From DealBook: Temporary injunction issued by Judge Robert Johnston of the Mecklenburg County General Court of Justice, Superior Court Division, at the behest of two Wachovia shareholders. The TRO seeks to enjoin Citigroup from trying to enforce its exclusivity agreement with Wachovia, as well as publicly castigate the Charlotte-based bank's mooted deal with Wells Fargo.
From DealBook: Temporary injunction issued by Judge Robert Johnston of the Mecklenburg County General Court of Justice, Superior Court Division, at the behest of two Wachovia shareholders. The TRO seeks to enjoin Citigroup from trying to enforce its exclusivity agreement with Wachovia, as well as publicly castigate the Charlotte-based bank's mooted deal with Wells Fargo.
From DealBook: Temporary injunction issued by Judge Robert Johnston of the Mecklenburg County General Court of Justice, Superior Court Division, at the behest of two Wachovia shareholders. The TRO seeks to enjoin Citigroup from trying to enforce its exclusivity agreement with Wachovia, as well as publicly castigate the Charlotte-based bank's mooted deal with Wells Fargo.
A TRUE COPY
STATE OF NORTH CAROLINA C} ERAL COURT OF JUSTICE
WAQURT DIVISION
CTION NO: 08-CVS- 3,1 4
COUNTY OF MECKLENBURG
MARY LOUISE GUTTMANN and LESLIE
M. (“BUD”) BAKER, JR.,
(TEMPORARY RESTRAINING ORDER
Plaintiffs,
AND
v
NOTICE OF HEARING ON
CITIGROUP INC. ‘LIMINARY INJUNCTION MOTION
Defendant.
This cause came on for hearing on October 5, 2008 before the undersigned Superior
Court Judge on Plaintiffs’ Motion for Temporary Restraining Order, pursuant to Rule 65(b) of
the North Carolina Rules of Civil Procedure, Based on the matters of record, the Court makes
‘he following Findings of Fact and enters this Order restraining the Defendant as set forth below.
DINGS OF FACT
1. Plaintiff Guttman is a citizen and resident of New York, New York. Plaintiffis a
Wachovia Corporation (“Wachovia”) shareholder who owns 949 shares of Wachovia stock.
Plaintiff Baker is a citizen and resident of New York, New York who owns a substantial number
of shares of Wachovia stock.
2. Defendant Citigroup, Inc. (“Citigroup”) is a Delaware corporation with its
Principal place of business in New York.
3. During the early morning hours of Monday, September 29, 2008, Wachovia
entered into an “agreement-in-principle” that contemplated the acquisition by Citigroup of its
tanking operations for approximately $2.1 billion, or $1 per Wachovia share (the “Proposed Citi
Transaction”). Acting pursuant to its authority under Section 13 of the Federal DepositInsurance Act (“FDIA”), 12 U.S.C. § 1832, the FDIC invoked the “systemic risk” provision of
the FDIA, and committed to use taxpayer money to limit Citigroup's losses on Wachovia's $312
billion loan portfolio to $42 billion if the transaction was consummated. Citigroup, Wachovia,
and the FDIC signed a non-binding term sheet reflecting the agreement in principal (the “Non-
Binding Term Sheet”).
4, Also on September 29, 2008, Citigroup entered into a Letter Agreement with
Wachovia, a copy of which is attached hereto as Exhibit A. The second paragraph of the Letter
Agreement purports, among other things, to prevent Wachovia from considering or entering
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another agreement that would result in the acquisition of more than 15% of the equity or assets
of Wachovia, even if such proposal is superior to the Proposed Citi Transaction, prior to October
6, 2008 (the “Letter Agreement”)
5. The Letter Agreement also confirms that the Non-Binding Term Sheet is, in fact,
“non-binding” and that Citigroup’s offer constitutes only a “proposed transaction.”
6. In addition, on September 29, 2008, Citigroup and Wachovia entered into a
binding confidentiality agreement prohibiting each party, without the written consent of the other
party, from disclosing to any other person the terms, conditions or other facts with respect to the
possible transaction between the two parties (the “Confidentiality Agreement”)
7. Wachovia and Citigroup continued to negotiate the terms of the Proposed Citi
Transaction, but as of October 2, 2008, the parties had been unable to reach agreement on a
number of material aspects of the proposed transaction, and Citigroup had insisted on terms and
provisions inconsistent with the Non-Binding Term Sheet.
8. As negotiations with Citigroup continued during the evening of October 2, 2008,
Wells Fargo & Co. (“Wells Fargo”) made an unsolicited proposal to enter into a stock-for-stockmerger with Wachovia (the “Wells Fargo Proposal”). Wachovia had had no contact with Wells
Fargo subsequent to the execution of the Letter Agreement with Citigroup. The unsolicited
Wells Fargo Proposal was superior to the Proposed Citi Transaction, contemplating an
acquisition of all of Wachovia, without any taxpayer assistance from the FDIC, for consideration
totaling $15 billion, or approximately $7 per Wachovia share.
9. During the night of October 2-3, the Wachovia board, consistent with its fiduciary
duties under North Carolina law to the Wachovia shareholders, considered and approved the
Wells Fargo Proposal. In the early moming of October 3, Wachovia and Wells Fargo entered
into a definitive merger agreement, which was announced prior to the opening of the markets
that day.
10. In response to the announcement of the Wachovia/Wells Fargo merger, Citigroup
has taken steps apparently di
gned to cause the Wachovia/Wells Fargo merger to fail, to cause
the seizure of Wachovia by the FDIC, and to cause the collapse of the market value of
Wachovia. These steps include publicly announcing that Wells Fargo has interfered with its
Letter Agreement with Wachovia, providing the Letter Agreement to the press in violation of the
Confidentiality Agreement, filing suit against Wells Fargo and Wachovia seeking to enjoin
‘consummation of the Wells Fargo Proposal, and obtaining an order from a New York state court
purportedly indefinitely extending the exclusivity period contained in the Letter Agreement.
Citigroup has further apparently announced to the press that the New York state court had in fact
enjoined the consummation of the Wachovia/Wells Fargo merger when in fact no such injunctive
relief was granted