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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: May 15, 1995
(Date of earliest event reported)
THE FOOTHILL GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-5467 94-1663353
(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation)
</TABLE>
11111 Santa Monica Boulevard, Los Angeles, California 90025
(Address of principal executive offices) (Zip Code)
(310) 996-7000
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On May 15, 1995, the Company entered into a merger agreement with
Norwest Corporation ("Norwest"), a bank holding corporation formed under the
laws of the State of Delaware, pursuant to which the Company will be a wholly
owned subsidiary of Norwest. Under the terms of the Agreement each share of
the Company's Class A Common Stock will be exchanged for .92 shares of Norwest
Common Stock, and each share of the Company's Series A Preferred Stock will be
exchanged for 6.133272 shares of Norwest Common Stock. Based on the total
number of the Company's common and preferred shares outstanding and assuming
the exercise of all outstanding options, Norwest will issue a total of
16,415,890 shares representing a purchase price of approximately $445 million.
The merger agreement was also approved by the Company's Board of Directors on
May 15, 1995, subject to the receipt by the Board of a fairness opinion that
the merger consideration is fair to the Company's common and preferred
shareholders from a financial point of view. Completion of the merger is
subject to certain regulatory approvals and customary closing conditions. The
merger agreement is also subject to approval by an affirmative vote of a
majority of the Company's common and preferred stockholders. As a condition to
the merger agreement, the Company entered into a stock option agreement with
Norwest pursuant to which Norwest has the option to purchase up to 4,156,641
shares of the company's Class A Common Stock (approximately 18.89% of the
outstanding shares) at an exercise price of $23.375 per share. The option may
be exercised if certain triggering events occur including entering into an
acquisition agreement with or the acquisition of 20% of the Company's
outstanding Common Stock by someone other than Norwest. The merger is expected
to close in the fourth quarter of 1995.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
2.1 Agreement and Plan of Reorganization between The
Foothill Group, Inc. and Norwest Corporation, dated May 15, 1995
2.2 Stock Option Agreement between The Foothill Group,
Inc. and Norwest Corporation, dated May 15, 1995
2.3 Funding Agreement between The Foothill Group, Inc.
and Norwest Corporation, dated May 15, 1995
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be executed on its
behalf by the undersigned thereunto duly authorized.
Dated: May 25, 1995 THE FOOTHILL GROUP, INC.
A Delaware Corporation
By: /s/ Henry Jordan
_____________________________________
Henry Jordan
Chief Financial Officer
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EXHIBIT 2.1
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as
of the 15th day of May, 1995, by and between FOOTHILL GROUP, INC. ("Foothill"),
a Delaware corporation, and NORWEST CORPORATION ("Norwest"), a Delaware
corporation.
WHEREAS, the parties hereto desire to effect a reorganization whereby
a wholly-owned subsidiary of Norwest will merge with and into Foothill (the
"Merger") pursuant to an agreement and plan of merger (the "Merger Agreement")
in substantially the form attached hereto as Exhibit A, which provides, among
other things, for the conversion and exchange of the shares of Series A Common
Stock of Foothill, no par value ("Foothill Common Stock"), including, subject
to the terms and conditions set forth herein, options convertible into shares
of Foothill Common Stock and Foothill Series A convertible Preferred Stock,
$1.00 par value per share ("Preferred Stock") outstanding immediately prior to
the time the Merger becomes effective in accordance with the provisions of the
Merger Agreement into shares of voting Common Stock of Norwest of the par value
of $1-2/3 per share ("Norwest Common Stock"),
NOW, THEREFORE, to effect such reorganization and in consideration of
the premises and the mutual covenants and agreements contained herein, the
parties hereto do hereby represent, warrant, covenant and agree as follows:
1. BASIC PLAN OF REORGANIZATION
(a) Merger. Subject to the terms and conditions contained herein, a
wholly-owned subsidiary of Norwest (the "Merger Co.") will be merged by
statutory merger with and into Foothill pursuant to the Merger Agreement, with
Foothill as the surviving corporation and the separate existence of Merger Co.
shall thereupon cease, in which merger (i) each share of Foothill Common Stock
outstanding immediately prior to the Effective Time of the Merger (as defined
below) (other than shares as to which statutory dissenters' appraisal rights
have been exercised) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and exchanged for .920 fully
paid and nonassessable shares of Norwest Common Stock, (ii) each share of the
Preferred Stock of Foothill issued and outstanding immediately prior to the
Effective Time of the Merger (other than shares of Preferred Stock held in
Foothill's treasury) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and exchanged for 6.1333272
fully paid and nonassessable shares of Norwest Common Stock, (iii) the shares
of Foothill Common Stock subject to each unexercised Option (as defined in
paragraph 4(o) of the Reorganization Agreement) having an exercise price that
is less than the "Fair Market Value" (as defined below) per share of Foothill
Common Stock and whose holder shall have entered into an agreement
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with Foothill pursuant to paragraph 4(o) hereof (the "Option Shares"), shall be
converted into and exchanged for that number of fully paid and nonassessable
shares of Norwest Common Stock determined as follows: (A) by dividing (1) the
aggregate Fair Market Value of the Option Shares less the aggregate exercise
price thereof by (2) the Fair Market Value of one share of Foothill Common
Stock, and then (B) multiplying the number obtained as the result of such
division by .920, and (iv) all shares of Foothill Common Stock owed by
Foothill or any subsidiary thereof, or by Norwest, or Merger Co. shall be
canceled. Each share of Merger Co. common stock shall be converted into and
exchanged by virtue of the Merger into shares of the surviving corporation.
For purposes of clause (iii), the term "Fair Market Value" with respect to
Foothill Common Stock shall mean the per share price of Foothill Common Stock
as reported by the consolidated tape of the New York Stock Exchange for the
trading day immediately preceding the "Closing Date" (as that term is defined
in the Reorganization Agreement).
(b) Norwest Common Stock Adjustments. If, between the date hereof
and the Effective Time of the Merger, shares of Norwest Common Stock shall be
changed into a different number of shares or a different class of shares by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or if a stock dividend thereon shall be
declared with a record date within such period (a "Common Stock Adjustment"),
then the number of shares of Norwest Common Stock into which a share of
Foothill Common Stock or Preferred Stock or Option Shares shall be converted
pursuant to subparagraph (a), above, will be appropriately and proportionately
adjusted so that the number of such shares of Norwest Common Stock into which a
share of Foothill Common Stock or Preferred Stock or Option Shares shall be
converted will equal the number of shares of Norwest Common Stock which holders
of shares of Foothill Common Stock or Preferred Stock or Option Shares would
have received pursuant to such Common Stock Adjustment had the record date
therefor been immediately following the Effective Time of the Merger.
(c) Fractional Shares. No fractional shares of Norwest Common Stock
and no certificates or scrip certificates therefor shall be issued for exchange
of certificates representing Foothill Comon Stock or Preferred Stock or Option
Shares pursuant to Section 1(a) to represent any such fractional interest, and
any holder thereof shall be paid upon such surrender an amount of cash (without
interest) in an amount equal to the product obtained by multiplying the
fractional share interest to which such holder is entitled by the average of
the closing prices of a share of Norwest Common Stock as reported by the
consolidated tape of the New York Stock Exchange for each of the five (5)
trading days ending on the day immediately preceding the meeting of
shareholders required by paragraph 4(c) of this Agreement.
(d) Mechanics of Closing Merger. Subject to the terms and conditions
set forth herein, the Merger Agreement shall be executed and it or Articles of
Merger or a Certificate of Merger shall be filed with the Secretary of State of
the State of Delaware within ten (10) business days following the satisfaction
or waiver of all conditions precedent set forth in Sections 6 and 7 of this
Agreement or on such other date as may be
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agreed to by the parties (the "Closing Date"). Each of the parties agrees to
use its best efforts to cause the Merger to be completed as soon as practicable
after the receipt of final regulatory approval of the Merger and the expiration
of all required waiting periods. The time that the filing referred to in the
first sentence of this paragraph is made is herein referred to as the "Time of
Filing". The day on which such filing is made and accepted is herein referred
to as the "Effective Date of the Merger". The "Effective Time of the Merger"
shall be 11:59 p.m. Delaware time on the Effective Date of the Merger. At the
Effective Time of the Merger on the Effective Date of the Merger, the separate
existence of Merger Co. shall cease and Merger Co. will be merged with and into
Foothill pursuant to the Merger Agreement.
Each of Norwest, Merger Co. and Foothill shall provide all reasonable
assistance to, and shall cooperate with each other to bring about the
consummation of the Merger as soon as possible in accordance with and subject
to the terms of this Agreement. Norwest shall cause Merger Co. to perform all
covenants and obligations required to be performed by it in connection with
this Agreement and the Merger Agreement.
The closing of the transactions contemplated by this Agreement and the
Merger Agreement (the "Closing") shall take place on the Closing Date at the
offices of Norwest, Norwest Center, Sixth and Marquette, Minneapolis,
Minnesota.
2. REPRESENTATIONS AND WARRANTIES OF FOOTHILL. Foothill represents
and warrants to Norwest as follows:
(a) Organization and Authority. Foothill is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business and are in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and failure to be so qualified would
have a material adverse effect on Foothill and its subsidiaries taken as a
whole and Foothill has the corporate power and authority to own its properties
and assets and to carry on its business as it is now being conducted. Foothill
has furnished Norwest true and correct copies of its articles of incorporation
and by-laws, as amended.
(b) Foothill's Subsidiaries. Schedule 2(b) sets forth a complete and
correct list of all of Foothill's direct and indirect subsidiaries and
partnerships of which Foothill is a general partner as of the date hereof
(individually a "Foothill Subsidiary" and collectively the "Foothill
Subsidiaries"), all shares of the outstanding capital stock or voting
securities of each of which, except as set forth on Schedule 2(b), are owned
directly or indirectly by Foothill. No equity security of any Foothill
Subsidiary is or may be required to be issued by reason of any option, warrant,
scrip, preemptive right, right to subscribe to, call or commitment of any
character whatsoever relating to, or security or right convertible into, shares
of any capital stock of such subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Foothill Subsidiary is
bound to issue additional shares of its capital stock, or any option, warrant
or right to purchase or acquire any additional shares of its capital stock.
Subject to the Delaware General Corporation
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Law, all of such shares so owned by Foothill are fully paid and nonassessable
and are owned by it free and clear of any lien, claim, charge, option,
encumbrance or agreement with respect thereto. Each Foothill Subsidiary is a
corporation or partnership duly organized, validly existing, duly qualified to
do business and in good standing under the laws of its jurisdiction of
incorporation or organization, and has corporate power and authority to own or
lease its properties and assets and to carry on its business as it is now being
conducted. Except for Foothill Partners, L.P. ("FPI") and Foothill Partners,
II. ("FPII") (collectively, the "Partnerships") and except as set forth on
Schedule 2(b), Foothill does not own beneficially, directly or indirectly, more
than 5% of any class of equity securities or similar interests of any
corporation, bank, business trust, association or similar organization, and is
not, directly or indirectly, a partner in any partnership or party to any joint
venture. Schedule 2(b) sets forth the partnership interests of the
Partnerships owned by Foothill.
(c) Capitalization. The authorized capital stock of Foothill
consists of 22,000,000 shares of Common Stock, no par value, 1,000,000 shares
of Preferred Stock, $1.00 par value, of which as of the close of business on
March 31, 1995, 16,705,594 shares of Foothill Common Stock and 100,000 shares
of Preferred Stock were issued and outstanding and no shares were held in the
treasury. The maximum number of shares of Foothill Common Stock (assuming for
this purpose that phantom shares and other share-equivalents constitute
Foothill Common Stock) that would be outstanding as of the Effective Date of
the Merger if all options, warrants, conversion rights and other rights with
respect thereto, except the option to purchase Foothill Common Stock granted
pursuant to the Stock Option Agreement dated the date hereof between Foothill
and Norwest (the "Stock Option Agreement"), were exercised is 17,843,359. All
of the outstanding shares of capital stock of Foothill have been duly and
validly authorized and issued and are fully paid and nonassessable. Except as
set forth in Schedule 2(c) and except for the option granted pursuant to the
Stock Option Agreement, there are no outstanding subscriptions, contracts,
conversion privileges, options, warrants, calls, preemptive rights or other
rights obligating Foothill or any Foothill Subsidiary to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares
of capital stock of Foothill or any Foothill Subsidiary. Except as set forth
on Schedule 2(c) hereof, since December 31, 1994, no shares of Foothill capital
stock have been purchased, redeemed or otherwise acquired, directly or
indirectly, by Foothill or any Foothill Subsidiary and no dividends or other
distributions have been declared, set aside, made or paid to the shareholders
of Foothill.
As of the date of this Agreement, there are no cumulated and unpaid
dividends with respect to the Preferred Stock. The Conversion Price, as
defined in Paragraph F of the Certificate of Designation, Voting Powers,
Preferences, Rights, Qualifications, Limitations and Restrictions of the
Preferred Stock (the "Foothill Certificate of Designation"), has not been
adjusted and the Conversion Price for each share of Preferred Stock, as defined
in Paragraph F of the Certificate of Designation is 6.66666 per share of
Preferred Stock.
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(d) Authorization. Foothill has the corporate power and authority to
enter into this Agreement and the Merger Agreement and, subject to any required
approvals of its shareholders, to carry out its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
Merger Agreement by Foothill and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Foothill. Subject to such approvals of shareholders and of
government agencies and other governing boards having regulatory authority over
Foothill as may be required by statute or regulation, this Agreement and the
Merger Agreement are valid and binding obligations of Foothill enforceable
against Foothill in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights and the availability of
equitable remedies, including specific performance.
Except as set forth on Schedule 2(d), neither the execution, delivery
and performance by Foothill of this Agreement or the Merger Agreement, nor the
consummation of the transactions contemplated hereby and thereby, nor
compliance by Foothill with any of the provisions hereof or thereof, will (i)
violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration of, or result in the creation of, any lien, security interest,
charge or encumbrance upon any of the properties or assets of Foothill or any
Foothill Subsidiary under any of the terms, conditions or provisions of (x) its
certificate of incorporation or by-laws or (y) any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Foothill or any Foothill Subsidiary is a
party or by which it may be bound, or to which Foothill or any Foothill
Subsidiary or any of the properties or assets of Foothill or any Foothill
Subsidiary may be subject, or (ii) subject to compliance with the statutes and
regulations referred to in the next paragraph, to the best knowledge of
Foothill, violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Foothill or any Foothill Subsidiary
or any of their respective properties or assets.
Other than in connection or in compliance with the provisions of the
Securities Act of 1933 and the rules and regulations thereunder (the
"Securities Act"), the Securities Exchange Act of 1934 and the rules and
regulations thereunder (the "Exchange Act"), the securities or blue sky laws of
the various states, the Investment Advisors Act of 1940, as amended (the "IAA")
or filings, consents, reviews, authorizations, approvals or exemptions required
to be made with the New York and Chicago Stock Exchange or under the Bank
Holding Company Act of 1956, as amended (the "BHC Act") or the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), and
filings required to effect the Merger under Delaware law, no notice to, filing
with, exemption or review by, or authorization, consent or approval of, any
public body or authority is necessary for the consummation by Foothill of the
transactions contemplated by this Agreement and the Merger Agreement.
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(e) Foothill Financial Statements. The consolidated balance sheets
of Foothill and its consolidated subsidiaries as of December 31, 1994 and 1993
and related consolidated statements of income, shareholders' equity and cash
flows for the three years ended December 31, 1994, together with the notes
thereto, certified by Ernst & Young and included in Foothill's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 (the "Foothill 10-K") as
filed with the Securities and Exchange Commission (the "SEC"), and the
unaudited consolidated statements of financial condition of Foothill and its
consolidated subsidiaries as of March 31, 1995 and the related unaudited
consolidated statements of income, shareholders' equity and cash flows for the
three months then ended included in Foothill's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1995 as filed with the SEC
(collectively, the "Foothill Financial Statements"), have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and present fairly (subject, in the case of financial statements for interim
periods, to normal recurring adjustments) the consolidated financial position
of Foothill and its consolidated subsidiaries as of the dates thereof and the
consolidated results of operations and cash flows of Foothill and its
consolidated subsidiaries for the periods then ended.
(f) Reports. Since December 31, 1990, Foothill and each Foothill
Subsidiary has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and proxy statements and
other filings required under the IAA, and (ii) any applicable state securities
authorities. All such reports and statements filed with any such regulatory
body or authority are collectively referred to herein as the "Foothill
Reports". As of their respective dates, the Foothill Reports complied in all
material respects with all the rules and regulations promulgated by the SEC
applicable to such Foothills Reports and applicable state securities
authorities, as the case may be, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Copies of all the
Foothill Reports have been made available to Norwest by Foothill.
(g) Properties and Leases. Except as may be reflected in the
Foothill Financial Statements and except for any lien for current taxes not yet
delinquent, Foothill and each Foothill Subsidiary have good title free and
clear of any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Foothill's
consolidated balance sheet as of December 31, 1994 included in Foothill's
Annual Report on Form 10-K for the period then ended, and all real and personal
property acquired since such date, except such real and personal property as
has been disposed of in the ordinary course of business. All leases of real
property and all other leases material to Foothill or any Foothill Subsidiary
pursuant to which Foothill or such Foothill Subsidiary, as lessee, leases real
or personal property, which leases are described on Schedule 2(g), are valid
and effective in accordance with their respective terms, and there is not,
under any such lease, any material existing default by Foothill or such
Foothill Subsidiary or any event which, with notice or lapse of time or both,
would constitute such a material default.
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(h) Taxes. Each of Foothill and the Foothill Subsidiaries has filed
all federal, state, county, local and foreign tax returns, including
information returns, required to be filed by it, and paid or has set up an
adequate reserve for the payment of all taxes owed by it required to be paid in
respect of the periods covered by such returns, including those with respect to
income, withholding, social security, unemployment, workers compensation,
franchise, ad valorem, premium, excise and sales taxes, and no taxes shown on
such returns to be owed by it or assessments received by it are delinquent.
The federal income tax returns of Foothill and the Foothill Subsidiaries for
the fiscal year ended December 31, 1990, and for all fiscal years prior
thereto, are for the purposes of routine audit by the Internal Revenue Service
closed because of the statute of limitations, and no claims for additional
taxes for such fiscal years are pending. Except only as set forth on Schedule
2(h), (i) neither Foothill nor any Foothill Subsidiary is a party to any
pending action or proceeding, nor is any such action or proceeding threatened
by any governmental authority, for the assessment or collection of taxes,
interest, penalties, assessments or deficiencies and (ii) no issue has been
raised by any federal, state, local or foreign taxing authority in connection
with an audit or examination of the tax returns, business or properties of
Foothill or any Foothill Subsidiary which has not been settled, resolved and
fully satisfied. Each of Foothill and the Foothill Subsidiaries has paid all
taxes owed or which it is required to withhold from amounts owing to employees,
creditors or other third parties. The consolidated balance sheet as of March
31, 1995, referred to in paragraph 2(e) hereof, includes, in accordance with
generally accepted accounting principles, adequate provision for all accrued
but unpaid federal, state, county, local and foreign taxes, interest,
penalties, assessments or deficiencies of Foothill and the Foothill
Subsidiaries with respect to all periods through the date thereof.
(i) Absence of Certain Changes. Except as contemplated in this
Agreement, the Merger Agreement, and the Stock Option Agreement, since December
31, 1994 there has been no change in the business, financial condition or
results of operations of Foothill or any Foothill Subsidiary, which has had, or
may reasonably be expected to have, a material adverse effect on the business,
financial condition or results of operations of Foothill and the Foothill
Subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as disclosed in Foothill
Reports or as set forth on Schedule 2(j), and except for commitments and
contracts authorized or required to be entered into between the date hereof and
the closing date neither Foothill nor any Foothill Subsidiary is a party or
subject to any of the following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay liabilities or fringe benefits) with any present or former
officer, director, employee or consultant (other than those which are
terminable at will by Foothill or such Foothill Subsidiary);
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(ii) any plan, contract or understanding providing for any
bonus, pension, option, deferred compensation, retirement payment,
profit sharing or similar arrangement with respect to any present or
former officer, director, employee or consultant;
(iii) any labor contract or agreement with any labor union;
(iv) any contract not made in the ordinary course of business
containing covenants which limit the ability of Foothill or any
Foothill Subsidiary to compete in any line of business or with any
person or which involve any restriction of the geographical area in
which, or method by which, Foothill or any Foothill Subsidiary may
carry on its business (other than as may be required by law or
applicable regulatory authorities);
(v) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K; or
(vi) any lease with annual rental payments aggregating
$150,000 or more.
(k) Litigation and Other Proceedings. Foothill has furnished Norwest
copies of (i) all attorney responses to the request of the independent auditors
for Foothill with respect to loss contingencies as of December 31, 1994 in
connection with the Foothill financial statements included in the Foothill
10-K, and (ii) a written list of legal and regulatory proceedings filed against
Foothill or any Foothill Subsidiary since said date. Neither Foothill nor any
Foothill Subsidiary is a party to any pending or, to the best knowledge of any
senior officer of Foothill, after diligent inquiry, threatened, claim, action,
suit, investigation or proceeding, or is subject to any order, judgment or
decree, except for matters which, in the aggregate, will not have, or cannot
reasonably be expected to have, a material adverse effect on the business,
financial condition or results of operations of Foothill and the Foothill
Subsidiaries taken as a whole.
(l) Insurance. Foothill and each Foothill Subsidiary is presently
insured, and during each of the past five calendar years (or during such lesser
period of time as Foothill has owned such Foothill Subsidiary) has been
insured, for reasonable amounts against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured and has maintained all insurance required by applicable law and
regulation.
(m) Compliance with Laws. Foothill and each Foothill Subsidiary have
complied with all applicable federal, state or local laws, statutes and
ordinances, and any applicable rule, regulation or order thereunder, except for
possible violations which individually or in the aggregate do not and would not
have a material adverse effect on Foothill and the Foothill Subsidiaries taken
as a whole. Foothill and each Foothill Subsidiary has all permits, licenses,
authorizations, orders and approvals of, and has made all filings, applications
and registrations with, federal, state, local or foreign governmental or
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regulatory bodies that are required in order to permit it to own or lease its
properties and assets and to carry on its business as presently conducted and
that are material to the business of Foothill and the Foothill Subsidiaries
taken as a whole; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to the best knowledge of
Foothill, no suspension or cancellation of any of them is threatened; and all
such filings, applications and registrations are current. The conduct by
Foothill and each Foothill Subsidiary of its business and the condition and use
of its properties does not violate or infringe, in any respect material to the
business of Foothill and the Foothill Subsidiaries taken as a whole, any
applicable domestic (federal, state or local) or foreign law, statute,
ordinance, license or regulation, including but not limited to state usury
laws. To the best of Foothill's knowledge, neither Foothill nor any Foothill
Subsidiary is in default under any order, license, regulation or demand of any
federal, state, municipal or other governmental agency or with respect to any
order, writ, injunction or decree of any court. Except for statutory or
regulatory restrictions of general application and except as set forth on
Schedule 2(m), no federal, state, municipal or other governmental authority has
placed any restriction on the business or properties of Foothill or any
Foothill Subsidiary which reasonably could be expected to have a material
adverse effect on the business or properties of Foothill and the Foothill
Subsidiaries taken as a whole. Neither Foothill nor any Foothill Subsidiary is
subject to any cease and desist order, written agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking
to, or is subject to any order or directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any continuing board
resolutions at the request of, federal or state governmental authorities
charged with the supervision or regulation of thrifts or savings and loan or
thrift holding companies or engaged in the insurance of bank deposits with
respect to Pacific Crest Capital, Inc. or Pacific Crest Investment and Loan
(formerly known as Foothill Thrift and Loan).
(n) Labor. No work stoppage involving Foothill or any Foothill
Subsidiary is pending or, to the best knowledge of any senior officer of
Foothill, after diligent inquiry, threatened. Neither Foothill nor any
Foothill Subsidiary is involved in, or threatened with or affected by, any
labor dispute, arbitration, lawsuit or administrative proceeding which could
materially and adversely affect the business of Foothill and the Foothill
Subsidiaries taken as a whole. Employees of Foothill and the Foothill
Subsidiaries are not represented by any labor union nor are any collective
bargaining agreements otherwise in effect with respect to such employees.
(o) Material Interests of Certain Persons. Except as set forth in
the Foothill Reports, to the best knowledge of Foothill, no officer or director
of Foothill or any Foothill Subsidiary, or any "associate" (as such term is
defined in Rule 14a-1 under the Exchange Act) of any such officer or director,
has any interest in any material contract or property (real or personal),
tangible or intangible, used in or pertaining to the business of Foothill or
any Foothill Subsidiary.
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(p) Foothill Benefit Plans.
(i) The only "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), for which Foothill or any Foothill Subsidiary
acts as the plan sponsor as defined in ERISA Section 3(16)(B), and
with respect to which any liability under ERISA or otherwise exists or
may be incurred by Foothill or any Foothill Subsidiary are those set
forth on Schedule 2(p) (the "Plans"). No Plan is a "multi-employer
plan" within the meaning of Section 3(37) of ERISA.
(ii) Each Plan is and has been in all material respects
operated and administered in accordance with its provisions and
applicable law. Except as set forth on Schedule 2(p), Foothill or the
Foothill subsidiaries have received favorable determination letters
from the Internal Revenue Service under the provisions of the Tax
Equity and Fiscal Responsibility Act ("TEFRA"), the Deficit Reduction
Act ("DEFRA") and the Retirement Equity Act ("REA") for each of the
Plans to which the qualification requirements of Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), apply.
Foothill does not know of the existence of a fact which is likely to
have an adverse effect on the qualified status of any plan within the
meaning of Section 401(a) of the Code or that its related trust is not
exempt from taxation under Section 501(a) of the Code.
(iii) The present value of all benefits vested and all
benefits accrued under each Plan which is subject to Title IV of ERISA
did not, in each case, as determined for purposes of reporting on
Schedule B to the Annual Report on Form 5500 of each such Plan as of
the end of the most recent Plan year exceed the value of the assets of
the Plan allocable to such vested or accrued benefits.
(iv) Except as disclosed in Schedule 2(p), and to the best
knowledge of Foothill, no Plan or any trust created thereunder, nor
any trustee, fiduciary or administrator thereof, has engaged in a
"prohibited transaction", as such term is defined in Section 4975 of
the Code or Section 406 of ERISA or violated any of the fiduciary
standards under Part 4 of Title I of ERISA which could subject, to the
best knowledge of Foothill, such Plan or trust, or any trustee,
fiduciary or administrator thereof, or any party dealing with any such
Plan or trust, to the tax or penalty on prohibited transactions
imposed by said Section 4975 or would result in material liability to
Foothill and the Foothill Subsidiaries taken as a whole.
(v) No Plan which is subject to Title IV of ERISA or any
trust created thereunder has been terminated, nor have there been any
"reportable events" as that term is defined in Section 4043 of ERISA,
with respect to any Plan, other than those events which may result
from the transactions contemplated by this Agreement and the Merger
Agreement.
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<PAGE> 11
(vi) No Plan or any trust created thereunder has incurred any
"accumulated funding deficiency", as such term is defined in Section
412 of the Code (whether or not waived), since the effective date of
ERISA.
(vii) Except as disclosed in Schedule 2(p), neither the
execution and delivery of this Agreement and the Merger Agreement nor
the consummation of the transactions contemplated hereby and thereby
will (i) result in any material payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or employee or former employee
of Foothill or any Foothill Subsidiary under any Plan or otherwise,
(ii) materially increase any benefits otherwise payable under any Plan
or (iii) result in the acceleration of the time of payment or vesting
of any such benefits to any material extent.
(q) Proxy Statement, etc. None of the information regarding Foothill
and the Foothill Subsidiaries supplied or to be supplied by Foothill to Norwest
for inclusion in (i) a Registration Statement on Form S-4 to be filed with the
SEC by Norwest for the purpose of registering the shares of Norwest Common
Stock to be exchanged for shares of Foothill Common Stock pursuant to the
provisions of the Merger Agreement (the "Registration Statement"), (ii) the
proxy statement to be mailed to Foothill's shareholders in connection with the
meeting to be called to consider the Merger (the "Proxy Statement") and (iii)
any other documents to be filed with the SEC or any regulatory authority in
connection with the transactions contemplated hereby or by the Merger Agreement
will, at the respective times such documents are filed with the SEC or any
regulatory authority and, in the case of the Registration Statement, when it
becomes effective and, with respect to the Proxy Statement, when mailed, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading
or, in the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the meeting of shareholders referred to in paragraph
4(c), be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for such meeting.
All documents which Foothill and the Foothill Subsidiaries are responsible for
filing with the SEC and any other regulatory authority in connection with the
Merger will comply as to form in all material respects with the provisions of
applicable law.
(r) Registration Obligations. Except as set forth on Schedule 2(r),
neither Foothill nor any Foothill Subsidiary is under any obligation,
contingent or otherwise, which will survive the Merger by reason of any
agreement to register any of its securities under the Securities Act.
(s) Brokers and Finders. Except as set forth on Schedule 2(s),
neither Foothill nor any Foothill Subsidiary nor any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or
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<PAGE> 12
indirectly for Foothill or any Foothill Subsidiary in connection with this
Agreement and the Merger Agreement or the transactions contemplated hereby and
thereby.
(t) Fiduciary Activities. Foothill and each Foothill Subsidiary has
properly administered in all respects material and which could reasonably be
expected to be material to the financial condition of Foothill and the Foothill
Subsidiaries taken as a whole all accounts for which it acts as a fiduciary,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment
advisor, in accordance with the terms of the governing documents and applicable
state and federal law and regulation and common law. Neither Foothill, any
Foothill Subsidiary, nor, to the knowledge of the senior officers of Foothill,
after diligent inquiry, any director, officer or employee of Foothill or any
Foothill Subsidiary has committed any breach of trust with respect to any such
fiduciary account which is material to or could reasonably be expected to be
material to the financial condition of Foothill and the Foothill Subsidiaries
taken as a whole, and the accountings for each such fiduciary account are true
and correct in all material respects and accurately reflect the assets of such
fiduciary account.
(u) No Defaults. Neither Foothill nor any Foothill Subsidiary is in
default, nor has any event occurred which, with the passage of time or the
giving of notice, or both, would constitute a default, under any material
agreement, indenture, loan agreement or other instrument to which it is a party
or by which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
material adverse effect upon Foothill and the Foothill Subsidiaries, taken as a
whole. To the best of Foothill's knowledge, all parties with whom Foothill or
any Foothill Subsidiary has material leases, agreements or contracts or who owe
to Foothill or any Foothill Subsidiary material obligations other than with
respect to those arising in the ordinary course of the lending business of the
Foothill Subsidiaries are in compliance therewith in all material respects.
(v) Environmental Liability. There is no legal, administrative, or
other proceeding, or action of any nature seeking to impose, or that could
result in the imposition of, on Foothill or any Foothill Subsidiary, any
liability relating to the release of hazardous substances as defined under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, pending or to the best of
Foothill's knowledge, threatened against Foothill or any Foothill Subsidiary
the result of which has had or could reasonably be expected to have a material
adverse effect upon Foothill and Foothill's Subsidiaries taken as a whole; to
the best of Foothill's knowledge there is no reasonable basis for any such
proceeding, claim or action; and to the best knowledge of any senior officer of
Foothill, after diligent inquiry, neither Foothill nor any Foothill Subsidiary
is subject to any agreement, order, judgment, or decree by or with any court,
governmental authority or third party imposing any such environmental
liability. Foothill has provided Norwest with copies of all environmental
assessments, reports,
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<PAGE> 13
studies and other related information in its possession with respect to each
owned facility and each non-residential OREO property.
(w) Antitakeover Provisions Not Applicable. The provisions of
Section 203 of the Delaware General Corporation Law as they relate to Foothill
do not and will not apply to the Stock Option Agreement, this Agreement, the
Merger or the transactions contemplated hereby or thereby.
(x) Registered Investment Advisor. Foothill is a registered
investment advisor under the IAA.
(y) Registered Investment Company. Neither Foothill, nor either of
the Partnerships, is an "investment company" within the meaning of Section 3(a)
of the Investment Company Act of 1940, as amended (the "1940 Act"), by virtue
of one or more exclusions therefrom provided for in the 1940 Act, and
specifically with respect to each of the Partnerships, by virtue of the
exclusion from such definition provided for under Section 3(c)(1) of the 1940
Act for an issuer whose outstanding securities are "beneficially owned"
(determined pursuant to Section 3(c)(1) of the 1940 Act) by not more than 100
persons and who does not presently propose to make a public offering of its
securities; and to the extent Foothill or either of the Partnerships may be
deemed to be an investment company under the 1940 Act, they are each exempt
from registration under the 1940 Act pursuant to one or more exemptions from
such registration provided for under the 1940 Act.
3. REPRESENTATIONS AND WARRANTIES OF NORWEST. Norwest represents and
warrants to Foothill as follows:
(a) Organization and Authority. Norwest is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and failure to be so qualified would
have a material adverse effect on Norwest and its subsidiaries taken as a whole
and has corporate power and authority to own its properties and assets and to
carry on its business as it is now being conducted. Norwest has furnished to
Foothill true copies of its Certificate of Incorporation and By-laws. Norwest
is registered as a bank holding company with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the BHC Act.
(b) Norwest Subsidiaries. Schedule 3(b) sets forth a complete and
correct list as of December 31, 1994, of Norwest's Significant Subsidiaries (as
defined in Regulation S-X promulgated by the SEC) (individually a "Norwest
Subsidiary" and collectively the "Norwest Subsidiaries"), all shares of the
outstanding capital stock of each of which, except as set forth in Schedule
3(b), are owned directly or indirectly by Norwest. No equity security of any
Norwest Subsidiary is or may be required to be issued to any person or entity
other than Norwest by reason of any option, warrant, scrip, right to subscribe
to,
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<PAGE> 14
call or commitment of any character whatsoever relating to, or security or
right convertible into, shares of any capital stock of such subsidiary, and
there are no contracts, commitments, understandings or arrangements by which
any Norwest Subsidiary is bound to issue additional shares of its capital
stock, or options, warrants or rights to purchase or acquire any additional
shares of its capital stock. Subject to 12 U.S.C. Section 55 (1982), all of
such shares so owned by Norwest are fully paid and nonassessable and are owned
by it free and clear of any lien, claim, charge, option, encumbrance or
agreement with respect thereto. Each Norwest Subsidiary is a corporation or
national banking association duly organized, validly existing, duly qualified
to do business and in good standing under the laws of its jurisdiction of
incorporation, and has corporate power and authority to own or lease its
properties and assets and to carry on its business as it is now being
conducted.
(c) Norwest Capitalization. The authorized capital stock of Norwest
consists of (i) 5,000,000 shares of Preferred Stock, without par value, of
which as of the close of business on December 31, 1994, 1,127,125 shares of
10.24% Cumulative Preferred Stock at $100 stated value, 980,000 shares of
Cumulative Tracking Preferred Stock, and 1,143,675 shares of Cumulative
Convertible Preferred Stock, Series B, at $200 stated value and 14,265 shares
of ESOP Cumulative Convertible Preferred Stock, at $1,000 stated value were
outstanding, (ii) 500,000,000 shares of Common Stock, $1-2/3 par value, of
which as of the close of business on December 31, 1994, 309,144,857 shares were
outstanding and 13,939,617 shares were held in the treasury, and (iii)
4,000,000 shares of Preference Stock, no par value, of which as of the close of
business on April 30, 1995, no shares were outstanding.
(d) Authorization. Norwest has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by Norwest and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Norwest. No approval or consent by the
stockholders of Norwest is necessary for the execution and delivery of this
Agreement and the Merger Agreement and the consummation of the transactions
contemplated hereby and thereby. The shares of Norwest Common Stock to be
issued in the Merger when issued as contemplated by this Agreement, will be
legally and validly issued, fully paid, and nonassessable. Subject to such
approvals of government agencies and other governing boards having regulatory
authority over Norwest as may be required by statute or regulation, this
Agreement is a valid and binding obligation of Norwest enforceable against
Norwest in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights and the availability of equitable remedies, including
specific performance.
Neither the execution, delivery and performance by Norwest of this
Agreement or the Merger Agreement, nor the consummation of the transactions
contemplated hereby and thereby, nor compliance by Norwest with any of the
provisions hereof or thereof, will (i) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under,
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<PAGE> 15
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the creation
of, any lien, security interest, charge or encumbrance upon any of the
properties or assets of Norwest or any Norwest Subsidiary under any of the
terms, conditions or provisions of (x) its certificate of incorporation or
by-laws or (y) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Norwest or
any Norwest Subsidiary is a party or by which it may be bound, or to which
Norwest or any Norwest Subsidiary or any of the properties or assets of Norwest
or any Norwest Subsidiary may be subject, or (ii) subject to compliance with
the statutes and regulations referred to in the next paragraph, to the best
knowledge of Norwest, violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to Norwest or any Norwest
Subsidiary or any of their respective properties or assets.
Other than in connection with or in compliance with the provisions of
the Securities Act, the Exchange Act, the securities or blue sky laws of the
various states, the IAA, or filings, consents, reviews, authorizations,
approvals or exemptions required to be made with the New York and Chicago Stock
Exchanges or under the BHC Act or the HSR Act, and filings required to effect
the Merger under Delaware law, no notice to, filing with, exemption or review
by, or authorization, consent or approval of, any public body or authority is
necessary for the consummation by Norwest of the transactions contemplated by
this Agreement and the Merger Agreement.
(e) Norwest Financial Statements. The consolidated balance sheets of
Norwest and Norwest's subsidiaries as of December 31, 1994 and 1993 and related
consolidated statements of income, stockholders' equity and cash flows for the
three years ended December 31, 1994, together with the notes thereto, certified
by KPMG Peat Marwick, L.L.P. and included in Norwest's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 (the "Norwest 10-K") as filed
with the SEC, and the unaudited consolidated balance sheets of Norwest and its
subsidiaries as of March 31, 1995 and the related unaudited consolidated
statements of income and cash flows for the three months then ended included in
Norwest's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1995, as filed with the SEC (collectively, the "Norwest Financial Statements"),
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis and present fairly (subject, in the case of
financial statements for interim periods, to normal recurring adjustments) the
consolidated financial position of Norwest and its subsidiaries at the dates
and the consolidated results of operations, changes in financial position and
cash flows of Norwest and its subsidiaries for the periods stated therein.
(f) Reports. Since December 31, 1990, Norwest and each Norwest
Subsidiary has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and proxy statements,
(ii) the Federal Reserve Board, (iii) the Federal Deposit Insurance Corporation
(the "FDIC"), (iv) the United States Comptroller of the Currency (the
"Comptroller") and (v) any applicable state securities or banking authorities.
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<PAGE> 16
All such reports and statements filed with any such regulatory body or
authority are collectively referred to herein as the "Norwest Reports". As of
their respective dates, the Norwest Reports complied in all material respects
with all the rules and regulations promulgated by the SEC, the Federal Reserve
Board, the FDIC, the Comptroller and any applicable state securities or banking
authorities, as the case may be, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(g) Properties and Leases. Except as may be reflected in the Norwest
Financial Statements and except for any lien for current taxes not yet
delinquent, Norwest and each Norwest Subsidiary has good title free and clear
of any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Norwest's
consolidated balance sheet as of December 31, 1994 included in Norwest's Annual
Report on Form 10-K for the period then ended, and all real and personal
property acquired since such date, except such real and personal property has
been disposed of in the ordinary course of business. All leases of real
property and all other leases material to Norwest or any Norwest Subsidiary
pursuant to which Norwest or such Norwest Subsidiary, as lessee, leases real or
personal property, are valid and effective in accordance with their respective
terms, and there is not, under any such lease, any material existing default by
Norwest or such Norwest Subsidiary or any event which, with notice or lapse of
time or both, would constitute such a material default. Substantially all
Norwest's and each Norwest Subsidiary's buildings and equipment in regular use
have been well maintained and are in good and serviceable condition, reasonable
wear and tear excepted.
(h) Taxes. Each of Norwest and the Norwest Subsidiaries has filed
all material federal, state, county, local and foreign tax returns, including
information returns, required to be filed by it, and paid or made adequate
provision for the payment of all taxes owed by it, including those with respect
to income, withholding, social security, unemployment, workers compensation,
franchise, ad valorem, premium, excise and sales taxes, and no taxes shown on
such returns to be owed by it or assessments received by it are delinquent.
The federal income tax returns of Norwest and the Norwest Subsidiaries for the
fiscal year ended December 31, 1979, and for all fiscal years prior thereto,
are for the purposes of routine audit by the Internal Revenue Service closed
because of the statute of limitations, and no claims for additional taxes for
such fiscal years are pending. Except only as set forth on Schedule 3(h), (i)
neither Norwest nor any Norwest Subsidiary is a party to any pending action or
proceeding, nor to Norwest's knowledge is any such action or proceeding
threatened by any governmental authority, for the assessment or collection of
taxes, interest, penalties, assessments or deficiencies which could reasonably
be expected to have any material adverse effect on Norwest and its subsidiaries
taken as a whole, and (ii) no issue has been raised by any federal, state,
local or foreign taxing authority in connection with an audit or examination of
the tax returns, business or properties of Norwest or any Norwest Subsidiary
which has not been settled, resolved and fully satisfied, or adequately
reserved for. Each of Norwest and the Norwest Subsidiaries has
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<PAGE> 17
paid all taxes owed or which it is required to withhold from amounts owing to
employees, creditors or other third parties.
(i) Absence of Certain Changes. Since December 31, 1994, there has
been no change in the business, financial condition or results of operations of
Norwest or any Norwest Subsidiary which has had, or may reasonably be expected
to have, a material adverse effect on the business, financial condition or
results of operations of Norwest and its subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 3(j),
as of December 31, 1994 neither Norwest nor any Norwest Subsidiary is a party
or subject to any of the following (whether written or oral, express or
implied):
(i) any labor contract or agreement with any labor union;
(ii) any contract not made in the ordinary course of business
containing covenants which materially limit the ability of Norwest or
any Norwest Subsidiary to compete in any line of business or with any
person or which involve any material restriction of the geographical
area in which, or method by which, Norwest or any Norwest Subsidiary
may carry on its business (other than as may be required by law or
applicable regulatory authorities);
(iii) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K.
(k) Litigation and Other Proceedings. Neither Norwest nor any
Norwest Subsidiary is a party to any pending or, to the best knowledge of
Norwest, threatened, claim, action, suit, investigation or proceeding, or is
subject to any order, judgment or decree, except for matters which, in the
aggregate, will not have, or cannot reasonably be expected to have, a material
adverse effect on the business, financial condition or results of operations of
Norwest and its subsidiaries taken as a whole.
(l) Insurance. Norwest and each Norwest Subsidiary is presently
insured or self insured, and during each of the past five calendar years (or
during such lesser period of time as Norwest has owned such Norwest Subsidiary)
has been insured or self-insured, against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured and has maintained all insurance required by applicable law and
regulation.
(m) Compliance with Laws. Norwest and each Norwest Subsidiary has
all permits, licenses, authorizations, orders and approvals of, and has made
all filings, applications and registrations with, federal, state, local or
foreign governmental or regulatory bodies that are required in order to permit
it to own or lease its properties or assets and to carry on its business as
presently conducted and that are material to the business of Norwest and the
Norwest Subsidiaries, taken as a whole; all such permits,
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<PAGE> 18
licenses, certificates of authority, orders and approvals are in full force and
effect, and to the best knowledge of Norwest, no suspension or cancellation of
any of them is threatened; and all such filings, applications and registrations
are current. The conduct by Norwest and each Norwest Subsidiary of its
business and the condition and use of its properties does not violate or
infringe, in any respect material to Norwest and the Norwest Subsidiaries taken
as a whole, business, any applicable domestic (federal, state or local) or
foreign law, statute, ordinance, license or regulation. To the best of
Norwest's knowledge, neither Norwest nor any Norwest Subsidiary is in default
under any order, license, regulation or demand of any federal, state, municipal
or other governmental agency or with respect to any order, writ, injunction or
decree of any court. Except for statutory or regulatory restrictions of
general application, no federal, state, municipal or other governmental
authority has placed any restrictions on the business or properties of Norwest
or any Norwest Subsidiary which reasonably could be expected to have a material
adverse effect on the business or properties of Norwest and its subsidiaries
taken as a whole.
(n) Labor. No work stoppage involving Norwest or any Norwest
Subsidiary is pending or, to the best knowledge of Norwest, threatened.
Neither Norwest nor any Norwest Subsidiary is involved in, or threatened with
or affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which could materially and adversely affect the business of Norwest
or such Norwest Subsidiary. Except as set forth on Schedule 3(j), employees of
Norwest and the Norwest Subsidiaries are not represented by any labor union nor
are any collective bargaining agreements otherwise in effect with respect to
such employees.
(o) Norwest Benefit Plans.
(i) As of September 1, 1994, the only "employee benefit
plans" within the meaning of Section 3(3) of ERISA for which Norwest
or any Norwest Subsidiary acts as plan sponsor as defined in ERISA
Section 3(16)(B) with respect to which any liability under ERISA or
otherwise exists or may be incurred by Norwest or any Norwest
Subsidiary are those set forth on Schedule 3(o) (the "Norwest Plans").
No Norwest Plan is a "multi-employer plan" within the meaning of
Section 3(37) of ERISA.
(ii) Each Norwest Plan is and has been in all material
respects operated and administered in accordance with its provisions
and applicable law. Except as set forth on Schedule 3(o), Norwest or
the Norwest Subsidiaries have received favorable determination letters
from the Internal Revenue Service under the provisions of TEFRA, DEFRA
and REA for each of the Norwest Plans to which the qualification
requirements of Section 401(a) of the Code apply. Norwest knows of no
reason that any Norwest Plan which is subject to the qualification
provisions of Section 401(a) of the Code is not "qualified" within the
meaning of Section 401(a) of the Code and that each related trust is
not exempt from taxation under Section 501(a) of the Code, except that
any such Norwest Plan may not
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<PAGE> 19
have been amended to comply with TRA and other recent legislation and
regulations, although each such Norwest Plan is within the remedial
amendment period during which retroactive amendment may be made.
(iii) The present value of all benefits vested and all
benefits accrued under each Norwest Plan which is subject to Title IV
of ERISA did not, in each case, as determined for purposes of
reporting on Schedule B to the Annual Report on Form 5500 of each such
Norwest Plan as of the end of the most recent Plan year, exceed the
value of the assets of the Norwest Plans allocable to such vested or
accrued benefits.
(iv) Except as set forth on Schedule 3(o), and to the best
knowledge of Norwest, no Norwest Plan or any trust created thereunder,
nor any trustee, fiduciary or administrator thereof, has engaged in a
"prohibited transaction", as such term is defined in Section 4975 of
the Code or Section 406 of ERISA or violated fiduciary standards
under Part 4 of Title I of ERISA, which could subject, to the best
knowledge of Norwest, such Norwest Plan or trust, or any trustee,
fiduciary or administrator thereof, or any party dealing with any such
Norwest Plan or trust, to the tax or penalty on prohibited
transactions imposed by said Section 4975 or would result in material
liability to Norwest and its subsidiaries taken as a whole.
(v) Except as set forth on Schedule 3(o), no Norwest Plan
which is subject to Title IV of ERISA or any trust created thereunder
has been terminated, nor have there been any "reportable events" as
that term is defined in Section 4043 of ERISA with respect to any
Norwest Plan, other than those events which may result from the
transactions contemplated by this Agreement and the Merger Agreement.
(vi) No Norwest Plan or any trust created thereunder has
incurred any "accumulated funding deficiency", as such term is defined
in Section 412 of the Code (whether or not waived), during the last
five Norwest Plan years which would result in a material liability.
(vii) Neither the execution and delivery of this Agreement
and the Merger Agreement nor the consummation of the transactions
contemplated hereby and thereby will (i) result in any material
payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any
director or employee or former employee of Norwest under any Norwest
Plan or otherwise, (ii) materially increase any benefits otherwise
payable under any Norwest Plan or (iii) result in the acceleration of
the time of payment or vesting of any such benefits to any material
extent.
(p) Registration Statement, etc. None of the information regarding
Norwest and its subsidiaries supplied or to be supplied by Norwest for
inclusion in (i) the Registration
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Statement, (ii) the Proxy Statement, or (iii) any other documents to be filed
with the SEC or any regulatory authority in connection with the transactions
contemplated hereby or by the Merger Agreement will, at the respective times
such documents are filed with the SEC or any regulatory authority and, in the
case of the Registration Statement, when it becomes effective and, with respect
to the Proxy Statement, when mailed, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements therein not misleading or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the meeting of
shareholders referred to in paragraph 4(c), be false or misleading with respect
to any material fact, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
any proxy for such meeting. All documents which Norwest and the Norwest
Subsidiaries are responsible for filing with the SEC and any other regulatory
authority in connection with the Merger will comply as to form in all material
respects with the provisions of applicable law.
(q) Brokers and Finders. Neither Norwest nor any Norwest Subsidiary
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for Norwest or any Norwest Subsidiary in connection with
this Agreement and the Merger Agreement or the transactions contemplated hereby
and thereby.
(r) No Defaults. Neither Norwest nor any Norwest Subsidiary is in
default, nor has any event occurred which, with the passage of time or the
giving of notice, or both, would constitute a default under any material
agreement, indenture, loan agreement or other instrument to which it is a party
or by which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
material adverse effect upon Norwest and its subsidiaries taken as a whole. To
the best of Norwest's knowledge, all parties with whom Norwest or any Norwest
Subsidiary has material leases, agreements or contracts or who owe to Norwest
or any Norwest Subsidiary material obligations other than with respect to those
arising in the ordinary course of the banking business of the Norwest
Subsidiaries are in compliance therewith in all material respects.
(s) Environmental Liability. There is no legal, administrative, or
other proceeding, claim, or action of any nature seeking to impose, or that
could result in the imposition, on Norwest or any Norwest Subsidiary of any
liability relating to the release of hazardous substances as defined under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, pending or to the best of
Norwest's knowledge, threatened against Norwest or any Norwest Subsidiary, the
result of which has had or could reasonably be expected to have a material
adverse effect upon Norwest and its subsidiaries taken as a whole; to the best
of Norwest's knowledge there is no reasonable basis for any such proceeding,
claim or action; and to the best of Norwest's knowledge neither Norwest nor any
Norwest Subsidiary is subject to any agreement,
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order, judgment, or decree by or with any court, governmental authority or
third party imposing any such environmental liability.
(t) Merger Co. As of the Closing Date, Merger Co. will be a
corporation duly organized, validly existing, duly qualified to do business and
in good standing under the laws of its jurisdiction of incorporation, and will
have corporate power and authority to own or lease its properties and assets
and to carry on its business and enter into and perform its obligations under
the Merger Agreement, and the execution and delivery by Merger Co. of the
Merger Agreement shall have been duly authorized by the Board of Directors and
shareholders of Merger Co.
(u) Operations of Foothill. Subject to any changes authorized,
required or contemplated by this Agreement, or as disclosed by Norwest to
Foothill, Norwest does not have any current plans following the Effective Time
to (i) materially change the operations, nature of business or location of
operations of Foothill as conducted immediately prior to the Effective Time,
(ii) cause Foothill to sell, transfer or otherwise dispose of all or
substantially all of its assets, except for dispositions made in the ordinary
course of business, (iii) liquidate Foothill, (iv) merge Foothill with or into
another corporation, including Norwest or its affiliates, (v) sell, distribute,
or otherwise dispose of the common stock of Foothill owned by Norwest, or (vi)
issue additional shares of stock, (or rights to acquire shares of stock) of
Foothill that would result in Norwest losing control of Foothill within the
meaning of Section 368(c) of the Code.
4. COVENANTS OF FOOTHILL. Foothill covenants and agrees with Norwest
as follows:
(a) Except as otherwise permitted or required by this Agreement, from
the date hereof until the Effective Time of the Merger, Foothill shall, and
shall cause each Foothill Subsidiary to: (i) maintain its corporate existence
in good standing; (ii) maintain the general character of its business and
conduct its business in its ordinary and usual manner; (iii) extend credit in
accordance with existing lending policies, except that Foothill and each
Foothill Subsidiary (other than the Partnerships) shall not, without the prior
written consent of Norwest, make any new loan or, except for the loans set
forth on Schedule 4(a)(iii), modify, restructure or renew any existing loan
(except pursuant to commitments made prior to the date of this Agreement) to
any borrower if the amount of the resulting loan, when aggregated with all
other loans or extensions of credit to such person, would be in excess of
$20,000,000; (iv) maintain proper business and accounting records in accordance
with generally accepted principles; (v) maintain its properties in good repair
and condition, ordinary wear and tear excepted; (vi) maintain in all material
respects presently existing insurance coverage; (vii) use its best efforts to
preserve its business organization intact, to keep the services of its present
principal employees and to preserve its good will and the good will of its
suppliers, customers and others having business relationships with it; (viii)
use its best efforts to obtain any approvals or consents required to maintain
existing material leases and other material contracts in effect following the
Merger; (ix) comply in all material respects with all laws, regulations,
ordinances, codes,
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orders, licenses and permits applicable to the properties and operations of
Foothill and each Foothill Subsidiary the non-compliance with which reasonably
could be expected to have a material adverse effect on Foothill and the
Foothill Subsidiaries taken as a whole; and (x) permit Norwest and its
representatives (including KPMG Peat Marwick, L.L.P.) to examine its and its
subsidiaries books, records and properties and to interview officers, employees
and agents at all reasonable times when it is open for business. No such
examination by Norwest or its representatives either before or after the date
of this Agreement shall in any way affect, diminish or terminate any of the
representations, warranties or covenants of Foothill herein expressed.
(b) Except as otherwise contemplated or required by this Agreement,
from the date hereof until the Effective Time of the Merger, Foothill and each
Foothill Subsidiary (other than the Partnerships, except with respect to (i),
(iii), (iv) or (xiv)) will not (without the prior written consent of Norwest):
(i) amend or otherwise change its articles of incorporation or association or
by-laws or Partnership Agreements; (ii) issue or sell or authorize for issuance
or sale, or grant any options, stock appreciation rights, warrants or awards or
make other agreements with respect to the issuance or sale or conversion of,
any shares of its capital stock, phantom shares or other share-equivalents, or
any other of its securities, except that Foothill may issue shares of Foothill
Common Stock upon the exercise of the option granted under the Stock Option
Agreement or upon the exercise of outstanding stock options described in
Schedule 4(b); (iii) authorize or incur any long-term debt, except as required
in the normal course of its business and, in the case of the Partnerships, as
required or authorized by the FPI and FPII partnership agreements; (iv)
mortgage, pledge or subject to lien or other encumbrance any of its properties,
except in the ordinary course of business and, in the case of the Partnerships,
as required or authorized by the FPI and FPII partnership agreements; (v) enter
into any material agreement, contract or commitment in excess of $200,000
except lending transactions in the ordinary course of business and in
accordance with policies and procedures in effect on the date hereof; (vi) make
any equity security investments except investments required to be made by the
"Co-Investor" provisions of the FPI and FPII partnership agreements ; (vii)
amend or terminate any Plan except as required by law; (viii) make any
contributions to any Plan except as required by the terms of such Plan in
effect as of the date hereof; (ix) except with respect to the payment prior to
the closing date of cash dividends paid on a quarterly basis in accordance with
past practices (including up to a $.08 per share dividend for Foothill's 1995
second quarter record date and up to $.10 per share for third and fourth
quarter record date dividends and first quarter 1996 record date dividends of
up to $.12 per share) and except for quarterly cash dividends of no more than
$2.70 per share of Preferred Stock, pursuant to the Certificate of Designation,
Voting Powers, Preferences, Rights, Qualifications, Limitations and
Restrictions of the Preferred Stock, declare, set aside, make or pay any
dividend or other distribution with respect to its capital stock and except for
any dividend declared by a subsidiary's Board of Directors in accordance with
applicable law and regulation; provided that the dividends otherwise permitted
to be paid hereunder may not be declared and paid in any particular quarter if
the Closing of the Merger occurs in such quarter and former shareholders of
Foothill would become shareholders of record of Norwest for the purposes of
qualifying for the quarterly
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Norwest dividend payable to shareholders of Norwest Common Stock for such
quarter; (x) redeem, purchase or otherwise acquire, directly or indirectly, any
of the capital stock of Foothill; (xi) except for increases of salaries in the
ordinary course of business consistent with past practice, and except for the
payment to participants in Foothill's Stock Purchase Plan of up to $8.00 per
share of Foothill Common Stock allocated to such participant as of the earliest
to occur of the Closing Date or September 30, 1995 upon termination of such
plan, increase in any manner the compensation or fringe benefits of, or pay any
benefit not required by any Plan or agreement as in effect as of the date of
this Agreement (including, without limitation, the granting of stock options,
stock appreciation rights, warrants, or awards to any director, officer, or
employee); (xii) enter into or modify any contract, agreement, commitment or
arrangement providing for the payment to or indemnification of any director,
officer, employee or consultant of Foothill or any Foothill Subsidiary of
compensation or benefits, except for the entering into of employment agreements
in substantially the form of Exhibit C2 with the persons listed on Exhibit C1;
(xiii) sell or otherwise dispose of any shares of the capital stock of any
Foothill Subsidiary or sell or otherwise dispose of Foothill's partnership
interest in the Partnerships; (xiv) sell or otherwise dispose of any of its
assets or properties, other than in the ordinary course of business, and, in
the case of the Partnerships, as required or authorized by the FPI and FPII
partnership agreements; (xv) take any action that is intended or may reasonably
be expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time of the Merger, or in any of the conditions to the
Merger set forth in Section 7 not being satisfied, or in a violation of any
provision of this Agreement, except, in every case, as may be required by
applicable law; and (xvi) become a general partner in any partnership (except
for the Partnerships).
(c) The Board of Directors of Foothill will duly call, and will cause
to be held not later than the later of thirty (30) calendar days or twenty-five
(25) business days following the effective date of the Registration Statement
referred to in paragraph 5(c) hereof, a meeting of its shareholders and will
direct that this Agreement and the Merger Agreement be submitted to a vote at
such meeting. The Board of Directors of Foothill will cause proper notice of
such meeting to be given to its shareholders in compliance with the Delaware
General Corporation Law and other applicable law and regulation. The Board of
Directors of Foothill will recommend the affirmative vote in favor of approval
of this Agreement and the Merger Agreement, and use its best efforts to solicit
from its shareholders proxies in favor thereof, provided, however, that if the
Board of Directors determine in good faith based on the advice of Foothill's
outside counsel that failure to take such action would result in a breach of
its fiduciary duties and is legally advisable as determined by Foothill's Board
of Directors after consultation with Foothill's outside counsel, then in such
case, the Board of Directors may amend or withdraw its recommendation regarding
the Merger and withhold soliciting proxies in favor thereof.
(d) Foothill will furnish or cause to be furnished to Norwest all the
information concerning Foothill and its subsidiaries required for inclusion in
the Registration Statement referred to in paragraph 5(c) hereof, or any
statement or application made by Norwest to
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<PAGE> 24
any governmental body in connection with the transactions contemplated by this
Agreement. Any financial statement for any fiscal year provided under this
paragraph must include the audit opinion and the consent of Ernst & Young to
use such opinion in such Registration Statement.
(e) Foothill will take all necessary corporate and other action and
use its best efforts to obtain all approvals of regulatory authorities,
consents and other approvals required of Foothill to carry out the transactions
contemplated by this Agreement and will cooperate with Norwest to obtain all
such approvals and consents required of Norwest.
(f) Foothill will deliver to Norwest at the Closing all opinions,
certificates and other documents required to be delivered by it at the Closing.
(g) Foothill will hold in confidence all documents and information
concerning Norwest and its subsidiaries furnished to Foothill and its
representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other
person, except as required by law and except to Foothill's outside professional
advisers in connection with this Agreement, with the same undertaking from such
professional advisers. If the transactions contemplated by this Agreement
shall not be consummated, such confidence shall be maintained and such
information shall not be used in competition with Norwest (except to the extent
that such information can be shown to be previously known to Foothill, in the
public domain, or later acquired by Foothill from other legitimate sources)
and, upon request, all such documents, any copies thereof and extracts
therefrom shall immediately thereafter be returned to Norwest.
(h) Neither Foothill, nor any Foothill Subsidiary, nor any director,
officer, representative or agent thereof, will, directly or indirectly, (i)
solicit, authorize the solicitation of, or (ii), except to the extent, based on
the advice of counsel, legally advisable by the Board of Directors in the
discharge of their fiduciary duties under applicable law, enter into any
discussions with any corporation, partnership, person or other entity or group
(other than Norwest) concerning any offer or possible offer (A) to purchase any
shares of common stock, any option or warrant to purchase any shares of common
stock, any securities convertible into any shares of such common stock, or any
other equity security of Foothill or any Foothill Subsidiary, (B) to make a
tender or exchange offer for any shares of such common stock or other equity
security, (C) to purchase, lease or otherwise acquire the assets of Foothill or
any Foothill Subsidiary except in the ordinary course of business, or (D) to
merge, consolidate or otherwise combine with Foothill or any Foothill
Subsidiary. If any corporation, partnership, person or other entity or group
makes an offer or inquiry to Foothill or any Foothill Subsidiary concerning any
of the foregoing, Foothill or such Foothill Subsidiary will promptly disclose
such offer or inquiry, including the terms thereof, to Norwest.
(i) Foothill shall consult with Norwest as to the form and substance
of any proposed press release or other proposed public disclosure of matters
related to this Agreement or any of the transactions contemplated hereby.
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(j) Foothill and each Foothill Subsidiary will take all action
necessary or required (i) to terminate or amend, if requested by Norwest, all
qualified pension and welfare benefit plans and all non-qualified benefit plans
and compensation arrangements as of the Effective Date of the Merger, (ii) to
amend the Plans to comply with the provisions of the TRA and regulations
thereunder and other applicable law, and (iii) to submit application to the
Internal Revenue Service for a favorable determination letter for each of the
Plans which is subject to the qualification requirements of Section 401(a) of
the Code prior to the Effective Date of the Merger.
(k) Neither Foothill nor any Foothill Subsidiary shall take any
action which with respect to Foothill would disqualify the Merger as a "pooling
of interests" for accounting purposes.
(l) Foothill shall use its best efforts to obtain and deliver at
least 32 days prior to the Effective Date of the Merger signed representations
substantially in the form attached hereto as Exhibit B to Norwest by each
executive officer, director or shareholder of Foothill who may reasonably be
deemed an "affiliate" of Foothill within the meaning of such term as used in
Rule 145 under the Securities Act.
(m) Foothill shall establish such additional accruals and reserves as
may be necessary to conform Foothill's accounting and credit loss reserve
practices and methods to those of Norwest and Norwest's plans with respect to
the conduct of Foothill's business following the Merger and to provide for the
costs and expenses relating to the consummation by Foothill of the Merger and
the other transactions contemplated by this Agreement.
(n) Foothill shall obtain, at its sole expense, Phase I environmental
assessments for each facility and each non-residential OREO property. Oral
reports of such environmental assessments shall be delivered to Norwest no
later than four (4) weeks and written reports shall be delivered to Norwest no
later than eight (8) weeks from the date of this Agreement. Foothill shall
obtain, at its sole expense, Phase II environmental assessments for properties
identified by Norwest on the basis of the results of such Phase I environmental
assessments.
(o) Foothill shall take all action necessary to terminate Foothill's
1978 Amended and Restated Stock Option Plan (the "Option Plan") and 1990
Performance and Equity Incentive Plan ("Incentive Plan") to provide for the
acceleration of the vesting rights of the options ("Options") issued thereunder
to permit such Options to be immediately exercisable and to provide for the
termination of any unexercised Options prior to the Effective Time of the
Merger and shall obtain the written consent or acknowledgment of the holders of
such Options to such termination in exchange for (i) the acceleration of such
Options in accordance with the terms of the Option Plan and Incentive Plan and
(ii) the exchange of such Options for shares of Norwest Common Stock as set
forth in paragraph 1(a)(iii).
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<PAGE> 26
(p) Foothill shall use its best efforts to obtain any required
consents required to be given by the general and limited partners of FPI and
FPII to the Merger and as may be necessary or required in order to conform the
activities of FPI and FPII to those permissible for bank holding companies and
their subsidiaries under the BHC Act and other applicable banking laws and
regulations and to such conditions and requirements imposed in the approvals
contemplated under paragraphs 6(e) and 7(e).
(q) Foothill agrees, if requested by Norwest, to cancel or, in the
alternative, to transfer to Foothill's employees in exchange for payment to
Foothill of the policy premiums paid by Foothill, the split dollar insurance
policies maintained by Foothill on its employees.
(r) Foothill shall use its best efforts to cause the employees listed
on Exhibit C1 to execute the Employment and Non-Competition Agreements
substantially in the form of Exhibit C2 hereof prior to the Closing Date.
(s) Foothill shall take all action necessary to terminate Foothill's
Director's Pension Plan and Executive Supplement Retirement Plan as of no later
than the Effective Time of Merger.
(t) Foothill shall take all action necessary to terminate Foothill's
Stock Purchase Plan as of no later than the earliest to occur of the Effective
Time of the Merger or September 30, 1995 and distribute to the participants
therein the amount contributed by such participants to such plan from January
1, 1995 to the date of termination, plus the amount referred to in paragraph
4(b)(xi).
(u) Foothill shall execute and deliver the Merger Agreement prior to
the Closing Date.
(v) Subject to the terms and conditions herein provided, Foothill
agrees to use all reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, the Merger Agreement and the
Stock Option Agreement, including using all reasonable efforts to obtain all
necessary waivers, consents and approvals, to effect all necessary
registrations and filings (including, but not limited to, filings under the BHC
Act and HSR Act and with all applicable governmental entities) and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed with
the Merger as expeditiously as possible) or the Stock Option Agreement.
(w) Foothill shall use its best efforts to terminate, effective prior
to the Closing Date, that certain Preferred Stock Purchase Agreement between
Foothill and Recovery Equity Investors, L.P. ("REI") dated May 10, 1991
("Preferred Stock Agreement") and
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that certain Registration Rights Agreement between Foothill and REI dated June
27, 1991 ("Registration Agreement").
5. COVENANTS OF NORWEST. Norwest covenants and agrees with Foothill
as follows:
(a) From the date hereof until the Effective Time of the Merger,
Norwest will maintain its corporate existence in good standing; conduct, and
cause the Norwest Subsidiaries to conduct, their respective businesses in
compliance with all material obligations and duties imposed on them by all
laws, governmental regulations, rules and ordinances, and judicial orders,
judgments and decrees applicable to Norwest or the Norwest Subsidiaries, their
businesses or their properties; maintain all books and records of it and the
Norwest Subsidiaries, including all financial statements, in accordance with
the accounting principles and practices consistent with those used for the
Norwest Financial Statements, except for changes in such principles and
practices required under generally accepted accounting principles.
(b) Norwest will furnish to Foothill all the information concerning
Norwest required for inclusion in a proxy statement or statements to be sent to
the shareholders of Foothill, or in any statement or application made by
Foothill to any governmental body in connection with the transactions
contemplated by this Agreement.
(c) As promptly as practicable after the execution of this Agreement,
Norwest will prepare, with the assistance of Foothill, as appropriate
(including, but not limited to preparation by Foothill and its counsel of
applicable disclosure in the registration Statement relating to Foothill) and
file with the SEC a registration statement on Form S-4 (the "Registration
Statement") together with the Prospectus/Proxy Statement to be included therein
under the Securities Act and any other applicable documents, relating to the
shares of Norwest Common Stock to be delivered to the shareholders of Foothill
pursuant to the Merger Agreement. Each of Norwest (and Foothill) shall use its
best efforts to respond promptly as is practicable to comments from the SEC, if
any and will use its best efforts to cause the Registration Statement to become
effective. At the time the Registration Statement becomes effective, the
Registration Statement will comply in all material respects with the provisions
of the Securities Act and the published rules and regulations thereunder, and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not false or misleading, and at the time of mailing thereof to the
Foothill shareholders, at the time of the Foothill shareholders' meeting
referred to in paragraph 4(c) hereof and at the Effective Time of the Merger
the prospectus included as part of the Registration Statement, as amended or
supplemented by any amendment or supplement filed by Norwest (hereinafter the
"Prospectus"), will not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not false
or misleading; provided, however, that none of the provisions of this
subparagraph shall apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information furnished by
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Foothill or any Foothill subsidiary for use in the Registration Statement or
the Prospectus. Each of Norwest and Foothill will notify the other promptly as
is practicable of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the S-4 or
Prospectus/Proxy Statement or for additional information and will supply the
other with copies of all correspondence with the SEC or its staff with respect
to the S-4 or the Prospectus/Proxy Statement. Whenever any event occurs which
should be set forth in an amendment or supplement to the S-4 or the
Prospectus/Proxy Statement, Norwest or Foothill, as the case may be, shall
promptly inform the other of such occurrence and cooperate in filing with the
SEC or its staff, and/or mailing to stockholders of Foothill, of such amendment
or supplement.
(d) Norwest will file all documents required to be filed to list the
Norwest Common Stock to be issued pursuant to the Merger Agreement on the New
York Stock Exchange and the Chicago Stock Exchange and use its best efforts to
effect said listings.
(e) The shares of Norwest Common Stock to be issued by Norwest to the
shareholders of Foothill pursuant to this Agreement and the Merger Agreement
will, upon such issuance and delivery to said shareholders pursuant to the
Merger Agreement, be duly authorized, validly issued, fully paid and
nonassessable. The shares of Norwest Common Stock to be delivered to the
shareholders of Foothill pursuant to the Merger Agreement are and will be free
of any preemptive rights of the stockholders of Norwest.
(f) Norwest will file all documents required to obtain, prior to the
Effective Time of the Merger, all necessary Blue Sky permits and approvals, if
any, required to carry out the transactions contemplated by this Agreement,
will pay all expenses incident thereto and will use its best efforts to obtain
such permits and approvals.
(g) Norwest will take all necessary corporate and other action and
file all documents required to obtain and will use its best efforts to obtain
all approvals of regulatory authorities, consents and approvals required of it
to carry out the transactions contemplated by this Agreement and will cooperate
with Foothill to obtain all such approval and consents required by Foothill.
Norwest will respond as promptly as practicable to any inquiries received from
any regulatory agency.
(h) Norwest will hold in confidence all documents and information
concerning Foothill and Foothill's Subsidiaries furnished to it and its
representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other
person, except as required by law and except to its outside professional
advisers in connection with this Agreement, with the same undertaking from such
professional advisers. If the transactions contemplated by this Agreement
shall not be consummated, such confidence shall be maintained and such
information shall not be used in competition with Foothill (except to the
extent that such information can be shown to be previously known to Norwest, in
the public domain, or later acquired by Norwest from other legitimate sources)
and, upon request, all such documents, copies thereof or extracts therefrom
shall immediately thereafter be returned to Foothill.
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(i) Norwest will file any documents or agreements required to be
filed in connection with the Merger under the Delaware General Corporation Law.
(j) Norwest will deliver to Foothill at the Closing all opinions,
certificates and other documents required to be delivered by it at the Closing.
(k) Norwest shall consult with Foothill as to the form and substance
of any proposed press release or other proposed public disclosure of matters
related to this Agreement or any of the transactions contemplated hereby.
(l) Norwest shall give Foothill written notice of receipt of the
regulatory approvals referred to in paragraph 7(e).
(m) Neither Norwest nor any Norwest Subsidiary shall take any action
which with respect to Norwest would disqualify the Merger as a "pooling of
interests" for accounting purposes.
(n) For a period not exceeding fifteen (15) days prior to the Closing
Date, Norwest will permit Foothill and its representatives to examine its
books, records and properties and interview officers, employees and agents of
Norwest at all reasonable times when it is open for business. No such
examination by Foothill or its representatives shall in any way affect,
diminish or terminate any of the representations, warranties or covenants of
Norwest herein expressed.
(o) Subject to the terms and conditions herein provided, Norwest
agrees to use all reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, the Merger Agreement and the
Stock Option Agreement, including using all reasonable efforts to obtain all
necessary waivers, consents and approvals, to effect all necessary
registrations and filings (including, but not limited to, filings under the BHC
Act and HSR Act and with all applicable governmental entities) and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed with
the Merger as expeditiously as possible) or the Stock Option Agreement.
(p) Merger Co. shall execute and deliver the Merger Agreement prior
to the Closing Date.
(q) From and after the Effective Time of Merger: (i) Norwest shall
indemnify, defend and hold harmless the officers, directors and employees of
Foothill and the Foothill Subsidiaries (the "Indemnified Parties") against all
losses, expenses, claims, damages or liabilities arising out of the
transactions contemplated by this Agreement to the fullest extent permitted or
required under Foothill's or a Foothill Subsidiary's Certificate of
Incorporation or Articles of Incorporation and By-laws as in effect as of the
Effective
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Time of the Merger; and (ii) Norwest shall ensure that all rights to
indemnification and all limitations of liability existing in favor of an
Indemnified Party in Foothill's Certificate of Incorporation or By-laws or
similar governing documents of any Foothill Subsidiary, as applicable in the
particular case and as in effect on the date hereof, shall, with respect to
claims arising from facts or events that occurred before the Effective Time of
the Merger, survive the Merger and shall continue in full force and effect.
Nothing contained in this paragraph 5(q) shall be deemed to preclude the
liquidation, consolidation or merger of Foothill or any Foothill Subsidiary, in
which case all of such rights to indemnification and limitations on liability
shall be deemed to so survive and continue as contractual rights
notwithstanding any such liquidation or consolidation or merger.
Notwithstanding anything to the contrary contained in this paragraph 5(q),
nothing contained herein shall require Norwest or Foothill to indemnify any
person who was a director or officer of Foothill or any Foothill Subsidiary to
a greater extent than Foothill or any Foothill Subsidiary is, as of the date of
this Agreement, required to indemnify any such person.
(r) With respect to the persons listed on Schedule 5(r) hereof and
who currently hold Options which constitute "Incentive Stock Options" for
purposes of the Code ("ISO"), which Options as a result of the transactions
contemplated by this Agreement will not be treated as ISO's by virtue of
Section 422(d) of the Code, Norwest agrees to grant to such person
non-qualified options to acquire Norwest Common Stock pursuant and subject to
the terms and conditions of the Norwest Corporation 1985 Long-Term Incentive
Compensation Plan. Said Norwest options will be granted at the first meeting
of the Human Resources Committee of the Norwest Board of Directors following
the Closing and shall be determined pursuant to the following formula (rounded
up to the next nearest whole share):
.11(G)
-------- = X
.36(FMV)
Where (i) G = the amount of the compensation income for federal income
tax purposes resulting from the exchange or exercise of such ISO's;
(ii) FMV = the fair market value of Norwest Common Stock at the
time of grant; and
(iii) x = the total number of Norwest options to be granted.
6. CONDITIONS PRECEDENT TO OBLIGATION OF FOOTHILL. The obligation of
Foothill to effect the Merger shall be subject to the satisfaction at or before
the Time of Filing of the following further conditions, which may be waived in
whole or in part in writing by Foothill:
(a) Except as they may be affected by transactions contemplated
hereby and except to the extent such representations and warranties are by
their express provisions
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made as of a specified date and except for activities or transactions after the
date of this Agreement made in the ordinary course of business and not
expressly prohibited by this Agreement, the representations and warranties
contained in paragraph 3 hereof shall be true and correct in all respects
material. For purposes of this section, "material" shall mean that the untruth
or incorrectness of such representation or warranty would cause a material
adverse effect on the business, financial condition or assets of Norwest and
the Norwest Subsidiaries taken as a whole.
(b) Norwest shall have, or shall have caused to be, performed and
observed in all material respects all covenants, agreements and conditions
hereof to be performed or observed by it and Merger Co. at or before the Time
of Filing.
(c) Foothill shall have received a favorable certificate, dated as of
the Effective Date of the Merger, signed by the Chairman, the President or any
Executive Vice President or Senior Vice President and by the Secretary or
Assistant Secretary of Norwest, as to the matters set forth in subparagraphs
(a) and (b) of this paragraph 6.
(d) This Agreement and the Merger Agreement shall have been approved
by the affirmative vote of the holders of the percentage of the outstanding
shares of Foothill required for approval of a plan of merger in accordance with
the provisions of Foothill's Certificate of Incorporation and the Delaware
General Corporation Law.
(e) Norwest shall have received approval by the Federal Reserve Board
and by such other governmental agencies as may be required by law of the
transactions contemplated by this Agreement and the Merger Agreement and all
waiting and appeal periods prescribed by applicable law or regulation shall
have expired.
(f) No court or governmental authority of competent jurisdiction
shall have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(g) The shares of Norwest Common Stock to be delivered to the
stockholders of Foothill pursuant to this Agreement and the Merger Agreement
shall have been authorized for listing on the New York Stock Exchange and the
Chicago Stock Exchange.
(h) Foothill shall have received an opinion, dated the Closing Date,
of counsel to Foothill, substantially to the effect that, for federal income
tax purposes: (i) the Merger will constitute a reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code; (ii) no gain or
loss will be recognized by the holders of Foothill Common Stock or Preferred
Stock upon the conversion of their shares into Norwest Common Stock pursuant to
the terms of the Merger (except to the extent cash is received in lieu of
fractional shares); (iii) the tax basis of the shares of Norwest Common Stock
received by the shareholders of Foothill on the conversion of the Foothill
Common Stock and Preferred Stock pursuant to the Merger will be the same as the
basis of Foothill Common Stock or Preferred Stock converted (less any portion
of such basis allocable to
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<PAGE> 32
any fractional interest in any shares of Foothill Common Stock or Preferred
Stock); and (iv) the holding period of the shares of Norwest Common Stock into
which the Foothill Common Stock and Preferred Stock are converted will include
the holding period of the Foothill Common Stock or Preferred Stock, provided
such shares of Foothill Common Stock or Preferred Stock were held as a capital
asset as of the Effective Time of the Merger.
(i) The Registration Statement (as amended or supplemented) shall
have become effective under the Securities Act and shall not be subject to any
stop order, and no action, suit, proceeding or investigation by the SEC to
suspend the effectiveness of the Registration Statement shall have been
initiated and be continuing, or have been threatened and be unresolved.
Norwest shall have received all state securities law or blue sky authorizations
necessary to carry out the transactions contemplated by this Agreement.
(j) Merger Co. shall have executed and delivered the Merger
Agreement.
(k) Norwest and each Norwest Subsidiary shall have obtained any and
all material permits, authorizations, consents, waivers and approvals required
for the lawful consummation by it of the Merger.
(l) Foothill shall have received the opinion of Norwest's counsel
dated the Closing Date in form and substance reasonably satisfactory to
Foothill to the effect that (i) Norwest is duly organized and existing under
the laws of the State of Delaware and (ii) all necessary corporate action on
the part of Norwest has been taken to authorize the issuance of the shares of
Norwest Common Stock in connection with the Merger, and when issued as
described in the Registration Statement, such shares will be legally and
validly issued, fully paid, and nonassessable.
7. CONDITIONS PRECEDENT TO OBLIGATION OF NORWEST. The obligation of
Norwest to effect the Merger shall be subject to the satisfaction at or before
the Time of Filing of the following conditions, which may be waived in writing
by Norwest:
(a) Except as they may be affected by transactions contemplated
hereby and except to the extent such representations and warranties are by
their express provisions made as of a specified date and except for activities
or transactions or events occurring after the date of this Agreement made in
the ordinary course of business and not expressly prohibited by this Agreement,
the representations and warranties contained in paragraph 2 hereof shall be
true and correct in all respects material to Foothill and the Foothill
Subsidiaries taken as a whole as if made at the Time of Filing. For purposes
of this section, "material" shall mean that the untruth or incorrectness of
such representation or warranty would cause a material adverse effect on the
business, financial condition or results of operation of Foothill and the
Foothill Subsidiaries taken as a whole.
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<PAGE> 33
(b) Foothill shall have, or shall have caused to be, performed and
observed in all material respects all covenants, agreements and conditions
hereof to be performed or observed by it at or before the Time of Filing.
(c) This Agreement and the Merger Agreement shall have been approved
by the affirmative vote of the holders of the percentage of the outstanding
shares of Foothill required for approval of a plan of merger in accordance with
the provisions of Foothill's Certificate of Incorporation and the Delaware
General Corporation Law.
(d) Norwest shall have received a favorable certificate dated as of
the Effective Date of the Merger signed by the Chairman or President and by the
Secretary or Assistant Secretary of Foothill, as to the matters set forth in
subparagraphs (a) through (c) of this paragraph 7.
(e) Norwest shall have received approval by all governmental agencies
as may be required by law of the transactions contemplated by this Agreement
and the Merger Agreement and all waiting and appeal periods prescribed by
applicable law or regulation shall have expired. No approvals, licenses or
consents granted by any regulatory authority shall contain any condition or
requirement relating to Foothill or any Foothill Subsidiary that, in the good
faith judgment of Norwest, is unreasonably burdensome to Norwest. For purposes
of the foregoing, "unreasonably burdensome" shall mean any condition which
could reasonably be expected to have a material adverse effect on the business,
financial condition, capital requirements or results of operation (including,
with respect to Foothill, Foothill's operating plans) of Norwest or the Norwest
Subsidiaries taken as a whole or Foothill or the Foothill Subsidiaries taken as
a whole or which would result in the inability of Foothill to continue to act
as an investment advisor to the Partnerships or requiring divestiture by
Foothill of any or all of its general partnership interest in the Partnerships
or the liquidation or dissolution of the Partnerships.
(f) Foothill and each Foothill Subsidiary shall have obtained any and
all material consents or waivers from other parties to loan agreements, leases
or other contracts material to Foothill's or such subsidiary's business
required for the consummation of the Merger, and Foothill and each Foothill
Subsidiary shall have obtained any and all material permits, authorizations,
consents, waivers and approvals required for the lawful consummation by it of
the Merger.
(g) No court or governmental authority of competent jurisdiction
shall have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(h) The Merger shall qualify as a "pooling of interests" for
accounting purposes and Norwest shall have received from KPMG Peat Marwick,
L.L.P. and Ernst & Young opinions to that effect.
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<PAGE> 34
(i) At any time since the date hereof the total number of shares of
Foothill Common Stock outstanding and subject to issuance upon exercise
(assuming for this purpose that phantom shares, if any, and other
share-equivalents constitute Foothill Common Stock) of all warrants, options,
conversion rights, phantom shares, if any, or other share-equivalents, other
than any option held by Norwest, shall not have exceeded 17,843,359.
(j) The Registration Statement (as amended or supplemented) shall
have become effective under the Securities Act and shall not be subject to any
stop order, and no action, suit, proceeding or investigation by the SEC to
suspend the effectiveness of the Registration Statement shall have been
initiated and be continuing, or have been threatened or be unresolved. Norwest
shall have received all state securities law or blue sky authorizations
necessary to carry out the transactions contemplated by this Agreement.
(k) Norwest shall have received from the Chief Executive Officer and
Chief Financial Officer of Foothill a letter, dated as of the effective date of
the Registration Statement and updated through the date of Closing, in form and
substance reasonably satisfactory to Norwest, to the effect that:
(i) the interim quarterly financial statements of Foothill
included or incorporated by reference in the Registration Statement
are prepared in accordance with generally accepted accounting
principles applied on a basis consistent with the audited financial
statements of Foothill;
(ii) the amounts reported in the interim quarterly financial
statements of Foothill agree with the general ledger of Foothill;
(iii) the annual and quarterly financial statements of
Foothill and the Foothill Subsidiaries included in, or incorporated by
reference in, the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the published rules and regulations thereunder;
(iv) from March 31, 1995 (or, if later, since the date of the
most recent unaudited consolidated financial statements of Foothill
and the Foothill Subsidiaries as may be included in the Registration
Statement) to the last day of the month immediately preceding the
effective date of the Registration Statement or the last day of the
month immediately preceding the Closing, there are no increases in
long-term debt, changes in the capital stock or decreases in
stockholders' equity of Foothill and the Foothill Subsidiaries, except
in each case for changes, increases or decreases which the
Registration Statement discloses have occurred or may occur or which
are described in such letters. For the same period, there have been no
decreases in consolidated net interest income, consolidated net
interest income after provision for credit losses, consolidated
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<PAGE> 35
income before income taxes, consolidated net income and net income per
share amounts of Foothill and the Foothill Subsidiaries, or in income
before equity in undistributed income of subsidiaries, in each case as
compared with the comparable period of the preceding year, except in
each case for changes, increases or decreases which the Registration
Statement discloses have occurred or may occur or which are described
in such letters;
(v) they have reviewed certain amounts, percentages, numbers
of shares and financial information which are derived from the general
accounting records of Foothill and the Foothill Subsidiaries, which
appear in the Registration Statement under the certain captions to be
specified by Norwest, and have compared certain of such amounts,
percentages, numbers and financial information with the accounting
records of Foothill and the Foothill Subsidiaries and have found them
to be in agreement with financial records and analyses prepared by
Foothill included in the annual and quarterly financial statements,
except as disclosed in such letters.
(l) Notice shall not have been received by Foothill relating to, or
any senior officer of Foothill, after diligent inquiry, shall become aware of,
a basis for any proceeding, claim or action of any nature seeking to impose, or
that could result in the imposition on Foothill or any Foothill Subsidiary of,
any liability relating to the release of hazardous substances as defined under
any local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended, which has had or could
reasonably be expected to have a material adverse effect upon Foothill and its
subsidiaries taken as a whole.
(m) Since March 31, 1995, no change shall have occurred and no
circumstances shall exist which has had or might reasonably be expected to have
a material adverse effect on the financial condition, results of operations or
business of Foothill and the Foothill Subsidiaries taken as a whole.
(n) Foothill shall have obtained all necessary or required consents
of the general and limited partners of FPI and FPII to the Merger and to the
matters referred to in paragraph 4(p).
(o) Foothill shall have terminated the Option Plan and Incentive Plan
and all outstanding Options shall have exercised or terminated as required in
paragraph 4(o).
(p) Foothill shall have terminated Foothill's Directors Pension Plan
and Executive Supplement Retirement Plan effective as of no later than the
Effective Time of Merger.
(q) The persons listed on Exhibit C1 shall have entered into the
Employment and Non-Competition Agreements in substantially the form of Exhibit
C2 hereto.
(r) Foothill shall have executed and delivered the Merger Agreement.
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<PAGE> 36
(s) The Foothill Stock Purchase Plan shall have been terminated as
provided in paragraph 4(t).
(t) Norwest shall have received an opinion of counsel to Foothill
dated the Closing Date, in form and substance reasonably satisfactory to
Norwest to the effect that (i) Foothill is duly organized and existing under
the State of Delaware and (ii) that the execution, delivery and performance of
the Agreement and the Merger Agreement has been duly and validly authorized by
all necessary corporate action.
(u) The Preferred Stock Agreement and Registration Agreement shall
have been terminated.
8. EMPLOYEE BENEFIT PLANS. Each person who is an employee of
Foothill or any Foothill Subsidiary as of the Effective Date of the Merger
("Foothill Employees") shall be eligible for participation in the employee
welfare and retirement plans of Norwest, as in effect from time to time, as
follows:
(a) Employee Welfare Benefit Plans. Each Foothill employee shall be
eligible for participation in the employee welfare benefit plans of Norwest
listed below subject to any eligibility requirements applicable to such plans
(but not subject to any pre-existing conditions exclusions except for the
Norwest Long Term Care Plan) and shall enter each plan not later than the first
day of the calendar quarter which begins at least 32 days after the Effective
Date of the Merger:
Medical Plan
Dental Plan
Vision Plan
Short Term Disability Plan
Long Term Disability Plan
Long Term Care Plan
Flexible Benefits Plan
Basic Group Life Insurance Plan
Group Universal Life Insurance Plan
Dependent Group Life Insurance Plan
Business Travel Accident Insurance Plan
Accidental Death and Dismemberment Plan
Severance Pay Plan
Vacation Program
For the purpose of determining each Foothill Employee's benefit for the year in
which the Merger occurs under the Norwest vacation program, vacation taken by
an Foothill Employee in the year in which the Merger occurs will be deducted
from the total Norwest benefit. Each Foothill Employee will be credited under
the Norwest Medical Plan for the amount of any deductible already satisfied
under Foothill's Plan prior to Closing. After the
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<PAGE> 37
Effective Date of the Merger, Foothill Employees will be subject to Norwest's
Vacation Program in accordance with the terms of that Program, with full credit
for years of past service to Foothill and the Foothill Subsidiaries. For
purposes of the Short Term Disability Plan and Severance Policy, Foothill
Employees will receive full credit for years of past service with Foothill and
the Foothill Subsidiaries.
Foothill Employees shall not be entitled to past service credit with regard to
retiree medical benefits.
(b) Employee Retirement Benefit Plans.
Each Foothill Employee shall be eligible for participation in the Norwest
Savings-Investment Plan (the "SIP"), subject to any eligibility requirements
applicable to the SIP (with full credit for years of past service to Foothill
and the Foothill Subsidiaries for the purpose of satisfying any eligibility and
vesting periods applicable to the SIP), and shall enter the SIP not later than
the first day of the calendar quarter which begins at least 32 days after the
Effective Date of the Merger.
Each Foothill Employee shall be eligible for participation, as a new employee,
in the Norwest Pension Plan under the terms thereof.
9. TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated at any time prior to the Time of
Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon written notice to
the other party if the Merger shall not have been consummated by March
31, 1996 unless such failure of consummation shall be due to the
failure of the party seeking to terminate to perform or observe in all
material respects the covenants and agreements hereof to be performed
or observed by such party;
(iii) by Foothill or Norwest upon written notice to the other
party if any court or governmental authority of competent jurisdiction
shall have issued a final order restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreementor;
(iv) by Norwest, if the Board of Directors of Foothill does
not publicly recommend in the Proxy Statement that the holders of the
Foothill Common Stock approve and adopt this Agreement, or if after
recommending in the Proxy Statement that stockholders approve and
adopt this Agreement, the Board of Directors of Foothill shall have
withdrawn, modified or amended such recommendation in any respect
materially adverse to Norwest.
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<PAGE> 38
(b) In the event of termination of this Agreement by either Norwest
or Foothill as provided in paragraph (a), this Agreement shall forthwith become
void and have no effect except that (i) termination of this Agreement under
this paragraph 9 shall not release, or be construed as so releasing, Foothill
from any liability or damage to Norwest arising out of Foothill's willful and
material breach of the warranties and representations made by it, or willful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, (ii) the obligations under paragraphs 4(g),
5(h) and 10 shall survive such termination; and (iii) in the event that this
Agreement shall have been terminated by Foothill pursuant to paragraph 9(a)(ii)
because of the failure of Norwest to perform or observe in all material
respects the covenants and agreements to be performed by Norwest or such other
willful action that results in a material breach of the warranties and
representations made by Norwest, or willful and material failure in performance
of any of Norwest's covenants, agreements, duties or obligations arising
hereunder, and all of the conditions to consummation of the Merger set forth in
Section 7 have been satisfied or, with respect to conditions relating to the
delivery of officers' certificates and opinions, would have been satisfied had
the Closing actually occurred, Norwest agrees, at the request of Foothill, to
purchase Foothill Senior Subordinated Debt in an amount and pursuant to the
terms and conditions of that certain Funding Agreement of even date herewith
between Norwest and Foothill and Foothill Capital Corporation ("Funding
Agreement") which purchase shall be in lieu of liquidated damages and in full
and complete satisfaction of any further liability of Norwest for any claims,
damages or losses incurred or alleged to have been incurred by Foothill by
virtue of or arising out of such termination.
10. EXPENSES. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by Foothill and Foothill Subsidiaries shall be borne
by Foothill, and all such expenses incurred by Norwest shall be borne by
Norwest.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assignable by either party hereto without the prior
written consent of the other party hereto.
12. THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
13. NOTICES. Any notice or other communication provided for herein
or given hereunder to a party hereto shall be in writing and shall be delivered
in person or shall be mailed by first class registered or certified mail,
postage prepaid, addressed as follows:
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<PAGE> 39
If to Norwest:
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Attention: Secretary
If to Foothill:
The Foothill Group, Inc.
11111 Santa Monica Boulevard
15th Floor
Los Angeles, CA 90025
Attention: Henry Jordan, Chief Financial Officer
With a copy to:
Buchalter, Nemer, Fields & Younger
601 South Figueroa Street
Los Angeles, CA 90017
Attention: Mark A. Bonenfant
or to such other address with respect to a party as such party shall notify the
other in writing as above provided.
14. COMPLETE AGREEMENT. This Agreement, the Merger Agreement, the
Stock Option Agreement and the Funding Agreement contain the complete agreement
between the parties hereto with respect to the Merger and other transactions
contemplated hereby and supersede all prior agreements and understandings
between the parties hereto with respect thereto.
15. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement.
16. WAIVER AND OTHER ACTION. Either party hereto may, by a signed
writing, give any consent, take any action pursuant to paragraph 9 hereof or
otherwise, or waive any inaccuracies in the representations and warranties by
the other party and compliance by the other party with any of the covenants and
conditions herein.
17. AMENDMENT. At any time before the Time of Filing, the parties
hereto, by action taken by their respective Boards of Directors or pursuant to
authority delegated by their respective Boards of Directors, may amend this
Agreement; provided, however, that no amendment after approval by the
shareholders of Foothill shall be made which changes
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<PAGE> 40
in a manner adverse to such shareholders the consideration to be provided to
said shareholders pursuant to this Agreement and the Merger Agreement.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware.
19. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No
representation or warranty contained in the Agreement or the Merger Agreement
shall survive the Merger or except as set forth in paragraph 9(b), the
termination of this Agreement. Paragraph 10 shall survive the Merger.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one instrument.
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<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
NORWEST CORPORATION FOOTHILL GROUP, INC.
By: ________________________ By: ________________________
Its: ________________________ Its: ________________________
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<PAGE> 42
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BETWEEN
FOOTHILL GROUP, INC.
a Delaware corporation
(the surviving corporation)
AND
MERGER CO.
a Delaware corporation
(the merged corporation)
This Agreement and Plan of Merger dated as of __________, 19__,
between FOOTHILL GROUP, INC., a Delaware corporation (hereinafter sometimes
called "Foothill" and sometimes called the "surviving corporation") and MERGER
CO., a Delaware corporation ("Merger Co.")(said corporations being hereinafter
sometimes referred to as the "constituent corporations"),
WHEREAS, Merger Co., a wholly-owned subsidiary of Norwest Corporation,
was incorporated by Articles of Incorporation filed in the office of the
Secretary of State of the State of Delaware on _______, 19__, and said
corporation is now a corporation subject to and governed by the provisions of
the Delaware General Corporation Law. Merger Co. has authorized capital stock
of ________ shares of common stock having a par value of $_____ per share
("Merger Co. Common Stock"), of which _________ shares were outstanding as of
the date hereof; and
WHEREAS, Foothill was incorporated by Articles of Incorporation filed
in the office of the Secretary of State of the State of Delaware on ________,
19__ and said corporation is now a corporation subject to and governed by the
provisions of the Delaware General Corporation Law. Foothill has authorized
capital stock of 22,000,000 shares of Common Stock, no par value ("Foothill
Common Stock"), of which _______ shares were outstanding and _____ shares were
held in the treasury as of ___________ 19__, 1,000,000 shares of Series A
convertible Preferred Stock, $1.00 par value per share ("Preferred Stock") of
which _____ shares were outstanding and no shares were held in the treasury as
of _____________, 19___; and
WHEREAS, Norwest Corporation and Foothill are parties to an Agreement
and Plan of Reorganization dated as of May ___, 1995 (the "Reorganization
Agreement"), setting forth certain representations, warranties and covenants in
connection with the merger provided for herein; and
WHEREAS, the directors, or a majority of them, of each of the
constituent corporations respectively deem it advisable for the welfare and
advantage of said corporations and for the best interests of the respective
shareholders of said corporations that said corporations merge and that Merger
Co. be merged with and into Foothill, with
<PAGE> 43
Foothill continuing as the surviving corporation, on the terms and conditions
hereinafter set forth in accordance with the provisions of the Delaware General
Corporation Law, which statute permits such merger; and
WHEREAS, it is the intent of the parties to effect a merger which
qualifies as a tax-free reorganization pursuant to Sections 368(a)(1)(A) of the
Internal Revenue Code, as amended, by virtue of the provisions of Section
368(a)(2)(E) of the Code and that as a condition to the obligations of the
parties hereunder that the Merger be treated as a "pooling" for accounting
purposes;
NOW, THEREFORE, the parties hereto, subject to the approval of the
shareholders of Merger Co., in consideration of the premises and of the mutual
covenants and agreements contained herein and of the benefits to accrue to the
parties hereto, have agreed and do hereby agree that Merger Co. shall be merged
with and into Foothill pursuant to the laws of the State of Delaware, and do
hereby agree upon, prescribe and set forth the terms and conditions of the
merger of Merger Co. with and into Foothill, the mode of carrying said merger
into effect, the manner and basis of converting the shares of Foothill Common
Stock and Preferred Stock and unexercised options of Foothill convertible into
Foothill Common Stock ("Options") into shares of common stock of Norwest of the
par value of $1-2/3 per share ("Norwest Common Stock"), and such other
provisions with respect to said merger as are deemed necessary or desirable, as
follows:
FIRST: At the time of merger Merger Co. shall be merged with and into
Foothill, one of the constituent corporations, which shall be the surviving
corporation, and the separate existence of Merger Co. shall cease and the name
of the surviving corporation shall be Foothill Group, Inc.
SECOND: The Articles of Incorporation of Foothill at the time of
merger shall be amended as set forth below and, as so amended, shall be the
Articles of Incorporation of the surviving corporation until further amended
according to law:
[Amend to change name, number of directors, etc.]
THIRD: The By-Laws of Foothill at the time of merger shall be and
remain the By-Laws of the surviving corporation until amended according to the
provisions of the Articles of Incorporation of the surviving corporation or of
said By-Laws.
FOURTH: The following persons at the time of merger shall be and
remain the directors of the surviving corporation and shall hold office from
the time of merger until their respective successors are elected and qualify:
[List Names]
2
<PAGE> 44
FIFTH: The following persons at the time of merger shall be and
remain the officers of the surviving corporation and shall hold office from the
time of merger until their respective successors are elected or appointed and
qualify:
[List Names]
SIXTH: The manner and basis of converting the shares of Foothill
Common Stock and Preferred Stock and Options into cash or shares of Norwest
Common Stock shall be as follows:
1. (a) Each of the shares of Foothill Common Stock outstanding
immediately prior to the time of merger (other than shares as to which
statutory dissenters' rights have been exercised) shall at the time of
merger, by virtue of the merger and without any action on the part of
the holder or holders thereof, be converted into and exchanged for
.920 shares of Norwest Common Stock.
(b) Each of the shares of Preferred Stock outstanding
immediately prior to the time of merger (other than shares as to which
statutory dissenters' rights have been exercised) shall at the time of
merger, by virtue of the merger and without any action on the part of
the holder or holders thereof, be converted into and exchanged for
6.1333272 shares of Norwest Common Stock.
(c) the shares of Foothill Common Stock subject to each
unexercised Option (as defined in paragraph 4(o) of the Reorganization
Agreement) having an exercise price that is less than the "Fair Market
Value" (as defined below) per share of Foothill Common Stock and whose
holder shall have entered into an agreement with Foothill pursuant to
paragraph 4(o) hereof (the "Option Shares"), shall be converted into
and exchanged for that number of fully paid and nonassessable shares
of Norwest Common Stock determined as follows: (i) by dividing (A) the
aggregate Fair Market Value of the Option Shares less the aggregate
exercise price thereof by (B) the Fair Market Value of one share of
Foothill Common Stock, and then (ii) multiplying the number obtained
as the result of such division by .920. For purposes of this
paragraph 1(c), the term "Fair Market Value" with respect to Foothill
Common Stock shall mean the per share price of Foothill Common Stock
as reported by the consolidated tape of the New York Stock Exchange
for the trading day immediately preceding the "Closing Date" (as that
term is defined in the Reorganization Agreement).
2. As soon as practicable after the merger becomes effective,
each holder of a certificate for shares of Foothill Common Stock or
Preferred Stock outstanding immediately prior to the time of merger
and of Options unexercised prior to the time of merger, the holder of
which shall have entered into the Agreement referred to in 1(c) above,
shall be entitled, upon surrender of such certificate or instrument
representing Options for cancellation to the surviving corporation or
to Norwest Bank Minnesota, National Association, as the designated
agent of the surviving
3
<PAGE> 45
corporation (the "Agent"), to receive a new certificate for the number
of whole shares of Norwest Common Stock to which such holder shall be
entitled on the basis set forth in paragraph 1 above. Until so
surrendered each certificate which, immediately prior to the time of
merger, represented shares of Foothill Common Stock and Preferred
Stock or instrument representing an Option shall not be transferable
on the books of the surviving corporation but shall be deemed to
evidence the right to receive (except for the payment of dividends as
provided below) ownership of the number of whole shares of Norwest
Common Stock into which such shares of Foothill Common Stock or
Preferred Stock or Options have been converted on the basis above set
forth; provided, however, until the holder of such certificate for
Foothill Common Stock or Preferred Stock or instrument representing
Options shall have surrendered the same for exchange as above set
forth, no dividend payable to holders of record of Norwest Common
Stock as of any date subsequent to the effective date of merger shall
be paid to such holder with respect to the Norwest Common Stock, if
any, represented by such certificate, but, upon surrender and exchange
thereof as herein provided, there shall be paid by the surviving
corporation or the Agent to the record holder of such certificate for
Norwest Common Stock issued in exchange therefor an amount with
respect to such shares of Norwest Common Stock equal to all dividends
that shall have been paid or become payable to holders of record of
Norwest Common Stock between the effective date of merger and the date
of such exchange.
3. If between the date of the Reorganization Agreement and the
time of merger, shares of Norwest Common Stock shall be changed into a
different number of shares or a different class of shares by reason of
any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or if a stock dividend thereon
shall be declared with a record date within such period (a "Common
Stock Adjustment"), then (i) the number of shares of Norwest Common
Stock, if any, into which a share of Foothill Common Stock or
Preferred Stock or an Option shall be converted on the basis above set
forth, will be appropriately and proportionately adjusted so that the
number of such shares of Norwest Common Stock into which a share of
Foothill Common Stock or Preferred Stock or Options shall be converted
will equal the number of shares of Norwest Common Stock which the the
holders of a share of Foothill Common Stock or Preferred Stock or
Options would have received pursuant to such Common Stock Adjustment
had the record date therefor been immediately following the time of
merger and (ii) if a Norwest Common Stock Adjustment occurs between
the date of the Reorganization Agreemnet and any date that the closing
price of a share of Norwest Common Stock is used for purposes of the
Reorganization Agreement or this Agreement, the closing price of a
share of Norwest Common Stock for such purposes shall be the sum of
the closing prices on the date of each such determination of the
number of shares of Norwest Common Stock and/or other securities, if
any, (in each case as reported on the consolidated tape of the New
York Stock Exchange on such date) issued with respect to one share of
Norwest Common Stock as a result of the Norwest Common Stock
Adjustment.
4
<PAGE> 46
4. No fractional shares of Norwest Common Stock and no
certificates or scrip certificates therefor shall be issued to
represent any such fractional interest, and any holder of a fractional
interest shall be paid an amount of cash equal to the product obtained
by multiplying the fractional share interest to which such holder is
entitled by the average of the closing prices of a share of Norwest
Common Stock as reported by the consolidated tape of the New York
Stock Exchange for each of the five (5) trading days immediately
preceding the meeting of shareholders held to vote on the merger.
5. Each share of Merger Co. Common Stock issued and outstanding
at the time of merger shall be converted into and exchanged for shares
of the surviving corporation after the time of merger.
6. At the Effective Date the stock transfer agent books of
Foothill shall be closed and no transfer of shares of Foothill Common
Stock or Preferred Stock or Options shall be made thereafter. In the
event that after the Effective Date, certificates or Options are
presented to Foothill they shall be canceled and exchanged for Norwest
Common Stock.
SEVENTH: The merger provided for by this Agreement shall be effective
as follows:
1. The effective date of merger shall be the date on which
Articles of Merger (as described in subparagraph 1(b) of this Article
Seventh) shall be delivered to and filed by the Secretary of State of
the State of Delaware; provided, however, that all of the following
actions shall have been taken in the following order:
a. This Agreement shall be approved and adopted on
behalf of Merger Co. and Foothill in accordance with the
Delaware General Corporation Law; and
b. Articles of merger (with this Agreement attached as
part thereof) with respect to the merger, setting forth the
information required by the Delaware General Corporation Law,
shall be executed by the President or a Vice President of
Merger Co. and by the Secretary or an Assistant Secretary of
Merger Co., and by the President or a Vice President of
Foothill and by the Secretary or an Assistant Secretary of
Foothill, and shall be filed in the office of the Secretary of
State of the State of Delaware in accordance with the Delaware
General Corporation Law.
2. The merger shall become effective as of 11:59 p.m.,
Minneapolis, Minnesota time (the "time of merger") on the effective
date of merger.
5
<PAGE> 47
EIGHTH: At the time of merger:
1. The separate existence of Merger Co. shall cease, and the
corporate existence and identity of Foothill shall continue as the
surviving corporation.
2. The merger shall have the other effects prescribed by
Section _______ of the Delaware General Corporation Law.
NINTH: The following provisions shall apply with respect to the
merger provided for by this Agreement:
1. The surviving corporation shall (i) file with the Secretary of
State of the State of Delaware an agreement that it may be served with
process within or without the State of Delaware in the courts of the
State of Delaware in any proceeding for the enforcement of any
obligation of Merger Co. and in any proceeding for the enforcement of
the rights of a dissenting shareholder of Merger Co. against Foothill,
and (ii) file with said Secretary of State an agreement that it will
promptly pay to the dissenting shareholders of Merger Co. the amount,
if any, to which such dissenting shareholders will be entitled under
the provisions of the Delaware General Corporation Law with respect to
the rights of dissenting shareholders.
2. The registered office of the surviving corporation in the
State of Delaware shall be _______________, and the name of the
registered agent of Foothill at such address is The Corporation Trust
Company.
3. If at any time the surviving corporation shall consider or be
advised that any further assignment or assurance in law or other
action is necessary or desirable to vest, perfect or confirm in the
surviving corporation the title to any property or rights of Merger
Co. acquired or to be acquired as a result of the merger provided for
herein, the proper officers and directors of Foothill and Merger Co.
may execute and deliver such deeds, assignments and assurances in law
and take such other action as may be necessary or proper to vest,
perfect or confirm title to such property or right in the surviving
corporation and otherwise carry out the purposes of this Agreement.
4. For the convenience of the parties and to facilitate the
filing of this Agreement, any number of counterparts hereof may be
executed and each such counterpart shall be deemed to be an original
instrument.
5. This Agreement and the legal relations among the parties
hereto shall be governed by and construed in accordance with the laws
of the State of Delaware.
6. This Agreement cannot be altered or amended except pursuant to
an instrument in writing signed by both of the parties hereto.
6
<PAGE> 48
7. At any time prior to the filing of Articles of Merger with the
Secretary of State of the State of Delaware, subject to the provisions
of the Reorganization Agreement this Agreement may be terminated upon
approval by the Boards of Directors of either of the constituent
corporations notwithstanding the approval of the shareholders of
either constituent corporation.
7
<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have cause this Agreement and
Plan of Merger to be signed in their respective corporate names by the
undersigned officers and their respective corporate seals to be affixed hereto,
pursuant to authority duly given by their respective Boards of Directors, all
as of the day and year first above written.
FOOTHILL GROUP, INC.
By: ______________________________
Its: ______________________________
(Corporate Seal)
Attest:
__________________________
Secretary
MERGER CO.
By: _____________________________
Its: _____________________________
(Corporate Seal)
Attest:
___________________________
Secretary
8
<PAGE> 50
EXHIBIT B
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
Attn: Secretary
Gentlemen:
I have been advised that I might be considered to be an "affiliate,"
as that term is defined for purposes of paragraphs (c) and (d) of Rule 145
("Rule 145") promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act") of Foothill Group, Inc., a Delaware corporation ("Foothill").
Pursuant to an Agreement and Plan of Reorganization, dated as of
________, 1995, (the "Reorganization Agreement"), between Foothill and Norwest
Corporation, a Delaware corporation ("Norwest") it is contemplated that a
wholly-owned subsidiary of Norwest will merge with and into Foothill (the
"Merger") and as a result, I will receive in exchange for each share of Series
A Common Stock, no par value, of Foothill ("Foothill Common Stock") and Series
A Convertible Preferred Stock, $1.00 par value per share of Foothill owned by
me immediately prior to the Effective Time of the Merger (as defined in the
Reorganization Agreement), a number of shares of Common Stock, par value $1 2/3
per share, of Norwest ("Norwest Common Stock"), as more specifically set forth
in the Reorganization Agreement.
I hereby agree as follows:
I will not offer to sell, transfer or otherwise dispose of any of the
shares of Foothill Common Stock or Norwest Common Stock held by me during the
30 days prior to the Effective Time of the Merger.
I will not offer to sell, transfer or otherwise dispose of any of the
shares of Norwest Common Stock issued to me pursuant to the Merger (the
"Stock") except (a) in compliance with the applicable provisions of Rule 145,
(b) in a transaction that is otherwise exempt from the registration
requirements of the Securities Act, or (c) in an offering registered under the
Securities Act.
I will not sell, transfer or otherwise dispose of the Stock or in any
way reduce my risk relative to any shares of the Stock issued to me pursuant to
the Merger until such time as financial results covering at least 30 days of
post-Merger combined operations of Foothill and Norwest have been published.
I consent to the endorsement of the Stock issued to me pursuant to the
Merger with a restrictive legend which will read substantially as follows:
<PAGE> 51
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933, as amended (the "Act"), applies, and may be sold or otherwise
transferred only in compliance with the limitations of such Rule 145,
or upon receipt by Norwest Corporation of an opinion of counsel
reasonably satisfactory to it that some other exemption from
registration under the Act is available, or pursuant to a registration
statement under the Act."
Norwest's transfer agent shall be given an appropriate stop transfer
order and shall not be required to register any attempted transfer of the
shares of the Stock, unless the transfer has been effected in compliance with
the terms of this letter agreement.
It is understood and agreed that this letter agreement shall terminate
and be of no further force and effect and the restrictive legend set forth
above shall be removed by delivery of substitute certificates without such
legend, and the related stop transfer restrictions shall be lifted forthwith,
if (a) (i) any such shares of Stock shall have been registered under the
Securities Act for sale, transfer or other disposition by me or on my behalf
and are sold, transferred or otherwise disposed of, or (ii) any such shares of
Stock are sold in accordance with the provisions of paragraphs (c), (e), (f)
and (g) of Rule 144 promulgated under the Securities Act, or (iii) I am not at
the time an affiliate of Norwest and have been the beneficial owner of the
Stock for at least two years (or such other period as may be prescribed
thereunder) and Norwest has filed with the Commission all of the reports it is
required to file under the Securities Exchange Act of 1934, as amended, during
the preceding twelve months, or (iv) I am not and have not been for at least
three months an affiliate of Norwest and have been the beneficial owner of the
Stock for at least three years (or such other period as may be prescribed by
the Securities Act, and the rules and regulations promulgated thereunder), or
(v) Norwest shall have received an opinion of counsel acceptable to Norwest to
the effect that the stock transfer restrictions and the legend are not
required, and (b) financial results covering at least 30 days of post-Merger
combined operations have been published.
I have carefully read this letter agreement and the Reorganization
Agreement and have discussed their requirements and other applicable
limitations upon my ability to offer to sell, transfer or otherwise dispose of
shares of the Stock, to the extent I felt necessary, with my counsel or counsel
for Foothill.
Sincerely,
_________________________
<PAGE> 52
EXHIBIT CII
1. LUMP SUM PAYMENT. Norwest shall cause to be paid ____________________
Dollars ($__________) to Employee pursuant to the schedule set forth in
paragraph 2. This amount shall be refereed to herein as the Lump Sum Payment
and is subject to all regular tax withholding. It is not certified earnings
for purposes of Foothill's or Norwest's benefit plans.
2. NON-COMPETE. In consideration for the payment described in paragraph
1, Employee agrees for a period of Two (2) Years following the date on
which the Employee's employment with Norwest terminates, he will not,
by himself or through associates, agents, employees, or others,
directly or indirectly, do any of the following:
i. attempt to divert any of the business or business which
Norwest or Foothill has a reasonable expectation of obtaining
by soliciting, contacting, or communicating with any Norwest
or Foothill customer, potential customer, or referral source
utilized by Norwest or Foothill within the last thirty-six
(36) months, for its products or service. Employee agrees
that he may be enjoined by a court of law should he attempt to
violate those restrictions; and
ii. solicit directly or indirectly an employee of Foothill or
Norwest for the purpose of encouraging that employee to leave
employment with Foothill or Norwest.
The Lump Sum Payment in paragraph 1 shall be made in the following manner:
i. one-third (1/3) of the Lump sum Payment shall be paid on the date of
the end of the Term or the date of the termination of the Employee's
employment with Norwest, whichever is later, and
ii. one-third (1/3) of the Lump Sum Payment shall be made on the first
anniversary of the end of the Term or the date of the termination of
the Employee's employment with Norwest, whichever is later; and
iii. one-third (1/3) of the Lump Sum Payment shall be made on the second
anniversary of the end of the Term or the date of the termination of
the Employee's employment with Norwest, whichever is later.
3. BREACH OF NON-COMPETE. Employee agrees he will not be entitled to any
of the Lump Sum Payment described in paragraphs 1 and 2 if he violates any of
the terms of paragraph 2.
IN WITNESS WHEREOF, the undersigned have set their hands as of the
date first written above.
Foothill Capital Corporation
By:__________________________________
Its President
_____________________________________
_________________, individually
<PAGE> 53
Norwest Corporation
By:
Norwest Corporation
By:___________________________________
Its:______________________________
<PAGE> 1
EXHIBIT 2.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of the 15th day of May, 1995 (this
"Agreement"), between Norwest Corporation, a Delaware corporation ("Grantee"),
and Foothill Group, Inc., a Delaware corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer are entering into an Agreement and Plan of
Reorganization, dated as of the 15th day of May, 1995 (the "Plan"), which is
being executed by the parties hereto simultaneously with the execution of this
Agreement;
WHEREAS, as a condition and inducement to Grantee's entering into the
Plan and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below); and
WHEREAS, capitalized terms used herein shall have the same meanings
given them in the Plan;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 4,156,641 fully paid and nonassessable shares of Series A
Common Stock, no par value ("Common Stock"), of Issuer at a price per share
equal to $23.375 per share (the "Initial Price"); provided, however, that in
the event Issuer issues or agrees to issue (other than pursuant to options to
issue Common Stock in effect as of the date hereof) any shares of Common Stock
at a price less than the Initial Price (as adjusted pursuant to Section 5(b)),
such price shall be equal to such lesser price (such price, as adjusted as
hereinafter provided, the "Option Price"). The number of shares of Common
Stock that may be received upon the exercise of the Option and the Option Price
are subject to adjustment as herein set forth.
SECTION 2. (a) Grantee may exercise the Option, in
whole or part, at any time and from time to time following the occurrence of a
Purchase Event (as defined below); provided that the Option shall terminate and
be of no further force and effect upon the earliest to occur of (i) the time
immediately prior to the Effective Time, (ii) 12 months after the first
occurrence of a Purchase Event, (iii) termination of the Plan in accordance
with the terms thereof prior to the occurrence of a Purchase Event (other than
a termination of the Plan by Grantee pursuant to paragraph 9 (a) (ii) due to
the failure of Issuer to perform or observe in all material respects the
covenants and agreements to be performed or observed by Issuer or pursuant to
paragraph 9(a) (iv) thereof), or (iv) 12
<PAGE> 2
months after the termination of the Plan by Grantee pursuant to
paragraph 9(a) (ii) due to the failure of Issuer to perform or observe in
all material respects the covenants and agreements to be performed or
observed by Issuer or pursuant to paragraph 9 (a) (iv) thereof. The events
described in clauses (i) - (iv) in the preceding sentence are hereinafter
collectively referred to as an "Exercise Termination Event."
(b) The term "Purchase Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer
Subsidiary") without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in
Sections 3 (a) (9) and 13 (d) (3) of the Securities Exchange Act of
1934 and the rules and regulations thereunder (the "Securities
Exchange Act"), and the rules and regulations thereunder) other than
Grantee or any of its subsidiaries (each a "Grantee Subsidiary") or
the Board of Directors of Issuer shall have recommended that the
shareholders of Issuer approve or accept any Acquisition Transaction
with any person other than Grantee or any Grantee Subsidiary. For
purposes of this Agreement, "Acquisition Transaction" shall mean (x) a
merger or consolidation, or any similar transaction, involving Issuer
or any of Issuer's subsidiaries, (y) a purchase, lease or other
acquisition of all or substantially all of the assets of Issuer or any
subsidiary or (z) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 20% or more of the voting power of Issuer or any Issuer
Subsidiary; provided that the term "Acquisition Transaction" does not
include any internal merger or consolidation involving only Issuer
and/or Issuer Subsidiaries;
(ii) Any person other than Grantee or any Grantee
Subsidiary shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to, a tender offer or exchange offer to purchase any
shares of Issuer Common Stock such that, upon consummation of such
offer, such person would own or control 20% or more of the then
outstanding shares of Issuer Common Stock (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer",
respectively)); or
(iii) After a proposal is made by a third party to Issuer
or its shareholders to engage in an Acquisition Transaction, Issuer
shall have breached any covenant or obligation contained in the Plan
and such breach would entitle Grantee to terminate the Plan or the
Board of Directors of Issuer does not recommend that the stockholders
of Issuer approve the Plan or the holders of Issuer Common Stock shall
not have approved the Plan at the meeting of such stockholders held
for the purpose of voting on the Plan, such meeting shall not have
been held or shall have been cancelled prior to termination of the
Plan or
-2-
<PAGE> 3
Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Plan; or
(iv) If the Board of Directors of Issuer does not publicly
recommend in the Proxy Statement that the holders of the Issuer Common
Stock approve and adopt the Plan, or shall have withdrawn, modified or
amended such recommendation in any respect materially adverse to
Grantee.
(c) Issuer shall notify Grantee promptly in writing of
the occurrence of any Purchase Event; provided, however, that the giving of
such notice by Issuer shall not be a condition to the right of Grantee to
exercise the Option.
(d) In the event that Grantee is entitled to and wishes
to exercise the Option, it shall send to Issuer a written notice (the "Option
Notice" and the date of which being hereinafter referred to as the "Notice
Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise and (ii) a period of time (that shall not be
less than three business days nor more than thirty business days) running from
the Notice Date (the "Closing Date") and a place at which the closing of such
purchase shall take place; provided, that, if prior notification to or approval
of the Federal Reserve Board or any other Governmental Authority is required in
connection with such purchase (each, a "Notification" or an "Approval," as the
case may be), (a) Grantee shall promptly file the required notice or
application for approval ("Notice/Application"), (b) Grantee shall
expeditiously process the Notice/Application and (c) for the purpose of
determining the Closing Date pursuant to clause (ii) of this sentence, the
period of time that otherwise would run from the Notice Date shall instead run
from the later of (x) in connection with any Notification, the date on which
any required notification periods have expired or been terminated and (y) in
connection with any Approval, the date on which such approval has been obtained
and any requisite waiting period or periods shall have expired. For purposes
of Section 2(a), any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto. On or prior to the Closing Date, Grantee shall
have the right to revoke its exercise of the Option in the event that the
transaction constituting a Purchase Event that gives rise to such right to
exercise shall not have been consummated.
(e) At the closing referred to in Section 2(d), Grantee
shall pay to Issuer the aggregate purchase price for the shares of Common Stock
specified in the Option Notice in immediately available funds by wire transfer
to a bank account designated by Issuer; provided, however, that failure or
refusal of Issuer to designate such a bank account shall not preclude Grantee
from exercising the Option.
(f) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(e), Issuer shall deliver
to Grantee a certificate or certificates representing the number of shares of
Common Stock specified in the Option Notice and, if the Option should be
exercised in part only, a new Option evidencing the
-3-
<PAGE> 4
rights of Grantee thereof to purchase the balance of the shares of Common Stock
purchasable hereunder.
(g) Certificates for Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by
this certificate is subject to resale
restrictions arising under the Securities Act
of 1933, as amended, and to certain
provisions of an agreement between Norwest
Corporation and Foothill Group, Inc.
("Issuer") dated as of the _____ day of
___________, 1995. A copy of such agreement
is on file at the principal office of Issuer
and will be provided to the holder hereof
without charge upon receipt by Issuer of a
written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission (the "SEC"), or an opinion of counsel, in form and
substance satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(h) Upon the giving by Grantee to Issuer of an Option
Notice and the tender of the applicable purchase price in immediately available
funds on the Closing Date, Grantee shall be deemed to be the holder of record
of the number of shares of Common Stock specified in the Option Notice,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then
actually be delivered to Grantee. Issuer shall pay all expenses and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of Grantee.
SECTION 3. Issuer agrees: (i) that it shall at all
times until the termination of this Agreement have reserved for issuance upon
the exercise of the Option that number of authorized and reserved shares of
Common Stock equal to the maximum
-4-
<PAGE> 5
number of shares of Common Stock at any time and from time to time issuable
hereunder, all of which shares will, upon issuance pursuant hereto, be duly
authorized, validly issued, fully paid, nonassessable, and delivered free and
clear of all claims, liens, encumbrances and security interests and not subject
to any preemptive rights; (ii) that it will not, by amendment of its
certificate of incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer; (iii) promptly to
take all action as may from time to time be required (including (x) complying
with all premerger notification, reporting and waiting period requirements
specified in 15 U.S.C. Section 18a and regulations promulgated thereunder and
(y) in the event, under the Bank Holding Company Act of 1956, as amended ("BHC
Act"), or any other federal or state banking law, prior approval of or notice
to the Federal Reserve Board or to any other Governmental Authority is
necessary before the Option may be exercised, cooperating with Grantee in
preparing such applications or notices and providing such information to each
such Governmental Authority as it may require) in order to permit Grantee to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) to take all action provided herein to protect
the rights of Grantee against dilution.
SECTION 4. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any agreements and related options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
SECTION 5. The number of shares of Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment from
time to time as follows:
(a) In the event of any change in the Common Stock by
reason of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or the
like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision
shall be made so that, in the event that any additional shares of
Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the
Option), the number
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of shares of Common Stock that remain subject to the Option shall be
increased so that, after such issuance and together with shares of
Common Stock previously issued pursuant to the exercise of the Option
(as adjusted on account of any of the foregoing changes in the Common
Stock), it equals 18.89% of the number of shares of Common Stock then
issued and outstanding.
(b) Whenever the number of shares of Common Stock
purchasable upon exercise hereof is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the
Option Price by a fraction, the numerator of which shall be equal to
the number of shares of Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number
of shares of Common Stock purchasable after the adjustment.
SECTION 6. (a) Upon the occurrence of a Purchase
Event that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee made within three years of a Purchase Event (whether on its
own behalf or on behalf of any subsequent holder of the Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto), promptly
prepare, file and keep current a registration statement under the Securities
Act covering any shares issued and issuable pursuant to the Option and shall
use its best efforts to cause such registration statement to become effective,
and to remain current and effective for a period not in excess of 180 days from
the day such registration statement first becomes effective, in order to permit
the sale or other disposition of any shares of Common Stock issued upon total
or partial exercise of the Option ("Option Shares") in accordance with any plan
of disposition requested by Grantee; provided, however, that Issuer may
postpone filing a registration statement relating to a registration request by
Grantee under this Section 6 for a period of time (not in excess of 30 days) if
in its judgment such filing would require the disclosure of material
information that Issuer has a bona fide business purpose for preserving as
confidential. Grantee shall have the right to demand two such registrations.
The foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in the process of
registration with respect to an underwritten public offering of shares of
Common Stock, and if in the good faith judgment of the managing underwriter or
managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering the offering or inclusion of the Option Shares would interfere
materially with the successful marketing of the shares of Common Stock offered
by Issuer, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; provided, however,
that after any such required reduction the number of Option Shares to be
included in such offering for the account of Grantee shall constitute at least
33 1/3% of the total number of shares of Grantee and Issuer covered in such
registration statement; provided further, however, that if such reduction
occurs, then Issuer shall file a registration statement for the balance as
promptly as practicable thereafter as to which no reduction pursuant to this
Section 6(a) shall be permitted or occur and the Grantee shall thereafter be
entitled to one additional registration statement. Grantee shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. In connection with
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any such registration, Issuer and Grantee shall provide each other with
representations, warranties, indemnities and other agreements customarily given
in connection with such registration. If requested by Grantee in connection
with such registration, Issuer and Grantee shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating themselves in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements. Notwithstanding the foregoing, if Grantee revokes any exercise
notice or fails to exercise any Option with respect to any exercise notice
pursuant to Section 2(e), Issuer shall not be obligated to continue any
registration process with respect to the sale of Option Shares issuable upon
the exercise of such Option and Grantee shall not be deemed to have demanded
registration of Option Shares.
(b) In the event that Grantee requests Issuer to file a
registration statement following the failure to obtain any approval required to
exercise the Option as described in Section 9, the closing of the sale or other
disposition of the Common Stock or other securities pursuant to such
registration statement shall occur substantially simultaneously with the
exercise of the Option.
SECTION 7. (a) Upon the occurrence of a "Repurchase
Event" (as defined in Section 7(e) below) that occurs prior to an Exercise
Termination Event, (i) at the request (the date of such request being the
"Option Repurchase Request Date") of Grantee, Issuer shall repurchase the
Option from Grantee at a price (the "Option Repurchase Price") equal to the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised, plus (C) the amount of the documented expenses incurred by
Grantee in connection with the Plan and the transactions contemplated thereby,
including reasonable accounting and legal fees and (ii) at the request (the
date of such request being the "Option Share Repurchase Request Date") of the
owner of Option Shares from time to time (the "Owner"), Issuer shall repurchase
such number of the Option Shares from the Owner as the Owner shall designate at
a price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term
"market/offer price" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof and on or prior to the Option Repurchase Request Date or
the Option Share Repurchase Request Date, as the case may be, (ii) the price
per share of Common Stock paid or to be paid by any third party pursuant to an
agreement with Issuer (whether by way of a merger, consolidation or otherwise),
(iii) the highest last sale price for shares of Common Stock within the 360-day
period ending on the Option Repurchase Request Date or the Option Share
Repurchase Request Date, as the case may be, which is reported by The Wall
Street Journal or, if not reported thereby, another authoritative source, (iv)
in the event of a sale of all or substantially all of Issuer's assets, the sum
of the price paid in such sale for such assets and the current market value of
the remaining assets of Issuer as determined by a nationally recognized
independent investment banking firm selected by Grantee or the Owner, as the
case may be, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the
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<PAGE> 8
market/offer price, the value of consideration other than cash shall be the
value determined by a nationally recognized independent investment banking firm
selected by Grantee or the Owner, as the case may be, whose determination shall
be conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and/or any Option
Shares pursuant to this Section 7 by surrendering for such purpose to Issuer,
at its principal office, a copy of this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or notices stating that
Grantee or the Owner, as the case may be, elects to require Issuer to
repurchase the Option and/or the Option Shares in accordance with the
provisions of this Section 7. As promptly as practicable, and in any event
within five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, Issuer shall deliver or cause to be delivered to Grantee the Option
Repurchase Price to the Owner the Option Share Repurchase Price or the portion
thereof that Issuer is not then prohibited from so delivering under applicable
law and regulation or as a consequence of administrative policy.
(c) Issuer hereby undertakes to use its best efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish any repurchase
contemplated by this Section 7. Nonetheless, to the extent that Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing any Option and/or any Option Shares in
full, Issuer shall promptly so notify Grantee and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to Grantee and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to Section 7(b) is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from delivering to Grantee and/or the Owner, as appropriate, the Option
Repurchase Price or the Option Share Repurchase Price, respectively, in full,
Grantee or the Owner, as appropriate, may revoke its notice of repurchase of
the Option or the Option Shares either in whole or in part whereupon, in the
case of a revocation in part, Issuer shall promptly (i) deliver to Grantee
and/or the Owner, as appropriate, that portion of the Option Purchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering
after taking into account any such revocation and (ii) deliver, as appropriate,
either (A) to Grantee, a new Agreement evidencing the right of Grantee to
purchase that number of shares of Common Stock equal to the number of shares of
Common Stock purchasable immediately prior to the delivery of the notice of
repurchase less than the number of shares of Common Stock covered by the
portion of the Option repurchased or (B) to the Owner, a certificate for the
number of Option Shares covered by the revocation.
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<PAGE> 9
(d) Issuer shall not enter into any agreement with any
party (other than Grantee or a Grantee Subsidiary) for an Acquisition
Transaction unless the other party thereto assumes all the obligations of
Issuer pursuant to this Section 7 in the event that Grantee or the Owner
elects, in its sole discretion, to require such other party to perform such
obligations.
(e) The term "Repurchase Event" shall mean (i) any person
(other than Grantee or a Grantee Subsidiary) shall have acquired "Beneficial
Ownership," as that term has the meaning set forth in Section 13(d) of the
Securities Exchange Act, of 50% or more of the then outstanding shares of
Common Stock of Foothill, or (ii) the consummation of an Acquisition
Transaction, except that the percentage referred to in clause (z) of Section
2(b)(i) shall be 50%.
SECTION 8. (a) In the event that prior to an
Exercise Termination Event, Issuer shall enter into an agreement (i) to
consolidate or merge with any person, other than Grantee or a Grantee
Subsidiary, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or a
Grantee Subsidiary, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger represent less
than 50% of the outstanding shares and share equivalents of the merged company,
or (iii) to sell or otherwise transfer all or substantially all of its or any
Material Subsidiary's assets to any person, other than Grantee or a Grantee
Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (x) the Acquiring Corporation
(as defined below) or (y) any person that controls the Acquiring Corporation
(the Acquiring Corporation and any such controlling person being hereinafter
referred to as the "Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such
number of shares of the Substitute Common Stock (as is hereinafter defined) as
is equal to the market/offer price (as defined in Section 7) multiplied by the
number of shares of the Issuer Common Stock for which the Option was
theretofore exercisable, divided by the Average Price (as is hereinafter
defined). The exercise price of the Substitute Option per share of the
Substitute Common Stock (the "Substitute Purchase Price") shall then be equal
to the Option Price multiplied by a fraction in which the numerator is the
number of shares of the Issuer Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares for which
the Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same
terms as the Option, provided that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms shall be as
similar as possible and in no event less
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<PAGE> 10
advantageous to Grantee, provided further that the terms of the Substitute
Option shall include (by way of example and not limitation) provisions for the
repurchase of the Substitute Option and Substitute Common Stock by the
Substitute Option Issuer on the same terms and conditions as provided in
Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer
is the continuing or surviving person, and (iii) the transferee of all
or any substantial part of the Issuer's assets (or the assets of any
Issuer subsidiary);
(ii) "Substitute Common Stock" shall mean the
common stock issued by the Substitute Option Issuer upon exercise of
the Substitute Option; and
(iii) "Average Price" shall mean the average
closing price of a share of the Substitute Common Stock for the one
year immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the shares
of the Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with
respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls or is controlled
by such merging person, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exerciseable for more than 18.89% of
the aggregate of the shares of the Substitute Common Stock outstanding
immediately prior to the issuance of the Substitute Option. In the event that
the Substitute Option would be exercisable for more than 18.89% of the
aggregate of the shares of Substitute Common Stock but for this clause (e), the
Substitute Option Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the Substitute Option
after giving effect to the limitation in the clause (e). This difference in
value shall be determined by a nationally recognized investment banking firm
selected by Grantee and the Substitute Option Issuer.
SECTION 9. Notwithstanding Sections 2, 6 and 7, if
Grantee has given the notice referred to in one or more of such Sections, the
exercise of the rights specified in any such Section shall be extended (a) if
the exercise of such rights requires obtaining regulatory approvals (including
any required waiting periods) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and (b) to the extent necessary to
avoid liability under Section 16(b) of the Securities Exchange Act by reason of
such exercise; provided that in no event shall any closing date occur more than
18 months after the related Notice Date, and, if the closing date shall not
have occurred within such period due to the failure to obtain any required
approval by the Federal
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Reserve Board or any other Governmental Authority despite the best efforts of
Issuer or the Substitute Option Issuer, as the case may be, to obtain such
approvals, the exercise of the Option shall be deemed to have been rescinded as
of the related Notice Date. In the event (a) Grantee receives official notice
that an approval of the Federal Reserve Board or any other Governmental
Authority required for the purchase and sale of the Option Shares will not be
issued or granted or (b) a closing date has not occurred within 18 months after
the related Notice Date due to the failure to obtain any such required
approval, Grantee shall be entitled to exercise the Option in connection with
the resale of the Option Shares pursuant to a registration statement as
provided in Section 6. Nothing contained in this Agreement shall restrict
Grantee from specifying alternative means of exercising rights pursuant to
Sections 2, 6 or 7 hereof in the event that the exercising of any such rights
shall not have occurred due to the failure to obtain any required approval
referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to
Grantee as follows:
(a) Issuer has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
approved by the Board of Directors of Issuer and no other corporate proceedings
on the part of Issuer are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly
executed and delivered by, and constitutes a valid and binding obligation of,
Issuer, enforceable against Issuer in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought; and
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise or the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, at all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
non-assessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
SECTION 11. (a) Neither of the parties hereto may
assign any of its rights or delegate any of its obligations under this
Agreement or the Option created hereunder to any other person without the
express written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Preliminary
Purchase Event.
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<PAGE> 12
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the
beginning thereof substantially as follows:
The transfer of the option represented by
this assignment and the related option
agreement is subject to resale restrictions
arising under the Securities Act of 1933, as
amended, and to certain provisions of an
agreement between Norwest Corporation and
Foothill Group, Inc. ("Issuer"), dated as of
the _____ day of _____________, 1995. A copy
of such agreement is on file at the principal
office of Issuer and will be provided to any
permitted assignee of the Option without
change upon receipt by Issuer of a written
request therefor.
It is understood and agreed that (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel, in form and substance satisfactory to Issuer, to the effect that such
legend is not required for purposes of the Securities Act; (ii) the reference
to the provisions of this Agreement in the above legend shall be removed by
delivery of substitute assignments without such reference if the Option has
been sold or transferred in compliance with the provisions of this Agreement
and under circumstances that do not require the retention of such reference;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
assignments shall bear any other legend as may be required by law.
SECTION 12. Each of Grantee and Issuer will use its
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation, if
necessary, applying to the Federal Reserve Board under the BHC Act for approval
to acquire the shares issuable hereunder.
SECTION 13. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties shall hereto be
enforceable by either party hereto through injunctive or other equitable
relief. Both parties further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such equitable
relief and that this provision is without prejudice to any other rights that
the parties hereto may have for any failure to perform this Agreement.
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<PAGE> 13
SECTION 14. 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 Grantee is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to Section 7, the
full number of shares of Common Stock provided in Section 1(a) (as adjusted
pursuant hereto), it is the express intention of Issuer to allow Grantee to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
SECTION 15. All notices, requests, claims, demands
and other communications hereunder shall be deemed to have been duly given when
delivered in person, by cable, telegram, telecopy or telex, or by registered or
certified mail (postage prepaid, return receipt requested) at the respective
addresses of the parties set forth in the Plan.
SECTION 16. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
SECTION 17. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement and shall be effective at the
time of execution.
SECTION 18. Except as otherwise expressly provided
herein, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
SECTION 19. Except as otherwise expressly provided
herein or in the Plan, this Agreement contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except as expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement
and not defined herein but defined in the Plan shall have the meanings assigned
thereto in the Plan.
SECTION 21. Nothing contained in this Agreement shall
be deemed to authorize Issuer or Grantee to breach any provision of the Plan.
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<PAGE> 14
SECTION 22. In the event that any selection or
determination is to be made by Grantee or the Owner hereunder and at the time
of such selection or determination there is more than one Grantee or Owner,
such selection shall be made by a majority in interest of such Grantee or
Owners.
SECTION 23. In the event of any exercise of the
option by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
SECTION 24. Except to the extent Grantee exercises
the Option, Grantee shall have no rights to vote or receive dividends or have
any other rights as a shareholder with respect to shares of Common Stock
covered hereby.
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IN WITNESS WHEREOF, each of the parties has caused this Stock
Option Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
NORWEST CORPORATION
By:___________________________________
Name:
Title:
FOOTHILL GROUP, INC.
By:___________________________________
Name:
Title:
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<PAGE> 1
EXHIBIT 2.3
May 15, 1995
F6460-0055
The Foothill Group, Inc.
11111 Santa Monica Boulevard, Ste. 1500
Los Angeles, CA 90025-3333
Gentlemen:
This letter agreement is executed in connection with the Agreement and
Plan of Reorganization dated the date hereof ("Merger Agreement") by and
between The Foothill Group, Inc., a Delaware corporation, and Norwest
Corporation, a Delaware corporation. Capitalized terms not otherwise defined
herein have the meaning accorded them in the Note Agreement by and among
Foothill Capital Corporation and the "Purchasers" listed therein dated as of
October 1, 1993 ("Note Agreement").
Foothill Capital Corporation ("Foothill") agrees to use its best
efforts to negotiate for and amend its various agreements relating to
Indebtedness for Borrowed Money ("Loan Agreements") to increase the Senior
Indebtedness leverage ratio in the Loan Agreements to 400% of the Senior
Borrowing Base (sometimes referred to in our discussions as Permissible Senior
Indebtedness).
Subject to the following paragraph, if Foothill is unable to amend the
Loan Agreements to increase the Senior Indebtedness leverage ratio, Foothill
shall have the right from time to time prior to the Effective Time (as defined
in the Merger Agreement) to arrange, obtain and incur additional Subordinated
Indebtedness ("Financing") in principal amounts and on the terms necessary in
order for Foothill to satisfy the most restrictive Senior Indebtedness leverage
ratio in any one of the Loan Agreements to which it is a party as of the date
hereof at then prevailing actual or implied market rates.
Foothill shall give Norwest notice of a proposed Financing indicating
the terms by which it expects it could obtain the Financing from existing or
new lenders (the "Notice"). Within three (3) business days of receipt of the
Notice, Norwest will notify Foothill of the Norwest agreement to provide the
Financing on the same or better terms disclosed in the Notice. If Norwest
declines to so agree or if it fails to respond to the Notice
<PAGE> 2
Foothill Group, Inc.
May 15, 1995
Page 2
within the three (3) business day period, Foothill may within 90 days from the
date of the Notice proceed with the Financing.
In the event that the Merger Agreement shall have been terminated by
Foothill pursuant to paragraph 9(a)(ii) because of the failure of Norwest to
perform or observe in all material respects the covenants and agreements to be
performed by Norwest and all of the conditions to consummation of the "Merger"
(as defined in the Merger Agreement) set forth in Section 7 have been satisfied
or, with respect to conditions relating to the delivery of officers'
certificates and opinions, would have been satisfied had the "Closing" (as
defined in the Merger Agreement) actually occurred, Norwest shall within 10
business days of the receipt of written demand by The Foothill Group, Inc.
provide, at Foothill's option, up to $25 million of Subordinated Debt subject
to the terms and conditions set forth in the Note Agreement, but at the
prevailing market rates based on Foothill's independent actual or implied
credit ratings as of the date of demand.
NORWEST CORPORATION
By ______________________________
AGREED AND ACCEPTED:
The Foothill Group, Inc.
By ______________________________
Foothill Capital Corporation
By ______________________________
