Before we can complete the merger, we must obtain the approval of Wachovia shareholders. We are sending you this document to ask you to approve the plan of merger contained in the merger agreement at a special meeting of Wachovia shareholders to be held at the time and place indicated in the meeting notice on the next page.

No vote of Wells Fargo stockholders is required to complete the merger. Wachovia shareholders may also be asked to vote on a proposal to adjourn or postpone the meeting to a later date, if necessary or appropriate, in order to solicit additional proxies in favor of the proposal to approve the plan of merger contained in the merger agreement.

If the merger is completed, each of your shares of Wachovia common stock will be converted into 0. The number of shares of Wells Fargo common stock that Wachovia common shareholders will receive in the merger is fixed.

The dollar value of the consideration Wachovia common shareholders will receive in the merger will change depending on changes in the market price of Wells Fargo common stock and will not be known at the time you vote on the merger.

This table also shows the implied value of the merger consideration proposed for each share of Wachovia common stock as of each of those dates, which we calculated by multiplying the closing price of Wells Fargo common stock on each of those dates by 0. If the merger is completed, each share of each series of Wachovia preferred stock will be converted into a share, or fractional share, of Wells Fargo preferred stock of corresponding series having rights, privileges, powers and preferences substantially identical to those of the relevant series of Wachovia preferred stock.

This document provides you with important information about the proposed merger. In addition to being a proxy statement of Wachovia, this document is also the prospectus of Wells Fargo for Wells Fargo common and preferred stock that will be issued in connection with the merger.

We encourage you to read the entire document carefully. We cannot complete the merger unless Wachovia shareholders approve the plan of merger contained in the merger agreement. Please read the attached proxy statement-prospectus carefully for information about the matters you are being asked to consider and vote upon.

Your vote is very important. An abstention or failure to vote or to instruct your broker how to vote will have the same effect as voting against the plan of merger contained in the merger agreement. Whether or not you plan to attend the meeting, please promptly return your completed proxy so that your shares are voted at the meeting. You may revoke your proxy at any time before it is voted at the special meeting. If you attend the meeting and vote in person, your vote will supersede any proxy you may have previously authorized.

You can also vote on the Internet or by telephone by following the instructions on the proxy card. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the merger or determined if this proxy statement-prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The securities to be issued in the merger are not savings and deposit accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

To the Shareholders of Wachovia Corporation:. Upon completion of the merger, each share of Wachovia common stock will be converted into 0.

Upon completion of the merger, each share of each series of Wachovia preferred stock will be converted into a share, or fractional share, of Wells Fargo preferred stock of corresponding series having rights, privileges, powers and preferences substantially identical to those of the relevant series of Wachovia preferred stock.

Holders of Wachovia common stock do not have rights of dissent and appraisal with respect to the merger. Please refer to the accompanying proxy statement-prospectus for information about the plan of merger contained in the merger agreement. By order of the board of directors,. YOUR VOTE IS IMPORTANT. Your vote is important regardless of the number of common shares that you own. Whether or not you plan to attend the meeting, please complete, sign, date and return the accompanying proxy card in the enclosed postage paid envelope.

Alternatively, you can vote by calling the toll-free telephone number indicated on the proxy card or by visiting the website indicated on the proxy card.

You can obtain documents incorporated by reference in this document without charge through the Securities and Exchange Commission website http: You should rely only on the information contained or incorporated by reference in this document.

We have not authorized anyone to provide you with different information. You should not assume that information contained or incorporated by reference in this document is accurate as of any date other than that date. Neither the mailing of this document to Wachovia shareholders nor the issuance by Wells Fargo of its common stock in the merger will create any implication to the contrary. Wachovia has supplied all information relating to Wachovia contained or incorporated by reference in this document, and Wells Fargo has supplied all information relating to Wells Fargo contained or incorporated by reference in this document.

Information on the Internet websites of Wells Fargo or Wachovia, or any subsidiary of Wells Fargo or Wachovia, is not part of this document. You should not rely on that information in deciding how to vote on the proposal to approve the plan of merger contained in the merger agreement.

Selected Financial Data And Market Price Information. The Wachovia Shareholder Meeting. Shares Outstanding and Entitled to Vote; Record Date. Delivery of Proxy Materials. Recommendation of the Wachovia Board of Directors.

Interests of Certain Wachovia Directors and Executive Officers in the Merger. Federal Income Tax Consequences. Unaudited Pro Forma Condensed Combined Financial Information. Litigation Related to the Merger. Treatment of Wachovia Stock Options and Other Equity-Based Awards. Treatment of Wachovia Preferred Stock in the Merger. Closing and Effective Time of the Merger. Conversion of Shares; Exchange of Certificates.

Reasonable Best Efforts of Wachovia to Obtain the Required Shareholder Vote. Agreement Not to Solicit Other Offers. Termination of the Merger Agreement.

Amendment, Waiver and Extension of the Merger Agreement. Price Range of Common Stock and Dividends. Wells Fargo Capital Stock. Restrictions on Payment of Dividends. Restrictions on Ownership of Wells Fargo Common Stock. Anti-takeover Provisions in the Restated Certificate of Incorporation and Bylaws. New Wells Fargo Preferred Stock to be Issued in the Merger.

Comparison of Shareholder Rights. Shareholder Proposals for Next Year. Where You Can Find More Information. Wachovia and Wells Fargo SEC Filings. Documents Incorporated by Reference. Documents Available Without Charge. The following are answers to certain questions that you, as a shareholder of Wachovia Corporation, may have regarding the merger and the special meeting of Wachovia shareholders.

We urge you to read carefully the remainder of this proxy statement-prospectus because the information in this section may not provide all the information that might be important to you with respect to the merger. Additional important information is also contained in the appendices to, and the documents incorporated by reference in, this proxy statement-prospectus.

Your latest vote actually received before the special meeting will be counted, and any earlier votes will be revoked. Any earlier proxy will thereby be revoked. However, simply attending the meeting without voting will not revoke an earlier proxy you may have given.

New York, NY This summary highlights the material information from this proxy statement-prospectus. It does not contain all of the information that may be important to you.

You should carefully read this entire document and the documents to which it refers you to fully understand the merger. Each item in this summary refers to the page or pages of this document where that subject is discussed in more detail. In the Merger, Each Share of Wachovia Corporation Common Stock Will Automatically Be Converted into 0. In the merger, Wachovia will merge with and into Wells Fargo. Wells Fargo will be the surviving corporation in the merger. Each share of Wachovia common stock issued and outstanding immediately prior to the completion of the merger, except for specified shares of Wachovia common stock held by Wachovia and Wells Fargo, will automatically be converted into 0.

Wells Fargo will not issue any fractional shares of Wells Fargo common stock in the merger. Instead, a Wachovia shareholder who otherwise would have received a fraction of a share of Wells Fargo common stock will instead receive an amount in cash rounded to the nearest cent. This cash amount will be determined by multiplying the fraction of a share of Wells Fargo common stock to which the holder would otherwise be entitled by the average of the closing sale prices of Wells Fargo common stock on the New York Stock Exchange for the five trading days immediately prior to the date on which the merger is completed.

The merger agreement between Wachovia and Wells Fargo governs the merger. Please read the merger agreement carefully. All descriptions in this summary and elsewhere in this document of the terms and conditions of the merger are qualified by reference to the merger agreement.

At the effective time of the merger, each option to purchase Wachovia common stock granted by Wachovia and each other equity-based award of Wachovia that is then outstanding will be converted automatically into an option or other equity-based award for shares of Wells Fargo common stock, generally subject to the same terms and conditions that applied to the Wachovia option or other equity-based award before the effective time of the merger.

The number of shares of Wells Fargo common stock subject to these stock options and other equity-based awards, and the exercise price of the Wachovia stock options, will be adjusted based on the exchange ratio of 0. The terms of each one one-thousandth of a Wells Fargo DEP Share will be substantially identical to the terms of one Wachovia DEP Share.

Accordingly, the merger generally will be tax-free to you for United States federal income tax purposes as to the shares of Wells Fargo common stock you receive in the merger, except for any gain or loss that may result from the receipt of cash instead of fractional shares of Wells Fargo common stock that you would otherwise be entitled to receive.

The United States federal income tax consequences described above may not apply to all holders of Wachovia common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you. The opinions of Goldman Sachs and Perella Weinberg were provided for the information and assistance of the board of directors of Wachovia in connection with its consideration of the merger and do not constitute a recommendation as to how any holder of shares of Wachovia common stock should vote or otherwise act with respect to the merger or any other matter.

The Wachovia board of directors was aware of these interests and considered them, among other matters, in adopting the merger agreement and the transactions contemplated by the merger agreement.

The Wachovia stock incentive plans generally provide for the vesting of equity-based awards following a change in control. The merger will constitute such a change in control of Wachovia.

In addition, certain executives have employment agreements with Wachovia that provide for severance payments in connection with a qualifying termination of employment following a change in control. Holders of Wachovia Common Stock. Holders of Wachovia Preferred Stock. Currently, we expect to complete the merger by the end of As more fully described in this document and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived.

These conditions include, among others, approval of the plan of merger contained in the merger agreement by Wachovia shareholders and the receipt of certain required regulatory approvals. We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed. Wachovia and Wells Fargo have agreed to use their reasonable best efforts to obtain all regulatory approvals, including all antitrust clearances, required to complete the transactions contemplated by the merger agreement.

These approvals include approval from or notices to the Board of Governors of the Federal Reserve System Federal Reserve , foreign and state securities authorities, various other federal, state and foreign antitrust and regulatory authorities and self-regulatory organizations, the Department of Justice DOJ , and the Federal Trade Commission FTC.

Wells Fargo and Wachovia have completed, or will complete promptly following the date of this proxy statement-prospectus, the filing of applications and notifications to obtain the required regulatory approvals. Although we do not know of any reason why we cannot obtain the remaining regulatory approvals in a timely manner, we cannot be certain when or if we will obtain them.

Wachovia and Wells Fargo may mutually agree to terminate the merger agreement before completing the merger, even after shareholder approval, as long as the termination is approved by each of their respective boards of directors. In addition, either Wachovia or Wells Fargo may decide to terminate the merger agreement, even after shareholder approval:.

In addition, Wells Fargo may terminate the merger agreement:. Holders of Wells Fargo common stock receive dividends if, when and as declared by the Wells Fargo board of directors out of legally available funds. The amount and timing of any future dividends on Wells Fargo common stock will depend on the earnings, cash requirements and financial condition of Wells Fargo and its subsidiaries, applicable law and regulations, including federal banking regulations, and other factors deemed relevant by the Wells Fargo board of directors.

At the special meeting, Wachovia shareholders will be asked to:. Wells Fargo has informed Wachovia that intends to vote these shares in favor of the proposal to approve the plan of merger contained in the merger agreement.

No Wells Fargo Stockholder Approval. Wells Fargo stockholders are not required to approve the plan of merger or the issuance of shares of Wells Fargo common stock as part of the merger consideration. Certain litigation is pending in connection with the merger. Its businesses provide banking, insurance, investments, mortgages and consumer finance through stores, the Internet and other distribution channels across North America and elsewhere internationally.

Based on assets, Wells Fargo was the seventh largest bank holding company in the United States. Wells Fargo common stock trades on the New York Stock Exchange under the symbol WFC. Charlotte, North Carolina Wachovia was incorporated under the laws of North Carolina in and is registered as a financial holding company and a bank holding company under the Bank Holding Company Act.

Wachovia also provides various other financial services, including mortgage banking, investment banking, investment advisory, home equity lending, asset-based lending, leasing, insurance, international and securities brokerage services, through other subsidiaries. Based on assets, Wachovia is the sixth largest bank holding company in the United States.

Wachovia common stock trades on the New York Stock Exchange under the symbol WB. The following selected financial information is to aid you in understanding certain financial aspects of the merger.

The following tables present selected historical financial data for Wells Fargo and Wachovia. The unaudited financial statements include all adjustments, consisting of normal recurring adjustments, which management of Wells Fargo and Wachovia, as the case may be, consider necessary for fair presentation of the financial position and results of operations for such periods. The historical results set forth below and elsewhere in this document are not necessarily indicative of the future performance of Wells Fargo or Wachovia.

All amounts are in U. Wachovia Corporation and Subsidiaries. Comparative Market Value of Securities. This table also shows the implied value of the merger consideration proposed for each share of Wachovia common stock as of each of those dates, which was calculated by multiplying the closing price of Wells Fargo common stock on each of those dates by 0. For each share of Wachovia common stock, Wachovia common shareholders will receive 0. The market prices of both Wells Fargo common stock and Wachovia common stock will fluctuate prior to the merger.

You should obtain current stock price quotations for Wells Fargo common stock and Wachovia common stock. You can get these quotations from a newspaper, on the Internet or by calling your broker. Comparative Per Common Share Data Unaudited. Amounts are in U. The Wells Fargo pro forma combined cash dividends per common share represent Wells Fargo historical cash dividends per common share. The Wachovia pro forma equivalent per common share amounts were calculated by multiplying the Wells Fargo pro forma combined per share amounts by the exchange ratio of 0.

Department of Treasury Investment. The agreement for the preferred securities includes certain restrictions on executive compensation.

In addition, the deductibility for federal income tax purposes of compensation paid to these five senior executive officers will be subject to certain limitations. The warrant provides for the adjustment of the exercise price and the number of shares of Wells Fargo common stock issuable upon exercise pursuant to customary anti-dilution provisions, such as upon stock splits or distributions of securities or other assets to holders of Wells Fargo common stock, and upon certain issuances of Wells Fargo common stock at or below a specified price relative to the initial exercise price.

The warrant expires ten years from the issuance date. The Wells Fargo share price may fluctuate prior to the completion of the merger. Upon completion of the merger, each share of Wachovia common stock will be converted into merger consideration consisting of 0.

Any change in the price of Wells Fargo common stock prior to completion of the merger will affect the dollar value of the merger consideration that Wachovia common shareholders will receive upon completion of the merger. The merger is subject to the receipt of consents and approvals from regulatory authorities that may impose conditions that could have an adverse effect on Wells Fargo or, if not obtained, could prevent completion of the merger.

Before the merger may be completed, various approvals and consents must be obtained from regulatory entities. These regulators may impose conditions on the completion of the merger or require changes to the terms of the merger. Any such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of Wells Fargo following the merger.

A number of the regulatory approvals and consents required in connection with the merger have been obtained. The merger agreement prohibits Wachovia and its directors, officers, representatives and agents from soliciting, authorizing the solicitation of or, subject to certain exceptions, entering into discussions with any third party regarding alternative acquisition proposals. Wachovia board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated by the merger agreement.

The value of Wells Fargo capital stock could be adversely affected to the extent Wells Fargo fails to realize the expected benefits of the merger.

The merger will involve the integration of the businesses of Wachovia and Wells Fargo. The market price of Wells Fargo capital stock may be affected by factors different from those affecting Wachovia capital stock. Upon completion of the merger, holders of Wachovia common stock and preferred stock will become holders of Wells Fargo common stock and preferred stock. Rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix, and level and quality of earnings, and there can be no assurance that Wells Fargo will maintain the aforementioned credit ratings.

The shares of Wells Fargo common stock to be received by Wachovia shareholders as a result of the merger will have different rights than the shares of Wachovia common stock. The rights associated with Wachovia common stock are different from the rights associated with Wells Fargo common stock. Current disruption and volatility in global financial markets might continue and governments may take measures to intervene.

Over the last year global financial markets have experienced extraordinary disruption and volatility following adverse changes in the global credit markets.

Governments have taken highly significant measures in response to such events, including enactment of the Emergency Economic Stabilization Act of , or EESA, in the United States.

Such dislocation and instability, and potential government responses thereto, may continue before and after completion of the merger and could negatively impact the operations of Wachovia and Wells Fargo and the value of the Wells Fargo capital stock you receive in the merger.

Do not unduly rely on forward-looking statements. They are expectations about the future and are not guarantees. Actual results may differ from those set forth in the forward-looking statements. Neither Wells Fargo nor Wachovia undertakes to update forward-looking statements to reflect changes that occur after that date.

This section contains information for Wachovia shareholders about the special meeting that Wachovia has called to allow its shareholders to consider and approve the proposal to approve the plan of merger contained in the merger agreement.

Together with this document, Wachovia is sending a notice of the special meeting and a form of proxy that our board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Time, Date and Place. Matters to be Considered: At the Wachovia special meeting, Wachovia shareholders will be asked:. At this time, the Wachovia board of directors is unaware of any matters, other than set forth above, that may be presented for action at the special meeting. If other matters are properly presented, however, the persons named as proxies will vote in accordance with their judgment with respect to such matters.

Each share of Wachovia common stock entitles the holder to one vote at the special meeting on all matters properly presented at the meeting. Wells Fargo has informed Wachovia that it intends to vote these shares in favor of approval of the plan of merger contained in the merger agreement at the special meeting.

How to Vote Your Shares. Wachovia shareholders of record may vote by mail, by the telephone, through the Internet or by attending the special meeting and voting in person. If you choose to vote by mail, simply complete the enclosed proxy card, date and sign it, and return it in the postage paid envelope provided.

If you are a shareholder of record, you may use the Internet to transmit your vote up until If you are a shareholder of record, you may call and use any touch-tone telephone to transmit your vote up until Have your proxy card in hand when you call and then follow the instructions.

Please note that although there is no charge to you for voting by telephone or electronically through the Internet, there may be costs associated with electronic access such as usage charges for Internet service providers and telephone companies. Wachovia will not pay for these costs; they are solely your responsibility. If your shares are held in the name of a bank, broker or other holder of record, you must provide instructions to the broker or nominee as to how your shares should be voted.

Brokers do not have the discretion to vote on the proposals and will only vote at the direction of the underlying beneficial owners of the shares of Wachovia common stock. Accordingly, if you do not instruct your broker to vote your shares, your broker will not have the discretion to vote your shares.

Your broker or nominee will usually provide you with the appropriate instruction forms at the time you receive this proxy statement-prospectus. If you own your shares in this manner, you cannot vote in person at the special meeting unless you receive a proxy to do so from the broker or the nominee, and you bring that proxy to the special meeting.

Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote those shares at the meeting, you must bring a letter from the broker, bank or other nominee confirming that you are the beneficial owner of the shares.

Any Wachovia shareholder of record executing a proxy may revoke it at any time before it is voted by:. Attendance at the special meeting will not, by itself, constitute revocation of a proxy. If you have instructed a broker to vote your shares, you must follow the directions you receive from your broker in order to change or revoke your vote. Each proxy returned and not revoked will be voted in accordance with the instructions indicated thereon.

If you return your proxy but no instructions are indicated, your shares will be voted in favor of the relevant proposal; provided, however, that if you vote against the proposal to approve the plan of merger contained in the merger agreement, and do not provide instruction on voting for the adjournment or postponement proposal, your shares will not be voted in favor of adjourning or postponing the meeting to solicit additional votes on the proposal to approve the plan of merger contained in the merger agreement.

Abstentions will be treated as shares that are present for purposes of determining the presence of a quorum. The failure to vote, either by proxy or in person, will have the same effect as a vote against the proposal to.

Shares which abstain from voting as to a particular matter will not be voted in favor of such matters. Wells Fargo has informed Wachovia that it intends to vote these shares in favor of the proposal to approve the plan of merger contained in the merger agreement. In addition to solicitation by mail, the directors, officers and regular employees of Wachovia and its subsidiaries may solicit proxies from shareholders in person or by telephone, telegram, facsimile or other electronic methods without compensation other than reimbursement for their actual expenses.

Arrangements also will be made with custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and Wachovia will reimburse such custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in connection therewith. Wachovia has retained Georgeson Inc. To reduce the expenses of delivering duplicate proxy materials to our shareholders, we are relying upon SEC rules that permit us to deliver only one proxy statement-prospectus to multiple shareholders who share an address unless we received contrary instructions from any shareholder at that address.

If you share an address with another shareholder and have received only one proxy statement-prospectus, you may write or call us as specified below to request a separate copy of this document and we will promptly send it to you at no cost to. For future meetings, if you hold shares directly registered in your own name, you may request separate copies of our proxy materials, or request that we send only one set of these materials to you if you are receiving multiple copies, by contacting us at: If your shares are held in the name of a bank, broker, or other nominee and you wish to receive separate copies of our proxy materials, or request that they send only one set of these materials to you if you are receiving multiple copies, please contact the bank, broker or other nominee.

The Wachovia board of directors has unanimously adopted the plan of merger contained in the merger agreement and the transactions contemplated by the merger agreement.

The following discussion provides material information about the merger. We urge you to carefully read this entire document, including the appendices, for a more complete understanding of the merger.

Each share of Wachovia common stock outstanding at the time of the merger will be automatically converted into 0. For Shares of Wachovia Common Stock. The merger agreement provides that, at the completion of the merger, each share of Wachovia common stock outstanding immediately before the merger will be converted into 0.

If the total number of shares of Wells Fargo common stock to be received in the merger by a Wachovia shareholder does not equal a whole number, the shareholder will receive cash instead of the fractional share. The amount of cash will equal the fractional share amount multiplied by the average, rounded to the nearest one ten thousandth, of the closing sale prices of Wells Fargo common stock on the New York Stock Exchange as reported by The Wall Street Journal for the five trading days immediately preceding the date of the completion of the merger.

For Wachovia Stock Options and Other Equity-Based Awards. The merger agreement also provides that, at the completion of the merger, each option to purchase Wachovia common stock and each other equity-based award of Wachovia that is then outstanding will be converted automatically into an option or other equity-based award of or on shares of Wells Fargo common stock, generally subject to the same terms and conditions that applied to the Wachovia option or other equity-based award.

The number of Wachovia common shares subject to these stock options and other equity-based awards, and the exercise price of the stock options, will be adjusted based on the exchange ratio of 0.

For Shares of Wachovia Preferred Stock. Bank, National Association as depositary, and the holders from time to time of depositary shares. Wells Fargo will instruct U. Such depositary shares will continue to be listed on the New York Stock Exchange upon completion of the merger under a new name and traded under a new symbol.

Background of the Merger. To accomplish this objective, over the last two decades Wachovia acquired nearly banks, thrifts and broker-dealers to become a leading banking franchise in the eastern, southern and western United States, as well as a nationwide retail securities brokerage business.

The credit quality of this portfolio has deteriorated significantly in the current mortgage crisis. In the spring of , the U. Throughout the remainder of , in accordance with the mark-to-market valuations required by United States generally accepted accounting principles, these declining asset values created valuation losses in certain types of securities that Wachovia held on its balance sheet, including sub-prime residential mortgage-backed securities RMBS and collateralized debt obligations whose underlying collateral contained sub-prime RMBS CDOs.

In addition, Wachovia began to increase its loan loss provision in response to generally deteriorating credit conditions, including in the Golden West mortgage portfolio. Economic conditions, and in particular the housing market, continued to deteriorate in the first quarter of Smith, as interim Chief Executive Officer while it searched for a permanent replacement.

Steel as its Chief Executive Officer and President. Toward the end of July, Wachovia also announced that its Chief Financial Officer and Chief Risk Officer would be replaced. In the first half of September , a series of unexpected and unprecedented events occurred in rapid succession in the financial services industry that increased the uncertainty and stress in the financial markets.

These events created significant turmoil as the markets and market participants affected by such events, including Wachovia, began absorbing the enormity of their consequences in the days following the September 15 announcements regarding Lehman Brothers and Merrill Lynch.

The resulting degradation in the credit markets which raised the costs of borrowing, together with the deteriorating condition of the U. Acknowledging a preference for Wachovia to remain an independent company, which was achievable under options , the board and management determined to pursue seriously options 2, 3 and 4 but also determined that current conditions made it prudent to remain open to and begin exploration of options 5 and 6 as well.

These advisors began developing the documentation necessary to raise capital. Wachovia and the potential partner also discussed transaction structure and management issues.

The general discussion of terms was about an at-market exchange of stock. Pandit placed yet another call to Mr. Wachovia also held telephonic meetings of its board of directors on September 18 and September 19 at which management briefed the board on developments regarding consideration of the various alternatives.

Wachovia continued to pursue actively the alternative strategy of raising capital and selling assets. Steel had a brief conversation with Richard Kovacevich, Chairman of Wells Fargo, about engaging in discussions regarding a possible transaction.

Kovacevich to make arrangements for due diligence work and encourage him to consider the opportunity on an accelerated basis. Pandit was traveling and unable to speak to Mr. Steel promptly responded to a 4: Pandit suggesting that he was available. In that transaction, JPMorgan Chase did not assume any equity or debt securities of the holding company for Washington Mutual Bank or the senior and subordinated debt of Washington Mutual Bank itself. The cost to insure Wachovia debt as evidenced by credit default swap spreads increased substantially from.

On that day, after briefing national rating agencies, Wachovia was informed that the rating agencies were likely to take negative ratings action in the very near future.

Wachovia had been regularly reviewing its liquidity situation with the Federal Reserve and the OCC, who on that day remained on site. Management also advised the board of directors that management had begun discussions with Citigroup and Wells Fargo regarding a possible merger and that Wachovia intended to pursue both during the weekend of September Wachovia representatives traveled to New York for the weekend of September and engaged in due diligence discussions and negotiations with Citigroup and Wells Fargo.

Citigroup communicated to Wachovia that it was not willing to acquire Wachovia itself, but only its bank subsidiaries and further that it was not able to proceed with any transaction without government assistance in the form of a loss-sharing arrangement. Although Wachovia explained its concerns that the remaining parts of Wachovia might not, after such a proposed Citigroup transaction, be viable or solvent on their own, Citigroup indicated that it was only prepared to negotiate for the purchase of the bank subsidiaries.

Kovacevich, the Chairman of Wells Fargo, told Mr. Steel that Wells Fargo was considering an offer to purchase all of Wachovia in a stock-for-stock transaction, pending completion of due diligence activities. Kovacevich commented that Wells Fargo was working on a transaction that would not require government assistance and that he believed Wells Fargo could meet the Monday morning timetable. Kovacevich held ongoing discussions throughout the day regarding the status of the due diligence.

In the afternoon, Mr. Kovacevich indicated that he was concerned that the compressed timeframe Wachovia requested would not enable Wells Fargo to complete the due diligence it believed necessary and prudent and at approximately 7: Steel that Wells Fargo was not prepared on this timetable to offer to acquire Wachovia along the lines previously discussed.

Steel spoke to Mr. Kovacevich, Sheila Bair, the Chairman of the FDIC, contacted Mr. Steel and advised him that the FDIC understood that Wachovia would be unable to find a merger partner that could accomplish a combination without government assistance. Wachovia held a telephonic meeting of its board of directors at approximately 9: Legal counsel discussed with the board matters regarding its fiduciary duties relative to shareholders and, in the existing context, creditors.

Management indicated that it likely would need to re-convene the board in several hours for the purpose of considering an agreement with the purchaser selected by the FDIC. During the evening and early morning hours, Wells Fargo had further conversations with representatives of the FDIC concerning the terms of a proposed acquisition of Wachovia by Wells Fargo, including the terms on which open-bank assistance might be provided by the FDIC.

Under this structure, Wachovia would attempt to continue as an ongoing business concern with its principal businesses being the Wachovia Securities retail brokerage business and the Evergreen mutual fund business. Among other material terms, the terms associated with separating the Wachovia businesses in connection with a transaction, and supporting and funding those businesses remaining with Wachovia after a transaction, were left unspecified and subject to negotiation.

The non-binding agreement-in-principle also indicated that if definitive agreements were reached they would provide that, in the event the resulting transaction was not consummated, Citigroup would have an option to purchase selected Wachovia branches in California, Florida and New Jersey at fair market value.

The non-binding agreement-in-principle was subject to the negotiation and execution of definitive transaction documentation, as well as Wachovia board of directors and shareholder approval. The non-binding agreement-in-principle also indicated that Citigroup would have exclusivity for seven days from announcement. Wachovia held a telephonic board of directors meeting at 6: Legal counsel to Wachovia described the terms of the non-binding agreement-in-principle.

Management informed the board that it was faced with two options: Perella Weinberg and Goldman Sachs both indicated that, based on the circumstances, and subject to conducting due diligence, completing their financial analysis and reviewing definitive documentation, and provided that the definitive terms thereof were consistent with the agreement-in-principle, they believed they would be able to render an opinion that the consideration to be received in the Citigroup proposed transaction was fair, from a financial point of view, to Wachovia.

The Wachovia board of directors voted in favor of proceeding with Citigroup. Following the board of directors meeting, Citigroup provided Wachovia with what it described as the execution copy of the non-binding agreement-in-principle and also sent Wachovia a letter agreement containing certain exclusivity covenants.

On several occasions, Wachovia urged that Citigroup reconsider the structure and acquire all of Wachovia to avoid the complexity inherent in the contemplated transaction and uncertainty about whether the remaining businesses in Wachovia would be viable, on-going concerns. Subsequent to these discussions, Wells Fargo continued analyzing a possible transaction involving Wachovia, and in particular was able to spend additional time reviewing the tax implications of a possible transaction under various scenarios.

Notice was not expected to have a material impact on the future results of operations of the combined company, other than providing a modest time value of money benefit attributable to its added assurance that tax benefits resulting from any loan losses would not be limited as to the timing of the recognitions of any such tax benefit.

Wells Fargo executives reviewed information regarding Wachovia and analyzed the financial implications of a potential transaction. Based on these discussions, and with the benefit of additional time to assess its diligence findings from the preceding weekend, Wells Fargo determined that an offer to acquire all of Wachovia in an unassisted stock-for-stock merger transaction could be undertaken on terms that were both likely to be more attractive to Wachovia and its shareholders than the terms of the Citigroup proposal, as they were understood, and that presented acceptable economics and risk levels to Wells Fargo.

Wells Fargo also informed representatives of federal banking regulators concerning its thinking and its renewed consideration of a proposal and indicated that its revised proposal would involve an acquisition of all of Wachovia and would not require FDIC assistance.

Following extensive discussion the Wells Fargo board unanimously approved the proposed merger with Wachovia and directed management to execute a merger agreement and deliver it to representatives of Wachovia. Steel received a telephone call from Chairman Bair of the FDIC, who asked if Mr.

Steel had heard from Mr. Steel answered that he had not spoken to Mr. Kovacevich since the initiation of negotiations with Citigroup, other than a very brief congratulatory phone call from Mr. Chairman Bair advised Mr. Steel that it was her understanding that Mr. Kovacevich would be calling Mr. Steel to give serious consideration to that offer. Sherburne advised Chairman Bair that unless Wachovia had a signed merger agreement from Wells Fargo that had been approved by the Wells Fargo board, it would not consider this proposal.

Chairman Bair indicated she would provide Mr. Kovacevich that information and subsequently reported to Ms. Sherburne that she had done so and that Mr. Kovacevich indicated a signed, Wells Fargo board-approved merger agreement would be forthcoming. Steel received a telephone call from Mr. Kovacevich that he would be sending a signed, Wells Fargo board-approved merger agreement to Mr. Steel that, in view of the significance of the proposal to Wells Fargo, Wells Fargo intended to disclose its proposal publicly the following morning.

Steel received that signed agreement in an e-mail at 9: Wachovia promptly called a meeting of its board of directors at Steel briefed the board on communications with Chairman Bair and Mr. Wells Fargo would disclose its proposal publicly the following morning whether or not Wachovia acted on it that evening. Wachovia management and members of the board of directors expressed the view that the Wells Fargo merger proposal appeared to be substantially superior to the Citigroup proposal in a number of ways, including value to Wachovia shareholders and certainty of completion due to a signed, definitive transaction agreement with minimal conditionality.

Perella Weinberg and Goldman Sachs both indicated that, based on the circumstances and subject to completion of due diligence and final financial analysis and review of definitive documentation, they expected that they would be able to render an opinion that the exchange ratio pursuant to the Wells Fargo merger proposal was fair, from a financial point of view, to Wachovia shareholders other than Wells Fargo and its affiliates.

After extensive questions, discussion and consideration by the board of directors, on motion duly made and seconded, the Wachovia board resolved unanimously that the Wells Fargo merger agreement and the merger are advisable for, fair to and in the best interest of Wachovia shareholders and voted unanimously to approve and adopt the merger agreement and the merger and recommend that Wachovia shareholders approve the plan of merger contained in the merger agreement, subject to receipt of the fairness opinions from Perella Weinberg and Goldman Sachs.

The opinions of Goldman Sachs and Perella Weinberg were subsequently confirmed in writing. Following execution of the merger agreement, Mr. Sherburne telephoned both Mr. Kovacevich and Chairman Bair to inform them of the Wachovia board approval and execution of the merger agreement.

Sherburne, and Chairman Bair next telephoned Vikram Pandit, Chief Executive Officer for Citigroup, to inform him that Wachovia had entered into the merger agreement with Wells Fargo. Pandit indicated he believed Wachovia was in breach of the exclusivity covenants and appealed to Chairman Bair to consider the effect of this development on systemic issues unrelated to Wachovia. By unanimous vote after careful consideration, the Wachovia board of directors determined that the merger agreement and the transactions contemplated by the merger agreement were advisable and in the best interests of Wachovia and its shareholders and adopted the merger agreement and the transactions contemplated by the merger agreement, including the merger.

It concluded that Wells Fargo and Wachovia have a unique strategic fit and that the merger provides an opportunity for enhanced financial performance and shareholder value. The board collectively made its determination with respect to the merger based on the conclusion reached by its members, in light of the factors that each of them considered appropriate, that the merger is in the best interests of Wachovia and its shareholders.

However, the board concluded the potential positive factors outweighed the potential risks of completing the merger. For the reasons set forth above, the Wachovia board of directors determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Wachovia and its shareholders, and adopted the plan of merger contained in the merger agreement.

Opinion of Goldman Sachs. The opinion of Goldman Sachs was provided for the information and assistance of the board of directors of Wachovia in connection with its consideration of the merger and does not constitute a recommendation as to how any holder of shares of Wachovia common stock should vote or otherwise act with respect to the merger or any other matter.

In connection with rendering the opinion described above and performing its financial analysis, Goldman Sachs reviewed, among other things:. Goldman Sachs also held discussions with members of the senior management of Wachovia regarding their assessment of the rationale for the merger, the past and current business operations, financial condition and future prospects of Wachovia and the fair market value of certain key asset categories of Wachovia. In addition, Goldman Sachs reviewed the reported price and trading activity for shares of Wachovia common stock and Wells Fargo common stock, compared certain financial and stock market information for Wachovia and Wells Fargo with similar information for certain other companies the securities of which are publicly traded and performed such other studies and analyses, and considered such other factors, as it considered appropriate.

In particular, Goldman Sachs was informed by Wachovia that:. Goldman Sachs was further advised by Wachovia that, as a result of the foregoing, Wachovia and its board of directors were faced with a rapidly narrowing set of alternatives, which, at the time, were limited to a transaction such as the merger or intervention by the United States federal banking regulators.

For purposes of rendering its opinion, Goldman Sachs relied upon and assumed, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it. Goldman Sachs also assumed that the merger would be consummated in accordance with the terms set forth in the merger agreement without any waiver or amendment of, or delay in the fulfillment of, any terms or conditions set forth in the merger agreement or any subsequent development related to the merger, including, without limitation, any litigation resulting from Wachovia having entered into the merger, that would have an adverse effect on Wachovia or Wells Fargo or on the expected benefits of the merger in any way meaningful to its analysis.

In addition, Goldman Sachs did not review individual credit files nor did it make an independent evaluation or appraisal of the assets and liabilities including any contingent, derivative or off-balance-sheet assets and liabilities of Wachovia or Wells Fargo or any of their respective subsidiaries, and it was not furnished with any such evaluation or appraisal.

In addition, Goldman Sachs did not evaluate the solvency or fair value of any party to the merger agreement under any state or federal laws relating to bankruptcy, insolvency or similar matters. Goldman Sachs did not express any opinion as to the value of any asset of Wachovia, whether at current market prices or in the future. It noted however, that under the ownership of a company with adequate liquidity and capital, such as Wells Fargo, the value of Wachovia and its subsidiaries could substantially improve, resulting in significant returns to Wells Fargo if the merger is consummated.

The opinion of Goldman Sachs did not address the underlying business decision of Wachovia to engage in the merger, or the relative merits of the merger as compared to any other strategic alternative that may have been available to Wachovia under the circumstances. The opinion of Goldman Sachs addressed only the fairness from a financial point of view to the holders of Wachovia common stock other than Wells Fargo and its affiliates , as of the date thereof, of the exchange ratio.

Goldman Sachs did not express any opinion as to the prices at which shares of Wachovia common stock or shares of Wells Fargo common stock would trade at any time. The opinion of Goldman Sachs was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date thereof, including the ongoing crisis in the capital markets, the condition of the mortgage market and the extraordinary financial and economic environment at the time and the related uncertainty regarding the extent and duration of those conditions.

Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date thereof.

Wells Fargo and Company Direct Purchase and Dividend Reinvestment Plan

The opinion of Goldman Sachs was approved by a fairness committee of Goldman Sachs. The following is a summary of the material financial analyses conducted by Goldman Sachs in connection with rendering its opinion. These analyses were not presented to the board of directors of Wachovia. The following summary does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of the analyses described herein represent relative importance or weight given them.

Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and alone are not a complete description of the financial analyses.

Comparative Credit Default Swap Spread Trends. Goldman Sachs reviewed the annual spreads applicable to five year credit default swaps with respect to the debt of Wachovia and selected financial institutions that it generally believed to be relevant. The applicable spreads with respect to such credit defaults swaps as of the respective dates set forth below are as follows:.

Projected Losses on Pick-A-Payment Mortgage Portfolio. Such projections are summarized below:. Goldman Sachs noted the rapid increase in expected loan losses since April , and considered the impact of such losses and associated loan loss provisions on the net tangible book value of Wachovia, as well as the possibility of higher projected losses in the future in view of the prevailing economic conditions and the severe displacement in the market for such assets. Goldman Sachs also noted that the extent of such projected losses exceeded publicly available estimates of research analysts, and could therefore result in a further decline in the trading price of Wachovia common stock.

Comparative Analysis of Wells Fargo Trading Multiples. Goldman Sachs also reviewed certain historical trading multiples of Wells Fargo common stock in relation to the corresponding median trading multiples for selected national banks and regional banks:. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description.

In arriving at its fairness determination, Goldman Sachs considered the circumstances described above and the results of all of its relevant analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering such circumstances and the results of all of its relevant analyses.

As described above, the opinion of Goldman Sachs to the Wachovia board of directors was one of many factors taken into consideration by the Wachovia board of directors in making its determination to approve the merger agreement. Wachovia selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience relevant to the merger.

Pursuant to engagement letters. Goldman Sachs and its affiliates are engaged in investment banking and financial advisory services, securities trading, investment management, principal investment, financial planning, benefits counseling, risk management, hedging, financing, brokerage activities and other financial and non-financial activities and services for various persons and entities.

In the ordinary course of these activities and services, Goldman Sachs and its affiliates may at any time make or hold long or short positions and investments, as well as actively trade or effect transactions, in the equity, debt and other securities or related derivative securities and financial instruments including bank loans and other obligations of Wachovia, Wells Fargo and any of their respective affiliates or any currency or commodity that may be involved in the transaction contemplated by the merger agreement for their own account and for the accounts of their customers.

Goldman Sachs also may provide investment banking and other financial services to Wachovia, Wells Fargo and their respective affiliates in the future. However, Goldman Sachs is not currently engaged to provide additional investment banking and other financial services to Wachovia or Wells Fargo, except as specifically disclosed above. In connection with the above-described services Goldman Sachs has received, and may receive, compensation.

Opinion of Perella Weinberg. Perella Weinberg was provided for the information and assistance of the board of directors of Wachovia in connection with its consideration of the merger and does not constitute a recommendation as to how any holder of shares of Wachovia common stock should vote or otherwise act with respect to the merger or any other matter. For purposes of its opinion, Perella Weinberg, among other things:. In particular, Perella Weinberg was informed by Wachovia that:.

Perella Weinberg was further advised by Wachovia that, as a result of the foregoing, Wachovia and its Board of Directors were faced with a rapidly narrowing set of alternatives, which, at the time, were limited to a transaction such as the merger or intervention by the United States federal banking regulators. In arriving at its opinion, Perella Weinberg assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information supplied or otherwise made available to it including information that is available from generally recognized public sources for purposes of its opinion and further assumed that the information furnished by the management of Wachovia for purposes of its analysis did not contain any material omissions or misstatements of material fact.

In addition, Perella Weinberg did not evaluate the solvency or fair value of any party to the merger agreement under any state or federal laws relating to bankruptcy, insolvency or similar matters.

Perella Weinberg did not express any opinion as to the value of any asset of Wachovia, whether at current market prices or in the future. However, it noted that under the ownership of a company with adequate liquidity and capital, such as Wells Fargo, the value of Wachovia and its subsidiaries could substantially improve, resulting in significant returns to Wells Fargo if the merger is consummated.

Perella Weinberg was not asked to, and it did not, offer any opinion as to any other term of the merger agreement or the form or structure of the merger or the likely timeframe in which the merger will be consummated. Perella Weinberg did not participate in negotiations with respect to the terms of the merger and related transactions. In addition, it expressed no opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any parties to the merger, or any class of such persons, whether relative to the exchange ratio or otherwise.

Perella Weinberg assumed that the merger would be consummated as described in the merger agreement, and that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger would be obtained without any adverse effect on Wachovia or Wells Fargo or on the expected benefits of the merger in any way meaningful to its analysis.

Perella Weinberg relied as to all legal matters relevant to rendering its opinion upon advice of counsel. Perella Weinberg was not authorized to solicit, and it did not solicit, on a widespread basis indications of interest in a transaction with Wachovia from any party. Perella Weinberg expressed no opinion as to the fairness of the merger or any consideration to holders of any class of securities, other than to holders of Wachovia common stock excluding Wells Fargo and its affiliates , or as to the fairness of the merger or any consideration to creditors or other constituencies of Wachovia or Wells Fargo.

Perella Weinberg did not express any opinion as to the prices at which shares of Wachovia or Wells Fargo common stock would trade at any time. The following is a summary of the material financial analyses conducted by Perella Weinberg in connection with rendering its opinion. The following summary does not purport to be a complete description of the financial analyses performed by Perella Weinberg, nor does the order of the analyses described represent relative importance or.

Comparative Trends of Credit Default Swap Spreads. Perella Weinberg reviewed the annual spreads applicable to five year credit default swaps, referred to as CDSs, over the preceding one-year period with respect to the debt of Wachovia and selected financial institutions that Perella Weinberg generally believed to be relevant under the circumstances, although none of the selected financial institutions is directly comparable to Wachovia.

The applicable spreads with respect to such credit default swaps as of the close of business on selected dates are as follows:. Historical Bank Failures Resulting in Government Takeovers. Perella Weinberg also reviewed the largest failures of publicly-traded banking institutions over the last five years in which such institutions were taken over by United States Federal Government regulators, noting.

The table below summarizes such instances:. Tangible Book Value Analysis of Wachovia. Such analysis yielded a negative pro forma tangible book value for Wachovia. Analyses of Wells Fargo Common Stock and Value Implied by Exchange Ratio. In addition to reviewing the implied value of the exchange ratio in relation to the historical trading price of Wells Fargo common stock, Perella Weinberg conducted the following analyses with respect to the value of Wells Fargo common stock and the corresponding value implied by the exchange ratio, on the basis of publicly available information regarding Wells Fargo, certain historical trading multiples of Wells Fargo common stock and other trading multiples that Perella Weinberg considered appropriate having reviewed similar trading multiples of other companies that Perella Weinberg believed to be relevant:.

Next-Twelve-Month Earnings Per Share Estimate IBES Median. Public Market Comparables Selected Multiples. Perella Weinberg also conducted an illustrative discounted cash flow analysis with respect to the value of Wells Fargo common stock and the corresponding value implied by the exchange ratio, based on estimates for earnings per share of Wells Fargo common stock derived from publicly available equity research.

In arriving at its fairness determination, Perella Weinberg considered the circumstances described above and the results of all of its relevant analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Perella Weinberg made its determination as to fairness on the basis of its experience and professional judgment after considering such circumstances and the results of all of its relevant analyses.

As described above, the opinion of Perella Weinberg to the Wachovia board of directors was one of many factors taken into consideration by the Wachovia board of directors in making its determination to approve the merger agreement. In addition, Wachovia has agreed to indemnify Perella Weinberg for certain liabilities and to reimburse Perella Weinberg for certain expenses arising out of its engagement.

Except pursuant to such engagement letter between Wachovia and Perella Weinberg, Perella Weinberg has not, in the past, provided investment banking or other financial services to Wachovia or Wells Fargo. In the ordinary course of its business activities, Perella Weinberg or its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for their own account or the accounts of customers, in debt or equity or other securities or related derivative securities or financial instruments including bank loans or other obligations of Wachovia or Wells Fargo or any of their respective affiliates.

Perella Weinberg also may provide investment banking and other financial services to Wachovia, Wells Fargo and their respective affiliates in the future, and may receive compensation in connection with such services.

Wells Fargo - Collective Funds New

However, Perella Weinberg is not currently engaged to provide additional investment banking and other financial services to Wachovia or Wells Fargo, except as specifically disclosed above. Wells Fargo did not consider these forecasts to be current, in view of the fact that Wachovia was being, and since the date such forecasts were prepared had been, severely impacted by extraordinary market and economic conditions, and, as a result, Wells Fargo did not rely upon them in assessing or formulating the proposed terms of the potential transaction.

These financial data were not prepared with a view toward public disclosure or with a view toward complying with the published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial Information or generally accepted accounting principles. The financial forecasts are not facts, do not take into account the subsequently rapidly changing market, economic and operating conditions and should not be understood or interpreted as being indicative of future results.

In light of the foregoing, and considering that the Wachovia special meeting will be held months after the date the latest financial forecasts referenced above were prepared, as well as the uncertainties inherent in any forecasted information, shareholders are cautioned not to rely on the financial forecasts. The board of directors of Wachovia was aware of these different interests and considered them, among other matters, in adopting the plan of merger contained in the merger agreement and approving the transactions it contemplates.

For purposes of the Wachovia agreements and plans described below, the completion of the transactions contemplated by the merger agreement will generally constitute a change in control.

Under the terms of these plans, upon a change of control of Wachovia, unvested stock options, RSAs and RSUs excluding certain performance-based RSAs granted under the plan generally would vest and become exercisable following the change of control. The merger agreement provides for the conversion of Wachovia stock options into stock options to purchase Wells Fargo common stock, as adjusted by the exchange ratio.

In addition, as of such date, such executive officers held , unvested RSAs, which will vest upon completion of the merger. These RSA amounts exclude the performance-based RSAs granted to Messrs. Zwiener and Kenneth J. Phelan which are discussed below, and , performance-based RSAs which may or may not be forfeited following completion of the merger depending on whether the applicable performance goals are met. Wachovia has not granted its non-employee directors Wachovia stock options or RSAs.

Smith, was awarded 20, RSUs in June , which will vest upon completion of the merger in accordance with the terms of the applicable stock incentive plan. Wachovia Executive Officer Employment Agreements. Wachovia has entered into employment agreements with all of its executive officers, excluding Robert K. In addition, pursuant to their employment agreements, the executives are subject to an ongoing confidentiality obligation, post-employment non-competition and non-solicitation covenant.

The post-employment non-competition covenant is not applicable following any termination after completion of the merger.

Pursuant to the terms of their employment agreements with Wachovia, Messrs. Zwiener and Phelan were granted, in the aggregate, 1. Wachovia did not enter into an employment agreement with Mr. Steel upon his hiring in July Following the change in control as a result of the merger, all of Mr. In addition, following the change in control as a result of the merger, Mr. The foregoing payments, if any, to Mr. Operating Committee Incentive Award. Wachovia is party to insurance bonus agreements with two of its executive officers, Stephen E.

Cummings and Stanhope A. Arrangements with Wells Fargo. Carroll currently has an employment agreement with Wachovia. The terms of his employment with Wells Fargo, including his compensation arrangements, have not yet been finalized. Although there can be no assurance that Wells Fargo and Mr. Carroll will reach an agreement, any new arrangement with Mr. Carroll would become effective upon the completion of the merger and would supersede his current employment agreement with Wachovia. Wells Fargo Board Positions.

The merger agreement provides that, upon completion of the merger, Wells Fargo will, to the fullest extent permitted by law, indemnify, defend and hold harmless all present and former directors, officers and employees of Wachovia against all costs and liabilities arising out of actions or omissions occurring at or before the completion of the merger and will advance any expenses as incurred to the fullest extent permitted by law. The following section is a summary of the anticipated material U.

Wachovia common stock for shares of Wells Fargo common stock in the merger. The following is based upon the Code, its legislative history, existing and proposed regulations under the Code and published rulings and decisions, all as currently in effect as of the date of this proxy statement-prospectus, and all of which are subject to change, possibly with retroactive effect. Tax considerations under state, local and foreign laws, or federal laws other than those pertaining to income tax, are not addressed in this document.

Determining the actual tax consequences of the merger to you may be complex. You should consult with your own tax advisor regarding the tax consequences of the merger in your particular circumstances, including the applicability and effect of the alternative minimum tax and any state, local or foreign and other tax laws and of changes in those laws.

Tax Consequences of the Merger Generally. The parties intend for the merger to qualify as a reorganization for United States federal income tax purposes. These opinions will be based on representation letters provided by Wells Fargo and Wachovia and on customary factual assumptions.

None of the opinions described above will be binding on the Internal Revenue Service. Wells Fargo and Wachovia have not sought and will not seek any ruling from the Internal Revenue Service regarding any matters relating to the merger, and as a result, there can be no. The aggregate tax basis in the shares of Wells Fargo common stock that you receive in the merger, including any fractional share interests deemed received and redeemed as described below, will equal your aggregate adjusted tax basis in the Wachovia common stock you surrender.

Your holding period for the shares of Wells Fargo common stock that you receive in the merger including a fractional share interest deemed received and sold as described below will include your holding period for the shares of Wachovia common stock that you surrender in the exchange.

If you acquired different blocks of Wachovia common shares at different times or at different prices, the Wells Fargo common stock you receive will be allocated pro rata to each block of Wachovia common stock, and the basis and holding period of each block of Wells Fargo common stock you receive will be determined on a block-for-block basis depending on the basis and holding period of the blocks of Wachovia common stock exchanged for such block of Wells Fargo common stock.

Cash Instead of a Fractional Share. If you receive cash instead of a fractional share of Wells Fargo common stock, you will be treated as having received the fractional share of Wells Fargo common stock pursuant to the merger and then as having sold that fractional share of Wells Fargo common stock for cash.

As a result, you generally will recognize gain or loss equal to the difference between the amount of cash received and the basis in your fractional share of Wells Fargo common stock as set forth above. This gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if, as of the effective date of the merger, the holding period for the shares including the holding period of Wachovia common stock surrendered therefor is greater than one year.

Long-term capital gains of individuals are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Backup Withholding and Information Reporting. Under North Carolina law, a holder of shares of a class or series of stock that is listed on a national securities exchange may not dissent from a merger in which a shareholder receives cash or shares which are also listed on a national securities exchange.

Wachovia urges you to consult a lawyer before electing or attempting to exercise these rights. This joint proxy statement-prospectus constitutes that notice.

If you are a holder of Wachovia preferred stock and desire to dissent and receive cash payment of the fair value of your Wachovia preferred stock, you must:. A holder of Wachovia preferred stock who demands payment and deposits preferred stock certificates retains all other rights of a holder of Wachovia preferred stock until those rights are canceled or modified by the effectiveness of the merger.

You may, however, notify Wachovia in writing of your own estimate of the fair value of your stock and amount of interest due, and demand payment of the excess of your estimate of the fair value of your stock over the amount previously paid by Wachovia if:. If you fail to notify Wachovia of your demand within such day period, you shall be deemed to have withdrawn your dissent and demand for payment.

The dissenting holder of Wachovia preferred stock will not have the right to a jury trial. The court will have discretion to make all dissenting holders of Wachovia preferred stock whose demands remain unsettled parties to the proceeding.

If you do not commence the proceeding within such day period, you will be deemed to have withdrawn the dissent and demand for payment. In such an appraisal proceeding, the court will determine all costs of the proceeding and assess the costs as it finds equitable. The proceeding is to be tried as in other civil actions; however, you will not have the right to a trial by jury. The court also may assess the fees and expenses of counsel and experts for the respective parties, in the amounts the court finds equitable, as follows:.

If the court finds that the services of counsel for any dissenting preferred stock holder were of substantial benefit to other dissenting preferred stock holders and that the fees for those services should not be assessed against Wachovia, the court may award to the counsel reasonable fees to be paid out of the amounts awarded the dissenting preferred stock holders who were benefited.

Wachovia recommends that such communications be sent by registered or certified mail, return receipt requested. Completion of the merger is subject to prior receipt of all approvals and consents required to be obtained from applicable governmental and regulatory authorities to complete the merger.

Wells Fargo and Wachovia have agreed to cooperate and use all reasonable best efforts to obtain all permits, consents, approvals and authorizations from any governmental or regulatory authority necessary to consummate the transactions contemplated by the merger agreement as promptly as practicable.

There can be no assurance that regulatory approvals will be obtained, that such approvals will be received on a timely basis, or that such approvals will not impose conditions or requirements that, individually or in the aggregate, would or could reasonably be expected to have a material adverse effect on the financial condition, results of operations, assets or business of Wells Fargo or Wachovia following completion of the merger.

The Federal Reserve must approve the merger before the merger can be completed. Federal Reserve approval is required because Wells Fargo is a bank holding company proposing to acquire another bank holding company, Wachovia. The approval of an application means only that the regulatory criteria for approval have been satisfied or waived.

It does not mean that the approving authority has determined that the consideration to be received by Wachovia shareholders is fair. Regulatory approval does not constitute an endorsement or recommendation of the merger. The merger is subject to review by the DOJ or the FTC, to determine whether it complies with applicable antitrust law. Under the provisions of the HSR Act, and its related rules, the merger cannot be completed until both Wells Fargo and Wachovia file notification of the merger with the DOJ and the FTC and the specified waiting periods have expired or been terminated.

Other Applications and Notices. Other applications and notices are being filed with various regulatory authorities and self-regulatory organizations in connection with the merger, including applications and notices in connection with the indirect change in control, as a result of the merger, of certain subsidiaries directly or indirectly owned by Wachovia.

Wells Fargo and Wachovia are not aware of any governmental approvals or compliance with banking laws and regulations that are required for the merger to become effective other than those described above. Wells Fargo and Wachovia intend to seek any other approval and to take any other action that may be required to complete the merger.

There can be no assurance that any required approval or action can be obtained or taken prior to the meeting. The shares of Wells Fargo common stock to be issued in the merger will be listed on the New York Stock Exchange.

WELLS FARGO AND WACHOVIA. Under the purchase method of accounting, the assets and liabilities of Wachovia will be recorded by Wells Fargo at their respective fair values as of the date the Merger is completed. The unaudited pro forma condensed combined statements of income give effect to the Merger as if the Merger had been completed at the beginning of the earliest period presented. The Merger, which is expected to be completed in the fourth quarter of , provides for the exchange of 0.

Each outstanding share of each series of Wachovia preferred stock will be converted into a share or fraction of a share of a corresponding series of Wells Fargo preferred stock having terms substantially identical to that series of Wachovia preferred stock. The unaudited pro forma condensed combined information does not give effect to these other pending acquisitions as they are not material to the unaudited pro forma condensed combined financial information, either individually or in the aggregate.

The unaudited pro forma condensed combined financial information does not give effect to this issuance which would in any event be eliminated from the pro forma presentation as it will be fully eliminated in consolidation. The unaudited pro forma condensed combined statements of income give effect to these capital issuances at the beginning of the earliest period presented.

The unaudited pro forma condensed combined financial information has been derived from and should be read in conjunction with:. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not necessarily indicate the financial results of the combined companies had the companies.

The adjustments included in these unaudited pro forma condensed financial statements are preliminary and may be revised. The unaudited pro forma condensed combined financial information also does not consider any potential impacts of current market conditions on revenues, potential revenue enhancements, anticipated cost savings and expense efficiencies, or asset dispositions, among other factors. Further, as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial information, the pro forma allocation of purchase price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded at the time the Merger is completed.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET. Federal funds sold, securities purchased under resale agreements and other short-term investments.

Cumulative other comprehensive income loss. See accompanying notes to unaudited pro forma condensed combined financial statements. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME. Net interest income loss after provision for credit losses. Net gains losses on debt securities available for sale. INCOME LOSS BEFORE INCOME TAX EXPENSE BENEFIT. DILUTED EARNINGS LOSS PER COMMON SHARE. Net interest income after provision for credit losses. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations or financial position had the Merger been consummated at the beginning of the period presented, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities.

Certain historical financial information has been reclassified to conform to the current presentation. The Merger, which is expected to be completed in the fourth quarter of , provides for issuance of 0.

The unaudited pro forma information does not give effect to these other pending acquisitions as they are not material to the unaudited pro forma condensed combined financial information, either individually or in the aggregate. The unaudited pro forma condensed combined financial information does not give effect to this issuance as it will be fully eliminated in consolidation.

The pro forma adjustments included herein are subject to updates as additional information becomes available and as additional analyses are performed. The unaudited pro forma condensed combined financial statements assume that the Merger will close in fourth quarter The accounting policies of both Wells Fargo and Wachovia are in the process of being reviewed in detail. Upon completion of such review, conforming adjustments or financial statement reclassifications may be determined.

The allowance for credit losses could represent a significant conforming change based on a detailed analysis of methodologies employed by Wells Fargo and Wachovia. For example, the loss emergence periods used for various loan product classes, the estimated probability of default, the loss given default and the asset quality ratings assigned to specific credits may differ and require conformity.

Further, other conforming adjustments could be determined based on the accounting policy review. The specific details of these plans will continue to be refined over the next several months. Our merger integration decisions will impact certain existing Wachovia facilities both leased and owned , information systems, supplier contracts and costs associated with the involuntary termination of personnel.

Additionally, as part of our formulation of the merger integration plan, certain actions regarding existing Wells Fargo information systems, premises, equipment, benefit plans, supply chain methodologies, supplier contracts and involuntary termination of personnel may be taken. To the extent there are costs associated with these actions, the costs will be recorded based on the nature and timing of these integration actions.

We expect that such decisions will be completed after the Merger. The estimated non-recurring charge consists of the following:. Costs associated with systems integration, operations and customer conversions.

Branch and administrative site consolidations, name change and signage. The unaudited pro forma condensed combined financial information does not reflect any benefit expected from revenue enhancements or derived from potential cost savings related to the Merger. The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are based on current assumptions and valuations which are subject to change.

The pro forma combined earnings loss and diluted earnings loss per share for the respective periods presented are based on the combined weighted average number of common and diluted potential common shares of Wells Fargo and Wachovia. The number of weighted average common shares, including all diluted potential common shares, reflects the exchange of 0.

Amounts used in the determination of the pro forma basic and diluted earnings per share are as follows:. Pro forma Wells Fargo before Stock Issuances. Income loss available to common stockholders. Pro forma Wells Fargo. Preferred stock dividends and accretion. The Department of the Treasury, as part of the preferred stock issuance, received warrants to purchase approximately The treasury stock method was utilized to determine dilution of the warrants for the periods presented.

Each outstanding share of each series of Wachovia preferred stock will be converted into one share of a corresponding series of Wells Fargo preferred stock having terms substantially identical to that series of Wachovia preferred stock. Accordingly, the pro forma purchase price was preliminarily allocated to the assets acquired and the liabilities assumed based on their estimated fair values as summarized in the following table:.

Purchase price per share of Wells Fargo common stock 2. Preliminary allocation of the pro forma purchase price. Adjustments to reflect assets acquired and liabilities assumed at fair value:. Accrued expenses and other liabilities exit, termination and other liabilities. Preliminary pro forma goodwill resulting from the Merger. Wells Fargo will account for the merger under the purchase method of accounting. Wells Fargo will record, at fair value, the acquired assets and assumed liabilities of Wachovia.

To the extent the total purchase price exceeds the fair value of the assets acquired and liabilities assumed, Wells Fargo will record goodwill. Citigroup purported to commence an action of the Supreme Court in the State of New York, captioned Citigroup, Inc. At about the same time, however, Justice Ramos of the Supreme Court issued an Order to Show Cause and Temporary Restraining Order that did not grant the relief Citigroup sought but did extend the period of the exclusivity agreement until further order of the court, and set a hearing for the following Thursday.

Justice Ramos thereupon issued a second Order to Show Cause and Temporary Restraining Order that was substantively identical to his first order. The press release further stated that Citigroup would no longer seek to enjoin the merger, but would continue to seek compensatory and punitive damages against Wachovia and Wells Fargo in the Second State Action.

The proposed amended complaint includes claims for breach of contract, tortious interference with contract, unjust enrichment, promissory estoppel, and quantum meruit. The motion is still pending.

The complaint seeks a declaration that the merger agreement is valid, proper, and not prohibited by the exclusivity agreement. The motion is fully briefed and remains pending. The complaint sought a judgment declaring the exclusivity agreement between Citigroup and Wachovia to be unenforceable and an injunction restraining Citigroup from attempting to enforce the agreement.

The complaint names as defendants Wachovia, Wells Fargo, and the directors of Wachovia. We urge you to read the merger agreement carefully and in its entirety, as it is the legal document governing this merger. Terms of the Merger. Each of the Wachovia board of directors and the Wells Fargo board of directors has adopted the plan of merger contained in the merger agreement, which provides for the merger of Wachovia with and into Wells Fargo.

Each share of Wachovia common stock issued and outstanding immediately prior to the completion of the merger, except for specified shares of Wachovia common stock held by Wachovia and Wells Fargo, will be converted into 0.

If the number of shares of common stock of Wells Fargo changes before the merger is completed because of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar event, then an appropriate and proportionate adjustment will be made to the number of shares of Wells Fargo common stock into which each share of Wachovia common stock will be converted.

Instead, a Wachovia shareholder who otherwise would have received a fraction of a share of Wells Fargo common stock will receive an amount in cash rounded to the nearest cent. This cash amount will be determined by multiplying the fraction of a share of Wells Fargo common stock to which the holder would otherwise be entitled by the average closing price of Wells Fargo common stock on the New York Stock Exchange over the five trading days immediately prior to the date on which the merger is completed.

The merger agreement provides that Wells Fargo may change the structure of the merger provided that no such change will alter the amount or kind of merger consideration to be provided under the merger agreement or materially impede or delay completion of the merger. Subject to applicable law, at the time of the merger, each option to purchase Wachovia common stock that is then outstanding and unexercised will be converted automatically into an option to buy Wells Fargo common stock, and Wells Fargo will assume each option to purchase Wachovia common stock subject to its terms except:.

At the time of the merger, other stock-based awards of Wachovia will be converted into a similar award of Wells Fargo with respect to Wells Fargo common stock generally on the same terms that applied to the Wachovia award except the number of shares of Wells Fargo common stock subject to the new Wells Fargo award will equal the number of shares of Wachovia common stock subject to the award multiplied by the exchange ratio, rounded down to the nearest whole share.

The merger will be completed only if all of the following occur:. The merger will become effective when a certificate of merger is filed with the Secretary of State of the State of Delaware. However, we may agree to a different time for completion of the merger and specify that time in the certificate of merger in accordance with Delaware law.

In the merger agreement, we have agreed to cause the completion of the merger to occur no later than the third business day following the satisfaction or waiver subject to applicable law of the last to occur of the conditions specified in the merger agreement, or on another mutually agreed date.

The conversion of Wachovia common stock into the merger consideration will occur automatically at the effective time of the merger. As soon as reasonably practicable after completion of the merger, the exchange agent will exchange certificates or direct registration statements representing or evidencing shares of Wachovia common stock for the merger consideration to be received pursuant to the terms of the merger agreement.

Wells Fargo Bank, N. As soon as reasonably practicable after the completion of the merger, the exchange agent will mail a letter of transmittal to each record holder of Wachovia common stock at the effective time of the merger.

This mailing will contain instructions on how to surrender Wachovia common stock certificates in exchange for direct registration statements indicating book-entry ownership of Wells Fargo common stock and a check in the amount of cash to be paid instead of fractional shares.

If a holder of a Wachovia common stock certificate makes a special request, however, the exchange agent will issue to the requesting holder a Wells Fargo stock certificate in lieu of book-entry shares. When you deliver your Wachovia stock certificates to the exchange agent along with a properly executed letter of transmittal and any other required documents, your Wachovia stock certificates will be cancelled and you will receive direct registration statements indicating book-entry ownership of Wells Fargo common stock, or, if requested, stock certificates representing the number of full shares of Wells Fargo common stock to which you are entitled under the merger agreement.

You also will receive a cash payment for any fractional shares of Wells Fargo common stock that would have been otherwise issuable to you as a result of the merger.

Holders of Wachovia common stock should not submit their Wachovia stock certificates for exchange until they receive the transmittal instructions and a form of letter of transmittal from the exchange agent. If a certificate for Wachovia common stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable under the merger agreement upon receipt of appropriate evidence as to that loss, theft or destruction and if reasonably required by Wells Fargo, the posting of a bond indemnifying Wells Fargo for any claim that may be made against Wells Fargo as a result of the lost, stolen or destroyed certificates.

After completion of the merger, there will be no further transfers on the stock transfer books of Wachovia, except as required to settle trades executed prior to the completion of the merger. The exchange agent will be entitled to deduct and withhold from the cash in lieu of fractional shares payable to any Wachovia shareholder the amounts the exchange agent is required to deduct and withhold under any applicable federal, state, local or foreign tax law.

If the exchange agent withholds any amounts, these amounts will be treated for all purposes of the merger as having been paid to the shareholders from whom they were withheld. Until Wachovia common stock certificates are surrendered for exchange, any dividends or other distributions having a record date after the effective time of the merger with respect to the whole shares of Wells Fargo common stock into which shares of Wachovia common stock may have been converted will accrue but will not be paid.

Wells Fargo will pay to former Wachovia shareholders any unpaid dividends or other distributions, without interest, only after they have duly surrendered their Wachovia stock certificates. The merger agreement contains representations and warranties of Wachovia and Wells Fargo relating to their respective businesses.

The representations and warranties in the merger agreement do not survive the effective time of the merger. Each of Wells Fargo and Wachovia has made representations and warranties to the other regarding, among other things:. In addition, Wachovia has made other representations and warranties about itself to Wells Fargo as to:. The representations and warranties described above and included in the merger agreement were made by each of Wells Fargo and Wachovia to the other.

These representations and warranties were made as of specific dates, may be subject to important qualifications and limitations agreed to by Wells Fargo and Wachovia in connection with negotiating the terms of the merger agreement, and may have been included in the merger agreement for the purpose of allocating risk between Wells Fargo and Wachovia rather than to establish matters as facts.

The merger agreement is described in, and included as an appendix to, this document only to provide you with information regarding its terms and conditions, and not to provide any other factual information regarding Wachovia, Wells Fargo or their respective businesses.

Accordingly, the representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this document and in the documents incorporated by reference into this document. Each of Wachovia and Wells Fargo has undertaken covenants that place restrictions on it and its subsidiaries until the effective time of the merger.

The merger agreement also contains covenants relating to the preparation of this document and the holding of the special meeting of Wachovia shareholders, access to information of the other company, authorization of listing of shares of Wells Fargo common stock on the New York Stock Exchange and public announcements with respect to the transactions contemplated by the merger agreement. Wachovia has agreed to take all action necessary to convene a meeting of Wachovia shareholders as promptly as possible to consider and vote upon approval of the plan of merger contained in the merger agreement.

The record date of the meeting will be determined with the prior approval of Wells Fargo and will be at least three business days after the closing of the transactions contemplated by the share exchange agreement as described below.

However, the Wachovia board of directors may only withdraw their recommendation after giving Wells Fargo at least five business days to respond to any competing business combination proposal or other circumstances and then taking into account any amendment or modification to the merger agreement proposed by Wells Fargo. Wachovia also has agreed that it will not, and will cause its subsidiaries and their officers, directors, agents, advisors and affiliates not to:.

Following completion of the merger, Wells Fargo has agreed to maintain employee benefit plans and compensation opportunities for employees of Wachovia and its subsidiaries who are employed on the closing date of the merger that are substantially comparable, in the aggregate, to those made available to similarly situated employees of Wells Fargo and its subsidiaries. In addition, Wells Fargo has agreed, to the extent any Wachovia employee becomes eligible to participate in Wells Fargo benefit plans following the merger:.

Wells Fargo has the right to amend or terminate Wachovia benefit plans to the extent permitted under the terms of such plans, and has no obligation to continue the employment of any Wachovia employee for any period following the merger. The merger agreement provides that after the merger is completed, Wells Fargo will, to the fullest extent permitted under applicable law, indemnify and hold harmless, and provide advancement of expenses to to the fullest extent permitted under applicable law provided the person provides an understanding to repay the expenses if the person is ultimately not entitled to indemnification , each present and former director, officer and employee of Wachovia and its subsidiaries from liabilities arising out of or pertaining to matters existing or occurring at or before the completion of the merger, including the transactions contemplated by the merger agreement and the share exchange agreement.

Conditions to the Merger. We cannot provide assurance as to when or if all of the conditions to the merger can or will be satisfied or waived by the appropriate party. As of the date of this document, we have no reason to believe that any of these conditions will not be satisfied. The merger agreement can be terminated at any time prior to completion of the merger by mutual consent if authorized by each of our boards of directors, or by either party in the following circumstances:.

In general, each of Wells Fargo and Wachovia will be responsible for all expenses incurred by it in connection with the negotiation and completion of the transactions contemplated by the merger agreement. However, the costs and expenses of printing and mailing this document, and all filing and other fees paid to the SEC in connection with the merger, will be borne equally by Wachovia and Wells Fargo and the costs of any filing under the HSR Act will be borne by Wells Fargo.

Subject to applicable law, the parties may amend the merger agreement by action taken or authorized by their respective boards of directors or by written agreement. At any time prior to completion of the merger, each of Wells Fargo and Wachovia, by action taken or authorized by their respective board of directors, to the extent legally allowed, may:.

PRICE RANGE OF COMMON STOCK AND DIVIDENDS. The following table shows the high and low reported intra-day sales prices per share of Wells Fargo common stock as reported by the New York Stock Exchange and the cash dividends declared per share:.

The following table shows the high and low reported intra-day sales prices per share of Wachovia common stock as reported by the New York Stock Exchange and the cash dividends declared per share:. Past price performance is not necessarily indicative of likely future performance. Because market prices of Wells Fargo and Wachovia common stock will fluctuate, you are urged to obtain current market prices for shares of Wells Fargo and Wachovia common stock.

Wells Fargo is a diversified financial services company organized under the laws of the state of Delaware and registered as a financial holding company and a bank holding company under the Bank Holding Company Act. Wells Fargo is a separate and distinct legal entity from its banking and other subsidiaries. Its principal source of funds to pay dividends on its capital stock and interest and principal on its debt is dividends from its subsidiaries.

Various federal and state laws and regulations limit the amount of dividends Wells Fargo subsidiaries can pay to Wells Fargo without regulatory approval.

Wells Fargo expands its business in part by acquiring banking institutions and other companies that engage in activities that are financial in nature. Wells Fargo continues to explore opportunities to acquire banking and non-banking organizations as permitted for a financial holding company under the Bank Holding Company Act.

It is not presently known whether, or on what terms, such discussions will result in future acquisitions. Wells Fargo policy is not to comment on such discussions or a possible acquisition until a definitive agreement with respect thereto has been signed.

Information on the Internet website of Wells Fargo or any subsidiary of Wells Fargo is not part of this document, and you should not rely on that information in deciding how to vote on the proposal to approve the merger agreement.

Information on the Internet website of Wachovia or any subsidiary of Wachovia is not part of this document, and you should not rely on that information in deciding how to vote on the proposal to approve the merger agreement. WELLS FARGO CAPITAL STOCK.

You should read these documents for complete information on Wells Fargo capital stock. Common Shares Authorized and Outstanding. Wells Fargo may pay dividends in cash, stock or other property. In some cases, holders of Wells Fargo common stock may not receive dividends until Wells Fargo has satisfied its obligations to holders of outstanding preferred stock.

Holders of Wells Fargo common stock have the exclusive right to vote on all matters presented to Wells Fargo stockholders unless Delaware law or the certificate of designations for an outstanding series of preferred stock gives the holders of that series of preferred stock the right to vote on certain matters.

Each holder of Wells Fargo common stock is entitled to one vote per share. Holders of Wells Fargo common stock have no cumulative voting rights for the election of directors. When Wells Fargo issues securities in the future, holders of Wells Fargo common stock have no preemptive rights with respect to those securities.

This means the holders of Wells Fargo common stock have no right, as holders of Wells Fargo common stock, to buy any portion of those issued securities. Holders of Wells Fargo common stock have no rights to have their shares of common stock redeemed by Wells Fargo or to convert their shares of common stock into shares of any other class of Wells Fargo capital stock. Outstanding shares of Wells Fargo common stock are fully paid and non assessable. This means the full purchase price for the shares has been paid and the holders of the shares will not be assessed any additional amounts for the shares.

Wells Fargo is incorporated in Delaware and is governed by the Delaware General Corporation Law DGCL.

Delaware law allows a corporation to pay dividends only out of surplus, as determined under Delaware law or, if there is no surplus, out of net profits for the fiscal year in which the dividend was declared and for the preceding fiscal year. Under Delaware law, however, Wells Fargo cannot pay dividends out of net profits if, after it pays the dividend, its capital would be less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets.

State-chartered banks are subject to state regulations that limit dividends. These provisions could delay, deter or prevent tender offers or takeover attempts that stockholders might believe are in their best interests, including tender offers or takeover attempts that could allow stockholders to receive premiums over the market price of their common stock.

In some cases, the issuance of preferred stock could discourage or make more difficult attempts to take control of Wells Fargo through a merger, tender offer, proxy context or otherwise. Preferred stock with special voting rights or other features issued to persons favoring Wells Fargo management could stop a takeover by preventing the person trying to take control of Wells Fargo from acquiring enough voting shares to take control.

Shares of Wells Fargo common stock are subject to the rights of holders of Wells Fargo preferred stock. Wells Fargo preferred stockholders are entitled to payment of dividends on their preferred stock before Wells Fargo can pay dividends on Wells Fargo common stock. If Wells Fargo voluntarily or involuntarily liquidates, dissolves or winds up its business, its preferred stockholders are entitled to receive, out of any assets remaining for distribution to stockholders, all accrued and unpaid dividends on their preferred stock and any liquidation preference for their preferred stock before holders of Wells Fargo common stock receive any distribution of assets with respect to their common stock.

There are 10 series of ESOP preferred stock outstanding, issued in each of the years from through , representing an aggregate of 3,, authorized shares of preferred stock and , outstanding shares of preferred stock. The ESOP preferred stock is subject to redemption, in whole or in part, at our option, at a price equal to the higher of:. In addition, a holder of ESOP preferred stock is entitled, at any time before the date fixed for redemption, to convert shares of ESOP preferred stock held by that holder into shares of common stock at the then-applicable Conversion Price.

Except as required by law, the holders of ESOP preferred stock are not entitled to vote, except under the limited circumstances. The ESOP preferred stock does not have preemptive rights and is not subject to any sinking fund and we are not otherwise obligated to repurchase or redeem the ESOP preferred stock. The Preferred Stock will not be convertible into Wells Fargo common stock or any other class or series of Wells Fargo securities and will not be subject to any sinking fund or any other obligation of Wells Fargo for their repurchase or retirement.

Dividends on shares of PPS preferred stock will not be mandatory. Holders of the PPS preferred stock, in preference to the holders of Wells Fargo common stock and of any other shares of Wells Fargo stock ranking junior to the PPS preferred stock as to payment of dividends, will be entitled to receive, only when, as and if declared by the Wells Fargo board of directors, out of assets legally available for payment, cash dividends.

These dividends will be payable as follows:. Holders of PPS preferred stock will have no right to require the redemption or repurchase of the PPS preferred stock.

Except as required by law, the holders of PPS preferred stock are not entitled to vote, except under the limited circumstances. The PPS preferred stock does not have preemptive rights. The following summary of the terms and provisions of the New Wells Fargo Preferred Stock is not complete and is qualified in its entirety by reference to the pertinent sections of the certificates of designation of each series of New Wells Fargo Preferred Stock.

Holders of Wells Fargo DEP Shares will not be entitled to receive any dividends. The Wells Fargo DEP Shares will not be convertible or exchangeable. If Wells Fargo redeems less than all outstanding Wells Fargo DEP Shares, then Wells Fargo must redeem all shares held by holders of fewer than one-tenth of a share, or by holders that would hold fewer than one-tenth of a share following the redemption. The holders of Wells Fargo DEP Shares will have no other right or claim to any of the remaining assets of the company.

Holders of Wells Fargo DEP Shares will not have voting rights, except those required by applicable law or the rules of a securities exchange on which the Wells Fargo DEP Shares may be listed. Wells Fargo does not presently intend to list the Wells Fargo DEP Shares with any securities exchange.

The Wachovia DEP Shares are currently traded on the over-the-counter Bulletin Board. Holders of depositary shares will receive one six-hundredth of any such dividend and one six-hundredth of any such liquidation preference.

Dividends in each quarterly period will accrue from the first day of such period. The depositary shares will be evidenced by depositary receipts. The depositary will act as transfer agent and registrar and paying agent with respect to the depositary shares. Depositary shares may be held either directly or indirectly through a broker or other financial institution. If you hold depositary shares directly, by having depositary shares registered in your name on the books of the depositary, you are a depositary receipt holder.

If you hold the depositary shares through your broker or financial institution nominee, you must rely on the procedures of such broker or financial institution to assert the rights of a depositary receipt holder described in this section. You should consult with your broker or financial institution to find out what those procedures are. Dividends and Other Distributions.

In the event of a distribution other than in cash, the depositary will distribute property received by it to the record holders of depositary shares entitled thereto, unless the depositary determines that it is not feasible to make such distribution, in which case the depositary may, after consultation with Wells Fargo, sell such property and distribute the net proceeds from such sale to such holders. Redemption of Depositary Shares. Holders of depositary shares will receive one eight-hundredth of any such dividend and one eight-hundredth of any such liquidation preference.

For any dividend period ending prior to the dividend payment date in March , dividends will accrue at a rate per annum equal to 5.

No interest will be payable in respect of any dividend payment on such offered stock that may be in arrears. These dividends will be payable at a rate per annum equal to 8. Right to Elect Two Directors upon Nonpayment. It shall be a qualification for election for any such director that the election of such director shall not cause. Wells Fargo to violate the corporate governance requirement of the New York Stock Exchange or any other securities exchange or other trading facility on which securities of Wells Fargo may then be listed or traded that listed or traded companies must have a majority of independent directors, and provided further that the board of directors shall at no time include more than two such directors including, for purposes of this limitation, all directors that the holders of any series of voting parity stock are entitled to elect pursuant to like voting rights.

If an amendment, alteration, repeal, share exchange, reclassification, merger or consolidation described above would adversely affect one or more but not all series of voting preferred stock including the Wells.

Bank, National Association, as depositary, under a deposit agreement that Wells Fargo will assume from Wachovia on or before the closing date. The Depositary Shares will be evidenced by depositary receipts. Bank, National Association will act as transfer agent and registrar and paying agent with respect to the Depositary Shares.

Purchasers may hold Depositary Shares either directly or indirectly through their broker or other financial institution. If a purchaser holds Depositary Shares directly, by having depositary shares registered in its name on the books of the depositary, the purchaser is a depositary receipt holder. If a purchaser holds the Depositary Shares through a broker or financial institution nominee, the purchasers must rely on the procedures of such broker or financial institution to assert the rights of a depositary receipt holder described in this section.

The amounts distributed to holders of Depositary Shares will be reduced by any amounts required to be withheld by the depositary or by us on account of taxes or other governmental charges.

Wells Fargo will agree to take all reasonable actions that the depositary determines are necessary to enable the depositary to vote as instructed. It shall be a qualification for election for any such director that the election of such director shall not cause Wells Fargo to violate the corporate governance requirement of the New York Stock Exchange or any other securities exchange or other trading facility on which securities of Wells Fargo may then be listed or traded that listed or traded companies must have a majority of independent directors, and provided further that the board of directors shall at no time include more than two such directors including, for purposes of this limitation, all directors that the holders of any series of voting parity stock are entitled to elect pursuant to like voting rights.

These dividends will be payable at a rate per annum equal to 7. Limitation on Beneficial Ownership. Conversion Upon Certain Acquisitions. The notice will specify the anticipated effective date of the make-whole acquisition and the date. The stock prices set forth in the first row of the table i. The adjusted stock prices will equal the stock prices applicable immediately prior to such adjustment multiplied by a fraction, the numerator of which is the conversion rate immediately prior to the adjustment giving rise to the stock price adjustment and the denominator of which is the conversion rate as so adjusted.

Conversion Upon Fundamental Change. The adjusted base price will equal the base price. If the reference price is less than the base price, holders will receive a maximum of In the event of:.

In the event that holders of the shares of Wells. The conversion rate will be adjusted, without duplication, if certain events occur:. The dividend threshold amount is subject to adjustment on an inversely proportional basis whenever the conversion rate is adjusted, provided that no adjustment will be made to the dividend threshold amount for any adjustment made to the conversion rate pursuant to this clause 4. If the merger is completed, holders of Wachovia common stock will receive shares of Wells Fargo common stock for their shares of Wachovia common stock.

The following is a summary of the material differences between the rights of holders of Wachovia common stock and holders of Wells Fargo common stock under applicable law and the governing documents of Wells Fargo and Wachovia. The summary is not a complete statement of the provisions affecting, and the differences between, such rights.

An indication that some of the differences in the rights are material does not mean that there are not other equally important differences. We urge you to read these statutes and documents in their entirety. Size of Board of Directors. Filling Vacancies on the Board of Directors. Nomination of Director Candidates by Shareholders. Calling Special Meetings of Shareholders.

Shareholder Action at a Meeting. Shareholder Action Without a Meeting. Shareholder Protection Rights Plan. A Delaware corporation may elect not to be governed by Section Wells Fargo has not made such an election. Wachovia will hold a annual meeting of shareholders only if the merger is not completed.

Each proposal submitted should be accompanied by the name and address of the shareholder submitting the proposal, the number of shares of common stock owned and the dates those shares were acquired by the shareholder. If the proponent is not a shareholder of record, proof of beneficial ownership should also be submitted. The proxy rules of the SEC govern the content and form of shareholder proposals and the minimum stockholding requirement. Each proposal submitted should set forth a brief description of the matter and the reasons for bringing it before the meeting, the name and address of the shareholder submitting the proposal, the number and class of shares owned or beneficially held by the shareholder and any material interest held by the shareholder in the business other than the interest as a Wachovia shareholder.

Additionally, the shareholder must be a shareholder of record of Wachovia at the time of giving such notice and be entitled to vote at such annual meeting. A copy of the by-laws may be obtained from the Secretary of Wachovia at the address on the first page of this proxy statement-prospectus.

Strother beneficially owns shares of Wells Fargo common stock and options to purchase additional shares of Wells Fargo common stock. This document is part of that registration statement. The registration statement and the exhibits to the registration statement contain additional important information about Wells Fargo and its common and preferred stock.

As allowed by SEC rules, this document does not contain all the information you can find in the registration statement or the exhibits to the registration statement. Wells Fargo and Wachovia file annual, quarterly and special reports, proxy statements and other information with the SEC. Please call the SEC at SEC for further information on the operation of the Public Reference Room.

The information incorporated by reference is considered part of this document, except for any information superseded by information that is included directly in this document or contained in later filed documents that are incorporated by reference into this document.

This document incorporates by reference the documents set forth below that Wells Fargo and Wachovia have previously filed with the SEC. Wells Fargo SEC Filings File No. Wachovia SEC Filings File No. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein or in any other subsequently filed document that also is, or is deemed to be, incorporated by reference herein modifies or supersedes such statement.

Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part hereof.

Wells Fargo and Wachovia will provide, without charge, copies of any report incorporated by reference into this document, excluding exhibits other than those that are specifically incorporated by reference into this document. You may obtain a copy of any document incorporated by reference by writing or calling the appropriate company:. Neither the mailing of this document to Wachovia shareholders nor the issuance by Wells Fargo of its common stock or preferred stock in the merger will create any implication to the contrary.

AGREEMENT AND PLAN OF MERGER. INDEX OF DEFINED TERMS. The parties desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe certain conditions to the Merger.

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, the parties agree as follows:. Parent shall be the Surviving Company in the Merger and shall continue its existence as a corporation under the laws of the State of Delaware.

As of the Effective Time, the separate corporate existence of Company shall cease. The Merger shall become effective as set forth in the Certificate of Merger. At and after the Effective Time, the Merger shall have the effects set forth in the DGCL. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Company or the holder of any of the following securities:.

Except as specifically provided above, following the Effective Time, each Company Stock Option shall continue to be governed by the same terms and conditions as were applicable under such Company Stock.

Option immediately prior to the Effective Time after giving effect to any rights resulting from the transactions contemplated under this Agreement pursuant to the Company Stock Plans and the award agreements thereunder. Except as specifically provided above, following the Effective Time, each Company Stock Award shall continue to be governed by the same terms and conditions as were applicable under such Company Stock Award immediately prior to the Effective Time after giving effect to any rights resulting from the transactions contemplated under this Agreement pursuant to the Company Stock Plans and the award agreements thereunder.

At the Effective Time, the certificate of incorporation of Parent in effect immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving Company until thereafter amended in accordance with applicable law.

The by-laws of Parent, as in effect immediately prior to the Effective Time, shall be the by-laws of the Surviving Company until thereafter amended in accordance with applicable law and the terms of such by-laws. Subject to applicable law, the directors of Parent immediately prior to the Effective Time shall be the initial directors of the Surviving Company and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

The officers of Parent immediately prior to the Closing Date, together with such officers of Company as the Board of Directors of Parent may determine before the Effective Time, shall be the initial officers of the Surviving Company and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal. If any Dissenting Stockholder gives notice to Company, Company will promptly give Parent notice thereof, and Parent will have the right to participate in all negotiations and proceedings with respect to any such demands.

Neither Company nor Surviving Corporation will, except with the prior written consent of Parent, voluntarily make any payment with respect to, or settle or offer to settle, any such demand for payment. If any Dissenting Stockholder fails to perfect or effectively withdraws or loses the right to dissent, the Company Preferred Stock held by such Dissenting Stockholder will.

Each share of Parent Stock outstanding immediately prior to the Effective Time will remain outstanding. To the extent the amounts are so withheld by the Exchange Agent or Parent, as the case may be, and timely paid over to the appropriate Governmental Entity, 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 in respect of whom such deduction and withholding was made by the Exchange Agent or Parent, as the case may be.

Notwithstanding the foregoing, none of Parent, the Surviving Company, the Exchange Agent or any other person shall be liable to any former holder of shares of Company Common Stock for any amount delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws. Company has the requisite corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary.

All of the issued and outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Significant Subsidiary of Company has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance 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.

The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by the Board of Directors of Company.

Except for receipt of the affirmative vote of the holders of a majority of the shares of Company Common Stock entitled to vote to adopt and approve the plan of merger contained in this Agreement, this Agreement and the transactions contemplated hereby have been authorized by all necessary respective corporate action.

No consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with the execution and delivery by Company of this Agreement. No such Company SEC Report or communication, at the time filed, furnished or communicated and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of the relevant meetings, respectively , contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances in which they were made, not misleading, except that information as of a later date but before the date of this Agreement shall be deemed to modify information as of an earlier date.

As of their respective dates, all Company SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto. As of the date hereof, the books and records of Company and its Subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions.

As of the date hereof, KPMG LLP has not resigned or been dismissed as independent public accountants of Company as a result of or in connection with any disagreements with Company on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. As of any date following the date hereof, notwithstanding anything in this Agreement to the contrary and notwithstanding anything that may be Previously Disclosed, neither the Company nor any of its Significant Subsidiaries has filed for bankruptcy or filed for reorganization under the U.

Company and each of its Subsidiaries hold all licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses under and pursuant to each, and have complied with and are not in default in any respect under any, law applicable to Company or any of its Subsidiaries, except for the failure to hold or to have complied with or to not be in default which would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

As of the date of this Agreement, Company knows of no reason why all regulatory approvals from any Governmental Entity required for the consummation of the transactions contemplated by this Agreement should not be obtained on a timely basis. The portions of the Proxy Statement relating to Company and its Subsidiaries and other portions within the reasonable control of Company and its Subsidiaries will comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder.

Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Parent has the requisite corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is and will be duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary.

All of the issued and outstanding shares of Parent Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights with no personal liability attaching to the ownership thereof. As of the date of this Agreement, no Voting Debt of Parent is issued and outstanding. The shares of Parent Common Stock to be issued pursuant to the Merger will be duly authorized and validly issued and, at the Effective Time, all such shares will be fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof.

The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by the Board of Directors of Parent, and no other corporate proceedings on the part of Parent are necessary to approve this Agreement or to consummate the transactions contemplated hereby.

This Agreement has been duly and validly executed and delivered by Parent and assuming due authorization, execution and delivery by Company constitutes the valid and binding obligation of Parent, enforceable against Parent in accordance with its terms subject to the Bankruptcy and Equity Exception. No consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with the execution and delivery by Parent of this Agreement.

No such Parent SEC Report or communication, at the time filed, furnished or communicated and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of the relevant meetings, respectively , contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances in which they were made, not misleading, except that information as of a later date but before the date of this Agreement shall be deemed to modify information as of an earlier date.

As of their respective dates, all Parent SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto. As of the date hereof, the books and records of Parent and its Subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions.

As of the date hereof, KPMG LLP has not resigned or been dismissed as independent public accountants of Parent as a result of or in connection with any disagreements with Parent on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. Parent and each of its Subsidiaries hold all licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses under and pursuant to each, and have complied with and are not in default in any respect under any, law applicable to Parent or any of its Subsidiaries, except for the failure to hold or to have complied with which would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

As of the date of this Agreement, Parent knows of no reason why all regulatory approvals from any Governmental Entity required for the consummation of the transactions contemplated by this Agreement should not be obtained on a timely basis.

The portions of the Proxy Statement relating to Parent and its Subsidiaries and other portions within the reasonable control of Parent and its Subsidiaries will comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder.

COVENANTS RELATING TO CONDUCT OF BUSINESS. During the period from the date of this Agreement to the Effective Time, except as Previously Disclosed, as expressly contemplated or permitted by this Agreement or as required by applicable law, Company shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Parent:.

Except as expressly permitted by this Agreement or with the prior written consent of Company, during the period from the date of this Agreement to the Effective Time, Parent shall not, and shall not permit any of its Subsidiaries to:. Company and Parent shall have the right to review in advance, and, to the extent practicable, each will consult the other on, in each case subject to applicable laws relating to the confidentiality of information, all the information relating to Company or Parent, as the case may be, and any of their respective Subsidiaries, that appear in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement.

In exercising the foregoing right, each of the parties shall act reasonably and as promptly as practicable. The parties shall consult with each other with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Entities necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other apprised of the status of matters relating to completion of the transactions contemplated by this Agreement.

Neither Company nor Parent, nor any of their 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. The Board of Directors of Company will submit to its shareholders the plan of merger contained in this Agreement and any other matters required to be approved or adopted by its shareholders in order to carry out the intentions of this Agreement.

In furtherance of that obligation, Company will take, in accordance with applicable law and the Company Articles and Company Bylaws, all action necessary to convene a meeting of its shareholders, as promptly as practicable, to consider and vote upon approval of the plan of merger as well as any other such matters.

The record date for any such meeting of Company shareholders shall be determined in prior consultation with and subject to the prior approval of Parent, and shall in any case be no fewer than 3 business days after the Share Exchange Closing.

The Board of Directors of Company will use all reasonable best efforts to obtain from its shareholders a vote approving and adopting the plan of merger contained in this Agreement. Parent shall cause the shares of capital stock of Parent to be issued in exchange for capital stock of the Company that is currently listed on the NYSE upon consummation of the Merger to have been authorized for listing on the NYSE, subject to official notice of issuance, prior to the Effective Time.

Company will immediately cease and cause to be terminated any activities, discussions or negotiations conducted before the date of this Agreement with any persons other than Parent with respect to any Acquisition Proposal and will use its reasonable best efforts to enforce any confidentiality or similar agreement relating to an Acquisition Proposal.

Company will promptly within two business days advise Parent following receipt of any Acquisition Proposal and the substance thereof including the identity of the person making such Acquisition Proposal , and will keep Parent apprised of any related developments, discussions and negotiations including the terms and conditions of the Acquisition Proposal on a current basis.

The respective obligations of the parties to effect the Merger shall be subject to the satisfaction at or prior to the Effective Time of the following conditions:. This Agreement, on substantially the terms and conditions set forth in this Agreement, shall have been approved and adopted by the requisite affirmative vote of the shareholders of Company entitled to vote thereon.

The shares of capital stock of Parent to be issued in exchange for capital stock of Company that is currently listed on the NYSE upon consummation of the Merger shall have been authorized for listing on the NYSE, subject to official notice of issuance. No order, injunction or decree issued by any court or agency of competent jurisdiction or other law preventing or making illegal the consummation of the Merger or any of the other transactions contemplated by this Agreement shall be in effect.

The obligation of Parent to effect the Merger is also subject to the satisfaction, or waiver by Parent, at or prior to the Effective Time, of the following conditions:. Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time; and Parent shall have received a certificate signed on behalf of Company by the Chief Executive Officer or the Chief Financial Officer of Company to such effect.

The obligation of Company to effect the Merger is also subject to the satisfaction or waiver by Company at or prior to the Effective Time of the following conditions:. Parent shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and Company shall have received a certificate signed on behalf of Parent by the Chief Executive Officer or the Chief Financial Officer of Parent to such effect.

This Agreement may be terminated at any time prior to the Effective Time, whether before or after approval of the matters presented in connection with the Merger by the shareholders of Company:. Except with respect to costs and expenses of printing and mailing the Proxy Statement and all filing and other fees paid to the SEC in connection with the Merger, which shall be borne equally by Company and Parent, and all filing and other fees in connection with any filing under the HSR Act, which shall be borne by Parent, all fees and expenses incurred in connection with the Merger, this Agreement, and the transactions contemplated by this Agreement shall be paid by the party incurring such fees or expenses, whether or not the Merger is consummated.

This Agreement may be amended by the parties, by action taken or authorized by their respective Boards of Directors, at any time before or after approval of the matters presented in connection with Merger by the shareholders of Company; provided, however , that after any approval of the transactions contemplated by this Agreement by the shareholders of Company, there may not be, without further approval of such shareholders, any amendment of this Agreement that requires further approval under applicable law.

This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

All notices and other communications in connection with this Agreement shall be in writing and shall be deemed given if delivered personally, sent via facsimile with confirmation , mailed by registered or certified mail return receipt requested or delivered by an express courier with confirmation to the parties at the following addresses or at such other address for a party as shall be specified by like notice:.

New York, New York When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

If any term, provision, covenant or restriction contained in this Agreement is held by a court or a federal or state regulatory agency of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions and covenants and restrictions contained in this Agreement shall remain in full force and effect, and shall in no way be affected, impaired or invalidated.

If for any reason such court or regulatory agency determines that any provision, covenant or restriction is invalid, void or unenforceable, it is the express intention of the parties that such provision, covenant or restriction be enforced to the maximum extent permitted. This Agreement may be executed in two or more counterparts including by facsimile or other electronic means , all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other party, it being understood that each party need not sign the same counterpart.

This Agreement including the documents and the instruments referred to in this Agreement , together with the Confidentiality Agreement, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement, other than the Confidentiality Agreement.

This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to contracts made and performed entirely within such state, without regard to any applicable conflicts of law principles; provided that the BCA, including the provisions thereof governing the fiduciary duties of director of a North Carolina corporation, shall govern as applicable.

The parties hereto agree that any suit, action or proceeding brought by either party to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in any federal or state court located in the State of New York.

Each of the parties hereto submits to the jurisdiction of any such court in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of, or in connection with, this Agreement or the transactions contemplated hereby and hereby irrevocably waives the benefit of jurisdiction derived from present or future domicile or otherwise in such action or proceeding.

Each party hereto irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

Neither Company nor Parent shall, and neither Company nor Parent shall permit any of its Subsidiaries to, issue or cause the publication of any press release or other public announcement with respect to, or otherwise make any public statement concerning, the transactions contemplated by this Agreement without the prior consent which shall not be unreasonably withheld or delayed of Parent, in the case of a proposed announcement or statement by Company, or Company, in the case of a proposed announcement or statement by Parent; provided, however , that either party may, without the prior consent of the other party but after prior consultation with the other party to the extent practicable under the circumstances issue or cause the publication of any press release or other public announcement to the extent required by law or by the rules and regulations of the NYSE.

Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by either of the parties whether by operation of law or otherwise without the prior written consent of the other party. Any purported assignment in contravention hereof shall be null and void. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by each of the parties and their respective successors and assigns.

The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to seek specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity.

IN WITNESS WHEREOF, Company and Parent have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written. Series of Company Preferred Stock. The Board of Directors Wachovia Corporation One Wachovia Center Charlotte, NC We expect to receive fees for our services in connection with the Transaction, the principal portion of which is contingent upon consummation of the Transaction, and the Company has agreed to reimburse our expenses and indemnify us against certain liabilities arising out of our engagement.

We also may provide investment banking and other financial services to the Company, Parent and their respective affiliates in the future. In connection with the above-described services we have received, and may receive, compensation. We have also held discussions with members of the senior management of the Company regarding their assessment of the rationale for the Transaction, the past and current business operations, financial condition and future prospects of the Company and the fair market value of certain key asset categories of the Company.

In addition, we have reviewed the reported price and trading activity for the Shares and shares of Parent Common Stock, compared certain financial and stock market information for the Company and Parent with similar information for certain other companies the securities of which are publicly traded and performed such other studies and analyses, and considered such other factors, as we considered appropriate.

In particular, you have informed us that:. You have advised us that, as a result of the foregoing, the Company and its Board of Directors are faced with a rapidly narrowing set of alternatives, which, at this time, are limited to a transaction such as the Transaction or intervention by the United States federal banking regulators. For purposes of rendering this opinion, we have relied upon and assumed, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by us.

We also have assumed that the Transaction will be consummated in accordance with the terms set forth in the Merger Agreement without any waiver or amendment of, or delay in the fulfillment of, any terms or conditions set forth in the Merger Agreement or any subsequent development related to the Transaction, including, without limitation, any litigation that may result from the Company having entered into the Transaction, that would have an adverse effect on the Company, Parent or on the expected benefits of the Transaction in any way meaningful to our analysis.

Our opinion does not address any legal, regulatory, tax or accounting matters, as to which matters we understand the Company has received such advice as it deems necessary from qualified professionals. In addition, we have not reviewed individual credit files nor have we made an independent evaluation or appraisal of the assets and liabilities including any contingent, derivative or off-balance-sheet assets and liabilities of the Company or Parent or any of their respective subsidiaries, and we have not been furnished with any such evaluation or appraisal.

In addition, we have not evaluated the solvency or fair value of any party to the Merger Agreement under any state or federal laws relating to bankruptcy, insolvency or similar matters. We do not express any opinion as to the value of any asset of the Company, whether at current market prices or in the future. We note, however, that, under the ownership of a company with adequate liquidity and capital, such as Parent, the value of the Company and its subsidiaries could substantially improve, resulting in significant returns to Parent if the Transaction is consummated.

Our opinion does not address the underlying business decision of the Company to engage in the Transaction, or the relative merits of the Transaction as compared to any other strategic alternative that may. This opinion addresses only the fairness from a financial point of view to the Holders, as of the date hereof, of the Exchange Ratio.

We are not expressing any opinion as to the prices at which the Shares or shares of Parent Common Stock will trade at any time.

Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof, including the ongoing crisis in the capital markets, the condition of the mortgage market, the extraordinary financial and economic environment currently prevailing and the related uncertainty regarding the extent and duration of these conditions. We assume no responsibility for updating, revising or reaffirming this opinion based on circumstances, developments or events occurring after the date hereof.

In addition, with your consent, we have not considered or evaluated in arriving at our opinion current plans for a possible program sponsored by the United States Federal Government to provide support to financial institutions by purchasing distressed mortgage-related assets, or any impact of any such plans or programs on the Company or Parent or the economic environment. Our advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors of the Company in connection with its consideration of the Transaction and such opinion does not constitute a recommendation as to how any holder of Shares should vote or otherwise act with respect to such Transaction or any other matter.

Based upon and subject to the foregoing, including the various assumptions and limitations set forth herein, as well as the extraordinary circumstances facing the Company described herein, it is our opinion that, as of the date hereof, the Exchange Ratio is fair from a financial point of view to the Holders.

Members of the Board of Directors:. The terms and conditions of the Merger are more fully set forth in the Merger Agreement. For purposes of the opinion set forth herein, we have, among other things:. You have advised us that, as a result of the foregoing, the Company and its Board of Directors are faced with a rapidly narrowing set of alternatives, which, at this time, are limited to a transaction such as the Merger or intervention by the United States federal banking regulators.

In arriving at our opinion, we have assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information supplied or otherwise made available to us including information that is available from generally recognized public sources for purposes of this opinion and have further assumed that the information furnished by the management of the Company for purposes of our analysis does not contain any material omissions or misstatements of material fact.

As you are aware, we. In arriving at our opinion, we have not reviewed individual credit files nor have we made any independent valuation or appraisal of the assets or liabilities including any contingent, derivative or off-balance-sheet assets and liabilities of the Company or Parent or any of their respective subsidiaries, and we have not been furnished with any such valuations or appraisals.

We note, however, that, under the ownership of a company with adequate liquidity and capital, such as Parent, the value of the Company and its subsidiaries could substantially improve, resulting in significant returns to Parent if the Merger is consummated.

We have not been asked to, nor do we, offer any opinion as to any other term of the Merger Agreement or the form or structure of the Merger or the likely timeframe in which the Merger will be consummated. As you are aware, we did not participate in negotiations with respect to the terms of the Merger and related transactions. In addition, we express no opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any parties to the Merger, or any class of such persons, whether relative to the Exchange Ratio or otherwise.

We have assumed that the Merger will be consummated as described in the Merger Agreement, and that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the Company, Parent or on the expected benefits of the Merger in any way meaningful to our analysis. Our opinion does not address the underlying business decision of the Company to enter into the Merger or the relative merits of the Merger as compared to any other strategic alternative that may be available to the Company under the circumstances, nor does it address any legal, tax, regulatory or accounting matters, as to which matters we understand the Company has received such advice as it deems necessary from qualified professionals.

We have relied as to all legal matters relevant to rendering our opinion upon advice of counsel. We have not been authorized to solicit, and have not solicited, on a widespread basis indications of interest in a transaction with the Company from any party.

We have acted as financial advisor to the Board of Directors of the Company in connection with the Merger and will receive fees for our services, a portion of which is payable upon the execution of definitive agreements in respect of the Merger and a substantial portion of which is contingent upon the closing of the Merger. In addition, the Company has agreed to indemnify us for certain liabilities and other items arising out of our engagement.

In the ordinary course of our business activities, Perella Weinberg Partners LP or its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for our own account or the accounts of customers, in debt or equity or other securities or related derivative securities or financial instruments including bank loans or other obligations of the Company or Parent or any of their respective affiliates.

The issuance of this opinion was approved by a fairness committee of Perella Weinberg Partners LP. It is understood that this letter is for the information and assistance of the Board of Directors of the Company in connection with and for the purposes of their evaluation of the Merger.

This opinion is not intended to be and does not constitute a recommendation to any holder of the Shares or any other class of securities of the Company as to how such holder should vote or otherwise act with respect to the Merger or any other matter.

In addition, we express no opinion as to the fairness of the Merger to, or any consideration to, the holders of any other class of securities other than the Holders , the creditors or other constituencies of the Company or Parent.