Letter.
Section 6.11 Affiliates. No later than twenty (20) days after the date of
this Agreement, the Company will deliver to the Purchaser a letter identifying
all Persons who may be deemed affiliates of the Company or of WFS under Rule 145
of the Securities Act, including all directors and executive officers of the
Company or WFS. The Company and WFS shall use their commercially reasonable
efforts to obtain from each Person identified in such letter a written
"affiliate's letter" in substantially the form attached hereto as Exhibit "E."
The Company and WFS shall use their commercially reasonable efforts to obtain as
soon as practicable from any Person who may be deemed to have become an
affiliate of the Company or WFS after the Company's delivery of the letter
referred to above and prior to the Parent Effective Time, a written "affiliate's
letter" in substantially the form attached hereto as Exhibit "E."
Section 6.12 NYSE Listing. The Purchaser shall prepare and submit to the
NYSE a listing application covering Purchaser Shares to be issued in the Mergers
and shall use its commercially reasonable efforts to obtain, prior to the Parent
Effective Time, approval for the listing of such Purchaser Shares, subject to
official notice to the NYSE of issuance, and the Company and WFS shall cooperate
with the Purchaser with respect to such listing, which cooperation shall include
taking all necessary actions to delist the shares of Company Common Stock from
the NYSE after the Parent Effective Time and to terminate quotations of the
shares of WFS Common Stock on the Nasdaq after the Subsidiary Effective Time.
Section 6.13 Reservation, Registration and Listing of Options and Other
Stock-Based Awards.
(a) Reservation. The Purchaser shall take all action necessary or
appropriate to reserve a sufficient number of Purchaser Shares and have
available for issuance or transfer a sufficient number of Purchaser Shares for
delivery upon exercise of Company Stock Options and WFS Stock Options assumed by
the Purchaser, cancellation of Non-Assumed Options in accordance with Section
2.5(f)(iii), vesting of Purchaser Restricted Share Rights or the settlement of
Purchaser RSUs.
(b) Registration of Assumed Option Shares. As soon as practicable
after the Parent Effective Time, the Purchaser shall prepare and file with the
SEC a post-effective amendment converting the Form S-4 to a Form S-8 (or file
such other appropriate form) registering a number of Purchaser Shares necessary
to fulfill the Purchaser's obligations under Section 2.5(f) and this Section
6.13.
(c) Listing. The Purchaser agrees to cause all such Purchaser Shares
(y) vested pursuant to Purchaser Restricted Share Rights, and (z) to be issued
upon (1) exercise of Company Stock Options and WFS Stock Options and (2)
settlement of Purchaser RSUs, to be authorized for listing on the NYSE.
52
Section 6.14 Dividends. After the date of this Agreement and until the
Parent Effective Time, each of the Company and the Purchaser shall coordinate
with the other the declaration of any dividends in respect of Company Common
Stock and Purchaser Shares and the record dates and payment dates relating
thereto, it being the intention of the parties that holders of Company Common
Stock shall not receive two dividends, or fail to receive one dividend, for any
quarter with respect to their shares of Company Common Stock and any Purchaser
Shares any such holder receives in exchange therefor in the Parent Merger or the
Subsidiary Merger.
Section 6.15 Certain Modifications; Restructuring Charges. The Purchaser,
the Company and WFS shall consult with respect to their loan, litigation and
real estate valuation policies and practices (including loan classifications and
levels of reserves) and the Company and WFS shall make such modifications or
changes to its policies and practices, if any, and at such date prior to the
Parent Effective Time, as may be mutually agreed upon. The Purchaser, the
Company and WFS 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 6.15.
ARTICLE VII
CONDITIONS TO THE MERGERS
Section 7.1 Conditions to Obligations of Each Party to Effect the Mergers.
The respective obligations of each party to effect the Parent Merger, the Bank
Conversion and the Subsidiary Merger shall be subject to the satisfaction or
written waiver at or prior to the Parent Effective Time of the following
conditions:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any Governmental Authority of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Parent Merger or the Subsidiary
Merger shall be in effect; and there shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Parent Merger or the Subsidiary Merger, which makes the
consummation of the Parent Merger or the Subsidiary Merger illegal.
(b) HSR Act; Other Approvals. The waiting period (and any extension
thereof) applicable to the consummation of the Parent Merger under the HSR Act
and all material filings, consents, approvals and authorizations (including
expiration of any applicable waiting period) legally required to be made or
obtained with or from a Governmental Authority to consummate the Parent Merger,
the Bank Conversion, the Subsidiary Merger and the other transactions
contemplated hereby shall have expired, been terminated, made or obtained, as
applicable; provided, however, that no such approval or consent of a
Governmental Authority shall have imposed any condition, restriction or
requirement which the Purchaser in good faith reasonably determines (1) would,
following the Parent Effective Time, have a Company Material Adverse Effect or
(2) would so materially adversely reduce the reasonably anticipated economic
53
or business benefits of the transactions contemplated hereby that the Purchaser,
acting reasonably, would not have entered into this Agreement had such
conditions, restrictions or requirements been known at the date hereof.
(c) Shareholder Approvals. The Parent Merger and this Agreement
shall have been approved by the requisite affirmative vote of the shareholders
of the Company in accordance with the California Code, the Company's articles of
incorporation and bylaws. In addition, the Subsidiary Merger and this Agreement
shall have been approved (i) by the requisite affirmative vote of the
shareholders of WFS in accordance with the California Code, WFS's articles of
incorporation and bylaws and (ii) by a majority of the shares of WFS Common
Stock represented and voting at a duly held shareholders' meeting excluding
shares of WFS Common Stock held by the Company and the Company's Affiliates
(together, the "Requisite WFS Approval"). The conditions set forth in this
Section 7.1(c) may not be waived by any of the parties.
(d) Registration Statement Effective. The Registration Statement
shall have been declared effective by the SEC under the Securities Act and no
stop order suspending the effectiveness of the Registration Statement shall be
in effect and no proceeding for that purpose shall be pending before or
threatened by the SEC. The Purchaser shall have received all state securities or
"blue sky" authorizations necessary to issue Purchaser Shares pursuant to the
Parent Merger or the Subsidiary Merger, if any.
(e) NYSE Listing. Purchaser Shares to be issued in the Parent Merger
or the Subsidiary Merger shall have been authorized for listing on the NYSE,
subject to official notice of issuance.
Section 7.2 Additional Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to effect the Parent Merger, the Bank Conversion
and the Subsidiary Merger are also subject to the satisfaction or written waiver
at or prior to the Parent Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
on the date hereof and as of the Parent Effective Time (except (i) those
representations and warranties that address matters only as of a particular date
(which shall remain true and correct as of such date (subject to the
qualifications in clause (ii) below)); and (ii) where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality" or "Company Material Adverse Effect" set
forth therein) would not, individually or in the aggregate, be reasonably likely
to have a Company Material Adverse Effect) with the same force and effect as if
made on and as of the Parent Effective Time and the Purchaser shall have
received a certificate to such effect signed by the President and Chief
Financial Officer of the Company.
(b) Agreements and Covenants. The Company, WFB and WFS shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Parent Effective Time and the Purchaser shall have received a certificate to
such effect signed by the President and the Chief Financial Officer of the
Company.
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(c) Consents. The Company shall have obtained all consents, waivers
and approvals listed on Schedule 3.5 of the Company Disclosure Letter, if any,
required in connection with the consummation of the Parent Merger or the
Subsidiary Merger, as applicable, and any required post-approval waiting periods
shall have expired or been terminated as of the Parent Effective Time.
(d) Tax Opinions. The Purchaser will have received an opinion of
Xxxxxx & Bird LLP in form and substance reasonably satisfactory to it, dated as
of the Parent Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion that are
consistent with the state of facts existing at the Parent Effective Time, the
Mergers will be treated as reorganizations within the meaning of Section 368(a)
of the Code. In rendering such opinion, counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of the Company, WFB, WFS and the Purchaser and others, reasonably
satisfactory in form and substance to such counsel.
Section 7.3 Additional Conditions to Obligation of the Company, WFB and
WFS. The obligation of the Company, WFB and WFS to effect the Parent Merger, the
Bank Conversion and the Subsidiary Merger is also subject to the satisfaction or
written waiver at or prior to the Parent Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct on the date hereof and as of the Parent Effective Time (except (i) those
representations and warranties that address matters only as of a particular date
(which shall remain true and correct as of such date (subject to the
qualifications in clause (ii) below)); and (ii) where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality" or "Purchaser Material Adverse Effect" set
forth therein) would not, individually or in the aggregate, be reasonably likely
to have a Purchaser Material Adverse Effect) with the same force and effect as
if made on and as of the Parent Effective Time and the Company and WFS shall
have received a certificate to such effect signed by the Chief Financial Officer
of the Purchaser.
(b) Agreements and Covenants. The Purchaser shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by the Purchaser on or prior to
the Parent Effective Time, and the Company and WFS shall have received a
certificate to such effect signed by the Chief Financial Officer of the
Purchaser.
(c) Consents. The Purchaser shall have obtained all consents,
waivers and approvals listed on Schedule 4.5 of the Purchaser Disclosure Letter,
if any, required in connection with the consummation of the Parent Merger and
the Subsidiary Merger and any required post-approval waiting periods shall have
expired or been terminated as of the Parent Effective Time.
(d) Tax Opinions.
(i) The Company will have received an opinion of Xxxxxxxx &
Xxxxxxxx LLP in form and substance reasonably satisfactory to it, dated as of
the Parent Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set
55
forth in such opinion that are consistent with the state of facts existing at
the Parent Effective Time, the Parent Merger will be treated as a reorganization
within the meaning of Section 368(a) of the Code. In rendering such opinion,
counsel may require and rely upon representations and covenants, including those
contained in certificates of officers of the Company, the Purchaser and others,
reasonably satisfactory in form and substance to such counsel.
(ii) WFS will have received an opinion of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP in form and substance reasonably satisfactory to it,
dated as of the Subsidiary Effective Time, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in such opinion
that are consistent with the state of facts existing at the Subsidiary Effective
Time, the Subsidiary Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion to WFS, counsel
may require and rely upon representations and covenants, including those
contained in certificates of officers of the Company, WFB, WFS, the Purchaser,
WBNA and others, reasonably satisfactory in form and substance to such counsel.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Parent Effective Time, notwithstanding approval thereof by the
shareholders of the Company and WFS:
(a) by mutual written consent duly authorized by the boards of
directors of the Purchaser, the Company and WFS; or
(b) by either the Purchaser, the Company or WFS if the Mergers shall
not have been consummated by June 30, 2006 (provided, that the right to
terminate this Agreement under this Section 8.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been a
principal cause of or resulted in the failure of the Mergers to occur on or
before such date and such action or failure to act constitutes a material breach
of this Agreement);
(c) by either the Purchaser, the Company or WFS if a Governmental
Authority of competent jurisdiction shall have issued a non-appealable final
order, decree or ruling or taken any other action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting either of
the Mergers or the other transactions expressly contemplated hereby, except if
the party relying on such order, decree or ruling or other action has not
complied with its obligations under Section 6.4;
(d) by the Purchaser, the Company, or WFS if, (i) at the Company
Shareholder Meeting (including any adjournment or postponement thereof), the
requisite vote of the shareholders of the Company for approval and adoption of
this Agreement and the Parent Merger shall not have been obtained or (ii) at the
WFS Shareholder Meeting (including any adjournment or postponement thereof), the
Requisite WFS Approval shall not have been obtained;
56
(e) by the Purchaser, if (i) the Company Special Committee or the
board of directors of the Company shall withdraw, modify or change its
recommendation of this Agreement or the Parent Merger in a manner adverse to the
Purchaser or shall have resolved to do any of the foregoing; (ii) the board of
directors of the Company (or any committee thereof) shall have recommended to
the shareholders of the Company an Alternative Transaction; or (iii) the Company
is in material breach of the provisions of Section 5.3 or 6.1;
(f) by the Purchaser, if (i) the WFS Special Committee or the board
of directors of WFS shall withdraw, modify or change its recommendation of this
Agreement or the Subsidiary Merger in a manner adverse to the Purchaser or shall
have resolved to do any of the foregoing; (ii) the board of directors of WFS (or
any committee thereof) shall have recommended to the shareholders of WFS an
Alternative Transaction; or (iii) WFS is in material breach of the provisions of
Section 5.3 or 6.1;
(g) by the Company in accordance with Section 5.3(b); provided, that
(1) neither the Company nor WFS has breached Section 5.3 (other than immaterial
breaches that have not directly or indirectly resulted in the making of, and did
not directly or indirectly result from, an Acquisition Proposal), and (2) the
Company has tendered the Termination Fee to the Purchaser;
(h) by either the Purchaser or the Company, upon a material breach
of any representation, warranty, covenant or agreement on the part of the
Company or the Purchaser, respectively, set forth in this Agreement such that
the conditions set forth in Section 7.2, or Section 7.3, as the case may be,
would not be satisfied, provided, that if such breach is curable through the
exercise of commercially reasonable efforts, then the other party may not
terminate pursuant to this Section 8.1(h) with respect to such breach if such
breach is curable and shall have been cured within forty-five (45) days
following notice by the other party of such breach, provided the breaching party
continues to use commercially reasonable efforts to cure such breach during such
forty-five (45) day period (it being understood that (i) the other party may not
terminate this Agreement pursuant to this Section 8.1(h) after notice of such
breach if such breach shall have been cured within such forty-five (45) days or
the party seeking to terminate shall then be in material breach of this
Agreement and (ii) no cure period shall be required for a breach which by its
nature cannot be cured).
Section 8.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void,
and there shall be no liability on the part of any party hereto or any of its
affiliates, directors, officers or shareholders; provided, however, that nothing
in this Section 8.2 shall relieve any party from liability for breach of this
Agreement or for fees and expenses as set forth in Section 8.3, and that this
Section 8.2 and Section 8.3 shall survive indefinitely any termination of this
Agreement.
Section 8.3 Fees and Expenses.
(a) General. All expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, except that the Purchaser and the Company will each bear and pay
one-half of the costs (excluding the fees and disbursements of counsel,
financial advisors and accountants) incurred in connection with the preparation
(including copying and printing and distribution) of the Disclosure Document.
57
(b) Termination Fee. The Company agrees to pay the Purchaser a fee
in immediately available funds (in recognition of the fees and expenses incurred
to date by the Purchaser in connection with the matters contemplated hereby) of
$125.0 million (the "Termination Fee") if this Agreement is terminated:
(i) (A) by the Company or the Purchaser pursuant to Section
8.1(d)(i) or by the Purchaser pursuant to Section 8.1(e)(i), 8.1(e)(iii)
or 8.1(h), (B) at any time after the date of this Agreement and prior to
such termination there shall have been publicly announced an Acquisition
Proposal (excluding an Acquisition Proposal solely for WFS) that has not
been formally withdrawn or abandoned prior to such termination, and (C)
within twelve (12) months following such termination an Acquisition
Proposal (excluding an Acquisition Proposal solely for WFS) is consummated
or a definitive agreement or letter of intent is entered into by the
Company or any of its Affiliates with respect to an Acquisition Proposal
(excluding an Acquisition Proposal solely for WFS);
(ii) by the Company pursuant to Section 8.1(g); or
(iii) by the Purchaser pursuant to Section 8.1(e)(ii).
(c) Proportionate Termination Fee. The Company agrees to pay the
Purchaser a fee in immediately available funds (in recognition of the fees and
expenses incurred to date by the Purchaser in connection with the matters
contemplated hereby) of $111.0 million and WFS agrees to pay the Purchaser a fee
in immediately available funds (in recognition of the fees and expenses incurred
to date by the Purchaser in connection with the matters contemplated hereby) of
$14.0 million (collectively, the "Proportionate Termination Fee") if this
Agreement is terminated:
(i) (A) by the Purchaser pursuant to Section 8.1(f)(i) or
8.1(f)(iii), (B) at any time after the date of this Agreement and prior to
such termination there shall have been publicly announced an Acquisition
Proposal solely with respect to WFS that has not been formally withdrawn
or abandoned prior to such termination, and (C) within twelve (12) months
following such termination an Acquisition Proposal solely with respect to
WFS is consummated or a definitive agreement or letter of intent is
entered into by WFS or any of its Affiliates (excluding the Company) with
respect to an Acquisition Proposal solely relating to WFS; or
(ii) by the Purchaser pursuant to Section 8.1(f)(ii);
provided, however, that no Proportionate Termination Fee shall be
due if a Termination Fee is payable pursuant to Section 8.3(b) and, in
such event, the Purchaser shall seek payment only pursuant to Section
8.3(b). In addition, the obligations of the Company and WFS to pay any
Proportionate Termination Fee shall be several and not joint.
(d) Timing of Payment. The Termination Fee or the Proportionate
Termination Fee, as the case may be, shall be paid promptly by the Company, or
the Company and WFS, in the case of a Proportionate Termination Fee, but in no
event later than: (x) two (2) Business Days after the first to occur of the
execution of an acquisition agreement or the
58
consummation of the Acquisition Proposal, in the case of clause (b)(i) or (c)(i)
above; (y) on the date of termination of this Agreement in the case of clause
(b)(ii) above; and (z) two (2) Business Days after termination of this Agreement
in the case of clause (b)(iii) or (c)(ii) above. Each of the Company and WFS
hereby acknowledges that the agreements contained in Sections 8.3(b) and (c) are
an integral part of the transactions contemplated by this Agreement and that,
without these agreements, the Purchaser would not enter into this Agreement. In
the event that the Company or WFS fails to pay when due any amount payable under
this Section 8.3(b) or (c), as applicable, then (i) the Company or WFS, as the
case may be, shall reimburse the Purchaser for all costs and expenses (including
disbursements and reasonable fees of counsel) incurred in connection with the
collection of such overdue amount, and (ii) the Company or WFS, as the case may
be, shall pay to the Purchaser interest on such overdue amount (for the period
commencing as of the date such overdue amount was originally required to be paid
and ending on the date such overdue amount is actually paid in full) at a rate
per annum equal to the prime rate in effect on the date such overdue amount was
originally required to be paid.
(e) Guaranty of Payment. The Company (the "Guarantor") hereby
unconditionally and irrevocably guarantees the prompt and complete payment of
WFS's portion of the Proportionate Termination Fee and any other fees
contemplated under Section 8.3(d) (the "Guaranty"). The Purchaser waives all
defenses and conditions to its obligations to pay under the Guaranty, other than
the condition that the Purchaser make a demand of payment to WFS no less than 3
days prior to seeking payment under this Guaranty. This Guaranty is one of
payment and not of collection. For the avoidance of doubt, other than the
condition contained in the foregoing sentence, the Guarantor hereby waives all
other conditions, including the commencement of a suit or the taking of other
action by the Purchaser against, and any other notice to, WFS, the Guarantor or
others. The Guarantor understands and agrees that this Guaranty shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability of this
Agreement, any of the obligations or any other guarantee or right of offset with
respect thereto at any time or from time to time held by the Purchaser, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by WFS against
the Purchaser, or (c) any other circumstance whatsoever (with or without notice
to or knowledge of WFB) which constitutes, or might be construed to constitute,
an equitable or legal discharge of WFB from its aforementioned obligations, or
of the Guarantor from this Guaranty, in bankruptcy or in any other instance. The
Guarantor waives, to the fullest extent permitted by applicable law, all
defenses of surety to which it may be entitled by statute or otherwise.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Effectiveness of Representations, Warranties and Agreements.
Except as otherwise provided in this Section 9.1, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any Person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Subsidiary Effective Time or upon the termination of this
Agreement pursuant to Section 8.1(a) through (g), as the case may be, except
that the agreements set forth in Article II,
59
Sections 6.6, 6.8, 8.2, 8.3, this Section 9.1 and Sections 9.2, 9.9, 9.10 and
9.12 shall survive the Subsidiary Effective Time indefinitely. The
Confidentiality Agreement shall survive termination of this Agreement as
provided therein. This Section 9.1 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance after the Subsidiary
Effective Time.
Section 9.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address which shall be effective upon
receipt) or sent by electronic transmission, with confirmation received, to the
facsimile number specified below:
(a) If to the Purchaser:
Wachovia Corporation
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq., Senior Executive Vice President,
General Counsel and Secretary
Facsimile: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Xxxxxx & Bird LLP
000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
60
(b) If to the Company Special Committee:
c/o Westcorp
00 Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
00000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(c) If to the Company, WFB or WFS:
WFS Financial Inc
00 Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President of the Company, Vice Chairman
and President of WFB and President and Chief Executive Officer of WFS
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
WFS Financial Inc
00 Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Guy Du Bose, General Counsel
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
61
(d) If to the WFS Special Committee:
c/o WFS Financial Inc
00 Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Section 9.3 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective boards of directors at any
time prior to the Parent Effective Time; provided, however, that, after approval
of the Parent Merger by the shareholders of the Company or the Subsidiary Merger
by the shareholders of WFS, as applicable, no amendment may be made which by law
requires further approval by such shareholders without such further approval;
and provided, further, that all amendments must be approved by the Company
Special Committee and the WFS Special Committee. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
Section 9.4 Waiver. At any time prior to the Parent Effective Time, any
party hereto may with respect to any other party hereto (a) extend the time for
the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein; provided, however, that if the
Company or WFS seeks to make such extension or waiver as provided in clause (a),
(b) or (c) above, it must first obtain the approval of the Company Special
Committee and the WFS Special Committee; and provided, further, that
notwithstanding this Section 9.4, the conditions set forth in Sections 7.1(a)
and (c) may not be waived by any of the parties. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
Section 9.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.6 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
62
Section 9.7 Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitute the entire agreement and supersede
all prior agreements and undertakings (other than the Confidentiality
Agreement), both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise expressly provided
herein, are not intended to confer upon any other Person any rights or remedies
hereunder.
Section 9.8 Assignment. This Agreement shall not be assigned by operation
of law or otherwise, except that the Purchaser may assign all or any of their
rights hereunder to any affiliate; provided, that no such assignment shall
relieve the assigning party of its obligations hereunder.
Section 9.9 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, except as provided in Section 6.8.
Section 9.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware,
applicable to contracts executed and fully performed within the State of
Delaware, without regard to the conflicts of laws provisions thereof, except to
the extent that federal law or the law of the State of California may apply to
the Parent Merger, the Bank Conversion or the Subsidiary Merger.
Section 9.11 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, but all of which taken
together shall constitute one and the same agreement. The exchange of copies of
this Agreement and of signature pages by facsimile or electronic transmission
shall constitute effective execution and delivery of this Agreement by the
parties hereto, and may be used in lieu of the original signature pages to this
Agreement for all purposes.
Section 9.12 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, EACH OF
THE PURCHASER, THE COMPANY, WFB AND WFS HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 9.13 Alternative Structure. Notwithstanding anything to the
contrary contained in this Agreement, the Purchaser may at any time change the
method of effecting the acquisition of the Company and WFS (including the
provisions of Article II) if and to the extent it deems such change to be
desirable; provided, however, that no such change shall (a) alter or change the
amount or kind of consideration to be issued to the holders of Company Common
Stock or the WFS Common Stock as provided in this Agreement, (b) adversely
affect the
63
intended tax-free treatment to the Company's stockholders and WFS's stockholders
as a result of receiving such consideration or cause the conditions set forth in
Section 7.2(d) or Section 7.3(d) not to be satisfied, or (c) materially impede
or delay consummation of the transactions contemplated by this Agreement. This
Agreement and any related documents will be appropriately amended in order to
reflect any such revised structure.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the Purchaser, the Company, WFB and WFS have caused
this Agreement and Plan Merger to be executed as of the date first written above
by their respective officers thereunto duly authorized.
WACHOVIA CORPORATION
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Xxxxxx X. Xxxxx
Senior Executive Vice President
WESTCORP
By: /s/ Xxxxxx X. Xxxx
---------------------------------------
Xxxxxx X. Xxxx
Chairman and Chief Executive Officer
WESTERN FINANCIAL BANK
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Xxxxxx X. Xxxxx
President and Vice Chairman
WFS FINANCIAL INC
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
-Signature Page-
