<PAGE>
As filed with the Securities and Exchange Commission on August 8, 1994
Registration No. 033-54513
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
__________________
NORWEST CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 6711 41-0449260
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1000
612-667-1234
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
__________________
<TABLE>
<S> <C>
Stanley S. Stroup, Esq.
Executive Vice President and General Counsel Copy to:
Norwest Corporation H. Bernt von Ohlen, Esq.
Norwest Center Norwest Corporation
Sixth and Marquette Norwest Center
Minneapolis, Minnesota 55479-1026 Sixth and Marquette
612-667-8858 Minneapolis, Minnesota 55479-1026
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
</TABLE>
__________________
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of the Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
===============================================================================
<PAGE>
LAPORTE BANCORP
7425 INDIANAPOLIS BOULEVARD
HAMMOND, INDIANA 46324
August 10, 1994
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
LaPorte Bancorp ("LaPorte") to be held at the main office of LaPorte Bank and
Trust Company, 601 Jackson Street, LaPorte, Indiana, on Friday, September 9,
1994, at 8:00 a.m., local time. At the Special Meeting you will be asked to
consider and vote upon the Agreement and Plan of Reorganization, dated as of
February 7, 1994, as amended, between LaPorte and Norwest Corporation
("Norwest"), and the related Agreement and Plan of Merger (together, the
"Merger Agreement"), providing for the merger of a wholly owned subsidiary of
Norwest with LaPorte (the "Merger").
Under the terms of the Merger Agreement, the Merger will result in the
conversion of each share of LaPorte Common Stock and of LaPorte Series C
Preferred Stock outstanding immediately prior to the time the Merger becomes
effective into a number of shares of Norwest Common Stock determined in
accordance with the provisions of the Merger Agreement, which are described in
the accompanying Proxy Statement-Prospectus for the Special Meeting.
The enclosed Proxy Statement-Prospectus contains a more complete description
of the terms of the Merger. You are urged to read the Proxy Statement-
Prospectus carefully.
The Board of Directors has approved the Merger Agreement as being in the best
interest of LaPorte's shareholders and recommends that you vote in favor of
the Merger. LaPorte has received an opinion from Mercer Capital Management,
Inc., a business valuation and financial advisory firm experienced in the
valuation of banking institutions, that the terms of the Merger are fair to
LaPorte's shareholders from a financial point of view. Also, it is a condition
to consummation of the Merger that LaPorte receive at closing an opinion of
counsel to the effect that the Merger will be treated as a tax-free
reorganization for federal income tax purposes. YOU SHOULD CONSULT YOUR OWN
TAX ADVISOR CONCERNING THE FEDERAL, AND ANY APPLICABLE FOREIGN, STATE, AND
LOCAL, INCOME TAX CONSEQUENCES OF THE MERGER.
In order to ensure that your vote is represented at the Special Meeting,
PLEASE DATE, SIGN, AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
If you attend the meeting, you may vote in person if you wish, even though you
have previously returned your proxy.
Clayton W. Anderson
Chairman of the Board and President
<PAGE>
LAPORTE BANCORP
7425 INDIANAPOLIS BOULEVARD
HAMMOND, INDIANA 46324
----------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
ON SEPTEMBER 9, 1994
---------------------------------------------
A special meeting of shareholders (the "Special Meeting") of LaPorte
Bancorp ("LaPorte"), an Indiana corporation, will be held at the main office
of LaPorte Bank and Trust Company, 601 Jackson Street, LaPorte, Indiana, on
Friday, September 9, 1994, at 8:00 a.m., local time, for the following
purposes:
1. To consider and vote upon the Agreement and Plan of Reorganization,
dated as of February 7, 1994, as amended, (including the Agreement and
Plan of Merger attached thereto) between LaPorte and Norwest Corporation
("Norwest"), a Delaware corporation, a copy of which is included in the
accompanying Proxy Statement-Prospectus as Appendix A, under the terms of
which a wholly owned subsidiary of Norwest would be merged with LaPorte
(the "Merger"), with LaPorte as the surviving corporation, and each
outstanding share of Common Stock, par value $1.00 per share, of LaPorte
and each outstanding share of Series C 10% Cumulative Preferred Stock, par
value $50.00 per share, of LaPorte would be converted into shares of
common stock, par value $1 2/3 per share, of Norwest; and to authorize
such further action by the Board of Directors and proper officers of
LaPorte as may be necessary or appropriate to carry out the intent and
purposes of the Merger.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record on the books of LaPorte at the close of
business on July 31, 1994, will be entitled to vote at the Special Meeting or
any adjournments thereof.
Shareholders of LaPorte have the right to dissent from the Merger by
properly exercising their dissenters' rights in strict compliance with the
procedures set forth in Chapter 44 of the Indiana Business Corporation Law
(Indiana Code, Chapter 23-1-44), a copy of which is attached as Appendix C to
the Proxy Statement-Prospectus.
Your attention is directed to the Proxy Statement-Prospectus accompanying
this notice for a more complete statement regarding the matters to be acted
upon at the Special Meeting.
By Order of the Board of Directors
Simon P. Gary
Secretary and Treasurer
August 10, 1994
HOLDERS OF LAPORTE COMMON STOCK AND OF LAPORTE PREFERRED STOCK ARE URGED TO
COMPLETE, SIGN, DATE, AND MAIL THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AND VOTE
IN PERSON. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE IN THE
MANNER DESCRIBED IN THE PROXY STATEMENT-PROSPECTUS.
<PAGE>
PROXY STATEMENT OF
LAPORTE BANCORP
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 9, 1994
---------------------
PROSPECTUS
OF
NORWEST CORPORATION
COMMON STOCK
This Prospectus of Norwest Corporation ("Norwest") relates to up to
650,000 shares of the common stock, par value $1 2/3 per share, of Norwest
("Norwest Common Stock") issuable to the shareholders of LaPorte Bancorp
("LaPorte") upon consummation of the proposed merger (the "Merger") of a
wholly owned subsidiary of Norwest with LaPorte, with LaPorte as the surviving
corporation, pursuant to the terms of an Agreement and Plan of Reorganization,
dated as of February 7, 1994, as amended, between LaPorte and Norwest
(together with the Agreement and Plan of Merger attached thereto, the "Merger
Agreement"). A copy of the Merger Agreement is attached as Appendix A to this
Proxy Statement-Prospectus and incorporated by reference herein.
This Prospectus also serves as the Proxy Statement of LaPorte for a
special meeting of its shareholders to be held on September 9, 1994 (the
"Special Meeting").
Except as described herein, upon consummation of the Merger, each
outstanding share of Common Stock, par value $1.00 per share, of LaPorte
("LaPorte Common Stock") and each outstanding share of Series C 10% Cumulative
Preferred Stock, par value $50.00 per share, of LaPorte ("LaPorte Preferred
Stock") will be converted into shares of Norwest Common Stock. The actual
number of shares of Norwest Common Stock to be issued upon consummation of the
Merger will be based in part on the market price of Norwest Common Stock
determined during a measurement period provided for in the Merger Agreement.
Based on the conversion factor which would have been applicable if the closing
of the Merger had occurred on August 5, 1994, approximately 1.824 shares of
Norwest Common Stock would have been issued for each outstanding share of
LaPorte Common Stock and approximately 1.969 shares of Norwest Common Stock
would have been issued for each outstanding share of LaPorte Preferred
Stock.
For a more complete description of the Merger Agreement and the terms of
the Merger, see "THE MERGER."
This Proxy Statement-Prospectus and the form of proxy are first being
mailed to shareholders of LaPorte on or about August 10, 1994.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Proxy Statement-Prospectus is August 10, 1994.
<PAGE>
AVAILABLE INFORMATION
Norwest is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
therewith, Norwest files reports, proxy statements, and other information with
the Securities and Exchange Commission (the "Commission").
Reports, proxy statements, and other information concerning Norwest can be
inspected and copied at the public reference facilities of the Commission,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located at Seven World Trade Center, Suite 1300, New
York, New York 10048, and at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials can be obtained at prescribed
rates by writing to the Commission, Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549. Reports, proxy statements, and other
information filed by Norwest also may be inspected at the offices of the New
York Stock Exchange at 20 Broad Street, New York, New York 10005 and at the
offices of the Chicago Stock Exchange at One Financial Place, 440 South
LaSalle Street, Chicago, Illinois 60605.
This Proxy Statement-Prospectus does not contain all of the information
set forth in the Registration Statement on Form S-4 and the exhibits thereto
(the "Registration Statement") covering the securities offered hereby that
Norwest has filed with the Commission. Certain portions of the Registration
Statement have been omitted pursuant to the rules and regulations of the
Commission. Reference is hereby made to such omitted portions for further
information with respect to Norwest, LaPorte, and the securities offered
hereby.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DOCUMENTS RELATING TO
NORWEST, EXCLUDING EXHIBITS, UNLESS SPECIFICALLY INCORPORATED THEREIN, ARE
AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST TO LAUREL A. HOLSCHUH,
SECRETARY, NORWEST CORPORATION, NORWEST CENTER, SIXTH AND MARQUETTE,
MINNEAPOLIS, MINNESOTA 55479-1026, TELEPHONE (612) 667-8655. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
SEPTEMBER 1, 1994.
The following documents filed by Norwest with the Commission are
incorporated by reference in, and made a part of, this Proxy Statement-
Prospectus: (i) Annual Report on Form 10-K for the year ended December 31,
1993, as amended by Form 10-K/A dated May 13, 1994; (ii) Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994; and (iii) Current Reports on
Form 8-K dated February 15, 1994, and July 21, 1994.
All documents filed by Norwest with the Commission pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date hereof
and prior to the Special Meeting shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of such filing. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein or in any other
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part hereof.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
AVAILABLE INFORMATION......................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................... 3
SUMMARY....................................................................... 6
The Companies............................................................. 6
Terms of the Merger....................................................... 7
Special Meeting and Vote Required......................................... 7
Reasons for the Merger; Recommendation of the LaPorte Board of Directors.. 8
Fairness Opinion.......................................................... 8
Effective Date and Time of the Merger..................................... 8
Accounting Treatment...................................................... 8
Regulatory Approvals...................................................... 9
Management and Operations After the Merger................................ 9
Dissenters' Rights........................................................ 9
Certain Federal Income Tax Considerations................................. 9
Market Information........................................................ 9
Certain Differences in Rights of Shareholders............................. 10
Comparative Unaudited Per Share Data...................................... 10
Selected Financial Data................................................... 12
MEETING INFORMATION........................................................... 16
General................................................................... 16
Date, Place, and Time..................................................... 16
Record Date; Vote Required................................................ 16
Principal Shareholders and Security Ownership of Management of LaPorte.... 17
Voting and Revocation of Proxies.......................................... 20
Solicitation of Proxies................................................... 21
THE MERGER.................................................................... 21
Background of and Reasons for the Merger.................................. 21
Terms of the Merger....................................................... 22
Fairness Opinion.......................................................... 23
Effective Date and Time of the Merger..................................... 24
Surrender of Certificates................................................. 24
Conditions to the Merger.................................................. 25
Regulatory Approvals...................................................... 26
Business Pending the Merger............................................... 27
Waiver, Amendment, and Termination........................................ 29
Management and Operations After the Merger................................ 29
Certain Differences in Rights of Shareholders............................. 29
Rights of Dissenting LaPorte Shareholders................................. 36
Certain Federal Income Tax Considerations................................. 37
Resale of Norwest Common Stock............................................ 38
Dividend Reinvestment and Optional Cash Payment Plan...................... 39
Accounting Treatment...................................................... 39
Expenses.................................................................. 39
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
INFORMATION ABOUT LAPORTE.................................................... 39
Business................................................................. 39
Market Information and Dividends......................................... 40
Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................... 41
CERTAIN REGULATORY CONSIDERATIONS............................................ 56
General................................................................. 56
Dividend Restrictions................................................... 56
Holding Company Structure............................................... 56
Capital Requirements.................................................... 57
Federal Deposit Insurance Corporation Improvement Act of 1991........... 58
FDIC Insurance.......................................................... 60
EXPERTS...................................................................... 60
LEGAL OPINIONS............................................................... 61
NORWEST MANAGEMENT AND ADDITIONAL INFORMATION................................ 61
INDEX TO LAPORTE FINANCIAL STATEMENTS........................................ F-1
</TABLE>
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION, AS AMENDED, AND AGREEMENT
AND PLAN OF MERGER
APPENDIX B OPINION OF MERCER CAPITAL MANAGEMENT, INC.
APPENDIX C INDIANA CODE, CHAPTER 23-1-44
---------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE NORWEST
COMMON STOCK OFFERED BY THIS PROXY STATEMENT-PROSPECTUS, OR THE SOLICITATION
OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF NORWEST OR LAPORTE SINCE THE DATE OF THIS PROXY
STATEMENT-PROSPECTUS.
5
<PAGE>
SUMMARY
The following summary is not intended to be complete and is qualified in
all respects by the more detailed information included in this Proxy
Statement-Prospectus, the Appendices hereto, and the documents incorporated by
reference herein. As used in this Proxy Statement-Prospectus, the terms
"Norwest" and "LaPorte" refer to such entities, respectively, and where the
context requires, such entities and their respective subsidiaries. All
information concerning Norwest included in this Proxy Statement-Prospectus has
been furnished by Norwest, and all information concerning LaPorte included in
this Proxy Statement-Prospectus has been furnished by LaPorte to Norwest for
incorporation herein.
THE COMPANIES
NORWEST CORPORATION
Norwest Corporation is a regional bank holding company which was
organized under the laws of Delaware in 1929 and is registered under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). As a diversified
financial services organization, Norwest operates through subsidiaries engaged
in banking and in related businesses. Norwest provides retail, commercial,
and corporate banking services to its customers through banks located in
Arizona, Colorado, Illinois, Indiana, Iowa, Minnesota, Montana, Nebraska, New
Mexico, North Dakota, Ohio, South Dakota, Texas, Wisconsin, and Wyoming.
Norwest provides additional financial services to its customers through
subsidiaries engaged in various businesses, principally mortgage banking,
consumer finance, equipment leasing, agricultural finance, commercial finance,
securities brokerage and investment banking, insurance, computer and data
processing services, trust services, and venture capital investments.
At March 31, 1994, Norwest had consolidated total assets of $55.3
billion, total deposits of $35.3 billion, and total stockholders' equity of
$3.9 billion. Based on total assets at March 31, 1994, Norwest was the 13th
largest commercial banking organization in the United States.
Norwest regularly explores opportunities for acquisitions of financial
institutions and related businesses. In connection with many of its completed
acquisitions, Norwest has issued its Common Stock to the shareholders of the
acquired entity and can be expected to continue to do so in the future.
Generally, management of Norwest does not make any public announcement about a
potential acquisition until a definitive agreement has been signed. Norwest
has entered into definitive agreements for the acquisition of various
financial institutions, including LaPorte, having aggregate total assets at
March 31, 1994, of $1.1 billion. Three of these acquisitions were completed
subsequent to March 31, 1994, and the others remain subject to regulatory
approval and are expected to be completed before the end of 1994. None of
these acquisitions is significant to the financial statements of Norwest,
either individually or in the aggregate.
Norwest's principal executive offices are located at Norwest Center,
Sixth and Marquette, Minneapolis, Minnesota 55479-1000, and its telephone
number is 612-667-1234.
Additional information concerning Norwest is included in the Norwest
documents incorporated by reference herein. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
6
<PAGE>
LAPORTE BANCORP
LaPorte is a bank holding company organized under the laws of Indiana in
1982. Its principal executive offices are located at 7425 Indianapolis
Boulevard, Hammond, Indiana 46324, and its telephone number is 219-844-1010.
It holds 100% of the issued and outstanding capital stock of LaPorte Bank and
Trust Company (the "Bank"), a full service commercial bank chartered under the
laws of Indiana. At March 31, 1994, on a consolidated basis, LaPorte had
total assets of $141.3 million, total deposits of $127.1 million, and total
shareholders' equity of $9.7 million. See "INFORMATION ABOUT LAPORTE."
TERMS OF THE MERGER
The Merger Agreement provides for the merger of a wholly owned subsidiary
of Norwest with LaPorte, with LaPorte as the surviving corporation. Upon
consummation of the Merger, the outstanding shares of LaPorte Common Stock and
of LaPorte Preferred Stock (other than shares as to which statutory
dissenters' rights have been exercised and not forfeited) will be converted
into a number of shares of Norwest Common Stock determined in accordance with
the provisions of the Merger Agreement. The exact number of shares of Norwest
Common Stock into which each outstanding share of LaPorte Common Stock will be
converted will be determined by a conversion factor (the "Common Stock
Conversion Factor") based on the average of the closing prices of Norwest
Common Stock during a specified period and the number of shares of LaPorte
Common Stock outstanding at the Effective Time of the Merger (as defined
below). The exact number of shares of Norwest Common Stock into which each
outstanding share of LaPorte Preferred Stock will be converted will be
determined by a conversion factor (the "Preferred Stock Conversion Factor")
based on an adjusted redemption price per share and on the average of the
closing prices of Norwest Common Stock during a specified period. See "THE
MERGER--Terms of the Merger."
SPECIAL MEETING AND VOTE REQUIRED
SPECIAL MEETING
The special meeting of LaPorte shareholders to consider and vote on the
Merger will be held on Friday, September 9, 1994, at 8:00 a.m., local time, at
the main office of the Bank, 601 Jackson Street, LaPorte, Indiana. Only
holders of record of LaPorte Common Stock and LaPorte Preferred Stock at the
close of business on July 31, 1994, will be entitled to vote at the Special
Meeting. At such date, there were 273,134.065 shares of LaPorte Common Stock
and 41,526 shares of LaPorte Preferred Stock outstanding. Each share of
LaPorte Common Stock and of LaPorte Preferred Stock is entitled to one vote.
For additional information relating to the Special Meeting, see "MEETING
INFORMATION."
VOTE REQUIRED
Approval of the Merger Agreement requires the affirmative vote of the
holders of (i) a majority of the outstanding shares of LaPorte Common Stock
and (ii) two-thirds of the outstanding shares of LaPorte Preferred Stock. As
of the record date for the Special Meeting, directors and officers of LaPorte
and their affiliates owned beneficially or controlled the voting of an
aggregate of 119,781.5 shares of LaPorte Common Stock and 5,300 shares of
LaPorte Preferred Stock, or approximately 43.85% and 12.76% of the shares of
LaPorte Common
7
<PAGE>
Stock and LaPorte Preferred Stock, repsectively, outstanding on that date.
LaPorte's directors and officers have informed LaPorte that they intend to
vote all of their shares in favor of approval of the Merger Agreement. At the
record date, directors and executive officers of Norwest did not own
beneficially any shares of LaPorte Common Stock or LaPorte Preferred Stock.
See "MEETING INFORMATION--Record Date; Vote Required" and "MEETING
INFORMATION--Principal Shareholders and Security Ownership of Management of
LaPorte."
REASONS FOR THE MERGER; RECOMMENDATION OF THE LAPORTE BOARD OF DIRECTORS
LaPorte's Board of Directors has unanimously determined that the Merger is
in the best interest of LaPorte and its shareholders. The Board of Directors
based its decision on a number of factors, including among others (a) the
potential operational and managerial benefits that could be derived from the
Merger, (b) the absence of a trading market for LaPorte's Common Stock and
Preferred Stock and the greater liquidity that shareholders might enjoy by
being shareholders of a larger institution with a larger shareholder base, and
(c) the consideration to be received by LaPorte's shareholders in the Merger
in relation to the book value and earnings of LaPorte. The Board of Directors
also believes that the Merger will allow the Bank to offer a greater diversity
of products and services to its customers. See "THE MERGER--Background of and
Reasons for the Merger."
THE BOARD OF DIRECTORS OF LAPORTE UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE MERGER.
---
FAIRNESS OPINION
Mercer Capital Management, Inc. has delivered its written opinion to
LaPorte's Board of Directors that, as of the date of this Proxy Statement-
Prospectus, the terms of the Merger are fair to LaPorte's shareholders from a
financial point of view. A copy of this opinion is attached hereto as
Appendix B. See "THE MERGER--Fairness Opinion."
EFFECTIVE DATE AND TIME OF THE MERGER
Subject to the terms and conditions of the Merger Agreement, the Merger
will be effective on the date on which the appropriate filings are made with
the Secretary of State of the State of Indiana (the "Effective Date of the
Merger") at 11:59 p.m., Minneapolis, Minnesota time (the "Effective Time of
the Merger"). Such filings shall be made ten business days following the
satisfaction or waiver of all conditions set forth in the Merger Agreement or
on such other date upon which the parties may agree. The closing of the
Merger will occur on the Effective Date of the Merger (the "Closing Date").
See "THE MERGER--Effective Date and Time of the Merger" and "THE MERGER--
Conditions to the Merger."
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a purchase
under generally accepted accounting principles. See "THE MERGER--Accounting
Treatment."
8
<PAGE>
REGULATORY APPROVALS
The Merger is subject to both the prior approval of the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board") and the approval
of the Indiana Department of Financial Institutions. Both approvals have been
received. See "THE MERGER--Regulatory Approvals."
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Following the Merger, Norwest intends to operate at the Bank's present
locations and to offer products and services offered by Norwest affiliates.
See "THE MERGER--Management and Operations After the Merger."
DISSENTERS' RIGHTS
Under Indiana law, LaPorte shareholders who dissent from the Merger are
entitled to obtain payment of the fair value of their shares instead of
receiving Norwest Common Stock in the Merger. Failure to comply with
statutory procedures in the exercise of dissenters' rights will nullify such
rights. See "THE MERGER--Rights of Dissenting LaPorte Shareholders."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
It is a condition to consumation of the Merger that LaPorte receive at
closing an opinion of counsel generally to the effect that, among other
things, for federal income tax purposes the Merger will constitute a tax-free
reorganization and no gain or loss will be recognized by LaPorte shareholders
upon receipt of Norwest Common Stock in the Merger. See "THE MERGER--Certain
Federal Income Tax Considerations."
MARKET INFORMATION
Norwest Common Stock is listed on the New York Stock Exchange (the
"NYSE") and the Chicago Stock Exchange (the "CHX"). On February 4, 1994, the
last trading day preceding public announcement of the proposed Merger, the
closing price per share of Norwest Common Stock was $25.75 and on August 5,
1994, the price was $26.125. Shareholders of LaPorte are advised to obtain
current market quotations for Norwest Common Stock. The market price for
Norwest Common Stock and, thus, the Norwest Measurement Price will fluctuate
between the date of this Proxy Statement-Prospectus and the Effective Date of
the Merger, which may be a period of several weeks or more. As a result, the
market value per share of the Norwest Common Stock that shareholders of
LaPorte ultimately receive in the Merger could be more or less than its market
value on the date of this Proxy Statement-Prospectus. No assurance can be
given concerning the market price of Norwest Common Stock before or after the
Effective Date of the Merger.
There is no public market for LaPorte Common Stock or LaPorte Preferred
Stock. See "INFORMATION ABOUT LAPORTE--Market Information and Dividends."
9
<PAGE>
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
Upon consummation of the Merger, shareholders of LaPorte will become
stockholders of Norwest. As a result, such shareholders' rights will change
significantly. See "THE MERGER--Certain Differences in Rights of
Shareholders."
COMPARATIVE UNAUDITED PER SHARE DATA
The following table presents selected comparative unaudited per share data
for Norwest Common Stock on a historical and pro forma combined basis and for
LaPorte Common Stock on a historical and a pro forma equivalent basis giving
effect to the Merger using the purchase method of accounting. See "THE
MERGER--Accounting Treatment." This information is derived from the
consolidated historical financial statements of Norwest, including the related
notes thereto, incorporated by reference into this Proxy Statement-Prospectus
and the consolidated historical financial statements of LaPorte, including the
notes thereto, appearing elsewhere in this Proxy Statement-Prospectus. This
information should be read in conjunction with such consolidated historical
financial statements and the related notes thereto. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE" and "INDEX TO LAPORTE FINANCIAL STATEMENTS."
This data is not necessarily indicative of the results of the future
operations of the combined entity or the actual results that would have
occurred had the Merger been consummated prior to the periods indicated.
10
<PAGE>
COMPARATIVE UNAUDITED PER SHARE DATA
<TABLE>
<CAPTION>
Norwest Common Stock LaPorte Common Stock
--------------------- ----------------------
Pro Forma Pro Forma
Historical Combined Historical Equivalent
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
BOOK VALUE (1):
March 31, 1994 $11.14 11.14 28.08 20.45
December 31, 1993 11.00 11.01 27.81 20.21
DIVIDENDS DECLARED (2):
Three Months Ended
March 31, 1994 0.185 0.185 -- 0.340
Year Ended
December 31, 1993 0.640 0.640 -- 1.175
NET INCOME (3):
Three Months Ended
March 31, 1994 0.58 0.57 0.86 1.06
Year Ended
December 31, 1993 1.86 1.86 3.93 3.41
</TABLE>
(1) The pro forma combined book values per share of Norwest Common Stock are
based upon the historical total combined common equity for Norwest and LaPorte
divided by total pro forma common shares of the combined entities assuming (i)
conversion of the outstanding LaPorte Common Stock at a Common Stock Conversion
Factor of 1.836 and (ii) conversion of the outstanding LaPorte Preferred Stock
at a Preferred Stock Conversion Factor of 1.963. The pro forma equivalent book
values per share of LaPorte Common Stock represent the pro forma combined
amounts multiplied by the assumed Common Stock Conversion Factor. See "THE
MERGER--Terms of the Merger."
(2) Assumes no changes in cash dividends per share. The pro forma equivalent
dividends per share of LaPorte Common Stock represent cash dividends declared
per share of Norwest Common Stock multiplied by 1.836.
(3) The pro forma combined net income per share of Norwest Common Stock (based
on fully diluted weighted average shares outstanding) is based upon the combined
historical net income for Norwest and LaPorte divided by the average pro forma
common shares of the combined entities. The pro forma equivalent net income per
share of LaPorte Common Stock represents the pro forma combined net income per
share amounts multiplied by 1.836.
11
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth certain selected historical consolidated
financial information for Norwest and LaPorte. The income statement and
balance sheet data included in the selected financial data for the five years
ended December 31, 1993, are derived from audited consolidated financial
statements of Norwest and LaPorte for such five-year period. The selected
financial data for the three-month periods ended March 31, 1994 and 1993, are
derived from the unaudited historical financial statements of Norwest and
LaPorte. All financial information derived from unaudited financial
statements reflects, in the respective opinions of management of Norwest and
LaPorte, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such data. Results for the three months
ended March 31, 1994, are not necessarily indicative of the results that may
be expected for any other interim period or for the year as a whole. This
information should be read in conjunction with the consolidated financial
statements of Norwest and the related notes thereto, included in documents
incorporated herein by reference, and in conjunction with the consolidated
financial statements of LaPorte, including the notes thereto, appearing
elsewhere in this Proxy Statement-Prospectus. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" and "INDEX TO LAPORTE FINANCIAL STATEMENTS."
12
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31 YEAR ENDED DECEMBER 31
------------------- -----------------------------------------------
1994 1993 1993(1) 1992(2) 1991 1990(3) 1989(4)
--------- -------- ----------- ----------- -------- ----------- -----------
(In millions except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
NORWEST:
Interest income $ 992.8 967.8 3,946.3 3,806.4 4,025.9 3,885.7 3,624.5
Interest expense 342.9 357.2 1,442.9 1,610.6 2,150.3 2,320.0 2,210.1
--------- -------- -------- -------- -------- -------- --------
Net interest income 649.9 610.6 2,503.4 2,195.8 1,875.6 1,565.7 1,414.4
Provision for credit losses 36.3 38.1 158.2 270.8 406.4 433.0 233.5
Non-interest income 434.1 349.1 1,585.0 1,273.7 1,064.0 896.3 728.5
Non-interest expense 769.1 683.7 3,050.4 2,553.1 2,041.5 1,744.5 1,525.9
--------- -------- -------- -------- -------- -------- --------
Income before income taxes 278.6 237.9 879.8 645.6 491.7 284.5 383.5
Income tax expense 88.1 79.6 266.7 175.6 73.4 115.1 99.0
--------- -------- -------- -------- -------- -------- --------
Income before cumulative effect
of a change in accounting method 190.5 158.3 613.1 470.0 418.3 169.4 284.5
Cumulative effect on years prior
to 1992 of change in accounting method -- -- -- (76.0) -- -- --
--------- -------- -------- -------- -------- -------- --------
Net income $ 190.5 158.3 613.1 394.0 418.3 169.4 284.5
========= ======== ======== ======== ======== ======== ========
Net income per share:
Primary:
Before cumulative effect of a
change in accounting method $ 0.59 0.49 1.89 1.44 1.33 0.59 1.00
Cumulative effect on years prior
to 1992 of change in accounting method -- -- -- (0.25) -- -- --
--------- -------- -------- -------- -------- -------- --------
Net income $ 0.59 0.49 1.89 1.19 1.33 0.59 1.00
========= ======== ======== ======== ======== ======== ========
Fully diluted:
Before cumulative effect of a
change in accounting method $ 0.58 0.48 1.86 1.42 1.32 0.59 1.00
Cumulative effect on years prior
to 1992 of change in accounting method -- -- -- (0.23) -- -- --
--------- -------- -------- -------- -------- -------- --------
Net income $ 0.58 0.48 1.86 1.19 1.32 0.59 1.00
========= ======== ======== ======== ======== ======== ========
Dividends declared per
common share $ 0.185 0.145 0.640 0.540 0.470 0.423 0.380
At period end:
Total assets $55,328.2 48,910.9 54,665.0 50,037.0 45,974.5 43,523.0 38,322.0
Long-term debt 6,829.5 5,500.6 4,553.2 4,553.2 3,686.6 3,066.0 2,720.0
Total stockholders' equity 3,853.3 3,496.3 3,760.9 3,371.8 3,192.3 2,434.0 2,288.2
</TABLE>
13
<PAGE>
(1) On January 14, 1994, First United Bank Group, Inc. ("First United"), a
$3.9 billion bank holding company headquartered in Albuquerque, New Mexico,
was acquired in a pooling transaction. Norwest's historical results have been
restated to include the historical results of First United. Appropriate
Norwest items reflect an increase in First United's provision for credit
losses of $16.5 million to conform with Norwest's credit loss reserve
practices and methods and $83.2 million in accruals and reserves for merger-
related expenses, including termination costs, systems and operations costs,
and investment banking, legal, and accounting expenses.
(2) On February 9, 1993, Lincoln Financial Corporation ("Lincoln"), a $2.0
billion bank holding company headquartered in Fort Wayne, Indiana, was
acquired in a pooling transaction. Norwest's historical results have been
restated to include the historical results of Lincoln. Appropriate Norwest
items reflect an increase in Lincoln's provision for credit losses of $60.0
million and $33.5 million in Lincoln's provisions and expenditures for costs
related to restructuring activities.
(3) On April 19, 1991, United Banks of Colorado, Inc. ("United"), a $5.5
billion financial institution headquartered in Denver, Colorado, merged with
Norwest in a pooling transaction. Norwest's historical results have been
restated to include the historical results of United. Appropriate Norwest
items reflect United's special provisions for credit losses and writedowns for
other real estate owned, which together totaled $165 million, and $31 million
of accruals for expected reorganization and restructuring costs for the year
ended December 31, 1990. The special provisions were due to deterioration of
several large commercial loan relationships, the anticipated results of the
then recent examination by the Office of the Comptroller of the Currency, and
the anticipated impact of the Resolution Trust Corporation's accelerated
efforts to liquidate foreclosed properties at deep discounts.
(4) On May 1, 1990, First Interstate Corporation of Wisconsin ("FIWI"), a
$2.0 billion financial institution headquartered in Sheboygan, Wisconsin,
merged with Norwest in a pooling transaction. Norwest's historical results
have been restated to include the historical results of FIWI. Appropriate
Norwest items reflect $12.0 million in charges resulting from FIWI's decision
to sell its portfolio of stripped mortgage-backed securities, an increase in
FIWI's provision for credit losses of $16.2 million, and $24.5 million in
FIWI's provisions and expenditures for costs related to restructuring
activities.
14
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31 YEAR ENDED DECEMBER 31
--------------- -------------------------------------
1994 1993 1993 1992 1991 1990 1989
------- ------ ------ ------ ------ ------ -----
(In millions except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
LAPORTE:
Interest income $ 2.4 2.7 10.4 11.8 12.8 13.0 13.0
Interest expense 1.0 1.2 4.7 6.0 7.4 8.0 8.2
------ ----- ----- ----- ----- ----- -----
Net interest income 1.4 1.5 5.7 5.8 5.4 5.0 4.8
Provision for credit losses -- -- -- 0.1 0.6 0.7 0.8
Non-interest income 0.2 0.2 1.1 0.9 1.1 0.9 0.9
Non-interest expenses 1.1 1.2 4.5 4.7 4.6 4.4 4.5
------ ----- ----- ----- ----- ----- -----
Income before income taxes 0.5 0.5 2.3 1.9 1.3 0.8 0.4
Income tax expense 0.2 0.2 0.9 0.8 0.5 0.3 0.1
------ ----- ----- ----- ----- ----- -----
Income before cumulative effect
of a change in accounting method 0.3 0.3 1.4 1.1 0.8 0.5 0.3
Cumulative effect on years prior to 1992
of change in accounting method -- (0.1) (0.1) -- -- -- --
------ ----- ----- ----- -----
Net income $ 0.3 0.3 1.3 1.1 0.8 0.5 0.3
====== ===== ===== ===== ===== ===== =====
Net income per share:
Primary:
Before cumulative effect of a
change in accounting method $ 0.86 0.94 4.33 3.38 2.33 1.18 0.40
Cumulative effect on years prior
to 1992 of change in accounting method -- (0.40) (0.40) -- -- -- --
------ ----- ----- ----- ----- -----
Net income $ 0.86 0.54 3.93 3.38 2.33 1.18 0.40
====== ===== ===== ===== ===== ===== =====
Fully diluted:
Before cumulative effect of a
change in accounting method $ 0.86 0.94 4.33 3.38 2.33 1.18 0.40
Cumulative effect on years prior
to 1993 of change in accounting method -- (0.40) (0.40) -- -- -- --
------ ----- ----- ----- ----- -----
Net income $ 0.86 0.54 3.93 3.38 2.33 1.18 0.40
====== ===== ===== ===== ===== ===== =====
Dividends declared per
common share -- -- -- -- -- -- --
At period end:
Total assets $141.3 141.9 142.5 143.2 140.5 142.3 140.8
Long-term debt 2.3 3.3 2.4 3.4 3.9 4.4 4.6
Total stockholders' equity 9.7 8.7 9.7 8.6 7.0 6.4 6.1
</TABLE>
15
<PAGE>
MEETING INFORMATION
GENERAL
This Proxy Statement-Prospectus is being furnished to holders of LaPorte
Common Stock and LaPorte Preferred Stock in connection with the solicitation
of proxies by the Board of Directors of LaPorte for use at the Special
Meeting, to be held on Friday, September 9, 1994, and any adjournments
thereof, to consider and take action upon a proposal to approve the Merger
Agreement and such other business as may properly come before the Special
Meeting or any adjournments thereof. Each copy of this Proxy Statement-
Prospectus mailed to holders of LaPorte Common Stock and LaPorte Preferred
Stock is accompanied by a form of proxy for use at the Special Meeting.
This Proxy Statement-Prospectus is also being furnished by Norwest to the
shareholders of LaPorte as a prospectus in connection with the issuance by
Norwest of shares of Norwest Common Stock upon consummation of the Merger.
This Proxy Statement-Prospectus, the attached Notice of Special Meeting,
and the form of proxy for LaPorte shareholders enclosed herewith are first
being mailed to shareholders of LaPorte on or about August 10, 1994.
DATE, PLACE, AND TIME
The Special Meeting will be held at the main office of the Bank, 601
Jackson Street, LaPorte, Indiana, on Friday, September 9, 1994, at 8:00 a.m.,
local time.
RECORD DATE; VOTE REQUIRED
SPECIAL MEETING
The Board of Directors of LaPorte has fixed the close of business on
July 31, 1994, as the record date for the determination of shareholders of
LaPorte entitled to receive notice of, and to vote at, the Special Meeting.
On the record date there were 273,134.065 shares of LaPorte Common Stock and
41,526 shares of LaPorte Preferred Stock outstanding. Holders of LaPorte
Preferred Stock are not ordinarily entitled to vote on matters submitted for
consideration at shareholder meetings. However, applicable Indiana corporate
law requires that the holders of LaPorte Preferred Stock approve the Merger as
a separate voting group. In addition, LaPorte's Articles of Incorporation
require the consent of the holders of two-thirds of the outstanding LaPorte
Preferred Stock to effect any exchange or cancellation of the LaPorte
Preferred Stock. Accordingly, each share of LaPorte Common Stock and of
LaPorte Preferred Stock outstanding on the record date is entitled to vote on
approval of the Merger Agreement. Approval of the Merger Agreement requires
the affirmative vote of the holders of (i) a majority of the outstanding
shares of LaPorte Common Stock voting as a single class and (ii) two-thirds of
the outstanding shares of LaPorte Preferred Stock voting as a single class.
The Merger cannot be consummated without the requisite approvals of the Merger
Agreement by both the holders of LaPorte Common Stock and the holders of
LaPorte Preferred Stock.
As of the record date for the Special Meeting, directors and officers of
LaPorte and their affiliates owned beneficially or controlled the voting of an
aggregate of 119,781.5 shares of LaPorte Common Stock and of 5,300 shares of
LaPorte Preferred Stock or approximately 43.85% and 12.76% of the shares of
LaPorte Common Stock and LaPorte Preferred Stock, respectively, outstanding on
that date. LaPorte's directors and officers have informed LaPorte
16
<PAGE>
that they intend to vote all of their shares in favor of the Merger Agreement.
Information regarding the shares of LaPorte Common Stock and LaPorte Preferred
Stock beneficially owned, directly or indirectly, by certain shareholders, by
each director and executive officer of LaPorte, and by all directors and
officers as a group is set forth in the table under the heading "Principal
Shareholders and Security Ownership of Management of LaPorte" below.
At the record date, directors and executive officers of Norwest did not
own beneficially any shares of LaPorte Common Stock or LaPorte Preferred
Stock.
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT OF LAPORTE
COMMON STOCK
Set forth below are the names and addresses of, and the number of shares
and the percentage of outstanding shares beneficially owned as of the record
date for the Special Meeting by, each holder of record who owns of record, or
who is known by LaPorte to be the beneficial owner of, more than 5% of the
outstanding shares of LaPorte Common Stock. Each shareholder named below has
sole voting and investment power over the shares shown in the table, unless
otherwise indicated. The shares shown in the table include all shares the
named parties may be deemed to own beneficially, including shares held by
spouses.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Percent of
Name and Address Owned Outstanding Shares
---------------- ---------------- ------------------
<S> <C> <C>
Clayton W. Anderson 37,817.5(1) 13.85%
7425 Indianapolis Blvd.
Hammond, IN 46324
David P. Cooley 23,737.5(2) 8.69%
7320 Knickerbocker Pkwy.
Hammond, IN 46323
Betty L. Gary 19,370 7.09%
53 W. Leslie La.
Villa Park, IL 60181
George L. Dearborn 15,016.75(3) 5.50%
0352 E. 650 S.
LaPorte, IN 46350
</TABLE>
________________________
(1) Includes 37,716 shares held by a trust of which Mr. Anderson is the
trustee and sole beneficiary. Also includes 98 shares held individually by
Mr. Anderson's wife.
(2) Includes 13,260 shares held by self-directed retirement accounts for which
the Bank serves as trustee.
(3) Includes 10,530 shares held jointly with Mr. Dearborn's wife.
17
<PAGE>
Set forth below is the number of shares of LaPorte Common Stock held by
each director and executive officer, and by all directors and executive
officers as a group, of LaPorte as of the record date for the Special Meeting.
Each shareholder named below has sole voting and investment power over the
shares shown in the table, unless otherwise indicated. The shares shown in
the table include all shares the named parties may be deemed to own
beneficially, including shares held by spouses.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Percent of
Name Owned Outstanding Shares
------------------- ---------------- ------------------
<S> <C> <C>
Clayton W. Anderson 37,817.5(1) 13.85%
David P. Cooley 23,737.5(2) 8.69%
George L. Dearborn 15,016.75(3) 5.50%
Gene M. Fryar 5,270(4) 1.93%
John E. Gardner 3,554.75(5) 1.30%
Simon P. Gary 19,370(6) 7.09%
G. Gregory Gates 12,200 4.47%
Richard E. Pliske 2,640(7) (8)
Harlan A. Siegesmund 175 (8)
Directors and executive officers 119,781.5 43.85%
as a group (9 persons)
</TABLE>
(1) Includes 37,716 shares held by a trust of which Mr. Anderson is the
trustee and sole beneficiary. Also includes 98 shares held individually by
Mr. Anderson's wife.
(2) Includes 13,260 shares held by self-directed retirement accounts for which
the Bank serves as trustee.
(3) Includes 10,530 shares held jointly with Mr. Dearborn's wife.
(4) Consists solely of shares held by Resources Trust Company, as trustee
under an IRA account for Mr. Fryar's benefit.
(5) Includes 3,210 held jointly with Mr. Gardner's wife and 192.5 shares held
individually by his wife.
(6) Consists solely of shares owned by Mr. Gary's wife, Betty L. Gary.
(7) Includes 530 shares held individually by Mr. Pliske's wife.
(8) Less than 1%.
18
<PAGE>
PREFERRED STOCK
Set forth below are the names and addresses of, and the number of shares
and the percentage of outstanding shares beneficially owned as of the record
date for the Special Meeting by, each holder of record who owns of record, or
who is known by LaPorte to be the beneficial owner of, more than 5% of the
outstanding shares of LaPorte Preferred Stock. Each shareholder named below
has sole voting and investment power over the shares shown in the table,
unless otherwise indicated. The shares shown in the table include all shares
the named parties may be deemed to own beneficially, including shares held by
spouses.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Percent of
Name and Address Owned Outstanding Shares
---------------- ---------------- ------------------
<S> <C> <C>
American Bancorp, Inc. (1) 6,750 16.25%
7425 Indianapolis Blvd.
Hammond, IN 46324
Clayton W. Anderson 3,800(2) 9.15%
7425 Indianapolis Blvd.
Hammond, IN 46324
Leon A. Kolanko 2,944(3) 7.09%
3330 Ridge Rd.
Highland, IN 46322
</TABLE>
________________________
(1) Clayton W. Anderson, LaPorte's Chairman of the Board and President,
serves as Chairman of the Board and President of, and David P. Cooley, a
director of LaPorte, is a shareholder of American Bancorp, Inc.
(2) Consists of 2,600 shares owned by Clayton Anderson & Company, Inc., a
corporation which is 100% owned by Clayton W. Anderson, LaPorte's
Chairman of the Board and President, and 1,200 shares held by a trust of
which Mr. Anderson is the trustee and sole beneficiary.
(3) All shares held jointly with Mr. Kolanko's wife.
19
<PAGE>
Set forth below is the number of shares of LaPorte Preferred Stock held
by each director and executive officer, and by all directors and executive
officers as a group, of LaPorte as of the record date for the Special Meeting.
Each shareholder named below has sole voting and investment power over the
shares shown in the table, unless otherwise indicated. The shares shown in
the table include all shares the named parties may be deemed to own
beneficially, including shares held by spouses.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Percent of
Name Owned Outstanding Shares
------------------------------- ---------------- ------------------
<S> <C> <C>
Clayton W. Anderson 3,800 (1) 9.15%
David P. Cooley 0 --
George L. Dearborn 450 1.08%
Gene M. Fryar 0 --
John E. Gardner 650 (2) 1.57%
Simon P. Gary 0 --
G. Gregory Gates 200 (3) (4)
Richard E. Pliske 0 --
Harlan A. Siegesmund 200 (4)
Directors and executive officers 5,300 12.76%
as a group (9 persons)
</TABLE>
(1) Consists of 2,600 shares owned by Clayton Anderson & Company, Inc., a
corporation which is 100% owned by Clayton W. Anderson, LaPorte's Chairman
of the Board and President, and 1,200 shares held by a trust of which Mr.
Anderson is the trustee and sole beneficiary.
(2) All shares held jointly with Mr. Gardner's wife.
(3) Consists solely of shares held by Mr. Gates as custodian for his children.
(4) Less than 1%.
VOTING AND REVOCATION OF PROXIES
Shares of LaPorte Common Stock and of LaPorte Preferred Stock represented
by a proxy properly signed and received at, or prior to, the Special Meeting,
unless subsequently revoked, will be voted at the Special Meeting in
accordance with the instructions thereon. If a proxy is signed and returned
without indicating any voting instructions, shares of LaPorte Common Stock or
LaPorte Preferred Stock, or both, represented by such proxy will be voted
20
<PAGE>
FOR approval of the Merger Agreement. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before the
proxy is voted by filing either an instrument revoking it or a duly executed
proxy bearing a later date with the Secretary of LaPorte prior to or at the
Special Meeting or by voting the shares subject to the proxy in person at the
Special Meeting. Attendance at the Special Meeting will not in and of itself
constitute a revocation of a proxy.
A proxy may indicate that all or a portion of the shares represented
thereby are not being voted with respect to a specific proposal. This could
occur, for example, when a broker is not permitted to vote shares held in
street name on certain proposals in the absence of instructions from the
beneficial owner. Shares that are not voted with respect to a specific
proposal will be considered as not present for such proposal, even though such
shares will be considered present for purposes of determining a quorum and
voting on other proposals. Abstentions on a specific proposal will be
considered as present, but not as voting in favor of such proposal. The
proposal to adopt the Merger Agreement must be approved by the holders of a
majority of the outstanding LaPorte Common Stock and by two-thirds of the
outstanding LaPorte Preferred Stock. Because this proposal requires the
affirmative vote of specified percentages of outstanding shares, the nonvoting
of shares or abstentions with regard to this proposal will have the same
effect as votes against the proposal.
The Board of Directors of LaPorte is not aware of any business to be
acted upon at the Special Meeting other than the business described herein.
If, however, other matters are properly brought before the Special Meeting, or
any adjournments thereof, the persons appointed as proxies will have
discretion to vote or act on such matters according to their best judgment.
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers, and employees
of LaPorte may solicit proxies from the shareholders of LaPorte, either
personally or by telephone, telegram, or other form of communication. None of
the foregoing persons who solicit proxies will be specifically compensated for
such services. Nominees, fiduciaries, and other custodians will be requested
to forward soliciting materials to beneficial owners and will be reimbursed
for their reasonable expenses incurred in sending proxy material to beneficial
owners. LaPorte will bear its own expenses in connection with any
solicitation of proxies for the Special Meeting. See "THE MERGER--Expenses."
ALL SHAREHOLDERS OF LAPORTE ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO LAPORTE IN THE ENCLOSED POSTAGE-
PREPAID ENVELOPE.
THE MERGER
This section of the Proxy Statement-Prospectus describes certain aspects
of the Merger. The following description does not purport to be complete and
is qualified in its entirety by reference to the Merger Agreement, which is
attached as Appendix A to this Proxy Statement-Prospectus and is incorporated
by reference herein. All shareholders are urged to read the Merger Agreement
in its entirety.
21
<PAGE>
BACKGROUND OF AND REASONS FOR THE MERGER
Indiana banking law historically prohibited multibank holding companies
and limited banks to operating within a single county. These laws were
changed in 1985, with the result that Indiana banks could merge with, or be
acquired by, banks or bank holding companies throughout Indiana and, in some
cases, outside of Indiana. Since 1985, the substantial majority of Indiana
banks have chosen to affiliate with other financial institutions.
In recent years, LaPorte has from time to time considered the possibility
of affiliation. In 1990, LaPorte entered into a merger agreement with
Merchants National Corporation which ultimately was not consummated. Since
then, LaPorte has occasionally had casual conversations with various parties
that expressed a potential interest in acquiring LaPorte. None of these
conversations, however, progressed beyond the preliminary stages.
Late in the summer of 1993, LaPorte was approached by Norwest, which
expressed an interest in acquiring LaPorte. Based on its discussions with
Norwest, LaPorte's Board of Directors became interested in affiliating with
Norwest for the reasons listed below. Therefore, in the fall of 1993, the
parties entered into a letter of intent for a proposed acquisition of LaPorte
by Norwest, and executed the Merger Agreement on February 7, 1994.
In determining that the Merger is in the best interest of LaPorte and its
shareholders, at a meeting held on February 7, 1994, LaPorte's Board of
Directors considered a number of factors, including (a) the business,
earnings, and potential for future growth and prospects of LaPorte and
Norwest, (b) the potential operational and managerial benefits that could be
derived from the Merger, (c) the absence of a trading market for LaPorte's
Common Stock and Preferred Stock and the greater liquidity that shareholders
might enjoy by being shareholders of a larger institution with a larger
shareholder base, (d) the consideration to be received by LaPorte's
shareholders in the Merger in relation to the book value and earnings of
LaPorte, (e) the prices paid in similar merger transactions, (f) the tax-free
nature of a stock-for-stock exchange, and (g) the opinion of Mercer Capital
Management, Inc. that the terms of the Merger are fair to LaPorte's
shareholders from a financial point of view. The Board of Directors also
considered their belief that Norwest shares a banking philosophy that would
benefit the employees, depositors, and customers of LaPorte and the community
it serves, and that the Merger will allow the Bank to offer a greater
diversity of products and services to its customers. The Board of Directors
did not assign any particular weight to each of the factors considered.
THE BOARD OF DIRECTORS OF LAPORTE UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE MERGER.
TERMS OF THE MERGER
At the Effective Time of the Merger, a wholly owned subsidiary of Norwest
which is an Indiana corporation, Norwest Acquistion Co., will merge into
LaPorte, with LaPorte as the surviving corporation, and the outstanding shares
of LaPorte Common Stock and LaPorte Preferred Stock (other than shares as to
which statutory dissenters' rights have been exercised and not forfeited) will
be converted into a number of shares of Norwest Common Stock determined in
accordance with the provisions of the Merger Agreement. The Common Stock
Conversion Factor, used to determine the number of shares of Norwest Common
Stock into which each outstanding share of LaPorte Common Stock will be
converted, will be calculated by dividing $12,800,000 by the Norwest
Measurement Price and then dividing the result by the number of shares of
LaPorte Common Stock outstanding immediately prior to the Effective
22
<PAGE>
Time of the Merger. The Preferred Stock Conversion Factor, used to determine
the number of shares of Norwest Common Stock into which each outstanding share
of LaPorte Preferred Stock will be converted, will be determined by dividing
the Redemption Price per Share by the Norwest Measurement Price. The "Norwest
Measurement Price" is the average of the closing prices of Norwest Common
Stock on the New York Stock Exchange during the period of 10 trading days
ending with the third trading day immediately preceding the Closing Date. The
"Redemption Price per Share" is the par value per share of LaPorte Preferred
Stock plus any accrued but unpaid cumulative dividends per share, plus $0.11
per share. Based on the pricing provisions of the Merger Agreement, if the
Closing Date had been August 5, 1994, and assuming no change in the number of
shares of LaPorte Common Stock outstanding, the applicable Norwest Measurement
Price would have been $25.70, each share of outstanding LaPorte Common Stock
would have been converted into approximately 1.824 shares of Norwest Common
Stock, and each share of outstanding LaPorte Preferred Stock would have been
converted into approximately 1.969 shares of Norwest Common Stock. The
foregoing information is provided solely for purposes of illustration. No
assurance can be given concerning the actual conversion factors that will
apply on the Closing Date.
The market price for Norwest Common Stock will fluctuate between the date
of this Proxy Statement-Prospectus and the Effective Date of the Merger, which
may be a period of several weeks or more, and the Norwest Measurement Price
will fluctuate accordingly. As a result, the market value of each share of
Norwest Common Stock that shareholders of LaPorte ultimately receive in the
Merger could be more or less than its market value on the date of this Proxy
Statement-Prospectus or the Norwest Measurement Price.
The Merger Agreement provides that if, between the date of the Merger
Agreement and the Effective Time of the Merger, shares of Norwest Common Stock
are changed into a different number or class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares,
or readjustment, or if a stock dividend thereon is declared with a record date
within the same period, the conversion factor provided for in the Merger
Agreement will be adjusted accordingly.
No fractional shares of Norwest Common Stock will be issued in the Merger.
Instead, Norwest will pay to each holder of LaPorte Common Stock or LaPorte
Preferred Stock who would otherwise be entitled to a fractional share an
amount of cash equal to the fraction of a share of Norwest Common Stock to
which the shareholder of LaPorte would otherwise be entitled multiplied by the
Norwest Measurement Price.
Shares of Norwest Common Stock issued and outstanding immediately prior to
the Effective Time of the Merger will remain issued and outstanding.
FAIRNESS OPINION
Mercer Capital Management, Inc. ("Mercer Capital") has delivered its
written opinion to LaPorte's Board of Directors that as of the date of this
Proxy Statement-Prospectus, the terms of the Merger are fair from a financial
point of view to the holders of LaPorte Common Stock and LaPorte Preferred
Stock. Mercer Capital is headquartered in Memphis, Tennessee. Founded in
1982, it is one of the larger independent valuation consulting firms in the
United States. Mercer Capital was selected by the Board of Directors of
LaPorte based upon its familiarity with the market for Indiana financial
institutions and knowledge of the banking industry generally. Mercer Capital
orally delivered its fairness opinion to the Board of directors of LaPorte on
February 7, 1994, at the meeting of the Board of Directors at which the
Directors approved execution of the Merger Agreement.
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In connection with its opinion, Mercer Capital reviewed, among other
things, (a) the Merger Agreement and this Proxy Statement-Prospectus; (b)
LaPorte's and Norwest's historical financial performance for the five years
ended December 31, 1993, and the three months ended March 31, 1994 and 1993;
(c) the redemption features and other terms of the LaPorte Preferred Stock;
and (d) the investment characteristics of the Norwest Common Stock, including
its trading volume, dividend history, and relative pricing in relation to
selected other bank holding companies. Mercer Capital also held discussions
with members of management of LaPorte, the Bank, and Norwest regarding their
respective historical performance and future prospects. Mercer Capital also
reviewed demographic, economic, and competitive conditions in LaPorte's
primary market place, LaPorte County, Indiana.
Based on its review, and in light of its knowledge of the banking industry
and experience in other transactions and in securities valuation generally,
Mercer Capital performed the following analyses: (1) a valuation analysis of
the fair market value of LaPorte under the assumption of a change in control;
(b) an analysis of pending and historical comparable transactions involving
acquisitions of community banks in Indiana, Michigan, Ohio, Kentucky, and
Illinois; and (c) a pro forma analysis of the impact of the Merger Agreement
on dividends, earnings, and book value from the perspective of LaPorte's
shareholders, including consideration of the tax-free nature of the exchange
of shares.
In performing its analyses, Mercer Capital made numerous assumptions with
respect to industry performance, general business and economic conditions, and
other matters, many of which are beyond the control of LaPorte or Norwest.
The analyses performed by Mercer Capital are not necessarily indicative of
actual values or actual future results, which may be significantly more or
less favorable than suggested by such analyses. Such analyses were prepared
solely as part of Mercer Capital's analysis of the fairness of the Merger to
LaPorte's shareholders. The analyses do not purport to be appraisals or to
reflect the prices at which a company might actually be sold or the prices at
which any securities may trade at the present time or at any time in the
future.
For its professional services in connection with rendering the fairness
opinion, LaPorte has paid Mercer Capital to date approximately $45,000, plus
Mercer Capital's out-of-pocket expenses. Prior to this engagement, Mercer
Capital has had no material relationship with LaPorte and has never acted as a
market maker for LaPorte's stock. Mercer Capital has had no material
relationship with Norwest in the past and has never been a market maker for
Norwest Common Stock and has no holding of Norwest Common Stock at this time.
EFFECTIVE DATE AND TIME OF THE MERGER
Subject to the terms and conditions of the Merger Agreement, the Effective
Date of the Merger will be the date on which executed Articles of Merger are
filed with the Secretary of State of the State of Indiana. Such filings will
be made ten business days following the satisfaction or waiver of all
conditions of the Merger Agreement or on such other date upon which the
parties agree, and the time at which such filing will be made is hereinafter
referred to as the "Time of Filing." The "Effective Time of the Merger" will
be 11:59 p.m., Minneapolis, Minnesota time, on the Effective Date of the
Merger. Norwest and LaPorte anticipate that the closing will occur as soon as
possible after the Special Meeting. See "Terms of the Merger," "Conditions to
the Merger," and "Regulatory Approvals."
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SURRENDER OF CERTIFICATES
As soon as practicable after the Effective Time of the Merger, Norwest
Bank Minnesota, National Association, acting in the capacity of exchange agent
for Norwest (the "Exchange Agent"), will mail to each former holder of record
of shares of LaPorte Common Stock or LaPorte Preferred Stock a form of letter
of transmittal, together with instructions for the exchange of such holder's
stock certificates for a certificate representing Norwest Common Stock.
SHAREHOLDERS OF LAPORTE SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of one or more certificates for
LaPorte Common Stock or Preferred Stock, or both, together with a properly
completed letter of transmittal, there will be issued and mailed to the holder
a certificate representing the number of whole shares of Norwest Common Stock
to which such holder is entitled and, where applicable, a check for the amount
representing any fractional share. A certificate for Norwest Common Stock may
be issued in a name other than the name in which the surrendered certificate
is registered only if (i) the certificate surrendered is properly endorsed and
otherwise in proper form for transfer and (ii) the person requesting the
issuance of such certificate either pays to the Exchange Agent any transfer or
other taxes required by reason of the issuance of a certificate for such
shares in a name other than the registered holder of the certificate
surrendered or establishes to the satisfaction of the Exchange Agent that such
tax has been paid or is not applicable.
All Norwest Common Stock issued pursuant to the Merger will be deemed
issued as of the Effective Time of the Merger. No dividends with a record
date after the Effective Time of the Merger will be paid to shareholders of
LaPorte entitled to receive certificates for shares of Norwest Common Stock
until such shareholders surrender their certificates representing shares of
LaPorte Common Stock or Preferred Stock. Upon such surrender, there shall be
paid to the shareholder in whose name the certificates representing such
shares of Norwest Common Stock are issued any dividends the record and payment
dates of which shall have been after the Effective Time of the Merger and
before the date of such surrender. After such surrender, there shall be paid
to the person in whose name the certificate representing such shares of
Norwest Common Stock is issued, on the appropriate dividend payment date, any
dividend on such shares of Norwest Common Stock which shall have a record date
after the Effective Time of the Merger, as the case may be, and prior to the
date of surrender, but a payment date subsequent to the surrender. In no
event shall the persons entitled to receive such dividends be entitled to
receive interest on amounts payable as dividends.
CONDITIONS TO THE MERGER
The Merger will occur only if the Merger Agreement is approved by the
requisite vote of both the holders of LaPorte Common Stock and the holders of
LaPorte Preferred Stock. Consummation of the Merger is subject to the
satisfaction of certain other conditions, unless waived, to the extent waiver
is permitted by applicable law. Such conditions to the obligations of both
parties to consummate the Merger include, but are not limited to, (i) the
continued accuracy of representations and warranties by the other party; (ii)
the performance by the other party of its obligations under the Merger
Agreement; (iii) the receipt of certain certificates from officers of the
other party; (iv) the receipt of all necessary regulatory approvals, including
the approval of the Merger by the Federal Reserve Board and the Indiana
Department of
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Financial Institutions, and the expiration of all applicable waiting and
appeal periods, provided that no regulatory approval license, or consent shall
contain any condition or requirement that Norwest judges unreasonably
burdensome; (v) the absence of any order of a court or agency of competent
jurisdiction restraining, enjoining, or otherwise prohibiting consummation of
the transactions contemplated by the Merger Agreement; (vi) the receipt of an
opinion of counsel for LaPorte to the effect that for federal income tax
purposes the Merger will be a tax-free reorganization; (vii) the continued
effectiveness of the Registration Statement of which this Proxy Statement-
Prospectus is a part and receipt by Norwest of all state securities law or
blue sky authorizations necessary for the Merger; (viii) the Merger Agreement
shall not have been terminated, and (ix) there shall not have occurred any
general suspension of, or limitation on prices for, trading securities on the
NYSE or in the over-the-counter market, or a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States.
LaPorte's obligation to consummate the Merger is also subject to (i)
authorization for listing on the NYSE and CHX upon official notice of issuance
of the shares of Norwest Common Stock issuable pursuant to the Merger and (ii)
the receipt of an opinion of Mercer Capital Management, dated the date of this
Proxy Statement-Prospectus, concerning the fairness of the consideration to be
received by the shareholders of LaPorte in the Merger. See "Fairness
Opinion."
Norwest's obligation to consummate the Merger is also subject to (i) the
receipt by LaPorte and the Bank of any and all material consents or waivers
from third parties to loan agreements, leases, or other material contracts
required for the consummation of the Merger, and the receipt by LaPorte and
the Bank of any and all material permits, authorizations, consents, waivers,
and approvals required for the consummation of the Merger; (ii) the total
number of shares of LaPorte Common Stock (including phantom shares and other
share equivalents) outstanding and subject to issuance upon exercise of all
warrants, options, conversion rights, phantom shares, or other share
equivalents, other than any option held by Norwest, not having exceeded
273,134; (iii) the receipt of a certificate signed by LaPorte's Chief
Executive Officer and Chief Financial Officer concerning the accuracy and
completeness of certain of LaPorte's financial statements and related
information and the absence of any changes in such financial statements and
related information subsequent to the date of such financial statements; (iv)
the requirement that LaPorte and the Bank considered as a whole shall not have
sustained since September 30, 1993, any material loss or interference with
their business from any civil disturbance or any fire, explosion, flood, or
other calamity, whether or not covered by insurance; (v) the absence of any
reasonable basis for any proceeding, claim, or action seeking to impose, or
that could reasonably be expected to result in the imposition, on LaPorte or
the Bank of any liability arising from the release of hazardous substances
under any local, state, or federal environmental statute, regulation, or
ordinance which has had or could reasonably be expected to have a material
adverse effect upon LaPorte and the Bank taken as a whole; (vi) the absence of
any change, other than changes in accruals and reserves made in accordance
with the provisions of the Merger Agreement, or any circumstance which might
reasonably be expected to have a material adverse effect on LaPorte and the
Bank taken as a whole; and (vii) the receipt of an opinion of counsel for
LaPorte and the Bank concerning certain matters of corporate existence and
authority specified in the Merger Agreement, including the due authorization
of the transactions contemplated therein.
REGULATORY APPROVALS
Transactions such as the Merger are subject to prior approval by the
Federal Reserve Board under the Bank Holding Company Act of 1956, as amended
(the "BHC Act"), which
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requires that the Federal Reserve Board take into consideration the financial
and managerial resources and future prospects of the existing and proposed
institutions and the convenience and needs of the communities to be served.
On July 1, 1994, the Federal Reserve Board announced that it had approved
the Merger. As required by Indiana law, Norwest applied to the Department of
Financial Institutions of the State of Indiana for prior approval of the
Merger. On July 14, 1994, the Department of Financial Institutions approved
the application. Accordingly, all required regulatory approvals for the Merger
have been received.
The approval of any application merely implies satisfaction of regulatory
criteria for approval, which do not include review of the Merger from the
standpoint of the adequacy of the consideration to be received by, or fairness
to, shareholders. Regulatory approvals do not constitute an endorsement or
recommendation of the proposed Merger.
Norwest and LaPorte are not aware of any governmental approvals or
compliance with banking laws and regulations that are required for
consummation of the Merger other than those described above. Should any other
approval or action be required, it is presently contemplated that such
approval or action would be sought. There can be no assurance that any such
approval or action, if needed, could be obtained and, if such approvals or
actions are obtained, there can be no assurance as to the timing thereof. The
Merger cannot proceed in the absence of all requisite regulatory approvals.
See "Conditions to the Merger," "Effective Date and Time of the Merger," and
"Waiver, Amendment, and Termination."
BUSINESS PENDING THE MERGER
Under the Merger Agreement, each of LaPorte and the Bank is generally
obligated to maintain its corporate existence in good standing; maintain the
general character of its business
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and conduct its business in the ordinary and usual manner; extend credit in
accordance with existing lending policies, except that neither shall, without
the prior written consent of Norwest, make any new loan or modify,
restructure, or renew any existing loan to any borrower which has been
criticized or specially mentioned by any bank regulator or which is
classified, if the amount of the resulting loan, when aggregated with all
other loans or extensions of credit to such person, would exceed $250,000 or
make any new loan or modify, restructure, or renew any existing loans (except
pursuant to commitments made prior to the date of the Merger 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 $350,000;
maintain proper business and accounting records in accordance with generally
accepted principles; maintain its properties in good repair and condition,
ordinary wear and tear excepted; maintain in all material respects presently
existing insurance coverage; use its best efforts to preserve its goodwill and
the goodwill of its suppliers, customers, and others having business
relationships with it; use its best efforts to obtain any approvals or
consents required to maintain existing leases and other contracts in effect
following the Merger; comply in all material respects with all laws,
regulations, ordinances, codes, orders, licenses, and permits applicable to
the properties and operations of LaPorte and each of its subsidiaries the
noncompliance with which reasonably could be expected to have a material
adverse effect on LaPorte and the Bank taken as a whole; and permit Norwest
and its representatives 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. The Merger Agreement also
provides that, prior to the Closing Date, neither LaPorte nor the Bank may,
without the prior written consent of Norwest, among other things: (i) amend or
otherwise change its articles of incorporation or association or bylaws; (ii)
issue or sell, or authorize for issuance or sale, or grant any options 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; (iii) authorize or incur any long-term debt
(other than deposit liabilities); (iv) mortgage, pledge, or subject to lien or
other encumbrance any of its properties, except in the ordinary course of
business; (v) enter into any material agreement, contract, or commitment in
excess of $25,000 except banking transactions in the ordinary course of
business and in accordance with policies and procedures in effect on the date
of the Merger Agreement; (vi) make any investments except investments made by
bank subsidiaries in the ordinary course of business for terms of up to one
year and in amounts of $100,000 or less; (vii) amend or terminate any
"employee benefit plan" within the meaning of the Employee Retirement Income
Security Act of 1974, as amended, except as required by law; (viii) make any
contributions to any such plan except as required by the terms of such plan in
effect as of the date of the Merger Agreement; (ix) declare, set aside, make,
or pay any dividend or other distribution with respect to its capital stock,
except any dividend declared by a subsidiary's Board of Directors in
accordance with applicable law and regulation; (x) redeem, purchase, or
otherwise acquire, directly or indirectly, any of the capital stock of LaPorte
or any of its subsidiaries; (xi) increase the compensation of any officers,
directors, or executive employees, except pursuant to existing compensation
plans and practices; (xii) sell or otherwise dispose of any shares of the
capital stock of the Bank; or (xiii) sell or otherwise dispose of any of its
assets or properties other than in the ordinary course of business.
Neither LaPorte nor the Bank, nor any director, officer, or representative
thereof, will, directly or indirectly, solicit, authorize the solicitation of,
or enter into any discussions with any party or group (other than Norwest)
concerning any offer or possible offer (i) to purchase any shares of LaPorte
Common Stock, any option or warrant to purchase any shares of LaPorte Common
Stock, any securities convertible into any shares of LaPorte Common Stock, or
any other equity security of LaPorte or any of its subsidiaries; (ii) to make
a tender or exchange offer for any shares of LaPorte Common Stock or other
equity security; (iii) to
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purchase, lease, or otherwise acquire the assets of LaPorte or any of its
subsidiaries, except in the ordinary course of business; or (iv) to merge,
consolidate, or otherwise combine with LaPorte or any of its subsidiaries. Any
offer or inquiry to LaPorte or any of its subsidiaries concerning any of the
foregoing must be promptly disclosed, along with the terms thereof, to
Norwest.
WAIVER, AMENDMENT, AND TERMINATION
The parties may, in writing, give any consent, take any action with
respect to termination of the Merger Agreement, or waive any inaccuracies in
the representations and warranties of the other party or compliance by the
other party with any of the covenants and conditions in the Merger Agreement.
At any time before the Time of Filing the parties may amend the Merger
Agreement by action of their respective Boards of Directors or pursuant to
authority delegated by their respective Boards of Directors; provided,
however, that no such amendment occurring after approval of the Merger by the
LaPorte shareholders may adversely affect the consideration to be received by
the LaPorte shareholders.
The Merger Agreement provides that it may be terminated at any time prior
to the Time of Filing (i) by mutual written consent of the parties; (ii) by
either party by written notice to the other if the Merger shall not have been
consummated by October 1, 1994, unless such failure of consummation is due to
the failure of the party seeking termination to perform or observe in all
material respects the covenants and agreements to be performed or observed by
it under the Merger Agreement; or (iii) by either party by written notice to
the other 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 the Merger
Agreement.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
As of the Effective Time of the Merger, LaPorte will become a subsidiary
of Norwest and the Bank will become an indirect subsidiary of Norwest. The
Bank will continue to operate at its present locations, providing products and
services offered by Norwest affiliates. See "Terms of the Merger."
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
LaPorte is incorporated as a corporation under the laws of the State of
Indiana, and Norwest is incorporated as a corporation under the laws of the
State of Delaware. Shareholders of LaPorte, whose rights are governed by
LaPorte's Articles of Incorporation and Bylaws and by the Indiana Business
Corporation Law (the "IBCL"), will, upon consummation of the Merger, become
stockholders of Norwest. The rights of former shareholders of LaPorte as
Norwest stockholders will then be governed by Norwest's Certificate of
Incorporation and By-Laws and by the Delaware General Corporation Law (the
"DGCL"). The following is a summary of certain significant differences
between the rights of shareholders of LaPorte and stockholders of Norwest.
AUTHORIZED CAPITAL STOCK
LAPORTE. LaPorte's Articles of Incorporation authorize the issuance of
310,000 shares of common stock, par value of $1.00 per share, and three
classes of preferred stock: 7,475
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shares of Series A 12% Cumulative Preferred Stock, par value $100.00 per
share; 10,000 shares of Series B Floating Rate Cumulative Preferred Stock, par
value $100.00 per share; and 50,000 shares of Series C 10% Cumulative
Preferred Stock, par value $50.00 per share. No shares of Series A or Series B
Preferred Stock are outstanding.
NORWEST. Norwest's Certificate of Incorporation authorizes the issuance
of 500,000,000 shares of common stock, par value $ 1 2/3 per share, of which
318,602,669 shares (consisting of 314,920,116 outstanding shares and 3,682,553
treasury shares) were issued at March 31, 1994, and 5,000,000 shares of
preferred stock (the "Norwest Preferred Stock"), of which 2,315,900 shares
were outstanding at March 31, 1994, and 1,000,000 shares are reserved for
issuance upon the exercise of certain rights described below. Norwest has
authorized for issuance from time to time and registered with the Securities
and Exchange Commission (the "SEC") an additional 1,700,000 shares of Norwest
Preferred Stock. In addition, Norwest has authorized for issuance from time
to time and registered with the SEC, pursuant to a univeral shelf registration
statement, an indeterminate number of securities (the "Shelf Securities") with
an aggregate initial offering price not to exceed $1,000,000,000. The Shelf
Securities may be issued as Preferred Stock or as securities convertible into
shares of Preferred Stock or Common Stock. All or any portion of the
authorized but unissued Norwest Preferred Stock or Shelf Securities issuable
as, or convertible into, Norwest Preferred Stock may be issued by the Board of
Directors of Norwest without further action by Norwest stockholders. Holders
of Norwest Preferred Stock have certain rights and preferences with respect to
dividends and upon liquidation that are superior to those of holders of
Norwest Common Stock. The relative rights and preferences of any Norwest
Preferred Stock issued in the future may be established by the Norwest Board
of Directors without stockholder action. Although management has no current
plans for the issuance of any shares of Norwest Preferred Stock, except as
disclosed in this Proxy Statement-Prospectus, such shares, when and if issued,
could have dividend, liquidation, voting, and other rights superior to those
of Norwest Common Stock.
Subject to any prior rights of any Preferred Stock then outstanding,
holders of Common Stock are entitled to receive such dividends as are declared
by Norwest's Board of Directors out of funds legally available for that
purpose. For information concerning legal limitations on the ability of
Norwest's banking subsidiaries to supply funds to Norwest, see "CERTAIN
REGULATORY CONSIDERATIONS." Subject to the rights, if any, of any Preferred
Stock then outstanding, all voting rights are vested in the holders of Common
Stock, each share being entitled to one vote. Subject to any prior rights of
any Preferred Stock, in the event of liquidation, dissolution, or winding up
of Norwest, holders of shares of Common Stock are entitled to receive pro rata
any assets distributable to stockholders in respect of shares held by them.
Holders of shares of Common Stock do not have any preemptive right to
subscribe for any additional securities which may be issued by Norwest. The
outstanding shares of Common Stock, including the Shares offered hereby, are
fully paid and nonassessable. The transfer agent and registrar for the Common
Stock is Norwest Bank Minnesota, N.A. Each share of Common Stock also
includes, and each share offered hereby will include, a right to purchase
certain Preferred Stock. See "Rights to Purchase Preferred Stock" below.
The foregoing description of the material terms of the Common Stock does
not purport to be complete and is qualified in its entirety by reference to
Article Fourth of Norwest's Certificate of Incorporation.
RIGHTS TO PURCHASE NORWEST PREFERRED STOCK. On November 22, 1988, the
Board of Directors of Norwest declared a dividend of one preferred share
purchase right (collectively, the "Rights") for each outstanding share of
Norwest Common Stock. The dividend was paid on December 9, 1988, to
stockholders of record on that date. Holders of shares of Norwest Common
Stock issued subsequent to that date, including those to be issued in
connection with the Merger, will receive the Rights with their shares. The
Rights trade automatically with shares of Norwest Common Stock and become
exercisable only under certain circumstances. The Rights are designed to
protect the interests of Norwest and its stockholders against coercive
takeover tactics. The purpose of the Rights is to encourage potential
acquirors to negotiate with Norwest's Board of Directors prior to attempting a
takeover and to give the Board leverage in negotiating on behalf of all
stockholders the terms of any proposed takeover. The Rights may, but are not
intended to, deter takeover proposals.
Until a Right is exercised, the holder of a Right, as such, will have no
rights as a stockholder of Norwest including, without limitation, the right to
vote or receive dividends. Upon becoming exercisable, each Right will entitle
the registered holder to purchase from Norwest one four-hundredth of a share
of Norwest Series A Junior Participating Preferred Stock (collectively, the
"Junior Preferred Shares"). The stated purchase price for each one one-
hundredth of a Junior Preferred Share is $175.00. The purchase price is
subject to adjustment upon the occurrence of certain events, including stock
dividends on the Junior Preferred Shares or issuance of warrants for, or
securities convertible on certain terms into, Junior Preferred Shares. The
number of Rights outstanding and the number of Junior Preferred Shares
issuable upon exercise of the Rights are subject to adjustment in the event of
a stock split of, or a stock dividend on, Norwest Common Stock.
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The Rights will become exercisable only if a person or group acquires or
announces an offer to acquire 25% or more of the outstanding shares of Norwest
Common Stock. This triggering percentage may be reduced to no less than 15%
by the Board of Directors prior to the time the Rights become exercisable.
The Rights have certain additional features that will be triggered upon the
occurrence of specified events:
(1) If a person or group acquires at least the triggering percentage of
Norwest Common Stock, the Rights permit holders of the Rights, other than
such person or group, to acquire Norwest Common Stock at 50% of market
value. However, this feature will not apply if a person or group which
owns less than the triggering percentage acquires at least 85% of the
outstanding shares of Norwest Common Stock pursuant to a cash tender offer
for 100% of the outstanding Norwest Common Stock.
(2) After a person or group acquires at least the triggering percentage
and before the acquiror owns 50% of the outstanding shares of Norwest
Common Stock, the Board of Directors may exchange each Right, other than
Rights owned by such acquiror, for one share of Norwest Common Stock or
one four-hundredth of a Junior Preferred Share.
(3) In the event of certain business combinations involving Norwest or
the sale of 50% or more of the assets or earning power of Norwest, the
Rights permit holders of the Rights to purchase the stock of the acquiror
at 50% of market value.
The Junior Preferred Shares will not be redeemable. Each Junior Preferred
Share will be entitled to a minimum preferential quarterly dividend payment of
$1.00 per share but will be entitled to an aggregate dividend of 400 times the
dividend declared per share of Norwest Common Stock. In the event of
liquidation, the holders of the Junior Preferred Shares will be entitled to a
minimum preferential liquidation payment of $400.00 per share but will be
entitled to an aggregate payment of 400 times the payment made per share of
Norwest Common Stock. Each Junior Preferred Share will have 400 votes, voting
together with the Norwest Common Stock. Finally, in the event of any merger,
consolidation, or other transaction in which Norwest Common Stock is
exchanged, each Junior Preferred Share will be entitled to receive 400 times
the amount received per share of Norwest Common Stock. These rights are
protected by customary antidilution provisions.
At any time prior to the acquisition by a person or group of the
triggering percentage or more of the outstanding shares of Norwest Common
Stock, the Board of Directors may redeem the Rights in whole, but not in part,
at a price of $.0025 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis, and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the
Rights will terminate and the only remaining right of the holders of Rights
will be to receive the Redemption Price.
The Rights will expire on November 23, 1998, unless extended or earlier
redeemed by Norwest. Generally, the terms of the Rights may be amended by the
Board of Directors without the consent of the holders of the Rights.
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS
LAPORTE. The IBCL generally requires the affirmative vote of the holders
of a majority of the shares of each class entitled to vote to approve a
merger, consolidation, share exchange, or sale, lease, exchange, or other
disposition of all or substantially all of LaPorte's assets. In addition,
LaPorte's Articles require the affirmative vote of the holders of two-thirds
of the
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outstanding shares of LaPorte Preferred Stock to approve any corporate action
which would involve or have the effect of making a material change in the
rights, preferences, or restrictions, or would effect an exchange,
reclassification, or cancellation, of all or a portion of the Preferred Stock.
However, no vote is required to approve a merger if (1) LaPorte is the
surviving corporation, (2) the plan of merger does not amend LaPorte's
Articles in a manner which would require shareholder approval, (3) each holder
of LaPorte shares outstanding prior to the Merger will hold the same
proportionate number of shares, with identical rights and preferences,
relative to the number of shares held by all such shareholders following the
Merger, and (4) the number of shares of LaPorte to be issued in the merger
does not exceed 20% of the voting shares of LaPorte outstanding immediately
prior to the Merger.
NORWEST. Under Delaware law, the vote of a simple majority of the
outstanding shares of Norwest Common Stock entitled to vote thereon is
required to approve a merger or consolidation, or the sale, lease, or exchange
of substantially all of Norwest's corporate assets. With respect to a merger,
no vote of the stockholders of Norwest is required if Norwest is the surviving
corporation and (1) the related agreement of merger does not amend Norwest's
Certificate of Incorporation, (2) each share of stock of Norwest outstanding
immediately before the Merger is an identical outstanding or treasury share of
Norwest after the Merger, and (3) the number of shares of Norwest stock to be
issued in the Merger (or to be issuable upon conversion of any convertible
instruments to be issued in the Merger) does not exceed 20% of the shares of
Norwest Common Stock outstanding immediately before the Merger.
AMENDMENT OF CORPORATE CHARTER
LAPORTE. Under the IBCL amendment of LaPorte's Articles requires the
affirmative vote of the holders of a majority of the votes entitled to be cast
by any voting group with respect to which the amendment would create
dissenters' rights, unless the articles require a greater vote.
NORWEST. The DGCL requires the vote of a simple majority of the
outstanding shares of Norwest Common Stock in order to amend Norwest's
Certificate.
DISSENTERS' RIGHTS
LAPORTE. Under the IBCL a shareholder of LaPorte is entitled to exercise
dissenters' rights and be paid the fair value of such shareholder's shares in
the event of certain corporate actions specified by statute. See the more
detailed discussion below under "Rights of Dissenting LaPorte Shareholders."
NORWEST. Under the DGCL a stockholder is generally entitled to receive
payment of the appraised value of such stockholder's shares if the stockholder
dissents from a merger or consolidation. However, appraisal rights are not
available to holders of (a) shares listed on a national securities exchange or
held of record by more than 2,000 persons or (b) shares of the corporation
surviving a merger, if the merger did not require the approval of the
stockholders of such corporation, unless in either case, the holders of such
stock are required by the terms of the merger to accept anything other than
(i) shares of stock of the surviving corporation, (ii) shares of stock of
another corporation which are also listed on a national securities exchange or
held by more than 2,000 holders, or (iii) cash in lieu of fractional shares of
such stock. Appraisal rights are not available for a sale of assets or an
amendment to the Certificate of Incorporation. Because shares of Norwest
Common Stock are listed on both the NYSE and the CHX, and Norwest has more
than 2,000 stockholders of record, its stockholders are not,
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subject to the aforementioned exceptions, entitled to any rights of appraisal
in connection with mergers or consolidations involving Norwest.
SPECIAL MEETINGS
LAPORTE. Under the IBCL and LaPorte's Bylaws, a special meeting of
shareholders may be called by LaPorte's President, its Board of Directors, or
the holders of one-fourth of the outstanding shares of LaPorte capital stock
outstanding and entitled to vote on the business proposed to be transacted at
the special meeting.
NORWEST. Under the DGCL and the By-Laws of Norwest, a special meeting of
stockholders may be called only by the Chairman of the Board, a Vice Chairman,
the President, or a majority of the Board of Directors.
LIMITATION OF DIRECTOR LIABILITY
LAPORTE. Section 23-1-35-1 of the IBCL provides that a director of an
Indiana corporation shall not be liable for any action taken or not taken as a
director except for liability arising out of any breach or failure to perform
the duties of the director's office in good faith, with the care an ordinarily
prudent person in a like position would exercise under similar circumstances,
and in a manner reasonably believed to be in the best interests of the
corporation, which breach or failure constitutes willful misconduct or
recklessness. Under the IBCL, a director of an Indiana corporation may not be
held accountable to the corporation for monetary damages resulting from
negligence or gross negligence. The provisions of the IBCL limiting the
liability of directors may not affect either the availability of equitable
relief, including injunctions, or the liability of directors for violations of
federal securities laws.
NORWEST. Under Delaware law, absent a provision in the certificate to the
contrary, directors can be held liable for gross negligence in connection with
decisions made on behalf of the corporation in the performance of their duty
of care, but will not be liable for simple negligence. As permitted by the
DGCL, Norwest's Certificate provides that a director (including an officer who
is also a director) of Norwest shall not be liable personally to Norwest or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability arising out of (a) any breach of the director's
duty of loyalty to Norwest or its stockholders, (b) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (c) payment of a dividend or approval of a stock repurchase in violation
of Section 174 of the DGCL, or (d) any transaction from which the director
derived an improper personal benefit. This provision protects Norwest's
directors against personal liability for monetary damages from breaches of
their duty of care. However, it does not eliminate the director's duty of
care. For example, this provision in Norwest's Certificate has no effect on
the availability of equitable remedies, such as an injunction or rescission,
based upon a director's breach of his duty of care.
INDEMNIFICATION
LAPORTE. Under Sections 23-1-37-1 through 23-1-37-15 of the IBCL and
Article IX of LaPorte's Articles, directors and officers of LaPorte may, at
the discretion of LaPorte's Board of Directors, be indemnified against
expenses judgments, fines, and actions, suits or proceedings, whether civil,
criminal, administrative or investigative if they are wholly successful with
respect thereto or if they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of LaPorte, and,
regarding any criminal
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action or proceeding, had no reasonable cause to believe their conduct was
unlawful or had reasonable cause to believe their conduct was lawful.
A claim, action, suit, or proceeding includes any claim, action, suit, or
proceeding that a person is threatened to be made a party to, or is involved
in, because he or she is or was a director, officer, or employee of LaPorte
(or was serving at the request of LaPorte as a director or officer of another
entity) while serving in such capacity.
The right to indemnification is not exclusive of any other right which any
person may have or acquire under LaPorte's Bylaws, by Board or shareholder
resolution, by contract, or by any other authorization approved by a majority
vote of LaPorte's shareholders.
NORWEST. The DGCL provides that directors, officers, and other employees
and individuals may be indemnified against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement in connection with
specified actions, suits, or proceedings, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of
the corporation, that is, a "derivative action") if they acted in good faith
and in a manner they reasonably believed to be in, or not opposed to, the best
interests of the corporation, and regarding any criminal action or proceeding,
had no reasonable cause to believe their conduct was unlawful. A similar
standard is applicable in the case of derivative actions, except that
indemnification extends only to expenses, including attorneys' fees, incurred
in connection with the defense or settlement of such actions. The DGCL
requires court approval before there can be any indemnification where the
person seeking indemnification has been found liable to the corporation. To
the extent that a person otherwise eligible to be indemnified is successful on
the merits of any claim or defense described above, indemnification for
expenses, including attorneys' fees, actually and reasonably incurred is
mandated by the DGCL.
Norwest's Certificate provides that Norwest must indemnify, to the fullest
extent authorized by the DGCL, each person who was or is made a party to, is
threatened to be made a party to, or is involved in, any action, suit, or
proceeding because he or she is or was a director or officer of Norwest (or
was serving at the request of Norwest as a director, trustee, officer,
employee, or agent of another entity) while serving in such capacity against
all expenses, liabilities, or loss incurred by such person in connection
therewith, provided that indemnification in connection with a proceeding
brought by such person will be permitted only if the proceeding was authorized
by Norwest's Board of Directors. Norwest's Certificate also provides that
Norwest must pay expenses incurred in defending the proceedings specified
above in advance of their final disposition, provided that if so required by
the DGCL, such advance payments for expenses incurred by a director or officer
may be made only if he or she undertakes to repay all amounts so advanced if
it is ultimately determined that the person receiving such payments is not
entitled to be indemnified.
Norwest is authorized by its Certificate to provide similar
indemnification to employees or agents of Norwest.
Pursuant to the Certificate, Norwest may maintain insurance, at its
expense, to protect itself and any directors, officers, employees or agents of
Norwest or another entity against any expense, liability, or loss, regardless
of whether Norwest has the power or obligation to indemnify that person
against such expense, liability, or loss under the DGCL.
The right to indemnification is not exclusive of any other right which any
person may have or acquire under any statute, provision of Norwest's
Certificate or By-Laws, agreement, vote of stockholders or disinterested
directors, or otherwise.
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ANTITAKEOVER STATUTES
LAPORTE. Indiana has in force both a control share acquisition statute,
which regulates the accumulation of shares of voting stock of Indiana
corporations, and a business combination statute, which restricts business
combinations with Indiana corporations. Chapter 42 of the IBCL, the Indiana
Control Share Acquisitions Statute, restricts the voting rights of certain
shares ("control shares") that, except for Chapter 42, would have voting
power, of an issuing public corporation that, when added to all other shares
of such corporation owned by a person, would entitle that person, immediately
after the acquisition of such shares, to the following ranges of voting power:
(a) one-fifth or more but less than one-third of all voting power; (b) one-
third or more but less than a majority of all voting power; and (c) a majority
or more of all voting power (a "control share acquisition"). The voting
rights of such control shares are restricted to those rights granted by a
resolution approved by the holders of a majority of the outstanding voting
shares, excluding the voting shares owned by the acquiring shareholder and
certain other "interested shares," including shares owned by officers of the
issuing corporation and employees of the issuing corporation who are also
directors of the issuing corporation. Chapter 42 does not apply to the
acquisition of shares of an issuing public corporation if the acquisition is
consummated (a) before January 8, 1986, (b) pursuant to a contract existing
before January 8, 1986, (c) pursuant to the laws of descent and distribution,
(d) pursuant to a satisfaction of a pledge or other security interest created
in good faith and not for the purposes of circumventing the statute, or (e)
pursuant to a merger or plan of share exchange effected in compliance with
IBCL Section 23-1-40 if the issuing public corporation is a party to the
agreement of merger or plan of share exchange. Because LaPorte, as the
issuing corporation, is a party to the Merger, which is being effected in
compliance with IBCL Section 23-1-40, Norwest's acquisition of LaPorte shares
in connection with the Merger will not be considered a control share
acquisition.
Chapter 43 of the IBCL, the Indiana Business Combination Statute, is
similar, but not identical, to Section 203 of the DGCL. Chapter 43 prohibits
Indiana corporations from engaging in certain transactions (including mergers,
consolidation, asset sales, liquidations or dissolutions, reclassifications,
recapitalizations, disproportionate share conversions, loans, advances, other
financial assistance, or tax benefits not received proportionately by all
shareholders) (each, a "business combination") with a person that is the
beneficial owner, directly or indirectly, of 10% or more of the voting power
of the outstanding voting shares of the corporation (an "interested
shareholder") for a period of five years after such person becomes an
interested shareholder unless, prior to the date the interested shareholder
becomes an interested shareholder, the board of directors of the corporation
approves either the transaction in which such person becomes an interested
shareholder or such business combination. Following the five-year moratorium
period, the corporation may engage in certain business combinations with an
interested shareholder only if, among other things, (a) the business
combination is approved by the affirmative vote of the holders of a majority
of the outstanding voting shares not beneficially owned by the interested
shareholder proposing the business combination or (b) the business combination
meets certain criteria designed to ensure that the remaining shareholders
receive fair consideration for their shares.
NORWEST. The Delaware antitakeover statute governs business combinations
between a publicly held Delaware corporation having certain numbers of
stockholders or listed on certain exchanges and an interested stockholder.
This statute is designed primarily to regulate the second step of a two-tiered
takeover attempt. Delaware law broadly defines a "business combination" as
including a merger, sale of assets, issuance of voting stock, and various
other types of transactions with an interested stockholder and other related
parties. An "interested stockholder" is defined as any person who
beneficially owns, directly or indirectly, 15% or
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more of the outstanding voting stock of a corporation. Delaware law prohibits
a corporation from engaging in a business combination with an interested
stockholder for a period of three years following the date on which the
stockholder became an interested stockholder, unless (a) the board of
directors approved the business combination before the stockholder became an
interested stockholder, (b) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, such
stockholder owned at least 85% of the voting stock outstanding when the
transaction began, excluding in computing such percentage shares held by
certain types of stockholders, or (c) the board of directors approved the
business combination after the stockholder became an interested stockholder
and the business combination was approved by at least two-thirds of the
outstanding voting stock not owned by such stockholder.
In addition to being subject to the laws of Indiana and Delaware,
respectively, both LaPorte and Norwest, as bank holding companies, are subject
to various provisions of federal law with respect to mergers, consolidations,
and certain other corporate transactions.
RIGHTS OF DISSENTING LAPORTE SHAREHOLDERS
The rights, if any, of the holders of LaPorte Common Stock and LaPorte
Preferred Stock to dissent from the Merger are governed by the provisions of
the IBCL. Pursuant to Chapter 44 of the IBCL, a shareholder of LaPorte has
the right to demand payment in cash for the fair value of his or her shares of
LaPorte Common Stock or LaPorte Preferred Stock as of the time immediately
before the Effective Time of the Merger, excluding any appreciation or
depreciation in value in anticipation of the Merger unless a court determines
that such exclusion would be inequitable. To claim this right the
shareholder:
(a) must, before the vote is taken, deliver to LaPorte a written notice
(addressed to: LaPorte Bancorp, 7425 Indianapolis Boulevard, Hammond,
Indiana 46324, Attention: Secretary) of the shareholder's intent to
demand payment for his or her shares if the Merger is effectuated, and
(b) must not vote in favor of the Merger in person or by proxy at the
Special Meeting.
If the Merger is approved by the shareholders, LaPorte will send a notice
of dissenters' rights to those shareholders satisfying the above conditions
within ten days after the shareholder approval. LaPorte's notice will state
the procedures the dissenting shareholder thereafter must follow to exercise
dissenters' rights in accordance with Chapter 44 of the IBCL.
A SHAREHOLDER WILL NOT BE CONSIDERED ENTITLED TO RIGHTS UNDER CHAPTER 44
OF THE IBCL UNLESS THE SHAREHOLDER BOTH DELIVERS TIMELY WRITTEN NOTICE OF
INTENT TO DEMAND PAYMENT AND EITHER VOTES AGAINST THE MERGER OR REFRAINS FROM
VOTING. Shareholders who execute and return the enclosed proxy but do not
specify a choice on the Merger proposal will be deemed to have voted in favor
of the Merger and accordingly to have waived their dissenters' rights, unless
they revoke the proxy prior to its being voted.
Upon consummation of the Merger, LaPorte will pay each dissenting
shareholder who has complied with all requirements of Chapter 44 of the IBCL
and of LaPorte's notice, LaPorte's estimate of the fair value of the shares as
of the time immediately prior to the Merger, EXCLUDING ANY APPRECIATION IN
VALUE IN ANTICIPATION OF THE MERGER. The determination of LaPorte's estimate
of "fair value" will be based on the financial condition of
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LaPorte, the trading history of the LaPorte Common Stock or LaPorte Preferred
Stock, as applicable, and other factors normally used to determine the value
of bank stock. There has been no public market for the LaPorte Common Stock or
LaPorte Preferred Stock. See "INFORMATION ABOUT LAPORTE--Market Information
and Dividends."
Dissenters may object to the fair value estimated by LaPorte by stating
their estimate of the fair value and demanding payment of the additional
amount claimed as fair value within 30 days after LaPorte makes or offers
payment for the dissenters' shares. LaPorte may elect to agree to the
dissenters' fair value demand or may commence an action in the Circuit or
Superior Court of Lake County, Indiana, within 60 days after receiving the
demand for payment for a judicial determination of the fair value. The Court
may appoint appraisers to determine the fair value. The costs of the
proceeding, including compensation and expenses of the appraisers, counsel for
the parties, and experts, will be assessed against all parties to the action
in such amounts as the Court finds equitable. Each dissenter made a party to
the action will be entitled to receive the amount, if any, by which the Court
finds the fair value of the dissenters' shares, plus interest, exceeds the
amount paid by LaPorte.
THIS SUMMARY OF THE RIGHTS OF DISSENTING SHAREHOLDERS DOES NOT PURPORT TO
BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY THE STATUTORY PROVISIONS
ATTACHED TO THIS PROXY STATEMENT-PROSPECTUS AS APPENDIX C.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Under the Merger Agreement, it is a condition to consumation of the Merger
that LaPorte receive at closing an opinion of its special counsel, Baker &
Daniels, generally to the effect that, for federal income tax purposes: (a)
the Merger will constitue a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended
(the "Code"); (b) no gain or loss will be recognized by the holders of LaPorte
Common Stock or LaPorte Preferred Stock upon receipt of Norwest Common Stock
in exchange therefor (except for cash received in lieu of fractional shares);
(c) the tax basis of the Norwest Common Stock received by the shareholders of
LaPorte will be the same as the tax basis of the LaPorte Common Stock or
LaPorte Preferred Stock exchanged therefor; and (d) the holding period of the
shares of Norwest Common Stock received by the shareholders of LaPorte will
include the holding period of the LaPorte Common Stock or LaPorte Preferred
Stock so exchanged, provided that such shares of LaPorte Common Stock or
LaPorte Preferred Stock are held as a capital asset at the Effective Time of
the Merger.
The opinion summarized above, unlike a letter ruling issued by the
Internal Revenue Service (the "IRS"), will not be binding on the IRS, and the
conclusions expressed therein may be challenged at a future date.
In connection with its opinion, Baker & Daniels will rely on certain
assumptions and representations that would be required by the IRS in
connection with a request for a ruling that the Merger would constitute a
"reorganization" within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E)
of the Code. Some of the more significant of such assumption include:
(i) There is no plan or intention by LaPorte's shareholders to sell,
exchange, or otherwise dispose of a number of shares of Norwest Common
Stock received in the Merger that would reduce that LaPorte shareholders'
ownership of Norwest Common Stock to a number of shares having a value, as
of the date of the Merger, of less than 50% of the value of all of the
formerly outstanding LaPorte Common Stock or Preferred Stock as of the
same date;
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(ii) In the Merger, shares of LaPorte Common Stock and Preferred Stock
representing at least 80% of the total combined voting power of all
classes of LaPorte stock entitled to vote and at least 80% of the total
number of shares of all other classes of LaPorte stock will be exchanged
solely for Norwest Common Stock; and
(iii) The principal LaPorte shareholders (those shareholders known to the
management of LaPorte to own beneficially more than five percent of the
outstanding stock of LaPorte) have no present intention to sell or dispose
of the Norwest Common Stock received in the Merger.
If any of the factual assumptions to be made become inaccurate, Norwest and
LaPorte will take such steps as it deems reasonable and appropriate to notify
recipients of this Proxy Statement-Prospectus of such inaccuracy.
Cash received in the Merger by a LaPorte shareholder in lieu of a
fractional share of Norwest Common Stock will be treated under Section 302 of
the Code as having been received in exchange for such fractional share, and
the LaPorte shareholder generally will recognize capital gain or loss in such
exchange equal to the difference between the cash received and the LaPorte
shareholder's tax basis allocable to the fractional share exchanged for cash.
The federal income tax treatment of a LaPorte shareholder who exercises
dissenters' rights under the Merger and receives cash for his or her LaPorte
Common Stock or Preferred Stock will depend upon such shareholder's particular
circumstances. It is likely that such shareholder will recognize capital gain
or loss equal to the difference between the amount of cash received and such
shareholder's tax basis in his LaPorte Common Stock or Preferred Stock.
THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS
BASED UPON FEDERAL INCOME TAX LAWS, RULES, AND REGULATIONS IN EFFECT ON THE
DATE OF THIS PROXY STATEMENT-PROSPECTUS WITHOUT CONSIDERATION OF THE FACTS AND
CIRCUMSTANCES OF ANY PARTICULAR SITUATION OF ANY SHAREHOLDER. EACH
SHAREHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISER WITH RESPECT TO THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICATION AND EFFECT
OF EXISTING OR PROPOSED FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS,
RULES, AND REGULATIONS.
RESALE OF NORWEST COMMON STOCK
The shares of Norwest Common Stock issuable to shareholders of LaPorte
upon consummation of the Merger have been registered under the Securities Act
of 1933 (the "Securities Act"). Such shares may be traded freely and without
restriction by those shareholders not deemed to be "affiliates" of LaPorte or
Norwest as that term is defined in the rules under the Securities Act.
Norwest Common Stock received by those shareholders of LaPorte who are deemed
to be "affiliates" of LaPorte may be resold without registration as provided
for by Rule 145, or as otherwise permitted under the Securities Act. In the
Merger Agreement, LaPorte has agreed to use its best efforts to cause each
LaPorte shareholder who is an executive officer or director of LaPorte or who
may otherwise reasonably be deemed to be an affiliate of LaPorte to enter into
an agreement with Norwest providing that such affiliate will not sell,
transfer, or otherwise dispose of the shares of Norwest Common Stock to be
received by such person in the Merger except in compliance with the applicable
provisions of the Securities Act and the rules and regulations promulgated
thereunder. This Proxy Statement-Prospectus does not cover any resales of
Norwest Common Stock received by affiliates of LaPorte.
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The Merger Agreement provides for the filing by Norwest of listing
applications with the NYSE and the CHX covering the shares of Norwest Common
Stock issuable upon consummation of the Merger. It is a condition to the
consummation of the Merger that such shares of Norwest Common Stock shall have
been authorized for listing on the NYSE and the CHX effective upon official
notice of issuance.
DIVIDEND REINVESTMENT AND OPTIONAL CASH PAYMENT PLAN
Norwest currently has an automatic Dividend Reinvestment and Optional Cash
Payment Plan which provides in substance, for those stockholders who elect to
participate, that dividends on Norwest Common Stock will be reinvested in
shares of Norwest Common Stock at market price (as defined). The plan also
permits participants to invest through voluntary cash payments, within certain
dollar limitations, in additional shares of Norwest Common Stock at the market
price (as defined) of such stock at the time of purchase. It is anticipated
that after the Effective Time of the Merger, Norwest will continue to offer
its Dividend Reinvestment and Optional Cash Payment Plan and that shareholders
of LaPorte who receive Norwest Common Stock in the Merger will have the right
to participate therein.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a "purchase"
transaction in accordance with generally accepted accounting principles.
EXPENSES
Norwest and LaPorte will each pay their own expenses in connection with
the Merger, including fees and expenses of their respective accountants and
counsel.
INFORMATION ABOUT LAPORTE
BUSINESS
LaPorte Bancorp ("LaPorte") is an Indiana business corporation and a bank
holding company registered as such with the Federal Reserve Board. It is
primarily engaged in the business of providing financial planning and business
development services to its wholly owned subsidiary, LaPorte Bank and Trust
Company (the "Bank"). LaPorte's principal asset consists of the ownership of
100% of the issued and outstanding shares of the Bank's common stock. All of
such shares are pledged to The Northern Trust Company to secure LaPorte's
obligations under the Term Loan Agreement, as amended January 6, 1992, between
LaPorte and The Northern Trust Company.
The Bank is an Indiana-chartered bank organized in 1936. Its deposits are
insured up to applicable limits by the Bank Insurance Fund administered by the
FDIC. The Bank conducts a commercial banking business primarily in LaPorte
County, Indiana, from its main office at 601 Jackson Street, LaPorte, Indiana.
In addition to its main office, the Bank has two branches in LaPorte, Indiana,
and one branch in Union Mills, Indiana. At March 31, 1994, the Bank had total
deposits of $127.1 million. Based on total deposits as of June 1993, the Bank
was the 5th largest financial institution headquartered in LaPorte County,
Indiana.
The Bank is a full-service commercial bank offering a range of commercial,
agricultural and personal banking services, as well as trust services. Its
business generally consists of attracting deposits from the general public and
making commercial, agricultural, consumer, mortgage, and other loans. The
Bank, like other financial institutions, is significantly affected
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by general economic conditions, the particular economic conditions in its
market, and by government policies and regulations. Deposit flows are
influenced by, among other things, interest rates paid on competing
investments and the level of personal income and savings. Loan volume is
influenced by factors such as the need for funds by the Bank's market, the
availability and cost of funds to the Bank, and various other items.
The Bank's earnings are primarily dependent on its net interest income,
that is, the difference between interest income and interest expense.
Interest income varies with the balances of loans and investments outstanding
during a given period, and the yield earned on those loans and investments.
Interest expense is a function of the amounts of deposits outstanding during
the same period, and the rates paid on those deposits. The Bank's earnings
are also affected by provisions for loan losses, service fees, operating
expenses, gains and losses on the sale of investments, and income taxes. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
MARKET INFORMATION AND DIVIDENDS
MARKET INFORMATION; SHAREHOLDERS. There has been no public market for
shares of LaPorte Common Stock or LaPorte Preferred Stock since LaPorte has
had a relatively small number of shareholders throughout its existence. As of
the date of this Proxy Statement-Prospectus, there are issued and outstanding
(i) 273,134.065 shares of LaPorte Common Stock, held by approximately 190
holders of record, and (ii) 41,526 shares of LaPorte Preferred Stock, held by
approximately 76 holders of record.
DIVIDENDS. LaPorte has not paid any dividends on the LaPorte Common Stock
during the last two fiscal years and has no intention of paying any dividends
during 1994. The Term Loan Agreement, as amended January 6, 1992, between
LaPorte and The Northern Trust Company prohibits LaPorte from paying any cash
dividends on its Common Stock, limits the cash dividends and redemptions of
the LaPorte Preferred Stock to $350,000 per year, and limits the purchase or
redemption of any class of LaPorte's capital stock to $600,000 per year. The
amount of dividends that LaPorte is permitted to pay is also limited by
supervisory policy of the Federal Reserve Board. See "CERTAIN REGULATORY
CONSIDERATIONS--Dividend Restrictions."
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
The following discussion is intended as a review of significant factors
affecting LaPorte's consolidated results of operations during the three-month
periods ended March 31, 1994 and 1993 and LaPorte's consolidated financial
condition at the end of each of those periods. This discussion should be read
in conjunction with the "Consolidated Financial Statements", including the notes
thereto, and the "Selected Financial Data" presented elsewhere in this Proxy
Statement-Prospectus.
RESULTS OF OPERATIONS
- ---------------------
Net income for the three months ending March 31, 1994 was $286,671 compared to
$199,285 for the three months ended March 31, 1993. Net income per common share
was $.86 for the first quarter of 1994 as compared to $.54 for the first quarter
of 1993. The increase in net income can be attributed to the cumulative effect
of a change in the method of accounting for income taxes made in the first
quarter of 1993.
NET INTEREST INCOME
- -------------------
For the three months ending March 31, 1994, net interest income was $1,351,314,
a decrease of $79,933 or 5.58% from the same period in 1993. This decrease was
the result of a decrease in interest income on mortgage loans. As a result of
the rise in interest rates in 1994, the Bank sold a portion of its mortgage
loans to the secondary market, and the new loan volume was not strong enough to
replace these balances. Therefore, the proceeds of the sale were invested in
investments with substantially lower interest rates.
Total interest income decreased $261,274 or 9.80% in 1994 as compared to the
same period in 1993.
Total interest expense decreased $181,341 or 14.69% in 1994 as compared to the
same period in 1993. This was the result of both a slight decline in deposit
balances and also the rate decline in 1993.
OTHER INCOME
- ------------
Other non-interest income decreased $10,856 or 4.38% in the first quarter of
1994 as compared to the same period in 1993. Trust fees decreased by $20,000 or
25% due to a decrease in trust assets, which was partially offset by an increase
in gains on mortgage loans sold of $17,557.
41
<PAGE>
OTHER EXPENSES
- --------------
Other non-interest expenses decreased $11,175 or .97% in 1994 as compared to the
same period in 1993. The primary reason for this decrease was due to a one-time
accrual of severance benefits paid to an employee in 1993 amounting to $23,738
which did not reoccur in 1994.
PROVISIONS FOR LOAN LOSSES
- --------------------------
A provision for possible loan losses was not provided for in the first quarter
of 1994 or 1993, due to management's assessment of the quality of LaPorte's loan
portfolio and the adequacy of the reserve for loan losses.
Net recoveries of $12,309 for the first three months of 1994 compares to net
recoveries of $4,534 for the same period in 1993.
The allowance for possible loan losses was $1,195,834 or 1.52% of total loans
outstanding net of unearned income and deferred loan fees as of March 31, 1994
compared to $1,223,694 or 1.50% at March 31, 1993. Non-accrual loans amounted
to $30,000 at March 31, 1994 compared to $63,000 at March 31, 1993.
INCOME TAXES
- ------------
Federal and state income taxes amounted to $162,000 for the three months ended
March 31, 1994 as compared to $219,000 for the same period in 1993. This
decrease of $57,000 or 26.03% was a result of decreased pre-tax income during
the first quarter of 1994 compared to 1993.
COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
- -----------------------------------------------------------------
The following discussion is intended as a review of significant factors
affecting LaPorte's consolidated results of operations during the three-year
period ended December 31, 1993 and LaPorte's financial condition at the end of
each year during this period. This discussion should be read in conjunction
with the "Consolidated Financial Statements" including the notes thereto, and
the "Selected Financial Data" presented elsewhere in this Proxy Statement-
Prospectus.
RESULTS OF OPERATIONS
- ---------------------
Net income in 1993 was $1,280,400 compared to $1,053,327 and $772,568 in 1992
and 1991, respectively. Net income per common share was $3.93 in 1993 as
compared to $3.38 in 1992 and $2.33 in 1991. The consistent improvement in
earnings can be attributed to the increase in net interest margins and improved
quality of the Bank's loan portfolio which resulted in decreasing provisions for
possible loan losses.
42
<PAGE>
Return on average assets was .98% in 1993 compared to .73% in 1992 and .55% in
1991. Return on average shareholders' equity was 15.23% in 1993 versus 13.60%
in 1992 and 11.64% in 1991.
NET INTEREST INCOME
- -------------------
Net interest income, which represents the difference between interest income on
earning assets and interest expense paid on deposits and borrowings, is the
largest source of LaPorte's earnings. Due to the decline in interest rates over
the last three years, net interest income increased and then leveled off in
1993. Net interest income went from $5,417,324 in 1991 to $5,767,539 in 1992 to
$5,715,016 in 1993. The net yield on earning assets has gone from 4.23% in 1991
to 4.35% in 1992 to 4.36% in 1993.
Total average earning assets decreased by $1,281,463 from 1992 to 1993. The
principal decrease was in taxable investment securities, which was a result of a
decrease in total average interest bearing liabilities of $2,821,141 during that
same period.
Total interest income has decreased from $12,788,736 in 1991 to $11,825,249 in
1992 to $10,442,424 in 1993. This decrease has been due to the continued
interest rate decline over the past three years, and also due to a decrease in
average earning assets.
Total interest expense has also decreased consistently over the past three years
due to the interest rate decline and also due to a decrease in average interest
bearing liabilities. Total interest expense has declined from $7,371,412 in
1991 to $6,057,710 in 1992 to $4,727,408 in 1993.
OTHER INCOME
- ------------
Total other income has fluctuated from 1991 to 1993 as a result of two
significant factors. Other operating income decreased from $453,226 in 1991 to
$209,211 in 1992 due principally to a $250,000 option fee received from the
termination of a proposed merger with another financial institution in 1991.
Other operating income then increased from $209,211 in 1992 to $487,761 in 1993
due to gains on mortgage loans sold of approximately $300,000 in 1993. Due to
the decrease in interest rates in 1993, mortgage loans sold into the secondary
market received a much greater premium than in prior years. Also, prior to
1993, LaPorte had classified any gains on mortgage loans sold as part of
interest income on mortgage loans. Prior to 1993, gains on loans sold were not
a significant amount.
Trust fees increased from $288,000 in 1991 to $312,000 in 1992 due to increased
trust assets. In 1993 trust fees decreased to $277,062 due to a decrease in
interest rates since a large portion of trust fees are based upon earnings in
the account. There was also a slight decrease in trust assets from 1992 to
1993.
43
<PAGE>
Service charge income on deposit accounts remained constant over the last three
years.
Security gains of $31,990 were recognized in 1993 as compared to $24,281 and
$47,783 in 1992 and 1991, respectively. The security gains were recognized in
order to take advantage of market conditions at the time.
OTHER EXPENSES
- --------------
Total other expenses increased 2.38% in 1993 following a .79% increase in 1992.
Salaries and employee benefits accounted for approximately 54% of other expenses
in 1993 as compared to 55% in 1992 and 52% in 1991. Salaries and employee
benefits increased 5.40% in 1992 as compared to an increase of 2.26% in 1993.
The number of full-time equivalent employees has gone from 87 in 1991 to 85 in
1992 and to 80 in 1993.
Net occupancy expense increased 6.91% in 1993 as compared to a decrease of
15.62% in 1992. Other operating expenses increased 1.29% in 1993 as compared to
a decrease of .46% in 1992.
INCOME TAXES
- ------------
Total income taxes have increased from $487,000 in 1991 to $785,000 in 1992 and
to $862,000 in 1993. This constant increase is due to the increase in pre-tax
income.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which required
LaPorte to change its method of accounting for deferred income taxes to the
liability method effective, January 1, 1993. The change resulted in a charge to
net income during the first quarter of 1993 of $110,000.
BALANCE SHEET ANALYSIS
- ----------------------
INVESTMENT SECURITIES
- ---------------------
Prior to January 1, 1994, investment securities had been purchased with the
intent and ability to hold them until maturity. It was LaPorte's policy to
carry the portfolio at historical cost, as adjusted for amortization of premium
and accretion of discount.
Total investment securities increased $3,411,619 or 6.49% from December 31, 1992
to December 31, 1993 due to an increase in U.S. Government obligations and
municipal bonds. Total investment securities decreased 1.53% from December 31,
1993 to March 31, 1994. At December 31, 1993, the investment portfolio had net
44
<PAGE>
unrealized holding gains totaling $733,095 compared to net unrealized holding
gains totaling $945,714 at December 31, 1992.
Mortgage-backed securities continue to make up a significant portion of
LaPorte's investment portfolio totaling 58.94% in 1992, 52.06% in 1993 and
48.54% at March 31, 1994. This has also been the portion of the portfolio to
experience the greatest appreciation.
Effective January 1, 1994, LaPorte segregated the investment portfolio into
"held to maturity" (HTM) holdings and "available for sale" (AFS) holdings to
comply with Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" ("FAS 115"). Any
unrecognized holding gains or losses on the "AFS" category will be recorded
through the equity section of the balance sheet. At March 31, 1994, LaPorte had
a net unrealized loss of $159,789. This loss is a result of the recent market
condition and prime rate increase.
LOANS
- -----
Total loans remained stable from 1992 to 1993 with a .01% decrease. Loans
decreased $475,538 or .60% from December 31, 1993 to March 31, 1994. Mortgage
loans decreased 10.83% from December 31, 1992 to December 31, 1993. Another
decrease of $1,517,426 or 4.85% was experienced from December 31, 1993 to March
31, 1994. This decrease was due to the rising interest rates during the last
half of 1993 and first quarter of 1994. LaPorte has continued to sell loans to
the secondary market and with rising rates, they have not been able to replace
those sold with new loan originations.
ALLOWANCE AND PROVISION FOR POSSIBLE LOAN LOSSES
- ------------------------------------------------
LaPorte's policy is to discontinue the accrual of interest on loans for which
principal or interest is past due and remains unpaid for 90 days or more, unless
the loan is well collateralized and in the process of collection and approved by
Loan Committee. When a loan is placed in non-accrual status, any current year
unpaid interest is reversed and prior year accruals are charged to the allowance
for possible loan losses.
Non-accrual loans amounted to $30,000 on March 31, 1994 as compared to $74,000
at the end of 1993, $116,000 at the end of 1992 and $168,000 at the end of 1991.
The allowance for possible loan losses was $1,195,834 or 1.52% of total loans
outstanding net of deferred loan fees as of March 31, 1994, compared to
$1,183,525 or 1.50% at December 31, 1993, $1,291,160 or 1.54% at December 31,
1992 and $1,096,836 or 1.39% at December 31, 1991. Due to the increasing
quality of LaPorte's loan portfolio, no additional provisions for possible loan
losses were taken in the first quarter of 1994 or during 1993. A provision of
$120,000 was provided in 1992 and a provision of $635,000 was provided in 1991.
45
<PAGE>
A net recovery of $12,309 was recognized in the first quarter of 1994,
compared to a net charge-off of $35,635 in 1993. A net recovery of $2,324 was
recognized in 1992, compared to a net charge-off of $777,391 in 1991.
CAPITAL RESOURCES
- -----------------
LaPorte's capital position continues to strengthen with the continued increase
in earnings. At March 31, 1994, total shareholders' equity was $9,746,241
compared to $9,671,267 at December 31, 1993, $8,598,497 at December 31, 1992 and
$6,998,177 at December 31, 1991.
The banking regulators have established guidelines for leverage capital
requirements expressed in terms of Tier I or core capital as a percentage of
average assets, to measure the soundness of a financial institution. These
guidelines require all banks to maintain a minimum leverage capital ratio of 4.0
percent. LaPorte's leverage capital ratio was 4.95% at March 31, 1994.
The regulatory agencies have also established risk-based capital guidelines for
US banking organizations. The guidelines establish a risk-adjusted ratio
relating capital to different categories of risk-weighted assets and off-balance
sheet exposures. There are two categories of capital under the guidelines.
Tier I capital includes shareholders' equity less goodwill. Tier II capital
includes the adjusted allowance for possible loan losses and qualifying long-
term debt. The guidelines require a minimum Tier I risk-based capital ratio of
4.0% and a total risk-based capital ratio of 8.0%. LaPorte's Tier I risk-based
capital ratio at March 31, 1994 was 10.80% and its total risk-based capital
ratio was 12.40%.
LIQUIDITY
- ---------
LaPorte's principal source of liquidity is its investment portfolio. LaPorte
generates cash flows from the sale and maturity of investment securities and
also from principal reductions on its mortgage-backed securities, which make up
48.54% of the investment portfolio at March 31, 1994. Other sources of funds
are federal funds sold and loan repayments. LaPorte's liquidity is also
enhanced by a relatively stable core deposit base and locally purchased
certificates of deposit which provide a consistent funding base.
LaPorte experienced a net decrease in total cash and cash equivalents in 1993
versus an increase in cash and cash equivalents in 1992. The increase of
$1,945,123 that occurred in 1992 was mainly due to an increase in interest
bearing demand deposits and savings deposits. In 1993 LaPorte did not
experience the same level of increase in demand deposits and savings, but did
46
<PAGE>
experience an increase in investment securities.
LaPorte's long-term debt payments also affect its liquidity and cash flow
position. The term loan agreement, as amended January 6, 1992, contains certain
restrictions, including maintenance of a minimum leverage ratio and risk-based
capital ratio and prescribed maximum levels of non-performing loans and loan to
equity ratio. The term loan agreement also prohibits the payment of cash
dividends on common stock, limits the aggregate amount of annual cash dividends
and redemptions of preferred stock to $350,000 and limits the purchase or
redemption of any class of capital stock to an aggregate amount of $600,000
while borrowings are outstanding under this agreement. In addition, the
agreement also requires annual mandatory principal prepayments on July 10th of
each year, commencing in 1993, in amounts equal to the Bank's net income for the
immediately preceding year in excess of $1,000,000. Such annual mandatory
prepayments are applied to the unpaid quarterly installments of the term loan in
reverse order of maturity. On July 10, 1994 a mandatory prepayment of
approximately $481,000 will be due.
EFFECTS OF INFLATION
- --------------------
Unlike companies with investments in capital assets and inventories,
substantially all of LaPorte's assets and liabilities are monetary in nature.
Since inflation has a significant effect on interest rates and LaPorte's assets
and liabilities are generally of a short-term nature, LaPorte is able to
maintain interest margins at varying levels of inflation. However, in periods
of high inflation, it is difficult to maintain a high return on equity that is
competitive with returns on monetary investments. Inflation may significantly
affect the carrying values of investments that are classified "available for
sale" in LaPorte's portfolio. Any fluctuations due to inflation will be
reflected through the equity section of LaPorte's balance sheet and will not
have an effect on earnings directly.
47
<PAGE>
SELECTED STATISTICAL INFORMATION REGARDING LAPORTE
Distribution of Assets, Liabilities and Shareholders' Equity;
Interest Rates and Interest Differential
For the years ended December 31, 1993 and 1992
-----
<TABLE>
<CAPTION>
1993 1992
---------------------------------- ----------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------- ----------- ------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold $ 1,539,771 $ 48,295 3.14% $ 1,430,323 $ 51,635 3.61%
Investment securities:
Taxable 49,084,762 3,059,705 6.23 51,197,295 3,788,151 7.40
Tax-exempt (1) 3,598,936 334,631 9.30 3,128,127 310,281 9.92
Net loans (2) (3) 80,265,799 7,148,781 8.91 80,014,986 7,813,660 9.77
------------ ----------- ------ ------------ ----------- ------
Total earning
assets 134,489,268 10,591,412 7.88 135,770,731 11,963,727 8.81
----------- ------ ----------- ------
Cash and due from banks 4,601,402 4,830,755
Allowance for possible
loan losses (1,222,274) (1,129,146)
Other assets 4,304,106 4,705,086
------------ ------------
Total $142,172,502 $144,177,426
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing
deposits $111,668,617 4,427,087 3.96 $113,545,736 5,634,942 4.96
Short-term borrowings 370,614 19,015 5.13 557,978 19,408 3.48
Long-term debt 3,016,484 281,306 9.33 3,773,142 403,360 10.69
------------ ---------- ---- ------------ ---------- -----
Total interest bear-
ing liabilities 115,055,715 4,727,408 4.11 117,876,856 6,057,710 5.14
------------ ---------- ---- ---------- -----
Noninterest bearing
deposits 16,630,339 15,636,264
Other liabilities 1,357,426 2,919,991
Shareholders' equity 9,129,022 7,744,315
------------ ------------
Total $142,172,502 $144,177,426
============ ============
Net interest income $5,864,004 $5,906,017
========== ==========
Net yield on earning
assets on a fully
taxable equivalent
basis 4.36% 4.35%
==== =====
</TABLE>
(1) Interest income includes the effects of taxable equivalent adjustments,
using a 39.6% rate. Tax equivalent adjustments were $132,514 in 1993 and
$122,871 in 1992.
(2) Interest income includes fees on loans of $287,927 in 1993 and $352,612 in
1992. Interest income also includes the effects of taxable equivalent
adjustments, using a 39.6% rate. Tax equivalent adjustments were $16,474 in
1993 and $15,607 in 1992.
(3) For purposes of this computation, non-accrual loans are included in the
daily average loan balances outstanding.
48
<PAGE>
The following table sets forth, for the periods indicated, a summary of the
changes in interest earned and interest paid resulting from changes in
volume and changes in rates:
<TABLE>
<CAPTION>
Increase (Decrease) Due to (1)
--------------------------------------
Volume Rate Net
---------- ------------ ------------
<S> <C> <C> <C>
1993 compared to 1992:
Interest earned on:
Federal funds sold $ 3,740 $ (7,080) $ (3,340)
Taxable investment securities (150,762) (577,684) (728,446)
Tax-exempt investment securities 44,613 (20,263) 24,350
Loans 24,461 (689,340) (664,879)
--------- ----------- -----------
Total interest income (77,948) (1,294,367) (1,372,315)
--------- ----------- -----------
Interest paid on:
Interest bearing deposits (91,536) (1,116,319) (1,207,855)
Short-term borrowings (7,797) 7,404 (393)
Long-term debt (74,678) (47,376) (122,054)
--------- ----------- -----------
Total interest expense (174,011) (1,156,291) (1,330,302)
--------- ----------- -----------
Net interest income $ 96,063 $ (138,076) $ (42,013)
========= =========== ===========
1992 compared to 1991:
Interest earned on:
Federal funds sold $ (7,724) $ (30,794) $ (38,518)
Taxable investment securities (126,291) (597,642) (723,933)
Tax-exempt investment securities 30,797 (29,083) 1,714
Loans 619,613 (815,229) (195,616)
--------- ----------- -----------
Total interest income 516,395 (1,472,748) (956,353)
--------- ----------- -----------
Interest paid on:
Interest bearing deposits 264,603 (1,472,386) (1,207,783)
Short-term borrowings (21,064) (17,233) (38,297)
Long-term debt (53,069) (14,553) (67,622)
--------- ----------- -----------
Total interest expense 190,470 (1,504,172) (1,313,702)
--------- ----------- -----------
Net interest income $ 325,925 $ 31,424 $ 357,349
========= =========== ===========
</TABLE>
(1) Changes due to both rate and volume have been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amounts of
the change in each.
49
<PAGE>
INVESTMENT PORTFOLIO
The carrying amounts of investment securities at December 31, 1993 and 1992 are
summarized as follows:
<TABLE>
<CAPTION>
December 31,
------------------------
1993 1992
----------- -----------
<S> <C> <C>
U.S. Treasury and Government agencies $37,617,098 $34,950,631
States and political subdivisions 4,199,201 2,993,004
Other 14,156,606 14,617,651
----------- -----------
Total $55,972,905 $52,561,286
=========== ===========
</TABLE>
The following table shows the maturities of investment securities at December
31, 1993 at the carrying amounts and the weighted average yields (for tax-exempt
obligations on a fully taxable basis assuming a 39.6% tax rate) of such
securities.
The weighted average yields are calculated on the basis of the cost and
effective yields weighted for the scheduled maturity of each security. The
taxable equivalent adjustment represents the annual amounts of income from tax-
exempt obligations divided by .604 (which includes the affect of state income
taxes), less the amount of such tax-exempt income.
<TABLE>
<CAPTION>
Maturing
--------------------------------------------------------------------------------
Within One Year Within Five Years Within Ten Years After Ten Years
----------------- ------------------ ------------------ ------------------
Amount Yield Amount Yield Amount Yield Amount Yield
---------- ----- ----------- ----- ----------- ----- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
and Govern-
ment agen-
cies $3,037,805 6.62% $13,099,310 5.11% $10,279,151 5.98% $11,200,832 6.40%
States and
political
subdivisions 188,333 11.29 644,917 11.08 2,501,580 8.61 864,371 8.74
Other - - 301,174 5.40 2,407,617 6.95 11,447,815 5.77
---------- ----- ----------- ----- ----------- ---- ----------- ----
Total $3,226,138 6.89% $14,045,401 5.39% $15,188,348 6.57% $23,513,018 6.18%
========== ===== =========== ===== =========== ==== =========== ====
</TABLE>
[Intentionally left blank]
50
<PAGE>
LOAN PORTFOLIO
The following table shows LaPorte's gross domestic loan distribution as of
December 31, 1993 and 1992 (LaPorte had no foreign loans as of these dates):
<TABLE>
<CAPTION>
December 31,
------------------------
<S> <C> <C>
1993 1992
----------- -----------
Commercial, financial and agricultural $33,529,866 $30,519,056
Real estate mortgage 31,257,249 35,051,633
Installment 14,100,418 13,300,190
Direct financing leases 443,224 523,227
----------- -----------
Total $79,330,757 $79,394,106
=========== ===========
</TABLE>
The following table shows the maturity of loans (excluding residential mortgage
loans for 1 - 4 single family residences, installment loans and student
financial loans) outstanding as of December 31, 1993. The amounts due after one
year are also classified according to the sensitivity to changes in interest
rates.
<TABLE>
<CAPTION>
Maturing
----------------------------------------------
After One
Within But Within After
One Year Five Years Five Years Total
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural (including direct
financing leases) $23,682,752 $9,577,350 $712,988 $33,973,090
=========== ========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
Interest Sensitivity
-----------------------
Fixed Variable
Rate Rate
---------- ----------
<S> <C> <C>
Due after one year but within five years $2,323,668 $7,253,682
Due after five years 712,988 -
---------- ----------
Total $3,036,656 $7,253,682
========== ==========
</TABLE>
The following table summarizes nonaccrual and past due loans:
<TABLE>
<CAPTION>
December 31,
------------------
1993 1992
-------- --------
<S> <C> <C>
Nonaccrual loans $74,000 $116,000
Accruing loans past due 90 days or more 34,000 8,000
Restructured loans - -
</TABLE>
LaPorte's policy is to discontinue the accrual of interest on loans for which
principal or interest is past due and remains unpaid for 90 days or more, unless
the loan is well collateralized and in the process of collection and approved by
Loan Committee. When a loan is placed on nonaccrual status, any current year
accrued unpaid interest is reversed and prior year accruals are charged to the
allowance for possible loan losses.
51
<PAGE>
LOAN PORTFOLIO, CONCLUDED.
Information with respect to nonaccrual and restructured loans at December 31,
1993 and 1992 is as follows:
<TABLE>
<CAPTION>
December 31,
------------------
1993 1992
-------- --------
<S> <C> <C>
Nonaccrual loans $74,000 $116,000
Restructured loans - -
Interest income which would have been
recorded under original terms 1,900 12,900
Interest income recorded during the period - 5,400
Commitments to lend additional funds - -
</TABLE>
At December 31, 1993, $74,000 of the nonaccrual loans were collateralized.
POTENTIAL PROBLEM LOANS:
At December 31, 1993, management was not aware of any potential problem loans
that would have a material affect on loan delinquency or loan charge-offs.
Loans are subject to constant review and are given management's attention
whenever a problem situation appears to be developing.
LOAN CONCENTRATIONS:
Most of LaPorte's commercial, real estate mortgage and installment loan activity
is with customers located in northwest Indiana with a major concentration in
agricultural lending.
[Intentionally left blank]
52
<PAGE>
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes LaPorte's loan loss experience for the years
ended December 31, 1993 and 1992:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1993 1992
------------ ------------
<S> <C> <C>
Amount of loans outstanding at end of period $79,330,757 $79,394,106
=========== ===========
Average amount of net loans outstanding
during period $80,265,799 $80,014,986
=========== ===========
Balance of allowance for possible loan losses
at beginning of period $ 1,219,160 $ 1,096,836
----------- -----------
Charge-offs:
Commercial, financial and agricultural (1,019) (11,821)
Real estate mortgage (9,280) -
Installment (96,004) (83,532)
----------- -----------
Total charge-offs (106,303) (95,353)
----------- -----------
Recoveries:
Commercial, financial and agricultural 5,029 40,963
Real estate mortgage - -
Installment 65,639 56,714
----------- -----------
Total recoveries 70,668 97,677
----------- -----------
Net (charge-offs) recoveries (35,635) 2,324
----------- -----------
Additions charged to operations - 120,000
----------- -----------
Balance of allowance for possible loan losses
at end of period $ 1,183,525 $ 1,219,160
=========== ===========
Ratio of net (charge-offs) recoveries to
average net loans outstanding (0.04)% 0.00%
=========== ===========
</TABLE>
LaPorte's allowance for possible loan losses is provided for by direct
charges to operations. Losses on loans are charged against the allowance
and, likewise, re-coveries during the period for prior losses are credited
to the allowance. The allowance for possible loan losses is maintained at a
level considered by manage-ment to be adequate to absorb possible losses
from loans presently outstanding. The provision made to this allowance is
determined by management based on assess-ments of the risk factors affecting
the loan portfolio, including general economic conditions, changes in the
portfolio mix, past loan loss experience and the finan-cial condition of the
borrower.
Management is constantly reviewing the status of the loan portfolio to
identify borrowers that might develop financial problems in order to aid
borrowers in the handling of their accounts and to prevent sizeable
unexpected losses.
At December 31, 1993, the allowance for possible loan losses was $1,183,525,
or 1.50% of net loans outstanding.
53
<PAGE>
SUMMARY OF LOAN LOSS EXPERIENCE, CONCLUDED.
The allowance for possible loan losses has been allocated according to the
amount deemed necessary to provide for the possibility of losses being
incurred within the categories of loans set forth in the table below. The
amount of such compo-nents of the allowance at December 31, and the ratio of
such loan categories to total outstanding loan balances, are as follows:
<TABLE>
<CAPTION>
1993 1992
------------------------- -------------------------
Percent of Percent of
Loans in Each Loans in Each
Allowance Category to Allowance Category to
Amount Total Loans Amount Total Loans
---------- -------------- ---------- -------------
<S> <C> <C> <C> <C>
Commercial, financial
and agricultural $ 315,000 42.3% $ 190,000 38.4%
Real estate mortgage 5,000 39.4 12,000 44.1
Installment 131,000 17.8 123,000 16.8
Direct financing leases - .5 - .7
Unallocated 732,525 - 894,160 -
---------- ----- ---------- -----
$1,183,525 100.0% $1,219,160 100.0%
========== ===== ========== =====
</TABLE>
DEPOSITS
The average daily amounts of deposits and rates paid on such deposits are
summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1993 1992
------------------ ------------------
Amount Rate Amount Rate
----------- ----- ----------- -----
<S> <C> <C> <C> <C>
Noninterest bearing deposits $16,630,339 - % $15,636,264 - %
Interest bearing demand deposits 25,980,782 2.96 24,907,239 3.51
Savings deposit 41,320,667 3.68 38,610,426 4.65
Other time deposits 44,367,168 4.82 50,028,071 5.89
</TABLE>
The amount of time certificates of deposit of $100,000 or more and other
time deposits of $100,000 or more outstanding at December 31, 1993, by time
remaining until maturity, is as follows:
Under 3 months $1,625,975
3 to 6 months 1,310,000
6 to 12 months 878,785
Over 12 months 1,233,476
----------
Total $5,048,236
==========
54
<PAGE>
RETURN ON EQUITY AND ASSETS
The ratio of income before cumulative effect of accounting change to average
shareholders' equity and average totals assets, and certain other ratios are
presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1993 1992
---- ----
<S> <C> <C>
Percentage of income before cumulative
effect of accounting change to:
Average shareholders' equity 15.23% 13.60%
Average total assets .98 .73
Percentage of average shareholders'
equity to average total assets 6.42 5.37
Percentage of dividends declared per
common share to net income per
common share - -
Percentage of dividends declared on
preferred stock to net income 16.22 19.67
</TABLE>
SHORT-TERM BORROWINGS
The following table shows the distribution of LaPorte's short-term
borrowings and the weighted average interest rates thereon at the end of
each of the last two years. Also provided are the maximum amount of
borrowings and the average amounts of borrowings, as well as weighted
average interest rates, for the last two years.
<TABLE>
<CAPTION>
Advances From
Federal Funds Federal Home
1993 Purchased Loan Bank
-------------- ------------- -------------
<S> <C> <C>
Balance at December 31, 1993 $ 275,000 $ 300,000
Maximum amount outstanding at any month-end 1,375,000 300,000
Average amount outstanding 124,861 245,753
Weighted average interest rate during the year 3.19% 6.09%
Weighted average interest rate for outstanding
amount at December 31, 1993 3.13% 6.37%
1992
--------------
Balance at December 31, 1992 $ - $ -
Maximum amount outstanding at any month-end 2,970,000 -
Average amount outstanding 557,978 -
Weighted average interest rate during the year 3.48% - %
Weighted average interest rate for outstanding
amount at December 31, 1992 - % - %
</TABLE>
Federal funds purchased generally mature within 1 to 30 days of the
transaction date.
55
<PAGE>
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
As a bank holding company, Norwest is subject to the supervision of the
Federal Reserve Board. Norwest's banking subsidiaries are subject to
supervision and examination by applicable federal and state banking agencies.
All of Norwest's banking subsidiaries are insured by, and therefore are
subject to the regulations of, the Federal Deposit Insurance Corporation (the
"FDIC"). In addition to the impact of regulation, commercial banks are
affected significantly by the actions of the Federal Reserve Board as it
attempts to control the money supply and credit availability in order to
influence the economy.
Norwest is a legal entity separate and distinct from its banking and
nonbanking subsidiaries. Accordingly, the right of Norwest, and thus the
right of Norwest's creditors, to participate in any distribution of the assets
or earnings of any subsidiary is necessarily subject to the prior claims of
creditors of such subsidiary, except to the extent that claims of Norwest in
its capacity as a creditor may be recognized. The principal sources of
Norwest's revenues are dividends and fees from its subsidiaries.
DIVIDEND RESTRICTIONS
Various federal and state statutory provisions limit the amount of
dividends the subsidiary banks can pay to Norwest without regulatory approval.
The approval of the OCC is required for any dividend by a national bank if the
total of all dividends declared by the bank in any calendar year would exceed
the total of its net profits, as defined by regulatory agencies, for that year
combined with its retained net profits for the preceding two years less any
required transfers to surplus or a fund for the retirement of any preferred
stock. In addition, a national bank may not pay a dividend in an amount
greater than its net profits then on hand after deducting its losses and bad
debts. For this purpose, bad debts are defined to include, generally, loans
which have matured and are in arrears with respect to interest by six months
or more, other than such loans which are well secured and in the process of
collection. Under these provisions Norwest's national bank subsidiaries could
have declared, as of March 31, 1994, without obtaining prior regulatory
approval, aggregate dividends of at least $375.5 million. The payment of
dividends by any subsidiary bank may also be affected by other factors, such
as the maintenance of adequate capital for such subsidiary bank.
If, in the opinion of the applicable regulatory authority, a bank under
its jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the bank, could
include the payment of dividends), such authority may require, after notice
and hearing, that such bank cease and desist from such practice. The Federal
Reserve Board, the OCC, and the FDIC have issued policy statements which
provide that insured banks and bank holding companies should generally pay
dividends only out of current operating earnings.
HOLDING COMPANY STRUCTURE
Norwest's banking subsidiaries are subject to restrictions under federal
law which limit the transfer of funds by the subsidiary banks to Norwest and
its nonbanking subsidiaries, whether in the form of loans, extensions of
credit, investments, or asset purchases. Such transfers by any subsidiary
bank to Norwest or any nonbanking subsidiary are limited in amount to 10% of
the bank's capital and surplus and, with respect to Norwest and all such
nonbanking subsidiaries, to an aggregate of 20% of such bank's capital and
surplus.
56
<PAGE>
Furthermore, such loans and extensions of credit are required to be secured in
specified amounts.
The Federal Reserve Board has a policy to the effect that a bank holding
company is expected to act as a source of financial and managerial strength to
each of its subsidiary banks and to commit resources to support each such
subsidiary bank. This support may be required at times when Norwest may not
have the resources to provide it. Any capital loans by Norwest to any of the
subsidiary banks are subordinate in right of payment to deposits and to
certain other indebtedness of such subsidiary bank. In addition, the Crime
Control Act of 1990 provides that in the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.
A depository institution insured by the FDIC can be held liable for any
loss incurred by, or reasonably expected to be incurred by, the FDIC after
August 9, 1989, in connection with (i) the default of a commonly controlled
FDIC-insured depository institution or (ii) any assistance provided by the
FDIC to a commonly controlled FDIC-insured depository institution in danger of
default. "Default" is defined generally as the appointment of a conservator
or receiver and "in danger of default" is defined generally as the existence
of certain conditions indicating that a "default" is likely to occur in the
absence of regulatory assistance.
Federal law (12 U.S.C. (S)55) permits the OCC to order the pro rata
assessment of stockholders of a national bank whose capital stock has become
impaired, by losses or otherwise, to relieve a deficiency in such national
bank's capital stock. This statute also provides for the enforcement of any
such pro rata assessment of stockholders of such national bank to cover such
impairment of capital stock by sale, to the extent necessary, of the capital
stock of any assessed shareholder failing to pay the assessment. Similarly,
the laws of certain states provide for such assessment and sale with respect
to the subsidiary banks, is subject to such provisions.
CAPITAL REQUIREMENTS
In January 1989, the Federal Reserve Board issued final risk-based capital
guidelines for bank holding companies, such as Norwest. The new guidelines,
which became effective December 31, 1990, were phased in over two years. The
minimum ratio of total capital to risk-adjusted assets (including certain off-
balance sheet items, such as stand-by letters of credit) is 8%. At least half
of the total capital is to be comprised of common equity, retained earnings,
and a limited amount of perpetual preferred stock ("Tier 1 capital"). The
remainder ("Tier 2 capital") may consist of hybrid capital instruments,
perpetual debt, mandatory convertible debt securities, a limited amount of
subordinated debt, other preferred stock, and a limited amount of loan and
lease loss reserves. In addition, the Federal Reserve Board approved in
August 1990 final minimum "leverage ratio" (the ratio of Tier 1 capital to
quarterly average total assets) guidelines for bank holding companies and
state member banks. These guidelines provide for a minimum leverage ratio of
3% for bank holding companies and state member banks that meet certain
specified criteria, including that they have the highest regulatory rating.
All other bank holding companies and state member banks will be required to
maintain a leverage ratio of 3% plus an additional cushion of 100 to 200 basis
points. The guidelines also provide that banking organizations experiencing
internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory levels, without
significant reliance on intangible assets. Furthermore, the guidelines
indicate that the Federal Reserve Board will continue to consider a "tangible
57
<PAGE>
Tier 1 leverage ratio" in evaluating proposals for expansion or new
activities. The tangible Tier 1 leverage ratio is the ratio of a banking
organization's Tier 1 capital, less all intangibles, to total assets, less all
intangibles. Each of Norwest's banking subsidiaries is also subject to
capital requirements adopted by applicable regulatory agencies which are
substantially similar to the foregoing. As of March 31, 1994, Norwest's Tier
1 and total capital (the sum of Tier 1 and Tier 2 capital) to risk-adjusted
assets ratios were 10.15% and 12.65%, respectively, and Norwest's leverage
ratio for the quarter ended March 31, 1994, was 6.97%. Neither Norwest nor
any subsidiary bank has been advised by its appropriate federal regulatory
agency of any specific leverage ratio applicable to it.
The Federal Reserve Board has adopted changes to its risk-based and
leverage ratio requirements applicable to bank holding companies and state
chartered member banks that require that all intangibles, including core
deposit intangibles, purchased mortgage servicing rights ("PMSRs"), and
purchased credit card relationships ("PCCRs") be deducted from Tier 1 capital.
The changes, however, grandfather identifiable assets (other than PMSRs and
PCCRs) acquired on or before February 19, 1992, and permit the inclusion of
readily marketable PMSRs and PCCRs in Tier 1 capital to the extent that (i)
PMSRs and PCCRs do not exceed 50% of Tier 1 capital and (ii) PCCRs do not
exceed 25% of Tier 1 capital. For such purposes, PMSRs and PCCRs each would
be included in Tier 1 capital only up to the lesser of (i) 90% of their fair
market value (which must be determined quarterly) and (ii) 100% of the
remaining unamortized book value of such assets. The OCC has adopted
substantially similar regulations. In the opinion of management, the
foregoing changes have not had a material impact on the results of operations
of Norwest.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
In December 1991, Congress enacted the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), which substantially revises
the bank regulatory and funding provisions of the Federal Deposit Insurance
Act and makes revisions to several other federal banking statutes.
Among other things, FDICIA requires the federal banking agencies to take
"prompt corrective action" in respect of depository institutions that do not
meet minimum capital requirements. FDICIA establishes five capital tiers:
"well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." A
depository institution's capital tier will depend upon where its capital
levels are in relation to various relevant capital measures, which will
include a risk-based capital measure and a leverage ratio capital measure, and
certain other factors.
A depository institution is well capitalized if it significantly exceeds
the minimum level required by regulation for each relevant capital measure,
adequately capitalized if it meets each such measure, undercapitalized if it
fails to meet any such measure, significantly undercapitalized if it is
significantly below any such measure, and critically undercapitalized if it
fails to meet any critical capital level set forth in regulations. The
critical capital level must be a level of tangible equity equal to not less
than 2% of total assets and not more than 65% of the minimum leverage ratio to
be prescribed by regulation (except to the extent that 2% would be higher than
such 65% level). An institution may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if,
among other things, it receives an unsatisfactory examination rating.
Under regulations adopted pursuant to the foregoing provisions, for an
institution to be well capitalized it must have a Tier 1 risk-based
58
<PAGE>
capital ratio of a least 6%, a total risk-based capital ratio of at least 10%,
and a leverage ratio of at least 5%, and not be subject to any specific
capital order or directive. For an institution to be adequately capitalized it
must have a Tier 1 risk-based capital ratio of at least 4%, a total risk-based
capital ratio of at least 8%, and a leverage ratio of a least 4% (and in some
cases 3%). All of Norwest's banking subsidiaries are well capitalized.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subject to growth limitations and are required to submit a capital restoration
plan. The federal banking agencies may not accept a capital plan without
determining, among other things, that the plan is based on realistic
assumptions and is likely to succeed in restoring the depository institution's
capital. In addition, for a capital restoration plan to be acceptable, the
depository institution's parent holding company must guarantee that the
institution will comply with such capital restoration plan. The aggregate
liability of the parent holding company is limited to the lesser of (i) an
amount equal to 5% of the depository institution's total assets at the time it
became undercapitalized and (ii) the amount which is necessary (or would have
been necessary) to bring the institution into compliance with all capital
standards applicable with respect to such institution as of the time it fails
to comply with the plan. If a depository institution fails to submit an
acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets, and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator.
FDICIA directs that each federal banking agency prescribe standards for
depository institutions and depository institution holding companies relating
to internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, a maximum ratio of classified assets to capital, minimum
earnings sufficient to absorb losses, a minimum ratio of market value to book
value for publicly traded shares, and such other standards as the agency deems
appropriate. The FDIC, in consultation with the other federal banking
agencies, has adopted a final rule and guidelines with respect to external and
internal audit procedures and internal controls in order to implement those
provisions of FDICIA intended to facilitate the early identification of
problems in financial management of depository institutions. The FDIC has
also issued proposed rules prescribing standards relating to certain other of
the management and operational areas listed above. The full impact of such
rule and guidelines and proposed standards on Norwest cannot yet be
ascertained.
FDICIA also contains a variety of other provisions that affect the
operations of Norwest, including new reporting requirements, revised
regulatory standards for real estate lending, "truth in savings" provisions,
and the requirement that a depository institution give 90 days' notice to
customers and regulatory authorities before closing any branch.
Under other regulations promulgated under FDICIA a bank cannot accept
brokered deposits (which term is defined to include payment of an interest
rate more than 75 basis points above prevailing market rates) unless (i) it is
"well capitalized" or (ii) it is "adequately capitalized" and receives a
waiver from the FDIC. A bank is defined to be well capitalized if it
maintains a leverage ratio of at least 5%, a ratio of Tier 1 capital to risk-
adjusted assets of at
59
<PAGE>
least 6%, and a ratio of total capital to risk-adjusted assets of at least
10%, and is not otherwise in a "troubled condition" as specified by its
appropriate federal regulatory agency. A bank is defined to be "adequately
capitalized" if it meets all of its minimum capital requirements. A bank that
cannot receive brokered deposits also cannot offer "pass-through" insurance on
certain employee benefit accounts, unless it provides certain notices to
affected depositors. In addition, a bank that is "adequately capitalized" may
not pay an interest rate on any deposits in excess of 75 basis points over
certain prevailing market rates. There are no such restrictions on a bank that
is "well capitalized." As of March 31, 1994, all of Norwest's banking
subsidiaries were well capitalized and therefore not subject to these
restrictions.
FDIC INSURANCE
Effective January 1, 1993, the deposit insurance assessment rate for the
Bank Insurance Fund ("BIF") and the Savings Association Insurance Fund
("SAIF") increased as part of the adoption by the FDIC of a transitional risk-
based assessment system. In June 1993, the FDIC published final regulations
making the transitional system permanent effective January 1, 1994, but left
open the possibility that it may consider expanding the range between the
highest and lowest assessment rates at a later date. An institution's risk
category is based upon whether the institution is well capitalized, adequately
capitalized, or less than adequately capitalized. Each insured depository
institution is also to be assigned to one of the following "supervisory
subgroups": Subgroup A, B, or C. Subgroup A institutions are financially
sound institutions with few minor weaknesses; Subgroup B institutions are
institutions that demonstrate weaknesses which, if not corrected, could result
in significant deterioration; and Subgroup C institutions are institutions for
which there is a substantial probability that the FDIC will suffer a loss in
connection with the institution unless effective action is taken to correct
the areas of weakness. Based on its capital and supervisory subgroups, each
BIF and SAIF member institution will be assigned an annual FDIC assessment
rate varying from 0.23% per annum (for well capitalized Subgroup A
institutions) to 0.31% (for undercapitalized Subgroup C institutions).
Adequately capitalized institutions will be assigned assessment rates varying
from 0.26% to 0.30%. Norwest incurred $72.4 million of FDIC insurance expense
in 1993. Because of decreases in the reserves of the BIF and SAIF due to the
increased number of bank failures in recent years, it is possible the BIF and
SAIF premiums will be further increased and it is possible that there may be a
special assessment. Any such further increase or special assessment would
also decrease net income, and a special assessment could have a material
adverse effect on the results of operations of Norwest.
EXPERTS
The consolidated financial statements of Norwest and subsidiaries as of
December 31, 1993 and 1992, and for each of the years in the three-year period
ended December 31, 1993, incorporated by reference herein, have been
incorporated herein in reliance upon the report of KPMG Peat Marwick,
independent certified public accountants, incorporated by reference herein and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of LaPorte and subsidiary as of
December 31, 1993 and 1992, and for each of the years in the three-year period
ended December 31, 1993, have been included herein in reliance upon the report
of Coopers & Lybrand, independent certified public accountants, included
herein and upon the authority of said firm as experts in accounting and
auditing.
60
<PAGE>
LEGAL OPINIONS
A legal opinion to the effect that the shares of Norwest Common Stock
offered hereby, when issued in accordance with the Merger Agreement, will be
validly issued and fully paid and nonassessable, has been rendered by Stanley
S. Stroup, Executive Vice President and General Counsel of Norwest
Corporation. At March 31, 1994, Mr. Stroup was the beneficial owner of
106,971 shares and held options to acquire 215,931 additional shares of
Norwest Common Stock.
Certain federal income tax consequences of the Merger, as described under
"THE MERGER--Certain Federal Income Tax Considerations" have been passed upon
for LaPorte by its special counsel, Baker & Daniels, Indianapolis, Indiana.
NORWEST MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, voting
securities and the principal holders thereof, certain relationships and
related transactions, and other related matters concerning Norwest is included
or incorporated by reference in its Annual Report on Form 10-K for the year
ended December 31, 1993, and Form 10K/A dated May 13, 1994, which are
incorporated in this Proxy Statement-Prospectus by reference. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." Shareholders of LaPorte
desiring copies of such documents may contact Norwest at its address or phone
number indicated under "AVAILABLE INFORMATION" above.
61
<PAGE>
INDEX TO FINANCIAL STATEMENTS
LAPORTE BANCORP AND SUBSIDIARY
-----
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
Report of Independent Accountants F-2
Consolidated Statements of Financial Condition as of
March 31, 1994 (unaudited) and December 31, 1993 and
1992 F-3
Consolidated Statements of Income for the three months
ended March 31, 1994 and 1993 (unaudited) F-4
Consolidated Statements of Income for the years
ended December 31, 1993, 1992 and 1991 F-5
Consolidated Statements of Shareholders' Equity for
the three months ended March 31, 1994 (unaudited)
and the years ended December 31, 1993, 1992 and 1991 F-6
Consolidated Statements of Cash Flows for the three
months ended March 31, 1994 and 1993 (unaudited) F-7
Consolidated Statements of Cash Flows for the years
ended December 31, 1993, 1992 and 1991 F-8
Notes to Consolidated Financial Statements F-9
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
LaPorte Bancorp:
We have audited the accompanying consolidated statements of financial condition
of LaPorte Bancorp and subsidiary as of December 31, 1993 and 1992, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1993. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of LaPorte
Bancorp and subsidiary as of December 31, 1993 and 1992, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1993 in conformity with generally accepted
accounting principles.
As discussed in Note I to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1993.
COOPERS & LYBRAND
South Bend, Indiana
January 14, 1994, except as to the information
presented in Note P, for which the date is
February 7, 1994
F-2
<PAGE>
LAPORTE BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
as of March 31, 1994 and December 31, 1993 and 1992
-----
ASSETS
<TABLE>
<CAPTION>
December 31,
March 31, -------------------------
1994 1993 1992
------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C>
Cash and due from banks $ 4,371,129 $ 4,451,870 $ 4,904,757
------------ ------------ ------------
Federal funds sold - - 3,350,000
------------ ------------ ------------
Investment securities (Notes A, B, F and K):
U.S. Government obligations 8,734,775 7,728,716 4,687,837
U.S. Government agency obligations 29,577,897 29,888,382 30,262,794
Obligations of states and political subdivisions 4,080,593 4,199,201 2,993,004
Other investment securities 12,725,851 14,156,606 14,617,651
------------ ------------ ------------
Total investment securities 55,119,116 55,972,905 52,561,286
------------ ------------ ------------
Loans (Notes A, C, F and K) 78,670,644 79,146,182 79,154,218
Less, Allowance for possible loan losses
(Notes A and D) 1,195,834 1,183,525 1,219,160
------------ ------------ ------------
Net loans 77,474,810 77,962,657 77,935,058
------------ ------------ ------------
Premises and equipment, net (Notes A and E) 1,524,068 1,568,797 1,620,105
------------ ------------ ------------
Other assets (Notes A and I) 2,830,058 2,503,394 2,782,456
------------ ------------ ------------
Total assets $141,319,181 $142,459,623 $143,153,662
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits $ 16,196,288 $ 17,455,443 $ 16,774,353
Interest-bearing demand deposits 26,753,874 27,046,971 25,594,110
Savings deposits 41,328,776 41,280,154 40,570,169
Time deposits:
Less than $100,000 37,816,111 37,846,893 39,790,348
$100,000 or more 5,000,387 5,048,236 6,723,890
------------ ------------ ------------
Total deposits 127,095,436 128,677,697 129,452,870
Short-term borrowings (Notes B and F) 900,000 575,000 -
Long-term debt (Note G) 2,342,558 2,382,558 3,410,000
Accrued expenses and other liabilities
(Notes H and L) 1,234,946 1,153,101 1,692,295
------------ ------------ ------------
Total liabilities 131,572,940 132,788,356 134,555,165
------------ ------------ ------------
Commitments and contingencies (Note J)
Shareholders' equity (Notes B, G, L and P):
10% cumulative preferred stock, $50 par value:
Authorized 50,000 shares; issued 41,526 shares 2,076,300 2,076,300 2,076,300
Common stock, $1 par value: Authorized 310,000
shares; issued 273,134 shares 273,134 273,134 273,134
Paid-in capital 1,825,474 1,825,474 1,825,474
Retained earnings 5,731,122 5,496,359 4,423,589
Unrealized depreciation of investment securities, net (159,789) - -
------------ ------------ ------------
Total shareholders' equity 9,746,241 9,671,267 8,598,497
------------ ------------ ------------
Total liabilities and shareholders' equity $141,319,181 $142,459,623 $143,153,662
============ ============ ============
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
F-3
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
for the three months ended March 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
---------- -----------
(Unaudited)
<S> <C> <C>
Interest income:
Interest and fees on loans $1,599,022 $1,790,399
Interest on federal funds sold 13,066 13,567
Interest on investment securities:
U.S. Government obligations 104,372 78,055
U.S. Government agency obligations 438,113 542,769
Obligations of states and political subdivisions 56,524 43,451
Other investment securities 193,141 197,271
---------- ----------
Total interest income 2,404,238 2,665,512
---------- ----------
Interest expense:
Deposits (Note F) 996,541 1,158,913
Short-term borrowings 4,824 603
Long-term debt 51,559 74,749
---------- ----------
Total interest expense 1,052,924 1,234,265
---------- ----------
Net interest income 1,351,314 1,431,247
Provision for possible loan losses (Notes A and D) - -
---------- ----------
Net interest income after provision for possible loan losses 1,351,314 1,431,247
---------- ----------
Other income:
Service charges on deposit accounts 80,200 79,451
Trust fees 60,000 80,000
Other operating income 96,856 85,961
Security gains - 2,500
---------- ----------
Total other income 237,056 247,912
---------- ----------
Other expenses:
Salaries and employee benefits 638,024 656,564
Net occupancy expense 121,013 110,398
Other operating expenses 380,662 383,912
---------- ----------
Total other expenses 1,139,699 1,150,874
---------- ----------
Income before income taxes 448,671 528,285
Income taxes (Notes A and I) 162,000 219,000
---------- ----------
Income before cumulative effect of accounting change 286,671 309,285
Cumulative effect of change in accounting for income taxes (Note I) - (110,000)
---------- ----------
Net income $ 286,671 $ 199,285
========== ==========
Net income per common share (Note A):
Income before cumulative effect $.86 $.94
Cumulative effect - (.40)
---------- ----------
Net income $.86 $.54
========== ==========
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
F-4
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
for the years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
------------ ----------- -----------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 7,132,307 $ 7,798,053 $ 8,000,124
Interest on federal funds sold 48,295 51,635 90,153
Interest on investment securities:
U.S. Government obligations 361,124 233,450 197,666
U.S. Government agency obligations 1,981,669 2,347,943 2,540,621
Obligations of states and political subdivisions 202,117 187,410 186,375
Other investment securities 716,912 1,206,758 1,773,797
----------- ----------- -----------
Total interest income 10,442,424 11,825,249 12,788,736
----------- ----------- -----------
Interest expense:
Deposits (Note F) 4,427,087 5,634,942 6,842,725
Short-term borrowings 19,015 19,408 57,705
Long-term debt 281,306 403,360 470,982
----------- ----------- -----------
Total interest expense 4,727,408 6,057,710 7,371,412
----------- ----------- -----------
Net interest income 5,715,016 5,767,539 5,417,324
Provision for possible loan losses (Notes A and D) - 120,000 635,000
----------- ----------- -----------
Net interest income after provision for possible loan losses 5,715,016 5,647,539 4,782,324
----------- ----------- -----------
Other income:
Service charges on deposit accounts 338,808 339,968 310,213
Trust fees 277,062 312,000 288,000
Other operating income (Note M) 487,761 209,211 453,226
Security gains 31,990 24,281 47,783
----------- ----------- -----------
Total other income 1,135,621 885,460 1,099,222
----------- ----------- -----------
Other expenses:
Salaries and employee benefits 2,505,103 2,449,793 2,324,358
Net occupancy expense 477,462 446,600 529,270
Other operating expenses 1,615,672 1,595,062 1,602,421
----------- ----------- -----------
Total other expenses 4,598,237 4,491,455 4,456,049
----------- ----------- -----------
Income before income taxes 2,252,400 2,041,544 1,425,497
Income taxes (Notes A and I) 862,000 785,000 487,000
----------- ----------- -----------
Income before minority interest 1,390,400 1,256,544 938,497
Minority interest in earnings of
bank subsidiary (Notes A and N) - 203,217 165,929
----------- ----------- -----------
Income before cumulative effect of accounting change 1,390,400 1,053,327 772,568
Cumulative effect of change in accounting for income taxes (Note I) (110,000) - -
----------- ----------- -----------
Net income $ 1,280,400 $ 1,053,327 $ 772,568
=========== =========== ===========
Net income per common share (Note A):
Income before cumulative effect $4.33 $3.38 $2.33
Cumulative effect (.40) - -
----------- ----------- -----------
Net income $3.93 $3.38 $2.33
=========== =========== ===========
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
F-5
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the three months ended March 31, 1994 and the
years ended December 31, 1993, 1992 and 1991
______
<TABLE>
<CAPTION>
Floating Unrealized
10% 12% Rate Depreciation
Cumulative Cumulative Cumulative of Total
Preferred Preferred Preferred Common Paid-in Retained Investment Shareholders'
Stock Stock Stock Stock Capital Earnings Securities Equity
---------- ---------- ---------- -------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1991 $1,995,300 $ 1,000 $ 80,000 $242,078 $1,102,312 $3,012,513 $ - $6,433,203
Net income - - - - - 772,568 - 772,568
Preferred stock conversion
(Note L) 81,000 (1,000) (80,000) - _ - - -
Cash dividends, 12%
cumulative preferred
stock - - - - - (60) - (60)
Cash dividends, floating
rate cumulative preferred
stock, 12% minimum - - - - - (4,800) - (4,800)
Cash dividends, 10%
cumulative preferred
stock - - - - - (202,734) - (202,734)
---------- ------- -------- -------- ---------- ---------- --------- ----------
BALANCE, DECEMBER 31, 1991 2,076,300 - - 242,078 1,102,312 3,577,487 - 6,998,177
Net income - - - 1,053,327 - 1,053,327
Cash dividends, 10%
cumulative preferred
stock - - - - - (207,225) - (207,225)
Issuance of 31,056 shares
of common stock in
connection with the
acquisition of minority
interest in bank
subsidiary (Note N) - - - 31,056 723,162 - - 754,218
---------- ------- -------- -------- ---------- ---------- --------- ----------
BALANCE, DECEMBER 31, 1992 2,076,300 - - 273,134 1,825,474 4,423,589 - 8,598,497
Net income - - - - - 1,280,400 - 1,280,400
Cash dividends, 10%
cumulative preferred
stock - - - - - (207,630) - (207,630)
---------- ------- -------- -------- ---------- ---------- --------- ----------
BALANCE, DECEMBER 31, 1993 2,076,300 - - 273,134 1,825,474 5,496,359 - 9,671,267
---------- ------- -------- -------- ---------- ---------- --------- ----------
Net income (unaudited) - - - - - 286,671 - 286,671
Cash dividends, 10%
cumulative preferred
stock (unaudited) - - - - - (51,908) - (51,908)
Unrealized depreciation of
investment securities
carried at market, net of
deferred income taxes
(Note B) (unaudited) - - - - - - (159,789) (159,789)
---------- ------- -------- -------- ---------- ---------- --------- ----------
BALANCE, MARCH 31, 1994
(unaudited) $2,076,300 $ - $ - $273,134 $1,825,474 $5,731,122 $(159,789) $9,746,241
========= ======= ======== ======== ========== ========== ========= ==========
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
F-6
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1994 and 1993
-----
<TABLE>
<CAPTION>
1994 1993
------------- -------------
(Unaudited)
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income $ 286,671 $ 199,285
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization of premises and equipment 46,871 38,817
Amortization of goodwill 8,755 8,755
Deferred income taxes - 110,000
Security gains - (2,500)
Gain on disposal of equipment - (1,182)
Amortization of premiums and accretion of discounts, net 76,136 78,780
Amortization of deferred loan fees and costs (33,930) (37,783)
Loan origination fees collected, net of costs 10,231 19,025
Increase in other assets (253,102) (174,788)
Increase in accrued expenses and other liabilities 81,845 168,076
----------- -----------
Net cash provided by operating activities 223,477 406,485
----------- -----------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Proceeds from sales of investment securities - 102,500
Proceeds from maturities of investment securities 2,645,078 8,220,680
Purchase of investment securities (2,109,531) (7,622,875)
Net increase in loans made to customers and principal collections on loans (1,084,425) (3,392,819)
Loans sold to others 1,595,971 1,017,933
Cash paid for acquisition of minority interest in bank subsidiary - (285,359)
Purchase of premises and equipment (2,142) (7,225)
Proceeds from sale of equipment - 5,448
----------- -----------
Net cash (used in) investing activities 1,044,951 (1,961,717)
----------- -----------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net decrease in demand deposits, NOW accounts and savings deposits (1,503,630) (565,921)
Net decrease in certificates of deposit (78,631) (1,264,546)
Net increase in short-term borrowings 325,000 549,363
Payments on long-term debt (40,000) (85,000)
Dividends paid on preferred stock (51,908) (51,908)
----------- -----------
Net cash (used in) financing activities (1,349,169) (1,418,012)
----------- -----------
Decrease in cash and cash equivalents (80,741) (2,973,244)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,451,870 8,254,757
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,371,129 $ 5,281,513
=========== ===========
</TABLE>
Disclosure of accounting policy:
For purposes of reporting cash flows, cash and cash equivalents include cash
and due from banks and federal funds sold. Generally, federal funds are
purchased and sold for periods of one to thirty days.
Supplemental disclosures of cash flow information:
Cash paid during the period for:
<TABLE>
<CAPTION>
<S> <C> <C>
Interest $ 960,350 $ 1,087,549
Income taxes 173,895 302,500
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
F-7
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1993, 1992 and 1991
-----
<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income $ 1,280,400 $ 1,053,327 $ 772,568
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of premises and equipment 179,945 175,075 190,410
Amortization of goodwill 35,021 35,021 35,021
Provision for possible loan losses - 120,000 635,000
Deferred income taxes 54,000 (53,000) 30,700
Deferred compensation 11,312 60,000 60,000
Minority interest in earnings of bank subsidiary - 203,217 165,929
Security gains (31,990) (24,281) (47,783)
(Gain) loss on disposal of equipment (1,182) - 4,135
Amortization of premiums and accretion of discounts, net 292,281 240,551 71,035
Amortization of deferred loan fees and costs (220,958) (280,253) (162,863)
Loan origination fees collected, net of costs 166,143 331,414 237,877
Decrease in other assets 190,041 201,110 164,583
Increase (decrease) in accrued expenses and other liabilities (245,230) 18,255 117,773
------------ ------------ ------------
Net cash provided by operating activities 1,709,783 2,080,436 2,274,385
------------ ------------ ------------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Proceeds from sales of investment securities 1,647,187 1,000,000 6,052,109
Proceeds from maturities of investment securities 19,253,880 25,823,728 25,001,698
Purchase of investment securities (24,572,977) (27,747,877) (26,410,833)
Net increase in loans made to customers and principal collections
on loans (12,445,422) (6,741,233) (13,689,121)
Loans sold to others 12,472,638 6,221,349 5,221,894
Cash paid for acquisition of minority interest in bank subsidiary (285,359) (611,746) -
Purchase of premises and equipment (152,820) (144,131) (77,517)
Proceeds from sale of equipment 5,448 - -
------------ ------------ ------------
Net cash (used in) investing activities (4,077,425) (2,199,910) (3,901,770)
------------ ------------ ------------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net increase in demand deposits, NOW accounts and savings deposits 2,843,936 7,096,594 1,444,037
Net decrease in certificates of deposit (3,619,109) (3,615,333) (2,984,996)
Net increase (decrease) in short-term borrowings 575,000 (640,420) (650,558)
Payments on long-term debt (1,027,442) (520,000) (500,000)
Dividends paid on preferred stock (207,630) (207,630) (201,378)
Dividends paid by Bank to minority interest - (48,614) (64,818)
------------ ------------ ------------
Net cash provided by (used in) financing activities (1,435,245) 2,064,597 (2,957,713)
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents (3,802,887) 1,945,123 (4,585,098)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 8,254,757 6,309,634 10,894,732
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 4,451,870 $ 8,254,757 $ 6,309,634
============ ============ ============
</TABLE>
Disclosure of accounting policy:
For purposes of reporting cash flows, cash and cash equivalents include cash
and due from banks and federal funds sold. Generally, federal funds are
purchased and sold for periods of one to thirty days.
<TABLE>
<CAPTION>
<C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 4,762,847 $ 6,189,272 $ 7,524,873
Income taxes 1,103,854 584,923 584,923
Noncash investing and financing activities:
Acquisition of minority interest in bank subsidiary:
Fair value of assets acquired - 1,773,112 -
Liabilities incurred - (285,359) -
Common shares issued - (754,218) -
Direct acquisition costs deferred during 1991 - (71,033) -
Conversion of 12% and floating rate cumulative preferred stock
into 10% cumulative preferred stock - - 81,000
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note A: ACCOUNTING POLICIES.
- ------
The following is a summary of the accounting policies which have a
significant effect on the consolidated financial statements.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of LaPorte Bancorp (the "Company") and LaPorte
Bank and Trust Company (the "Bank"), its wholly-owned subsidiary.
Prior to October 15, 1992, the Company owned 82.7% of the Bank (see
Note N). The Company's investment in the Bank exceeded its equity in
the underlying net assets by $663,238, $671,993 and $707,014 at March
31, 1994, December 31, 1993 and December 31, 1992, respectively. This
excess is included in other assets in the consolidated statements of
financial condition and is being amortized over a period of 40 years
on a straight-line basis.
INVESTMENT SECURITIES - Effective January 1, 1994, the Company
adopted, on a prospective basis, Statements of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS 115"), and revised its investment
securities accounting policy. Securities that may be sold as part of
the Company's assets/liability or liquidity management or in response
to or in anticipation of changes in interest rates and resulting
prepayment risk, or for other similar factors, are classified as
available-for-sale and carried at fair market value. Unrealized
holding gains and losses on such securities are reported net of
related deferred income taxes as a separate component of
shareholders' equity. Securities that the Company has the ability and
positive intent to hold to maturity are classified as held-to-
maturity and carried at amortized cost. Realized gains and losses on
the sales of all securities are reported in earnings and computed
using the specific identification cost basis.
Prior to January 1, 1994, all debt securities were carried at
amortized cost.
PREMISES AND EQUIPMENT - Premises and equipment are carried at cost
less accumulated depreciation and amortization. For financial
accounting purposes, depreciation and amortization are determined
using both accelerated and straight-line methods.
LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES - Interest income on
loans is recognized when earned, generally based on the principal
balance outstanding. Loans are placed on a non-accrual basis when, in
the opinion of management, uncertainty exists as to the ultimate
collection of such interest.
Loan origination and commitment fees and direct loan origination
costs are deferred and the net amount is amortized to interest income
generally over the contractual life of the related loan or
commitment.
The allowance for possible loan losses is increased by the provision
for possible loan losses and reduced by loans charged off, net of
recoveries. The allowance is maintained at a level considered
adequate to provide for possible loan losses based on management's
evaluation of the loan portfolio and prevailing and anticipated
economic conditions.
LEASING - Direct financing leases are accounted for by the finance
method of accounting, whereby the aggregate amount of all lease
payments and the estimated residual value of the equipment, less any
unearned income, are recorded as a receivable. Unearned income, the
excess of the lease payments and estimated residual value of the
equipment over the investment in the equipment, is recorded as income
using the simple interest method.
FEDERAL INCOME TAXES - Effective January 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS No. 109"), which requires recognition of
deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the differences between the
financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the years in which the differences
are expected to reverse.
Prior to 1993, the Company accounted for income taxes using the
deferred method (see Note I).
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note A: ACCOUNTING POLICIES, Concluded.
- ------
The Company and the Bank file consolidated income tax returns
pursuant to an agreement between the two parties. Under the terms of
such agreement, the Bank is required to pay to the Company its
current federal income tax (exclusive of any deferred income taxes)
computed on the separate return method.
NET INCOME PER COMMON SHARE - Net income per common share is based on
net income after preferred dividend requirements. The weighted
average number of common shares used in the computation were 273,134
shares for the three months ended March 31, 1994 and 1993 and 273,134
shares, 249,842 shares and 242,078 shares for the years ended
December 31, 1993, 1992 and 1991, respectively.
Note B: INVESTMENT SECURITIES.
- ------
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS 115"). This statement
modified the financial accounting and reporting for investments in
equity securities that have readily determinable fair values and for all
investments in debt securities. Securities are to be classified as
either held-to-maturity and reported at amortized cost, trading and
reported at fair value (with unrealized gains and losses included in
current earnings), or available-for-sale and reported at fair value
(with unrealized gains and losses excluded from current earnings and
reported as a separate component of shareholders' equity).
The Company adopted SFAS 115 as of January 1, 1994. As a result, the
amortized cost of securities classified as available-for-sale was
decreased by $242,106 to record them at their then fair value with a
corresponding decrease to shareholders' equity of $159,789, net of
applicable deferred income taxes. The Company had no trading securities
as of March 31, 1994.
The amortized cost and estimated aggregate fair value of investment
securities classified as available-for-sale and held to maturity at
March 31, 1994 are as follows:
<TABLE>
<CAPTION>
Available-For-Sale
-------------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Aggregate
Amortized Holding Holding Fair
Cost Gains Losses Value
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Government
and agency
obligations $23,553,480 $139,053 $(190,178) $23,502,355
Mortgage-backed
securities 26,944,650 208,483 (399,465) 26,753,668
FHLB stock 682,500 - - 682,500
Other debt
securities 100,000 - - 100,000
----------- ---------- ---------- -----------
Totals $51,280,630 $347,536 $(589,643) $51,038,523
=========== ========== ========== ===========
</TABLE>
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note B: INVESTMENT SECURITIES, Continued.
- ------
<TABLE>
<CAPTION>
Held-To-Maturity
----------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Aggregate
Amortized Holding Holding Fair
Cost Gains Losses Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Obligations of
states and
political sub-
divisions $4,080,593 $23,699 $(100,433) $4,003,859
========== ======= ========= ==========
</TABLE>
The amortized cost and estimated aggregate fair value of investment
securities classified as available-for-sale and held-to-maturity at
March 31, 1994, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
Available-For-Sale Held-To-Maturity
----------------------- ----------------------------
Estimated Estimated
Aggregate Aggregate
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ---------- ----------------
<S> <C> <C> <C> <C>
Due in one year
or less $ 3,026,719 $ 3,060,313 $ 180,000 $ 181,079
Due after one year
through five years 14,094,962 14,045,011 544,901 560,858
Due after five years
through ten years 6,431,799 6,397,031 2,501,646 2,448,508
Due after ten years 782,500 782,500 854,046 813,414
Mortgage-backed
securities 26,944,650 26,753,668 - -
----------- ----------- ---------- ----------
Totals $51,280,630 $51,038,523 $4,080,593 $4,003,859
=========== =========== ========== ==========
</TABLE>
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note B: INVESTMENT SECURITIES, Continued.
- ------
The amortized cost and estimated market value of investment securities at
December 31, 1993 are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Government
and agency
obligations $21,550,994 $268,941 $(46,435) $21,773,500
Obligations of
states and
political sub-
divisions 4,199,201 110,545 (5,746) 4,304,000
Corporate
securities 301,174 -- (174) 301,000
Mortgage-backed
securities 29,139,036 441,791 (35,827) 29,545,000
FHLB stock 682,500 -- -- 682,500
Other debt
securities 100,000 -- -- 100,000
----------- ---------- ---------- -----------
</TABLE>
Totals $55,972,905 $821,277 $(88,182) $56,706,000
=========== ======== ======== ===========
The amortized cost and estimated market value of investment securities at
December 31, 1992 are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Government
and agency
obligations $15,746,593 $ 317,378 $ (8,971) $16,055,000
Obligations of
states and
political sub-
divisions 2,993,004 39,594 (56,598) 2,976,000
Corporate
securities 959,000 3,500 -- 962,500
Mortgage-backed
securities 30,980,189 699,484 (48,673) 31,631,000
FHLB stock 682,500 -- -- 682,500
Other debt
securities 1,200,000 -- -- 1,200,000
----------- ---------- ---------- -----------
</TABLE>
Totals $52,561,286 $1,059,956 $(114,242) $53,507,000
=========== ========== ========= ===========
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note B: INVESTMENT SECURITIES, Concluded.
- ------
Proceeds from sales of investments in debt securities during the three
months ended March 31, 1993 and the years ended December 31, 1993,
1992 and 1991 were $102,500, $1,647,187, $1,000,000 and $6,052,109,
respectively. Gross gains of $2,500, $31,990, $24,281 and $47,783
were realized on those sales during the three months ended March 31,
1993 and the years ended December 31, 1993, 1992 and 1991,
respectively. There were no sales of investments in debt securities
for the three months ended March 31, 1994.
Investment securities with carrying values of $1,044,531, $1,033,254
and $1,521,298 were pledged as collateral for short-term borrowings
as required or permitted by law at March 31, 1994, December 31, 1993
and December 31, 1992, respectively.
Note C: LOANS.
- ------
Loans consisted of the following at March 31, 1994, December 31, 1993
and December 31, 1992:
<TABLE>
<CAPTION>
December 31,
March 31, ------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Commercial $33,577,585 $33,529,866 $30,519,056
Real estate mortgage 29,739,823 31,257,249 35,051,633
Installment 15,144,146 14,100,418 13,300,190
Direct financing leases 369,966 443,224 523,227
----------- ----------- -----------
78,831,520 79,330,757 79,394,106
Less: Deferred loan fees 160,876 184,575 239,390
Unearned income -- -- 498
----------- ----------- -----------
$78,670,644 $79,146,182 $79,154,218
=========== =========== ===========
</TABLE>
Non-accrual loans at March 31, 1994, December 31, 1993 and December 31,
1992 aggregated approximately $30,000, $74,000 and $116,000,
respectively, all of which are collateralized. Interest income for
the three months ended March 31, 1994 and 1993 and the years ended
December 31, 1993, 1992 and 1991 would have increased by
approximately $600, $700, $1,900, $7,500 and $80,000, respectively,
if these loans accrued interest at their full contract rate.
The Bank has extended loans to certain officers and directors of the
Bank and the Company and to their associates aggregating $826,000,
$579,749 and $803,163 at March 31, 1994, December 31, 1993 and
December 31, 1992, respectively. During 1993, $521,503 of new loans
were made and repayments totaled $744,917.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note D: ALLOWANCE FOR POSSIBLE LOAN LOSSES.
- ------
The following is an analysis of the allowance for possible loan losses:
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
------------------------ -------------------------------------
1994 1993 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, beginning of period $1,183,525 $1,219,160 $1,219,160 $1,096,836 $1,239,227
Provision for possible loan
losses -- -- -- 120,000 635,000
Loans charged off (20,076) (9,004) (106,303) (95,353) (855,262)
Loan recoveries 32,385 13,538 70,668 97,677 77,871
---------- ---------- ---------- ---------- ----------
Balance, end of period $1,195,834 $1,223,694 $1,183,525 $1,219,160 $1,096,836
========== ========== ========== ========== ==========
</TABLE>
Note E: PREMISES AND EQUIPMENT.
- ------
Premises and equipment, at cost less accumulated depreciation and
amortization, consisted of the following at March 31, 1994 and
December 31, 1993 and 1992:
<TABLE>
<CAPTION>
March 31, December 31,
---------- ----------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Land $ 447,522 $ 447,522 $ 447,522
Buildings and improvements 1,911,475 1,950,843 1,895,625
Furniture, fixtures and equipment 495,176 549,464 625,352
---------- ---------- ----------
2,854,173 2,947,829 2,968,499
Less, Accumulated deprecia-
tion and amortization 1,330,105 1,379,032 1,348,394
---------- ---------- ----------
Premises and equipment, net $1,524,068 $1,568,797 $1,620,105
========== ========== ==========
</TABLE>
Note F: TIME DEPOSITS AND SHORT-TERM BORROWINGS.
- ------
Interest expense on time deposits in denominations of $100,000 or more was
$67,125 and $90,007 for the three months ended March 31, 1994 and 1993,
respectively, and $251,806, $463,939 and $756,521 for the years ended
December 31, 1993, 1992 and 1991, respectively .
Short-term borrowings and their weighted average interest rates as of
March 31, 1994 and December 31, 1993 were as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
--------- ------------
<S> <C> <C>
Federal funds
purchased $600,000 $275,000
Advances from
Federal Home
Loan Bank 300,000 300,000
-------- -------
Total $900,000 $575,000
======== ========
Weighted
average
interest rate 4.71% 4.82%
====== =======
</TABLE>
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note F: TIME DEPOSITS AND SHORT-TERM BORROWINGS, Concluded.
- ------
During 1992, the Bank became a member of the Federal Home Loan Bank
("FHLB") and made a required investment of $682,500 in FHLB stock.
Pursuant to an Advances, Pledge and Security Agreement (the "Agreement")
between the Bank and the FHLB of Indianapolis, the Bank may apply for
available advances from the FHLB of Indianapolis of up to $8,250,000.
Advances outstanding under the Agreement bear interest at variable rates
of interest and are collateralized by FHLB stock and specified mortgage
loans and mortgage-backed securities.
There were no FHLB advances outstanding under the above Agreement nor
other short-term borrowings outstanding at December 31, 1992.
Note G: LONG-TERM DEBT.
- ------
Long-term debt consisted of the following at March 31, 1994, December 31,
1993 and December 31, 1992:
<TABLE>
<CAPTION>
March 31, December 31,
--------- ------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Term loan, principal payable in
increasing quarterly install-
ments ranging from $35,000 to
$80,000 through July 10, 1998
with the remaining balance pay-
able October 10, 1998, plus
interest at 9.74% per annum
through July 30, 1992 and at
the prime rate thereafter;
collateralized by all the Bank's
issued and outstanding common
shares. $1,392,558 $1,432,558 $2,010,000
Subordinated notes, interest at
12.5% payable quarterly, with
annual principal payments rang-
ing from $400,000 to $500,000
through November 15, 1995. 950,000 950,000 1,350,000
Other -- -- 50,000
---------- ---------- ---------
Total $2,342,558 $2,382,558 $3,410,000
========== ========== ===========
</TABLE>
The term loan agreement, as amended January 6, 1992, contains certain
restrictions, including maintenance of a minimum leverage ratio by the
Company and a minimum risk-based capital ratio by the Bank and
prescribed maximum allowable levels of non-performing loans and loan to
equity ratio. The term loan agreement also prohibits the payment of
cash dividends on the Company's common stock, limits the aggregate
amount of annual cash dividends and redemptions of the Company's
preferred stock to $350,000 and limits the purchase or redemption of any
class of the Company's capital stock to an aggregate amount of $600,000
while borrowings are outstanding under this agreement. In addition, the
agreement also requires annual mandatory principal prepayments on July
10 of each year, commencing in 1993, in amounts equal to the Bank's net
income for the immediately preceding year in excess of $1,000,000. Such
annual mandatory prepayments are applied to the unpaid quarterly
installments of the term loan in inverse order of maturity. On July 10,
1994, a mandatory prepayment of approximately $481,000 will be due.
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note G: LONG-TERM DEBT, Concluded.
- ------
Payments of principal and interest on the subordinated notes are
subordinate to other liabilities of the Bank. The subordinated note
agreement contains certain restrictions, including limitations on the
Bank's incurrence of additional indebtedness and payment of
dividends, other than stock dividends. As of December 31, 1993,
approximately $2,545,000 of the Bank's undivided profits was
available for the payment of cash dividends.
Annual maturities of long-term debt for each of the next five years
ending December 31, including the mandatory prepayment of the term
loan due in 1994, are as follows: 1994 - $1,091,000; 1995 - $680,000;
1996 - $200,000; 1997 - $220,000 and 1998 - $191,558.
Note H: BENEFIT PLANS.
- ------
The Bank has a defined benefit pension plan which covers substantially
all full-time employees. Benefits under the plan are based on a fixed
percentage of the participant's average compensation over the five
consecutive calendar years producing the highest compensation
multiplied by the number of years of service. The Bank's policy is to
fund costs accrued on a current basis. Plan assets consist of fixed
income and equity investments.
Net pension expense for the years ended December 31, 1993, 1992 and
1991 included the following components:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Service cost benefits
earned during the year $ 63,417 $ 66,220 $ 39,354
Interest cost on projected
benefit obligation 58,134 61,209 48,692
Return on plan assets (13,233) (30,488) (23,988)
Net amortization and
deferral (28,700) (25,416) (31,921)
-------- -------- --------
Net pension expense $ 79,618 $ 71,525 $ 32,137
======== ======== ========
</TABLE>
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note H: BENEFIT PLANS, Concluded.
- ------
The following table sets forth the actuarial present value of benefit
obligations and the funded status of the plan as of December 31, 1993
and 1992:
<TABLE>
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
Accumulated benefit obligation,
including vested benefits of
$398,080 and $535,073 in 1993
and 1992, respectively $ 427,178 $ 591,425
========= =========
Projected benefit obligation for
service rendered to date $(871,410) $(950,431)
Plan assets at fair value 510,569 678,817
--------- ---------
Projected benefit obligation
in excess of plan assets (360,841) (271,614)
Unrecognized net loss from past
experience different from that
assumed and effects of changes
in assumptions 319,861 247,811
Remaining unrecognized transi-
tion net asset from January 1,
1989, being recognized
over 21 years (9,015) (9,589)
--------- ---------
Accrued pension costs included
in accrued expenses and
other liabilities $ (49,995) $ (33,392)
========= =========
</TABLE>
The projected benefit obligation was determined using an assumed discount
rate of 6.50% for 1993 and 6.75% for 1992. The assumed rate of expected
future salary increases was 5% and the expected rate of return on plan
assets was 8% for both years.
The discount rate used to determine both the 1993 and 1992 projected
benefit obligation was decreased to more closely approximate current
rates on high-quality long-term obligations. The effect of this change
was to increase vested benefits, accumulated benefit obligation and
projected benefit obligation by $17,110, $19,144 and $45,917,
respectively, at December 31, 1993 and $35,489, $41,127 and $82,182,
respectively, at December 31, 1992.
In addition, the Bank maintains a trusteed defined contribution profit
sharing plan which covers substantially all employees. Discretionary
employer contributions are authorized by the Bank's Board of Directors.
The profit sharing plan also allows eligible employees to voluntarily
contribute a percentage of their compensation by salary reduction with
the Bank contributing a discretionary percentage of eligible employee
contributions. Profit sharing expense under this plan for the three
months ended March 31, 1994 and 1993 aggregated $15,000 and $9,000,
respectively, and for the years ended December 31, 1993, 1992 and 1991
aggregated $59,000, $56,000 and $58,000, respectively.
The Bank has deferred compensation agreements with one current and one
retired key executive which provide for supplemental benefits payable
during fixed periods after their retirement from the Bank. The
estimated present value of the liability for these deferred compensation
agreements is accrued and aggregated $275,299, $292,601 and $289,771 as
of March 31, 1994, December 31, 1993 and December 31, 1992,
respectively. The Bank maintains life insurance policies for these key
executives to provide a portion of the funding for the related deferred
compensation obligations. Deferred compensation expense under these
agreements aggregated $11,312, $60,000 and $60,000 for the years ended
December 31, 1993, 1992 and 1991, respectively. There was no deferred
compensation expense recorded under these agreements for the three
months ended March 31, 1994 and 1993.
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note I: INCOME TAXES.
- ------
Income taxes for the three months ended March 31, 1994 and 1993 and the
years ended December 31, 1993, 1992 and 1991 consist of the
following:
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
--------------------- -----------------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Federal:
Current $120,000 $164,000 $715,000 $620,000 $321,300
Deferred - - (56,000) (53,000) 30,700
-------- -------- -------- -------- --------
120,000 164,000 659,000 567,000 352,000
State 42,000 55,000 203,000 218,000 135,000
-------- -------- -------- -------- --------
Total $162,000 $219,000 $862,000 $785,000 $487,000
======== ======== ======== ======== ========
</TABLE>
The following is a reconciliation of the computed statutory federal
income tax applicable to income before income taxes to the actual
income tax provision for the three months ended March 31, 1994 and
1993 and the years ended December 31, 1993, 1992 and 1991:
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
--------------------- -----------------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Computed statutory tax (34%) $152,500 $179,600 $765,800 $694,100 $484,700
Increase (decrease) resulting from:
Tax-exempt interest (21,100) (17,200) (70,400) (67,400) (68,600)
State income taxes, net of
federal income tax benefit 27,700 36,300 134,000 143,900 89,100
Alternative minimum tax credits
realized - - - - (50,800)
Amortization of goodwill 3,000 3,000 11,900 11,900 11,900
Other, net (100) 17,300 20,700 2,500 20,700
-------- -------- -------- -------- --------
Actual income tax provision $162,000 $219,000 $862,000 $785,000 $487,000
======== ======== ======== ======== ========
</TABLE>
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which
required a change from the deferred to the liability method of
accounting for deferred income taxes. The cumulative effect of this
accounting change on years prior to 1993 was a decrease in net income
of $110,000 which has been included in the results of operations for
1993. The effect of this change on net income for the year ended
December 31, 1993 and the three months ended March 31, 1993,
excluding the cumulative effect discussed above, was not material.
Prior to 1993, the Company accounted for deferred income taxes under
the provisions of Accounting Principles Board Opinion No. 11 using
the deferred method of accounting whereby deferred income taxes were
provided for significant timing differences in the recognition of
revenue and expenses for financial reporting and tax purposes. For
the years ended December 31, 1992 and 1991, the tax effect of those
timing differences consisted of the following: Accretion of discounts
on investment securities $19,600 and $12,100, deferred compensation
($20,400) and ($20,400), provision for possible loan losses ($40,800)
and $56,000 and other timing differences ($11,400) and ($17,000),
respectively.
F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note I: INCOME TAXES, Concluded.
- ------
Deferred tax assets of $301,300, $219,000 and $273,000 at March 31,
1994, December 31, 1993 and December 31, 1992, respectively, are
included in other assets in the consolidated statements of financial
condition and are net of deferred tax liabilities aggregating
approximately $42,000, $42,000 and $101,000, respectively. The type
of temporary differences between the tax bases of assets and
liabilities and their financial reporting amounts that give rise to
significant portions of deferred tax assets or liabilities are
accretion of discounts on investment securities, deferred
compensation, depreciation, the allowance for possible loan losses
and for the three months ended March 31, 1994, unrealized
depreciation of investment securities.
Note J: FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK.
- ------
The Bank is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of
its customers. These financial instruments include loan commitments
and standby letters of credit. The instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the
amount recognized in the consolidated statements of financial con-
dition. The aggregate dollar amount of the instruments reflect the
extent of involvement the Bank has in particular classes of financial
instruments.
The Bank's exposure to credit loss in the event of non-performance by
the other party to the financial instrument for loan commitments and
standby letters of credit is represented by the dollar amount of
those instruments. The Bank uses the same credit policies in making
commitments and conditional obligations as it does for on-balance-
sheet financial instruments.
The total amount of financial instruments with off-balance-sheet risk
as of March 31, 1994 and December 31, 1993 and December 31, 1992 is
as follows:
<TABLE>
<CAPTION>
March 31, December 31,
----------- ------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Loan commitments $15,938,000 $18,223,000 $15,184,000
Standby letters of credit 389,000 362,000 444,000
</TABLE>
Loan commitments are agreements to lend to a customer as long as there is
no violation of any condition established in the contract. Loan
commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments
are expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The Bank
evaluates each customer's credit-worthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by the Bank upon
extension of credit, is based on management's credit evaluation of the
borrower. Collateral held varies but may include marketable securities,
accounts receivable, inventories, property, plant and equipment, and
income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. The credit
risk involved and collateral obtained in issuing letters of credit is
essentially the same as that involved in extending loan commitments to
customers.
F-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Amounts and disclosures as of March 31, 1994 and for the
three months ended March 31, 1994 and 1993 are unaudited)
-----
Note K: CONCENTRATIONS OF CREDIT RISK.
- ------
Most of the Bank's commercial, real estate mortgage and installment
loan activity is with customers located in northwest Indiana with a
major concentration in agricultural lending.
Generally, the loans are collateralized by real estate and equipment.
The loans are expected to be repaid from cash flow or proceeds from
the sale of selected assets of the borrowers. The Bank's policy for
requiring collateral is dependent upon management's credit evaluation
of the borrower.
The mortgage-backed securities held by the Bank consist principally of
FNMA, GNMA and FHLMC pass-through certificates which are guaranteed
by those respective agencies of the United States government.
Note L: SHAREHOLDERS' EQUITY.
- ------
During 1991, all of the Company's remaining issued and outstanding
shares of 12% cumulative and floating rate cumulative preferred stock
were exchanged for 1,620 shares of its 10% cumulative preferred
stock.
Note M: OTHER OPERATING INCOME.
- ------
Other operating income for the year ended December 31, 1991 includes a
$250,000 option fee received by the Company in conjunction with the
termination of a proposed merger agreement with another financial
institution.
Note N: ACQUISITION.
- ------
At a special meeting of shareholders held on June 4, 1992, the
shareholders of the Bank approved an Agreement and Plan of Merger
(the "Merger Agreement") between the Bank, the Company and LaPorte
Interim Bank, a newly formed wholly-owned subsidiary of the Company,
providing for the merger of the Bank and LaPorte Interim Bank. Under
the Merger Agreement, which was approved by the Indiana Department of
Financial Institutions on October 15, 1992, each share of the Bank's
common stock, other than those shares owned by the Company or those
Bank shareholders who properly exercised their dissenters' rights,
was converted into the right to receive 1.75 shares of the Company's
common stock. Following the merger, LaPorte Interim Bank, as the
surviving bank, changed its name to LaPorte Bank and Trust Company.
In connection with the merger, which was accounted for as a purchase,
the Company issued 31,056 shares of its common stock valued at
$754,218 and made aggregate cash payments of $777,814 to dissenting
Bank shareholders, including $285,359 which was paid in January, 1993
and is included in accrued expenses and other liabilities in the
accompanying consolidated statement of financial condition at
December 31, 1992. The total purchase price of $1,722,356, including
direct acquisition costs of $190,324, was $50,756 less than the
Company's carrying value of the minority interest acquired which has
been recorded as a reduction of the Company's previously recorded
goodwill.
Had the Company acquired the minority interest in the Bank at the
beginning of 1991, net income and net income per share for the years
ended December 31, 1992 and 1991 would have been as follows:
<TABLE>
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Net income $1,258,704 $940,657
========== ========
Net income per share $ 3.85 $ 2.68
========== ========
</TABLE>
F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----
Note O: LAPORTE BANCORP (PARENT COMPANY ONLY) FINANCIAL INFORMATION.
- ------
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, December 31,
------------ ------------------------
1994 1993 1992
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 296,151 $ 102,920 $ 343,564
Dividend receivable from bank subsidiary 400,000 200,000 200,000
Investment in bank subsidiary 10,429,871 10,672,388 10,226,514
Investment securities 100,000 100,000 100,000
Other assets 38,014 38,014 38,014
----------- ----------- -----------
Total assets $11,264,036 $11,113,322 $10,908,092
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Accrued expenses $ 125,237 $ 9,497 $ 299,595
Long-term debt 1,392,558 1,432,558 2,010,000
----------- ----------- -----------
Total liabilities 1,517,795 1,442,055 2,309,595
Shareholders' equity 9,746,241 9,671,267 8,598,497
----------- ----------- -----------
Total liabilities and
shareholders' equity $11,264,036 $11,113,322 $10,908,092
=========== =========== ===========
</TABLE>
F-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----
Note O: LAPORTE BANCORP (PARENT COMPANY ONLY) FINANCIAL INFORMATION, Continued.
- ------
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1994 1993
---------- -----------
(Unaudited)
<S> <C> <C> <C>
Equity in earnings of bank subsidiary $ 317,272 $ 338,120
Interest and dividend income 5,133 5,085
---------- ----------
Total income 322,405 343,205
---------- ----------
Interest on long-term debt 20,922 29,660
Salaries and employee benefits 11,791 13,487
Other operating expenses 24,021 10,773
---------- ----------
Total expenses 56,734 53,920
---------- ----------
Income before income tax benefit 265,671 289,285
Income tax benefit 21,000 20,000
---------- ----------
Income before cumulative effect of
accounting change 286,671 309,285
Cumulative effect of change in accounting
for income taxes -- (110,000)
---------- ----------
Net income $ 286,671 $ 199,285
========== ==========
Year Ended December 31,
-----------------------------------
1993 1992 1991
---------- ---------- ----------
Equity in earnings of bank subsidiary $1,445,874 $1,199,204 $ 756,520
Interest and dividend income 21,227 27,037 37,160
Other operating income -- -- 250,000
---------- ---------- ----------
Total income 1,467,101 1,226,241 1,043,680
---------- ---------- ----------
Interest on long-term debt 105,205 192,944 218,920
Salaries and employee benefits 54,161 49,937 48,414
Other operating expenses 141,335 45,033 77,778
---------- ---------- ----------
Total expenses 300,701 287,914 345,112
---------- ---------- ----------
Income before income tax benefit 1,166,400 938,327 698,568
Income tax benefit 114,000 115,000 74,000
---------- ---------- ----------
Net income $1,280,400 $1,053,327 $ 772,568
========== ========== ==========
</TABLE>
F-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
Note O: LAPORTE BANCORP (PARENT COMPANY ONLY) FINANCIAL INFORMATION, Continued.
- ------
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------
1994 1993
-------- ---------
<S> <C> <C>
(Unaudited)
Cash flows provided by (used in) operating activities:
Net income $ 286,671 $ 199,285
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Equity in undistributed earnings of bank subsidiary 73,973 (146,875)
Cumulative effect of accounting change - 110,000
Amortization of goodwill 8,755 8,755
Increase in dividend receivable (200,000) -
Increase (decrease) in accrued expenses 115,740 (240,501)
-------- ---------
Net cash provided by (used in) operating activities 285,139 (69,336)
-------- ---------
CASH FLOWS (USED IN) FINANCING ACTIVITIES:
Payments on long-term debt (40,000) (35,000)
Dividends paid on preferred stock (51,908) (51,908)
-------- ---------
Net cash (used in) financing activities (91,908) (86,908)
-------- ---------
Increase (decrease) in cash and cash equivalents 193,231 (156,244)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 102,920 343,564
-------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $296,151 $187,320
======== ========
</TABLE>
F-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
Note O: LAPORTE BANCORP (PARENT COMPANY ONLY) FINANCIAL INFORMATION, Concluded.
- ------
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income $1,280,400 $1,053,327 $ 772,568
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed earnings of bank subsidiary (480,895) (802,340) (482,359)
Amortization of goodwill 35,021 35,021 35,021
Increase in dividend receivable -- (122,705) ---
Decrease in other assets -- 51,233 (22,945)
Increase (decrease) in accrued expenses (290,098) 160,253 85,897
---------- ---------- ---------
Net cash provided by operating activities 544,428 374,789 388,182
---------- ---------- ---------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Maturity of interest bearing deposit with bank subsidiary -- 250,000 (250,000)
Cash paid for acquisition of minority interest -- (119,291) --
---------- ---------- ---------
Net cash provided by investing activities -- 130,709 (250,000)
---------- ---------- ---------
CASH FLOWS (USED IN) FINANCING ACTIVITIES:
Payments on long-term debt (577,442) (120,000) (150,000)
Dividends paid on preferred stock (207,630) (207,630) (201,378)
---------- ---------- ---------
Net cash (used in) financing activities (785,072) (327,630) (351,378)
---------- ---------- ---------
Increase (decrease) in cash and cash equivalents (240,644) 177,868 (213,196)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 343,564 165,696 378,892
---------- ---------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 102,920 $ 343,564 $165,696
============ ========= ========
</TABLE>
F-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Concluded
-----
Note P: SUBSEQUENT EVENT.
- ------
On February 7, 1994, the Company entered into an Agreement and Plan of
Reorganization (the "Agreement") with Norwest Corporation ("Norwest").
The Agreement provides for Norwest to acquire all of the outstanding
shares of preferred and common stock of the Company in a merger of the
Company with Norwest, or an affiliate of Norwest, in exchange for
aggregate consideration of approximately $14.9 million, payable in
common stock of Norwest. The transaction is subject to a number of
conditions, including ratification by the shareholders of the Company
and obtaining necessary regulatory approvals.
F-25
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION,
AS AMENDED,
AND
AGREEMENT AND PLAN OF MERGER
<PAGE>
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as of
the 7th day of February, 1994, by and between LAPORTE BANCORP ("LaPorte"), an
Indiana 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 LaPorte (the
"Merger") pursuant to an agreement 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 all of the
common stock of LaPorte of the par value of $1.00 per share ("LaPorte Common
Stock") and Class C preferred stock of LaPorte of the value of $50.00 per
share ("LaPorte Preferred Stock") outstanding immediately prior to the time
the Merger becomes effective in accordance with the provisions of the Merger
Agreement (the "Effective Time of the Merger") 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 LaPorte pursuant to the Merger Agreement, with
LaPorte as the surviving corporation, in which Merger each share of LaPorte
Common Stock outstanding immediately prior to the Effective Time of the Merger
(other than shares as to which statutory dissenters' appraisal rights have
been exercised) will be converted into and exchanged for the number of shares
of Norwest Common Stock determined by dividing $12,800,000 by the Norwest
Measurement Price and then dividing the result thereof by the total number of
shares of LaPorte Common Stock outstanding as of the Effective Time of the
Merger. The "Norwest Measurement Price" is defined as the average of the
closing prices of a share of Norwest Common Stock as reported on the
consolidated tape of the New York Stock Exchange during the period of 10
trading days ending at the end of the third trading day immediately preceding
the Closing Date (as defined below).
(b) LaPorte Preferred Stock. At the Effective Time of the Merger, each
share of LaPorte Preferred Stock issued and outstanding immediately prior to
the Effective Time of the Merger, will be converted into and exchanged for the
number of shares of Norwest Common Stock determined by dividing the
"Redemption Price per Share" by the Norwest Measurement Price. For purposes
of the foregoing, the Redemption Price per Share shall equal the par value
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per share plus accrued but unpaid cumulative dividends per share plus $.11 per
share of the LaPorte Preferred Stock.
(c) 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, then the number of shares of
Norwest Common Stock into which a share of LaPorte Common Stock or LaPorte
Preferred Stock shall be converted pursuant to subparagraphs (a) and (b),
above, will be appropriately and proportionately adjusted so that the number
of such shares of Norwest Common Stock into which a share of LaPorte Common
Stock or LaPorte Preferred Stock shall be converted will equal the number of
shares of Norwest Common Stock which holders of shares of LaPorte Common Stock
or LaPorte Preferred Stock would have received pursuant to such
reclassification, recapitalization, split-up, combination, exchange of shares
or readjustment, or stock dividend had the record date therefor been
immediately following the Effective Time of the Merger.
(d) Fractional Shares. 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 thereof 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 Norwest Measurement Price.
(e) 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 Secretaries of State
of the States of Indiana and Delaware 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 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. Minneapolis, Minnesota 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 LaPorte pursuant to 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 LAPORTE. LaPorte represents and
warrants to Norwest as follows:
(a) Organization and Authority. LaPorte is a corporation duly organized
and existing under the laws of the State of Indiana, is duly qualified to do
business in all other jurisdictions where its ownership or leasing of property
or the conduct of its business requires it to be so
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qualified and failure to be so qualified would have a material adverse effect
on LaPorte and each LaPorte Subsidiary (defined below) 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. LaPorte is registered as a
bank holding company with the Board of Governors of the Federal Reserve System
("Federal Reserve Board") under the Bank Holding Company Act of 1956, as
amended (the "BHC Act"). LaPorte has furnished Norwest true and correct copies
of its articles of incorporation and by-laws, as amended.
(b) LaPorte's Subsidiaries. LaPorte's only subsidiary is LaPorte Bank
and Trust Company (the "Bank"), all shares of the outstanding capital stock of
which are owned directly or indirectly by LaPorte, and Bank's only subsidiary
is LBT Corporation, ("LBT"), all shares of the outstanding capital stock of
which are owned by Bank (Bank and LBT being each a "LaPorte Subsidiary"). No
equity security of any LaPorte Subsidiary is or may be required to be issued
by reason of any option, warrant, scrip, 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
LaPorte 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. All of such shares so owned by LaPorte 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. Bank is a
banking corporation duly organized and in existence under the laws of Indiana,
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 and is an
insured bank under the provisions of Chapter 16 of Title 12, United States
Code, known as the "Federal Deposit Insurance Act." Except as set forth on
Schedule 2(b), LaPorte 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.
(c) Capitalization. The authorized capital stock of LaPorte consists of
(i) 310,000 shares of common stock, $1.00 par value, of which 273,134 shares
are outstanding and (ii) the series of preferred stock, Series A, B, and C,
described on Schedule 2(c), which shares of preferred stock have the par value
and consist of the number of shares authorized and outstanding as set forth on
Schedule 2(c), the authorized capital stock of Bank consists of 100 shares of
common stock, $10.00 par value of which 100 shares are outstanding, ("Bank
Common Stock"), all of which shares of Bank Common Stock are owned by LaPorte,
and the authorized capital stock of LBT Corporation is as set forth on
Schedule 2(c) which amounts constitute the maximum number of shares of LaPorte
Common Stock, LaPorte Preferred Stock and Bank Common Stock (assuming for this
purpose that phantom shares and other share-equivalents constitute LaPorte
Common Stock or LaPorte Preferred Stock and Bank 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 were exercised). All
of the outstanding shares of capital stock of LaPorte and each LaPorte
Subsidiary have been duly and validly authorized and issued and are fully paid
and nonassessable. Except as set forth in Schedule 2(c), there are no
outstanding subscriptions, contracts, conversion privileges, options,
warrants, calls or other rights obligating LaPorte or any LaPorte Subsidiary
to issue, sell or otherwise dispose of, or to purchase, redeem or otherwise
acquire, any shares of capital stock of LaPorte or any LaPorte Subsidiary, nor
are there any stock appreciation, phantom or similar rights outstanding based
on the book value or any other attribute of LaPorte Common
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Stock or LaPorte Preferred Stock or Bank Common Stock. Since June 30,1993,
except as set forth on Schedule 2(c), no shares of capital stock of LaPorte or
any LaPorte Subsidiary have been purchased, redeemed or otherwise acquired,
directly or indirectly, by LaPorte or Bank and no dividends or other
distributions have been declared, set aside, made or paid to the shareholders
of LaPorte or any LaPorte Subsidiary. LaPorte has provided Norwest with a true
and correct list of the shareholders of record of LaPorte and the beneficial
holders of certificates of the LaPorte Voting Trust, setting forth their
respective share ownership as of the date hereof.
(d) Authorization. LaPorte 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 LaPorte and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of LaPorte. Subject to such approvals of shareholders and of
government agencies and other governing boards having regulatory authority
over LaPorte as may be required by statute or regulation, this Agreement and
the Merger Agreement are valid and binding obligations of LaPorte enforceable
against LaPorte in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditor's rights generally
or equitable principles..
Neither the execution, delivery and performance by LaPorte of this
Agreement or the Merger Agreement, nor the consummation of the transactions
contemplated hereby and thereby, nor compliance by LaPorte 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 LaPorte or any LaPorte Subsidiary under any of the terms, conditions
or provisions of (x) its articles 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 LaPorte or any LaPorte
Subsidiary is a party or by which it may be bound, or to which LaPorte or any
LaPorte Subsidiary or any of the properties or assets of LaPorte or any
LaPorte 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 LaPorte, violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to LaPorte or any LaPorte
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 or filings, consents, reviews, authorizations, approvals
or exemptions required under the BHC Act or the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act"), and filings required to effect the
Merger under Indiana 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 LaPorte of the transactions contemplated by
this Agreement and the Merger Agreement.
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(e) LaPorte Financial Statements. The consolidated statements of
financial condition of LaPorte and Bank as of December 31, 1992 and 1991 and
related consolidated statements of income, shareholders' equity and cash flows
for the three years ended December 31, 1992, together with the notes thereto,
certified by Coopers & Lybrand and included in LaPorte's Annual Report on Form
10-K for the fiscal year ended December 31, 1992 (the "LaPorte 10-K") as filed
with the Securities and Exchange Commission (the "SEC"), and the unaudited
consolidated statements of financial condition of LaPorte and the LaPorte
Subsidiaries as of September 30, 1993 and the related unaudited consolidated
statements of income, shareholders' equity and cash flows for the 9 months
then ended (collectively, the "LaPorte 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 LaPorte and the LaPorte Subsidiaries at the
dates and the consolidated results of operations and cash flows of LaPorte and
the LaPorte Subsidiaries for the periods stated therein.
(f) Reports. LaPorte and Bank have filed all reports, registrations and
statements, together with any required amendments thereto, that they were
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"), and (iv) any applicable
state securities or banking authorities. All such reports and statements
filed with any such regulatory body or authority are collectively referred to
herein as the "LaPorte Reports". As of their respective dates, the LaPorte
Reports complied in all material respects with all the rules and regulations
promulgated by the SEC, the Federal Reserve Board, the FDIC and 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. Copies of all the LaPorte Reports have been made available to
Norwest by LaPorte.
(g) Properties and Leases. Except as may be reflected in the LaPorte
Financial Statements and except for any lien for current taxes not yet
delinquent, LaPorte and Bank 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 LaPorte's consolidated balance
sheet as of September 30, 1993 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 LaPorte or Bank
pursuant to which LaPorte or Bank, 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 LaPorte or Bank or any event which,
with notice or lapse of time or both, would constitute such a material
default. Substantially all LaPorte's and Bank'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. LaPorte and each LaPorte Subsidiary have each filed all
federal, state, county, local and foreign tax returns, including information
returns, required to be filed by it, and paid 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
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are delinquent. No tax returns of LaPorte or Bank have been audited by any
governmental authority other than as set forth in Schedule 2(h) and neither
LaPorte nor Bank has waived any statute of limitations with respect to tax
returns or agreed to any extension of time with respect to an assessment or
deficiency for taxes. Neither LaPorte nor Bank has received any notice of
deficiency or assessment from any taxing authority with respect to liabilities
for taxes of LaPorte or Bank. Except only as set forth on Schedule 2(h), (i)
neither LaPorte nor any LaPorte 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 LaPorte or
any LaPorte Subsidiary which has not been settled, resolved and fully
satisfied. LaPorte and each LaPorte Subsidiary have each 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 September 30,
1993, referred to in paragraph 2(e) hereof, includes adequate provision for
all accrued but unpaid federal, state, county, local and foreign taxes,
interest, penalties, assessments or deficiencies of LaPorte and each LaPorte
Subsidiary with respect to all periods through the date thereof.
(i) Absence of Certain Changes. Since September 30, 1993 there has been
no change in the business, financial condition or results of operations of
LaPorte or any LaPorte 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 LaPorte and Bank taken as a whole (other
than changes in banking laws or regulations, or interpretation thereof, that
affect the banking industry generally or changes in the general level of
interest rates).
(j) Commitments and Contracts. Except as set forth on Schedule 2(j),
neither LaPorte nor any LaPorte 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 LaPorte or Bank);
(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 LaPorte or Bank 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,
LaPorte or Bank 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
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(vi) any lease with annual rental payments aggregating $10,000 or
more.
(k) Litigation and Other Proceedings. LaPorte has furnished Norwest
copies of (i) all attorney responses to the request of the independent
auditors for LaPorte with respect to loss contingencies as of December 31,
1992 in connection with the LaPorte Financial Statements included in the
LaPorte 10-K, and (ii) a written list of legal and regulatory proceedings
filed against LaPorte or any LaPorte Subsidiary since said date. Neither
LaPorte nor any LaPorte Subsidiary is a party to any pending or, to the best
knowledge of LaPorte, 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 LaPorte and the LaPorte Subsidiaries taken as a
whole.
(l) Insurance. Schedule 2(l) lists each insurance policy maintained by
LaPorte or any LaPorte Subsidiary with respect to their properties and assets
for the last five (5) years, with no gaps in coverage with respect to such
insurance. LaPorte has delivered to Norwest complete and accurate copies of
each of the insurance policies described on Schedule 2(l) and all of such
insurance policies are in full force and effect (except as set forth on
Schedule 2(l)) and neither LaPorte nor Bank is in default with respect to its
obligations under any of such insurance policies.
(m) Compliance with Laws. LaPorte and each LaPorte Subsidiary each have
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 and assets and to carry on its business as
presently conducted and that are material to the business of LaPorte or Bank;
all such permits, licenses, certificates of authority, orders and approvals
are in full force and effect and, to the best knowledge of LaPorte, no
suspension or cancellation of any of them is threatened; and all such filings,
applications and registrations are current. The conduct by LaPorte and Bank
of its business and the condition and use of its properties does not violate
or infringe, in any respect material to any such business, any applicable
domestic (federal, state or local) or foreign law, statute, ordinance, license
or regulation. Neither LaPorte nor Bank 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 as set forth on Schedule 2(m), neither LaPorte nor Bank
is subject to any cease and desist order, written agreement or memorandum of
understanding with, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of federal or state governmental authorities
charged with the supervision or regulation of banks or bank holding companies
or engaged in the insurance of bank deposits ("Bank Regulators"), nor, to the
best of their knowledge, have any of them been advised by any Bank Regulator
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, or board resolutions. 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 LaPorte or Bank which reasonably
could be expected to have a material adverse effect on the business or
properties of LaPorte and Bank taken as a whole.
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(n) Labor. No work stoppage involving LaPorte or any LaPorte Subsidiary
is pending or, to the best knowledge of LaPorte, threatened. Neither LaPorte
nor any LaPorte 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 LaPorte or any LaPorte
Subsidiary. Employees of LaPorte and the LaPorte 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 on
Schedule 2(o), to the best knowledge of LaPorte no officer or director of
LaPorte or any LaPorte Subsidiary, or any "associate" (as such term is defined
in Rule l4a-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 LaPorte or Bank.
Schedule 2(o) sets forth a correct and complete list of any loan or
extension of credit from LaPorte or Bank and every covered transaction to any
present officer, director, principal shareholder, employee or any associate or
related interest or affiliate of any such person or of LaPorte or any LaPorte
Subsidiary which was required under Regulation O of the Federal Reserve Board
("Regulation O") to be approved by or reported to LaPorte's or any LaPorte
Subsidiaries' Board of Directors or which is otherwise subject to the
restrictions contained in Regulation O or the provisions of 12 USC (S)371c and
12 USC (S)371c-1 ("23A and 23B"). To the extent such laws and regulations
apply, LaPorte and the LaPorte Subsidiaries are not in violation of the
provisions of Regulation O or 23A and 23B.
(p) LaPorte 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 LaPorte or any LaPorte 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
LaPorte or any LaPorte 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), LaPorte or the LaPorte 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. LaPorte knows of no reason that any 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 Plan may not have been amended
to comply with the Tax Reform Act of 1986 (the "TRA") and other recent
legislation and regulations, although each such Plan is within the
remedial amendment period during which retroactive amendment may be made.
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(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 for the plan year ending
December 31, 1992, 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 LaPorte, 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
LaPorte, 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 LaPorte and Bank 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.
(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 LaPorte or Bank 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 LaPorte and
the LaPorte Subsidiaries supplied or to be supplied by LaPorte 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 LaPorte Common Stock and LaPorte Preferred Stock
pursuant to the provisions of the Merger Agreement (the "Registration
Statement"), (ii) the proxy statement to be mailed to LaPorte'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
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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
LaPorte and Bank 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 LaPorte nor Bank 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 for Mercer Capital (which has been
retained by LaPorte and the costs and expenses of which will be paid by
LaPorte), neither LaPorte nor Bank 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
LaPorte or Bank in connection with this Agreement and the Merger Agreement or
the transactions contemplated hereby and thereby.
(t) Administration of Trust Accounts. To the extent LaPorte and Bank
have acted as a fiduciary, to the best of the knowledge of the officers of
LaPorte and Bank LaPorte and Bank have each properly administered in all
respects material and which could reasonably be expected to be material to the
financial condition of LaPorte and Bank 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. To the best of their knowledge, neither LaPorte, the LaPorte
Subsidiaries, nor any current or past director, officer or employee of LaPorte
or the LaPorte Subsidiaries 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 LaPorte and Bank 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. To the best of their knowledge, neither LaPorte nor
the LaPorte Subsidiaries 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 LaPorte and the
LaPorte Subsidiaries, taken as a whole. To the best of LaPorte's knowledge,
all parties with whom LaPorte or the LaPorte Subsidiaries have material
leases, agreements or contracts or who owe to LaPorte or the LaPorte
Subsidiaries material obligations other than with respect to those arising in
the ordinary course of the banking business of the LaPorte Subsidiaries are in
compliance therewith in all material respects.
(v) Environmental Liability. There is no legal, administrative, or
other proceeding, claim, or action of any nature seeking to impose, or that
could reasonably be expected to result
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in the imposition of, on LaPorte or the LaPorte Subsidiaries, any liability
arising from the release of hazardous substances 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 LaPorte's
knowledge, threatened against LaPorte or the LaPorte Subsidiaries the result
of which has had or could reasonably be expected to have a material adverse
effect upon LaPorte and the LaPorte Subsidiaries taken as a whole; to the best
of LaPorte's knowledge there is no reasonable basis for any such proceeding,
claim or action; and to the best of LaPorte's knowledge neither LaPorte nor
the LaPorte Subsidiaries is subject to any agreement, order, judgment, or
decree by or with any court, governmental authority or third party imposing
any such environmental liability.
(w) Loan Documentation. To the best knowledge of LaPorte, there is no
defect in the documentation of any loan made by Bank, or the creation or
perfection of any security interests, mortgages and other liens with respect
to all collateral for such any loan, that is material to or could reasonably
be expected to be material to the financial condition of LaPorte and the
LaPorte Subsidiaries taken as a whole.
(x) Disclosure. Neither this Agreement nor any of the appendices,
Schedules or attachments hereto contains any untrue statement of a material
fact or omits a material fact necessary to make the statements contained
herein or therein not misleading. To the best of LaPorte's and Bank's
knowledge, there is no fact which has not been disclosed to Norwest pursuant
to the Agreement, the Schedules and Exhibits, which would materially adversely
affect the business, operations or financial condition of LaPorte and the
LaPorte Subsidiaries taken as a whole.
3. REPRESENTATIONS AND WARRANTIES OF NORWEST. Norwest represents and
warrants to LaPorte 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 is
registered as a bank holding company with 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, 1993, 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, 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
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capital stock. Subject to 12 U.S.C. (S) 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 31,1993, 1,131,250 shares of
10.24% Cumulative Preferred Stock at $100 stated value and 1,143,750 shares of
Cumulative Convertible Preferred Stock, Series B, at $200 stated value were
outstanding, and (ii) 500,000,000 shares of Common Stock, $1-2/3 par value, of
which as of the close of business on December 31,1993, 292,174,867 shares were
outstanding and 1,956,803 shares were held in the treasury.
(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. 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.
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, 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 or filings, consents, reviews, authorizations, approvals or
exemptions required under the BHC Act or the HSR Act, and filings required to
effect the Merger under Indiana and Delaware law, no notice to, filing
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<PAGE>
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 statements of
financial condition of Norwest and Norwest's subsidiaries as of December 31,
1992 and 1991 and related consolidated statements of income, stockholders'
equity and cash flows for the three years ended December 31, 1992, together
with the notes thereto, certified by KPMG Peat Marwick and included in
Norwest's Annual Report on Form 10-K for the fiscal year ended December 31,
1992 as amended by Form 8 dated March 3, 1993 (the "Norwest 10-K") as filed
with the SEC, and the unaudited consolidated balance sheets of Norwest and its
subsidiaries as of September 30, 1993 and the related unaudited consolidated
statements of income and cash flows for the 9 months then ended included in
Norwest's Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1993, 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 31,1989, 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 FDIC, (iv) the
Comptroller and (v) any applicable state securities or banking authorities.
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 September 30, 1993 included in Norwest's
Quarterly Report on Form 10-Q 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.
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(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 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 September 30,1993, 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 the date hereof 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
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<PAGE>
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, 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, for reasonable amounts with financially sound and
reputable insurance companies 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 or such
Subsidiary; all such permits, 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 any such
business, any applicable domestic (federal, state or local) or foreign law,
statute, ordinance, license or regulation. 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 the date hereof, 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
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<PAGE>
on Schedule 3(o), Norwest or the Norwest 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 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 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 for the plan
year ending December 31, 1992, 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.
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<PAGE>
(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 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 reasonably be expected to result in the imposition, on Norwest or any
Norwest Subsidiary of any liability arising from the release of hazardous
substances 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, order,
judgment, or decree by or with any court, governmental authority or third
party imposing any such environmental liability.
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(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.
4. COVENANTS OF LAPORTE. LaPorte 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, LaPorte and each
LaPorte Subsidiary will: (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 they shall not, without the prior
written consent of Norwest, (A) make any new loan or modify, restructure or
renew any existing loan to any borrower which has been criticized or specially
mentioned by any bank regulator or which is classified, 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 $250,000 or (B) make any new loan or
modify, restructure or renew any other existing loans (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 $350,000; (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 leases and other contracts in effect following the Merger; (ix)
comply in all material respects with all laws, regulations, ordinances, codes,
orders, licenses and permits applicable to the properties and operations of
LaPorte and the LaPorte Subsidiaries the non-compliance with which reasonably
could be expected to have a material adverse effect on LaPorte and Bank taken
as a whole; and (x) permit Norwest and its representatives (including KPMG
Peat Marwick) 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 LaPorte herein expressed. Any consent, approval or determination
required to be made pursuant to Subsection 4(a)(iii) as a condition for any
extension of credit by the Bank shall be deemed to have been made by the end
of business of the third full succeeding business day after the business day a
final complete loan credit approval presentation (consisting of the standard
Bank loan presentation package) or other material reasonably requested by
Norwest within such time period is received by Norwest by facsimile, unless
Norwest transmits a written objection to such extension of credit within that
time.
(b) Except as otherwise contemplated or required by this Agreement, from
the date hereof until the Effective Time of the Merger, LaPorte and the
LaPorte Subsidiaries will not (without the prior written consent of Norwest):
(i) amend or otherwise change its articles of incorporation or association or
by-laws; (ii) issue or sell or authorize for issuance or sale, or grant any
options or make other agreements with respect to the issuance or sale or
conversion
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of, any shares of its capital stock, phantom shares or other share-
equivalents, or any other of its securities; (iii) authorize or incur any
long-term debt (other than deposit liabilities); (iv) mortgage, pledge or
subject to lien or other encumbrance any of its properties, except in the
ordinary course of business; (v) enter into any material agreement, contract
or commitment in excess of $25,000 except banking transactions in the ordinary
course of business and in accordance with policies and procedures in effect on
the date hereof; (vi) make any investments except investments made by bank
subsidiaries in the ordinary course of business for terms of up to one year
and in amounts of $100,000 or less; (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)
declare, set aside, make or pay any dividend or other distribution with
respect to its capital stock except any dividend declared by a subsidiary's
Board of Directors in accordance with applicable law and regulation; (x)
redeem, purchase or otherwise acquire, directly or indirectly, any of the
capital stock of LaPorte or the LaPorte Subsidiaries; (xi) increase the
compensation of any officers, directors or executive employees, except
pursuant to existing compensation plans and practices; (xii) sell or otherwise
dispose of any shares of the capital stock of Bank; or (xiii) sell or
otherwise dispose of any of its assets or properties other than in the
ordinary course of business.
(c) The Board of Directors of LaPorte will duly call, and will cause to
be held not later than forty-five (45) days following the effective date of
the Registration Statement referred to in paragraph 5(c) hereof, but in no
event later than 22 "business days" (defined as any day on which the SEC
accepts documents for filing) after the date Norwest proposes to mail its
Prospectus to shareholders of LaPorte, 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 LaPorte will (i) cause proper notice
of such meeting to be given to its shareholders in compliance with the Indiana
Business Corporation Law and other applicable law and regulation, (ii)
recommend by the affirmative vote of the Board of Directors a vote in favor of
approval of this Agreement and the Merger Agreement, and (iii) use its best
efforts, consistent with the Board's fiduciary obligations, to solicit from
its shareholders proxies in favor thereof.
(d) LaPorte will furnish or cause to be furnished to Norwest all the
information concerning LaPorte and the LaPorte Subsidiaries required for
inclusion in the Registration Statement referred to in paragraph 5(c) hereof,
or any statement or application made by Norwest to any governmental body in
connection with the transactions contemplated by this Agreement.
(e) LaPorte 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 LaPorte 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) LaPorte will deliver to the Closing all opinions, certificates and
other documents required to be delivered by it at the Closing.
(g) LaPorte will hold in confidence all documents and information
concerning Norwest and its subsidiaries furnished to LaPorte 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 LaPorte's outside professional
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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 LaPorte,
in the public domain, or later acquired by LaPorte 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 LaPorte, nor Bank, nor any director, officer, representative
or agent thereof, will, directly or indirectly, solicit, authorize the
solicitation of or enter into any discussions with any corporation,
partnership, person or other entity or group (other than Norwest) concerning
any offer or possible offer (i) 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 LaPorte or Bank, (ii) to make a tender or exchange offer for any shares of
such common stock or other equity security, (iii) to purchase, lease or
otherwise acquire the assets of LaPorte or Bank except in the ordinary course
of business, or (iv) to merge, consolidate or otherwise combine with LaPorte
or Bank. If any corporation, partnership, person or other entity or group
makes an offer or inquiry to LaPorte or Bank concerning any of the foregoing,
LaPorte or Bank will promptly disclose such offer or inquiry, including the
terms thereof, to Norwest.
(i) LaPorte 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.
(j) LaPorte and Bank will take all action necessary or required, to the
extent permitted by the Code and ERISA (i) to terminate or amend, if requested
by Norwest, (A) all qualified pension benefit plans and all welfare benefit
plans to facilitate the merger of such plans with Norwest Plans without gaps
in coverage for participants in the LaPorte Plans and without duplication of
costs caused by the continuation of such LaPorte Plans after coverage is
available under the Norwest Plans, and (B) all non-qualified pension 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, provided that LaPorte and Bank will not be required to submit such
application to the Internal Revenue Service if the Internal Revenue Service
does not accept such applications prior to the Effective Date of the Merger.
(k) LaPorte 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 LaPorte who may reasonably be
deemed an "affiliate" of LaPorte within the meaning of such term as used in
Rule 145 under the Securities Act.
(l) LaPorte, at the request of Norwest, immediately prior to Closing,
shall establish such additional accruals and reserves as may be necessary to
conform LaPorte's accounting and credit loss reserve practices and methods to
those of Norwest and Norwest's plans with respect to the conduct of LaPorte's
business following the Merger and to provide for the costs
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<PAGE>
and expenses relating to the consummation by LaPorte of the Merger and the
other transactions contemplated by this Agreement.
(m) LaPorte shall use its best efforts to pay in full those certain
Subordinated Notes dated November 15, 1985 on terms and conditions acceptable
to Norwest.
(n) LaPorte shall cause Bank to maintain in force and effect that
certain Data Processing Service Agreement dated January 30, 1989 between Bank
and Indiana Information Controls, Inc. and shall cause Bank to terminate
without penalty that certain Data Processing Agreement dated March 9, 1993
between Bank and Computer Services, Inc. prior to the Effective Date.
(o) LaPorte shall, and shall cause the LaPorte Subsidiaries to,
cooperate with Norwest for the obtaining of Phase I and Phase II environmental
reports and title insurance commitments and boundry surveys as Norwest may
request for the properties of Bank and LaPorte, the cost of which shall be the
responsibility of Norwest.
(p) LaPorte shall, prior to the Closing Date, use its best efforts to
cause the redemption at par, the 1,000 shares of American Bancorp. Series 2
Floating Rate Cumulative Preferred Stock, $100.00 par value, owned by LaPorte.
5. COVENANTS OF NORWEST. Norwest covenants and agrees with LaPorte as
follows:
(a) From the date hereof until the Effective Time of the Merger, Norwest
will: (i) maintain its corporate existence in good standing; (ii) 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; and (iii) 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 LaPorte all the information concerning
Norwest required for inclusion in a proxy statement or statements to be sent
to the shareholders of LaPorte, or in any statement or application made by
LaPorte 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 file with the SEC a registration statement on Form S-4 (the
"Registration Statement") under the Securities Act and any other applicable
documents, relating to the shares of Norwest Common Stock to be delivered to
the shareholders of LaPorte pursuant to the Merger Agreement, 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 LaPorte shareholders, at
the
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<PAGE>
time of the LaPorte 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 LaPorte
or any LaPorte Subsidiary for use in the Registration Statement or the
Prospectus.
(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 Midwest 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 LaPorte 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 LaPorte 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 LaPorte to obtain all such approvals and consents required by LaPorte,
including the tax opinion required under Section 6(h) hereof.
(h) Norwest will hold in confidence all documents and information
concerning LaPorte and LaPorte'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 LaPorte (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 LaPorte.
(i) Norwest will file any documents or agreements required to be filed
in connection with the Merger under the Indiana Business Corporation Law and
the Delaware General Corporation Law and the Indiana Financial Institutions
Law.
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<PAGE>
(j) Norwest will use its best efforts to deliver to the Closing all
opinions, certificates and other documents required to be delivered by it at
the Closing.
(k) Norwest shall consult with LaPorte 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 LaPorte written notice of receipt of the
regulatory approvals referred to in paragraph 7(e).
(m) For a period not exceeding fifteen days prior to the Closing Date,
Norwest will permit LaPorte 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
LaPorte or its representatives shall in any way affect, diminish or terminate
any of the representations, warranties or covenants of Norwest herein
expressed.
6. CONDITIONS PRECEDENT TO OBLIGATION OF LAPORTE. The obligation of
LaPorte 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
writing by LaPorte:
(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 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 to Norwest and its subsidiaries taken as a whole as if
made at the Time of Filing.
(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) LaPorte 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 LaPorte required for approval of a plan of merger in accordance with
the provisions of LaPorte's Articles of Incorporation and the Indiana Business
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.
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<PAGE>
(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 LaPorte pursuant to this Agreement and the Merger Agreement
shall have been authorized for listing on the New York Stock Exchange and the
Midwest Stock Exchange upon official notice of issuance.
(h) LaPorte shall have received an opinion, dated the Closing Date, of
counsel to LaPorte, substantially to the effect that, for federal income tax
purposes: (i) the Merger (of a wholly owned subsidiary of Norwest into
LaPorte) 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 LaPorte Common Stock upon receipt of Norwest
Common Stock except for cash received in lieu of fractional shares; (iii) the
basis of the Norwest Common Stock received by the shareholders of LaPorte will
be the same as the basis of LaPorte Common Stock and LaPorte Preferred Stock
exchanged therefor; and (iv) the holding period of the shares of Norwest
Common Stock received by the shareholders of LaPorte will include the holding
period of the LaPorte Common Stock and LaPorte Preferred Stock, provided such
shares of LaPorte Common Stock and LaPorte 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) No party hereto shall have terminated this Agreement as permitted
herein.
(k) There shall not have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock Exchange
or in the over-the-counter market, or (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States.
(l) The Board of Directors of LaPorte shall have received the opinion of
Mercer Capital, dated effective of the date of distribution of the Prospectus
to shareholders of LaPorte referred to in Section 5(c) hereof, as to the
fairness of the consideration to be received by shareholders of LaPorte
pursuant to the Merger.
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
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<PAGE>
Agreement, the representations and warranties contained in paragraph 2 hereof
shall be true and correct in all respects material to LaPorte and Bank taken
as a whole as if made at the Time of Filing.
(b) LaPorte 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 LaPorte required for approval of a plan of merger in accordance with
the provisions of LaPorte's Articles of Incorporation and the Indiana Business
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 LaPorte, 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 LaPorte or Bank that, in the good faith judgment of
Norwest, is unreasonably burdensome to Norwest.
(f) LaPorte and Bank shall have obtained any and all material consents
or waivers from other parties to loan agreements, leases or other contracts
material to LaPorte's or Bank's business required for the consummation of the
Merger, and LaPorte and Bank 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) At any time since the date hereof the total number of shares of
LaPorte Common Stock outstanding and subject to issuance upon exercise
(assuming for this purpose that phantom shares and other share-equivalents
constitute LaPorte Common Stock) of all warrants, options, conversion rights,
phantom shares or other share-equivalents, other than any option held by
Norwest, shall not have exceeded 273,134.
(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 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.
(j) Norwest shall have received from the Chief Executive Officer and
Chief Financial Officer of LaPorte a letter, dated as of the effective date of
the Registration Statement and
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<PAGE>
updated through the date of Closing, in form and substance satisfactory to
Norwest, to the effect that:
(i) the interim quarterly financial statements of LaPorte 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 LaPorte;
(ii) the amounts reported in the interim quarterly financial
statements of LaPorte agree with the general ledger of LaPorte;
(iii) the annual and quarterly financial statements of LaPorte and
the LaPorte 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 December 31, 1993 (or, if later, since the date of the
most recent unaudited consolidated financial statements of LaPorte and
the LaPorte Subsidiaries as may be included in the Registration
Statement) to a date 5 days prior to the effective date of the
Registration Statement or 5 days prior to the Closing, there have been no
increases in long-term debt, changes in the capital stock or decreases in
stockholders' equity of LaPorte and the LaPorte 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 income before income taxes,
consolidated net income and net income per share amounts of LaPorte and
the LaPorte Subsidiaries, or 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 LaPorte and the LaPorte 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 LaPorte
and the LaPorte Subsidiaries and have found them to be in agreement with
financial records and analyses prepared by LaPorte included in the annual
and quarterly financial statements, except as disclosed in such letters.
(k) LaPorte and Bank considered as a whole shall not have sustained
since September 30, 1993 any material loss or interference with their business
from any civil disturbance or any fire, explosion, flood or other calamity,
whether or not covered by insurance.
(l) There shall be no reasonable basis for any proceeding, claim or
action of any nature seeking to impose, or that could reasonably be expected
to result in the imposition on LaPorte or Bank of, any liability arising from
the release of hazardous substances under any local, state or federal
environmental statute, regulation or ordinance including, without
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<PAGE>
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 LaPorte and Bank taken as a
whole.
(m) Except for changes in accruals and reserves made in accordance with
paragraph 4(l) hereof, no change shall have occurred and no circumstances
shall exist which might reasonably be expected to have a material adverse
effect on the financial condition, results of operations, business or
prospects of LaPorte and Bank taken as a whole (other than changes in banking
laws or regulations, or interpretations thereof, that affect the banking
industry generally or changes in the general level of interest rates).
(n) Norwest shall have received an opinion letter dated as of the
Effective Date addressed to Norwest from counsel to LaPorte and Bank, based on
customary reliance and subject to customary qualifications, to the effect
that:
(i) LaPorte is a corporation duly incorporated and existing under
the laws of the State of Indiana. LaPorte is registered as a bank
holding company under the Bank Holding Company Act.
(ii) Bank is a banking corporation duly organized and existing
under the laws of Indiana and is an "insured bank" under the Federal
Deposit Insurance Act.
(iii) LaPorte and Bank each have the requisite corporate and other
power and authority (including all licenses, permits and authorizations)
to own and operate its properties and to carry on its business as now
conducted. LaPorte and Bank are each licensed or qualified to do
business in every jurisdiction in which the nature of its business or its
ownership of property requires them to be licensed or qualified except
where the failure to be so licensed or qualified would not have or would
not be reasonably expected to have a material adverse effect on the
business, operations, financial condition or operating results of LaPorte
or Bank.
(iv) The execution and delivery of this Agreement by LaPorte and
the consummation of the transactions contemplated hereby and thereby will
not constitute a breach, default or violation under (A) the respective
Articles of Incorporation, Articles of Association or Bylaws of LaPorte
or Bank, (B) any agreement, arrangement or understanding known to such
counsel to which LaPorte or Bank is a party, (C) any license, franchise
or permit or (D) any law, regulation, order, judgment or decree.
(v) The authorized capital of LaPorte and Bank is as set forth in
Sections 2(b) and 2(c) herein.
(o) No party hereto shall have terminated this Agreement as permitted
herein.
(p) There shall not have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock Exchange
or in the over-the-counter market, or (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States.
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<PAGE>
(q) LaPorte shall have received an opinion, dated the Closing Date, of
counsel to LaPorte, substantially to the effect that, for federal income tax
purposes: (i) the Merger (of a wholly owned subsidiary of Norwest into
LaPorte) 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 LaPorte Common Sock upon receipt of Norwest
Common Stock except for cash received in lieu of fractional shares; (iii) the
basis of the Norwest Common Stock received by the shareholders of LaPorte will
be the same as the basis of LaPorte Common Stock and LaPorte Preferred Stock
exchanged therefor; and (iv) the holding period of the shares of Norwest
Common Stock received by the shareholders of LaPorte will include the holding
period of the LaPorte Common Stock and LaPorte Preferred Stock, provided such
shares of LaPorte Common Stock and LaPorte Preferred Stock were held as a
capital asset as of the Effective Time of Merger.
8. EMPLOYEE BENEFIT PLANS. Each person who is an employee of LaPorte or
Bank as of the Effective Date of the Merger ("LaPorte Employees") shall be
eligible for participation in the employee welfare and pension plans of
Norwest, as in effect from time to time, as follows (provided, however, that
it is Norwest's intent that the transition from the LaPorte Plans to the
Norwest Plans be facilitated without gaps in coverage to the participants and
without duplication in costs to Norwest):
(a) Employee Welfare Benefit Plans. Each LaPorte 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 condition exclusions, except for the 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
Long Term Care Plan
Long Term Disability Plan
Flexible Benefits Plan
Group Basic Life Insurance Plan
Group Optional and Dependent Life Insurance Plan
Business Travel Accident and Accidental Death and Dismemberment
Insurance Plan
Short-Term Disability Program
Severance Program
Vacation Program
Vision Plan
For the purpose of determining each LaPorte Employee's benefit for the year in
which the Merger occurs under the Norwest vacation program, vacation taken by
a LaPorte Employee in the year in which the Merger occurs will be deducted
from the total Norwest benefit.
(b) Employee Pension Benefit Plans.
-------------------------------
Each LaPorte Employee shall be eligible for participation in the Norwest
Savings-Investment Plan (the "SIP") and Norwest Pension Plan, subject to any
eligibility requirements applicable
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<PAGE>
thereto (with full credit for years of past service to LaPorte and Bank for
the purpose of satisfying any eligibility and vesting periods applicable
thereto, to the extent such service is credited under the comparable LaPorte
Plan but not for benefit accrual service under the Norwest Pension Plan), and
shall enter the SIP and Norwest Pension Plan not later than the first day of
the calendar quarter which begins at least 32 days after the Effective Date of
the Merger.
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 October 1,
1994 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; or
(iii) by LaPorte 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 Agreement;
(b) Termination of this Agreement under this paragraph 9 shall not
release, or be construed as so releasing, either party hereto from any
liability or damage to the other party hereto arising out of the breaching
party'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, and the obligations under
paragraphs 4(g), 5(h) and 10 shall survive 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 LaPorte and Bank shall be borne by LaPorte, 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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If to Norwest:
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Attention: Secretary
If to LaPorte:
LaPorte Bancorp
7425 Indianapolis Boulevard
Hammond, IN 46324
Attention: Clayton Anderson
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 and the Merger 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 LaPorte shall be made which changes 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 Minnesota.
19. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation
or warranty contained in the Agreement or the Merger Agreement shall survive
the Merger of Merger Co. with and into LaPorte 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>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NORWEST CORPORATION LAPORTE BANCORP
By: /s/ John E. Ganoe By: /s/ Clayton W. Anderson
------------------------- ------------------------
Its: Senior Vice President Its: President
------------------------- ------------------------
A-31
<PAGE>
AMENDMENT TO AGREEMENT
AND
PLAN OF REORGANIZATION
AMENDMENT dated June 23, 1994 ("Amendment") to AGREEMENT AND PLAN OF
REORGANIZATION (the "Agreement") entered into as of the 7th day of February,
1994, by and between LAPORTE BANCORP ("LaPorte"), an Indiana corporation, and
NORWEST CORPORATION ("Norwest"), a Delaware corporation.
WHEREAS, the parties hereto have entered into the Agreement for
purpose of effecting a reorganization whereby a wholly-owned subsidiary of
Norwest will merge with and into LaPorte (the "Merger") pursuant to an agreement
of merger (the "Merger Agreement") which provides, among other things, for the
conversion and exchange of the shares of all of the common stock of LaPorte of
the par value of $1.00 per share ("LaPorte Common Stock") and Class C preferred
stock of LaPorte of the value of $50.00 per share ("LaPorte Preferred Stock")
outstanding immediately prior to the time the Merger becomes effective in
accordance with the provisions of the Merger Agreement (the "Effective Time of
the Merger") into shares of voting Common Stock of Norwest of the par value of
$1-2/3 per share ("Norwest Common Stock"); and
WHEREAS, the parties hereto desire to amend the Agreement as provided
herein; and
WHEREAS, capitalized terms used herein shall, unless otherwise
defined, have the meaning given them in the Agreement.
NOW, THEREFORE, 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. Section 8 of the Agreement is amended in its entirety to read
as follows:
"8. EMPLOYEE BENEFIT PLANS. Each person who is an employee of
LaPorte or Bank as of the Effective Date of the Merger ("LaPorte
Employees") shall be eligible for participation in the employee
welfare and pension plans of Norwest, as in effect from time to time,
as follows (provided, however, that it is Norwest's intent that the
transition from the LaPorte Plans to the Norwest Plans be facilitated
without gaps in coverage to the participants and without duplication
in costs to Norwest):
(a) Employee Welfare Benefit Plans. Each LaPorte 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 condition exclusions, except for the Long Term Care Plan)
and shall enter each plan not later than January 1, 1995:
Medical Plan
Dental Plan
Long Term Care Plan
Long Term Disability Plan
Flexible Benefits Plan
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Group Basic Life Insurance Plan
Group Optional and Dependent Life Insurance Plan
Business Travel Accident and Accidental Death and
Dismemberment Insurance Plan
Short-Term Disability Program
Severance Program
Vacation Program
Vision Plan
For the purpose of determining each LaPorte Employee's benefit for the
year in which the Merger occurs under the Norwest vacation program,
vacation taken by a LaPorte Employee in the year in which the Merger
occurs will be deducted from the total Norwest benefit.
(b) Employee Pension Benefit Plans. Each LaPorte Employee
shall be eligible for participation in the Norwest Savings-Investment
Plan (the "SIP") and Norwest Pension Plan, subject to any eligibility
requirements applicable thereto (with full credit for years of past
service to LaPorte and Bank for the purpose of satisfying any
eligibility and vesting periods applicable thereto, to the extent such
service is credited under the comparable LaPorte Plan but not for
benefit accrual service under the Norwest Pension Plan), and shall
enter the SIP and Norwest Pension Plan not later than January 1,
1995."
2. Except as specifically amended hereby, the Agreement remains in
full force and effect. Each of the parties hereto represents and warrants
that this Amendment has been duly and validly authorized and represents the
valid and binding obligation of such party.
3. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Agreement as of the day and year first above written.
NORWEST CORPORATION LAPORTE BANCORP
By: /s/ Daniel A. Saklad By: George Dearborn
-------------------- ---------------
Its: Executive Vice President Its: Vice President
------------------------ --------------
A-33
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
Between
NORWEST ACQUISITION CORPORATION
a Delaware corporation
(the merged corporation)
AND
LAPORTE BANCORP
an Indiana corporation
(the surviving corporation)
This Agreement and Plan of Merger dated as of __________, 19__, between
NORWEST ACQUISITION CORPORATION, a Delaware corporation (hereinafter called
"Norwest") and LAPORTE BANCORP, an Indiana corporation ("LaPorte" and
sometimes called the "surviving corporation") (said corporations being
hereinafter sometimes referred to as the "constituent corporations"),
WHEREAS, LaPorte was incorporated by Articles of Incorporation filed in
the office of the Secretary of State of the State of Indiana on September 10,
1982, and said corporation is now a corporation subject to and governed by the
provisions of the Indiana Business Corporation Law. LaPorte has authorized
capital stock of 310,000 shares of common stock, divided into par value of
$1.00 per share ("LaPorte Common Stock"), 7,475 shares of Series A Preferred
Stock, $100 par value, 10,000 shares of Series B Preferred Stock, $100 par
value, and 50,000 shares of Series C Preferred Stock, $50 par value ("LaPorte
Preferred Stock"). As of _______, 19___, there were 273,134 shares of LaPorte
Common Stock outstanding 41,526 shares of LaPorte Preferred Stock, Series C
outstanding and no shares of LaPorte Preferred Stock Series A or B outstanding
and no shares were held in the treasury; and
WHEREAS, Norwest, a wholly owned subsidiary of Norwest Corporation
("Norwest Corporation") was incorporated by a Certificate 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, with an
authorized capital stock of ______ shares of Common Stock, par value
_________, of which _________ shares were outstanding as of ___________, 1993
("Norwest Common Stock"); and
WHEREAS, Norwest and LaPorte are parties to an Agreement and Plan of
Reorganization dated as of ________________, 1993 (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 corporation merge and that Norwest be merged with
and into LaPorte, with LaPorte continuing as the surviving corporation, on the
terms and conditions hereinafter set forth in accordance with the provisions
of the Delaware General Corporation Law and the Indiana Business Corporation
Law, which statutes permit such merger; and
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<PAGE>
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) and
368(a)(2)(E) of the Internal Revenue Code;
NOW, THEREFORE, the parties hereto, subject to the approval of the
shareholders of Norwest and LaPorte, 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 Norwest
shall be merged with and into LaPorte pursuant to the laws of the States of
Delaware and Indiana, and do hereby agree upon, prescribe and set forth the
terms and conditions of the merger of Norwest with and into LaPorte, the mode
of carrying said merger into effect, the manner and basis of converting the
shares of LaPorte Common Stock and LaPorte Preferred Stock into shares of
"Norwest Corporation Common Stock" (as defined below), and such other
provisions with respect to said merger as are deemed necessary or desirable,
as follows:
FIRST: At the time of merger Norwest shall be merged with and into
LaPorte, one of the constituent corporations, which shall be the surviving
corporation, and the separate existence of Norwest shall cease and the name of
the surviving corporation shall be LaPorte Bancorp.
SECOND: The Articles of Incorporation of LaPorte 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 amended according to law:
[Amend to change name, number of directors, etc.]
THIRD: The By-Laws of LaPorte 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 directors of the Surviving Corporation at the time of merger
shall be as set forth below and shall hold office from the time of merger
until their respective successors are elected and qualify:
_____________________ _________________________
_____________________ _________________________
_____________________ _________________________
FIFTH: The officers of the Surviving Corporation at the time of merger
shall be as set forth below and shall hold office from the time of merger
until their respective successors are elected or appointed and qualify:
_____________________ _________________________
_____________________ _________________________
_____________________ _________________________
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<PAGE>
SIXTH: The manner and basis of converting the shares of LaPorte Common
Stock and LaPorte Preferred Stock into shares of voting common stock of
Norwest Corporation, $ 1 2/3 par value per share ("Norwest Corporation Common
Stock") shall be as follows:
1. Each share of LaPorte Common Stock outstanding immediately prior to
the Effective Time of the Merger (other than shares as to which statutory
dissenters' appraisal rights have been exercised) will be converted into
and exchanged for the number of shares of Norwest Corporation Common
Stock determined by dividing $12,800,000 by the Norwest Measurement Price
and then dividing the result thereof by the total number of shares of
LaPorte Common Stock outstanding as of the Effective Time of the Merger.
The "Norwest Measurement Price" is defined as the average of the closing
prices of a share of Norwest Corporation Common Stock as reported on the
consolidated tape of the New York Stock Exchange during the period of 10
trading days ending at the end of the third trading day immediately
preceding the Closing Date (as defined below).
2. At the Effective Time of the Merger, each share of LaPorte Preferred
Stock, Series C issued and outstanding immediately prior to the Effective
Time of the Merger, will be converted into and exchanged for the number
of shares determined by dividing the "Redemption Price per Share" by the
Norwest Measurement Price. For purposes of the foregoing, the Redemption
Price per Share shall equal the par value per share plus accrued but
unpaid cumulative dividends per share plus $.11 per share of the LaPorte
Preferred Stock, Series C.
3. As soon as practicable after the merger becomes effective, each
holder of a certificate for shares of LaPorte Common Stock or LaPorte
Preferred Stock, Series C outstanding immediately prior to the time of
merger shall be entitled, upon surrender of such certificate for
cancellation to the surviving corporation or to Norwest Bank Minnesota,
National Association, as the designated agent of the surviving
corporation (the "Agent"), to receive a new certificate for the number of
whole shares of Norwest Corporation Common Stock to which such holder
shall be entitled on the basis above set forth. Until so surrendered
each certificate which, immediately prior to the time of merger,
represented shares of LaPorte Common Stock or LaPorte Preferred Stock,
Series C shall not be transferable on the books of the surviving
corporation but shall be deemed (except for the payment of dividends as
provided below) to evidence ownership of the number of whole shares of
Norwest Corporation Common Stock into which such shares of LaPorte Common
Stock or LaPorte Preferred Stock, Series C have been converted on the
basis above set forth; provided, however, that, until the holder of such
certificate shall have surrendered the same for exchange as above set
forth, no dividend payable to holders of record of Norwest Corporation
Common Stock as of any date subsequent to the effective date of merger
shall be paid to such holder with respect to the Norwest Corporation
Common Stock 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 Corporation Common Stock issued in exchange therefor an amount
with respect to such shares of Norwest Corporation Common Stock equal to
all dividends that shall have been paid or become payable to holders of
record of Norwest Corporation Common Stock between the effective date of
merger and the date of such exchange.
A-36
<PAGE>
4. If between the date of the Reorganization Agreement and the time of
merger, shares of Norwest Corporation 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, then the number of shares
of Norwest Corporation Common Stock into which a share of LaPorte Common
Stock and LaPorte Preferred Stock, Series C shall be converted on the
basis above set forth, will be appropriately and proportionately adjusted
so that the number of such shares of Norwest Corporation Common Stock
into which a share of LaPorte Common Stock and LaPorte Preferred Stock,
Series C shall be converted will equal the number of shares of Norwest
Corporation Common Stock which the holders of shares of LaPorte Common
Stock and LaPorte Preferred Stock, Series C would have received pursuant
to such reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or stock dividend had the record date
therefor been immediately following the time of merger.
5. No fractional shares of Norwest Corporation 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 Norwest Measurement Price.
6. Each share of Norwest Corporation Common Stock issued and outstanding
at the time of merger shall continue as an outstanding share of Norwest
after the time of merger.
7. Each share of Norwest Corporation Common Stock held in the treasury
of Norwest at the time of merger shall continue as a treasury share of
Norwest after the time of merger.
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 this
Agreement or the Certificate of Merger (as described in subparagraph 1(c)
of this Article Seventh) shall be delivered to and filed by the Secretary
of State of the State of Indiana; 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
LaPorte and Norwest in accordance with the Indiana Business
Corporation Law and 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 Indiana Business Corporation Law, shall be executed
by the President or a Vice President of LaPorte and by the Secretary
or an Assistant Secretary of LaPorte, and by the President or a Vice
President of Norwest and by the Secretary or an Assistant Secretary
of Norwest, and shall be filed in the office of the Secretary of
State of the State of Indiana in accordance with the Indiana
Business Corporation Law; and
A-37
<PAGE>
c. This Agreement or a Certificate of Merger with respect to the
merger setting forth the information required by the Delaware
General Corporation Law shall be executed by the Chairman or the
President or a Vice President of Norwest and by the Secretary or an
Assistant Secretary of Norwest and certified and acknowledged in
accordance with the Delaware General Corporation Law, 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. (the "time of
merger") on the effective date of merger.
EIGHTH: At the time of merger:
1. The separate existence of Norwest shall cease, and the corporate
existence and identity of LaPorte shall continue as the surviving
corporation.
2. The merger shall have the other effects prescribed by Section ______
of the Indiana Business 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 Indiana an agreement that it may be served with process
within or without the State of Indiana in the courts of the State of
Indiana in any proceeding for the enforcement of any obligation of
LaPorte and in any proceeding for the enforcement of the rights of a
dissenting shareholder of Norwest against LaPorte, and (ii) file with
said Secretary of State an agreement that it will promptly pay to the
dissenting shareholders of Norwest the amount, if any, to which such
dissenting shareholders will be entitled under the provisions of the
Indiana Business Corporation Law with respect to the rights of dissenting
shareholders.
2. The registered office of Norwest in the State of Indiana shall be
________________________________, and the name of the registered agent of
Norwest 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 Norwest acquired or to
be acquired as a result of the merger provided for herein, the proper
officers and directors of the surviving corporation and Norwest 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 Norwest 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.
A-38
<PAGE>
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
Indiana, except insofar as the laws of the State of Delaware shall
mandatorily apply to the merger provided for herein.
6. This Agreement cannot be altered or amended except pursuant to an
instrument in writing signed by both of the parties hereto.
7. At any time prior to the filing of Articles of Merger with the
Secretary of State of the State of Indiana and the filing of this
Agreement or a Certificate 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.
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.
NORWEST ACQUISITION
CORPORATION
By: ________________________
Its: ________________________
(Corporate Seal)
Attest:
__________________________
Secretary
LAPORTE BANCORP
By: _________________________
Its: _________________________
(Corporate Seal)
Attest:
___________________________
Secretary
A-39
<PAGE>
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 LaPorte
Bancorp, Inc., an Indiana corporation ("Company").
Pursuant to an Agreement and Plan of Reorganization, dated as of ____________,
19___, (the "Reorganization Agreement"), between Company and Norwest
Corporation, a Delaware corporation ("Norwest") it is contemplated that
Company will merge with and into a wholly owned subsidiary of Norwest (the
"Merger") and as a result, I will receive in exchange for each share of Common
or Preferred Stock of Company 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 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 Company 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:
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<PAGE>
"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 certificate 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
abilities 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 Company.
Sincerely,
________________________________
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<PAGE>
APPENDIX B
OPINION OF MERCER CAPITAL MANAGEMENT, INC.
<PAGE>
August 10, 1994
Board of Directors
c/o Mr. Clayton W. Anderson
Chairman
LaPorte Bancorp
7425 Indianapolis Boulevard
Hammond, Indiana 46324
Re: Fairness Opinion Related to the Acquisition of LaPorte Bancorp by
Norwest Corporation
Dear Board Members:
Mercer Capital Management, Inc. ("Mercer Capital") has been retained by the
board of directors of LaPorte Bancorp ("LaPorte" or "the Company") to
determine the fairness of the proposed acquisition of the Company by Norwest
Corporation ("Norwest") from a financial point of view for the Company's
common and preferred shareholders.
Under the terms of the agreement, LaPorte common shareholders will receive
that number of common shares of Norwest stock to be determined by dividing
$12,800,000 by the "Norwest Measurement Price" and then dividing the result by
the number of shares of LaPorte common stock outstanding as of the closing
date of the merger. The "Norwest Measurement Price" will be the average of
the closing prices of Norwest common stock on the New York Stock Exchange
during the period of ten (10) trading days ending with the third day
immediately preceding the closing date.
Based upon the average Norwest common stock price of $25.7125 for the last ten
trading days of July 1994 and the 273,134 currently outstanding shares of
LaPorte common stock, the pricing formula set forth in the preceding paragraph
implies a price of $46.8634 per share of LaPorte common stock and an exchange
ratio of 1.82259 Norwest shares per LaPorte share. Given LaPorte's book value
per common share of $28.08 per share at March 31, 1994 and last twelve months'
fully diluted earnings before extraordinary items per common share at March
31, 1994 of $4.25 per share, the transaction price corresponds to a price/book
value ratio of 166.9% and a price/earnings multiple of 11.03x. Norwest's
current quarterly common dividend of $0.185 per share implies an annual
dividend of $1.3487 per exchanged LaPorte common share following the
merger.
The 41,526 outstanding shares of LaPorte Bancorp 10.00% cumulative, $50.00 par
value per share preferred stock will be converted to shares of Norwest common
stock through an exchange ratio to be determined by dividing the redemption
price of each preferred share
B-1
<PAGE>
Board of Directors
August 10, 1994
Page Two
by the "Norwest Measurement Price." For the purposes of the merger, the
preferred stock redemption price is $50.00 per share plus any accrued but
unpaid dividends per share plus $0.11 per share.
Assuming a preferred stock redemption price of $50.11 per share, total
consideration for LaPorte's preferred stock is $2,080,868. Aggregate
consideration for all the equity capital of LaPorte is thus $12,800,000 plus
$2,080,868, or $14,880,868. Given LaPorte's total equity of $9,746,241 at
March 31, 1994 and last twelve months' net income before extraordinary items
at March 31, 1994 of $1,367,786, the aggregate consideration corresponds to a
price/book value ratio of 152.7% and a price/earnings multiple of 10.88x.
Assuming a $50.11 per preferred share redemption price and a $25.7125 per
share "Norwest Measurement Price," the implied exchange ratio would be 1.94886
Norwest shares for each LaPorte preferred share. Norwest's current quarterly
common dividend of $0.185 per share implies an annual dividend of $1.44216
per exchanged LaPorte preferred share following the merger.
In connection with this assignment, Mercer Capital advised the board of its
estimate of the Company's fair market value under the assumption of a change
of control, assisted in the negotiations on behalf of LaPorte, and reviewed
the pricing and terms of the offer from Norwest.
Factors considered in rendering the opinion included:
1. A review of LaPorte's historical financial performance for the fiscal
years ended December 31, 1989-1993 and quarters ended March 31, 1993 and
March 31, 1994 as well as preliminary results for the six months ended
June 30, 1994;
2. On site interviews with Company management in Hammond, Indiana and with
the management of the Company's subsidiary, LaPorte Bank & Trust
Company, in LaPorte, Indiana regarding the historical performance of and
future prospects of the bank and the Company;
3. A review of demographic, economic, and competitive conditions in the
Company's primary marketplace, LaPorte County, Indiana;
4. A review of the redemption features and other terms of LaPorte's 10.00%
cumulative, $50.00 par value per share preferred stock.
5. A review of Norwest's historical financial performance for the fiscal
years ended December 31, 1989-1993 and the quarters ended March 31, 1993
and March 31, 1994 as well as preliminary results for the six months
ended June 30, 1994;
B-2
<PAGE>
Board of Directors
August 10, 1994
Page Three
6. An interview with Norwest management in Minneapolis to discuss matters
relating to Norwest's recent operational and financial performance as
well as its future prospects;
7. A valuation analysis of the fair market value of LaPorte under the
assumption of a change in control;
8. An analysis of pending and historical comparable transactions involving
acquisitions of community banks in Indiana, Michigan, Ohio, Kentucky,
and Illinois;
9. Discussions with LaPorte management regarding the results of previous
attempts to sell the Company;
10. A pro-forma analysis of the impact of the Merger Agreement on
dividends, earnings and book value from the perspective of LaPorte's
shareholders, including consideration of the tax-free nature of the
exchange of shares;
11. A review of the investment characteristics of Norwest, including its
trading volume, dividend history and relative pricing in relation to
other publicly traded superregional bank holding companies as well as
to Norwest's current trading position; and,
12. Other factors and financial analyses deemed necessary to render this
opinion.
We have not compiled, reviewed, or audited the financial statements of Norwest
or LaPorte, nor have we independently verified the information reviewed. We
have relied on such information as being complete and accurate in all material
respects. We have not made an independent valuation of the loan portfolio, of
the adequacy of the loan loss reserve, or of other assets of LaPorte or
Norwest.
Based upon our analysis of the transaction, it is our opinion that the terms
of the acquisition of LaPorte Bancorp by Norwest Corporation are fair from a
financial point of view for the holders of the Company's common and preferred
stock.
Sincerely,
MERCER CAPITAL MANAGEMENT, INC.
/s/ J. Michael Julius
----------------------------
J. Michael Julius, ASA, CFA
Vice President
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APPENDIX C
INDIANA CODE
CHAPTER 23-1-44
<PAGE>
23-1-44-1 ["CORPORATION"].--As used in this chapter, "corporation means
the issuer of the shares held by a dissenter before the corporate action, or
the surviving or acquiring corporation by merger or share exchange of that
issuer.
23-1-44-2 ["DISSENTER"].--As used in this chapter, "dissenter" means a
shareholder who is entitled to dissent from corporate action under section 8
of this chapter and who exercises that right when and in the manner required
by sections 10 through 18 of this chapter.
23-1-44-3 ["FAIR VALUE"].--As used in this chapter, "fair value", with
respect to a dissenter's shares, means the value of the shares immediately
before the effectuation of the corporate action to which the dissenter
objects, excluding any appreciation or depreciation in anticipation of the
corporate action unless exclusion would be inequitable.
23-1-44-4 ["INTEREST"].--As used in this chapter, "interest" means
interest from the effective date of the corporate action until the date of
payment, at the average rate currently paid by the corporation on its
principal bank loans or, if none, at a rate that is fair and equitable under
all the circumstances.
23-1-44-5 ["RECORD SHAREHOLDER"].--As used in this chapter, "record
shareholder" means the person in whose name shares are registered in the
records of a corporation or the beneficial owner of shares to the extent that
treatment as a record shareholder is provided under a recognition procedure or
a disclosure procedure established under IC 23-1-30-4.
23-1-44-6 ["BENEFICIAL SHAREHOLDER"].--As used in this chapter,
"beneficial shareholder" means the person who is a beneficial owner of shares
held by a nominee as the record shareholder.
23-1-44-7 ["SHAREHOLDER"].--As used in this chapter, "shareholder means
the record shareholder or the beneficial shareholder.
23-1-44-8 ["WHEN SHAREHOLDER MAY DISSENT].--(a) A shareholder is
entitled to dissent from, and obtain payment of the fair value of the
shareholder's shares in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a party
if:
(A) shareholder approval is required for the merger by IC 23-1-40-3 or
the articles of incorporation and
(B) the shareholder is entitled to vote on the merger.
(2) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan.
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all
of the net proceeds of the sale will be distributed to the shareholders within
one (1) year after the date of sale.
(4) The approval of a control share acquisition under IC-23-1-42.
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment of their shares.
(b) This section does not apply to the holders of shares of any class or
series if, on the date fixed to determine the shareholders entitled to receive
notice of and vote at the meeting of shareholders at which the merger, plan of
share exchange, or sale or exchange of property is to be acted on, the shares
of that class or series were:
(1) registered on a United States securities exchange registered under
the Exchange Act (as defined in IC-1-43-9); or
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(2) traded on the National Association of Securities Dealers, Inc.
Automated Quotations System Over-the-Counter Market--National Market Issues or
a similar market.
(c) A shareholder:
(1) who is entitled to dissent and obtain payment for the shareholder's
shares under this chapter; or
(2) who would be so entitled to dissent and obtain payment but for the
provisions of subsection (b); may not challenge the corporate action creating
(or that, but for the provisions of subsection (b), would have created) the
shareholder's entitlement.
23-1-44-9 [DISSENTERS' RIGHTS WITH RESPECT TO FEWER THAN ALL SHARES
REGISTERED IN SHAREHOLDER'S NAME].--(a) A record shareholder may assert
dissenters' rights as to fewer than all the shares registered in the
shareholder's name only if the shareholder dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in
writing of the name and address of each person on whose behalf the shareholder
asserts dissenters' rights. The rights of a partial dissenter under the
subsection are determined as if the shares as to which the shareholder
dissents and the shareholder's other shares were registered in the names of
different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
on the shareholder's behalf only if:
(1) the beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(2) the beneficial shareholder does so with respect to all the
beneficial shareholder's shares or those shares over which the beneficial
shareholder's shares or those shares over which the beneficial shareholder has
power to direct the vote.
23-1-44-10 [NOTICE OF PROPOSED ACTION CREATING DISSENTERS' RIGHTS].--(a)
If proposed corporate action creating dissenters' rights under section 8 of
this chapter is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert
dissenters' rights under this chapter.
(b) If corporate action creating dissenters' rights under section 8 of
this chapter is taken without a vote of shareholders, the corporation shall
notify in writing all shareholders entitled to assert dissenters' rights that
the action was taken and send them the dissenters; notice described in section
12 of this chapter.
23-1-44-11 [NOTICE OF SHAREHOLDERS INTENT TO ASSERT DISSENTERS'
RIGHTS].--(a) If proposed corporate action creating dissenters' rights under
section 8 of this chapter is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(1) must deliver to the corporation before the vote is taken written
notice of the shareholder's intent to demand payment for the shareholder's
shares if the proposed action is effectuated; and
(2) must not vote the shareholder's shares in favor of the proposed
action.
(b) A shareholder who does not satisfy the requirements of subsection
(a) is not entitled to payment for the shareholder's shares under this
chapter.
23-1-44-12 [DISSENTERS' NOTICE].--(a) If proposed corporate action
creating dissenters' rights under section 8 of this chapter is authorized at a
shareholder's meeting, the corporation shall deliver a written dissenters'
notice to all shareholders who satisfied the requirements of section 11 of
this chapter.
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(b) The dissenters' notice must be sent no later than ten (10) days
after approval by the shareholders, or if corporate action is taken without
approval by the shareholders, then ten (10) days after the corporate action
was taken. The dissenters' notice must:
(1) state where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not the person acquired beneficial ownership of the
shares before that date;
(4) set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty (30) nor more than sixty (60) days
after the date the subsection (a) notice is delivered; and
(5) be accompanied by a copy of this chapter.
23-1-44-13 [DEMAND].--(a) A shareholder sent a dissenters' notice
described in IC 23-1-42-11 or in section 12 of this chapter must demand
payment, certify whether the shareholder acquired beneficial ownership of the
shares before the date required to be set forth in the dissenters' notice
under section 12(b)(3) of this chapter, and deposit the shareholder's
certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits the shareholder's
shares under subsection (a) retains all other rights of a shareholder until
these rights are cancelled or modified by the taking of the proposed corporate
action.
(c) A shareholder who does not demand payment or deposit the
shareholder's share certificates where required, each by the date set in the
dissenters' notice, is not entitled to payment for the shareholder's shares
under this chapter and is considered, for purposes of this article, to have
voted the shareholder's shares in favor or the proposed corporate action.
23-1-44-14 [TRANSFER OF UNCERTIFICATED SHARES].--(a) The corporation
may restrict the transfer of uncertificated shares from the date the demand
for their payment is received until the proposed corporate action is taken
or the restrictions released under section 16 of this chapter.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate
action.
23-1-44-15 [PAYMENT OF FAIR VALUE].--(a) Except as provided in section
17 of this chapter, as soon as the proposed corporate action is taken, or, if
the transaction did not need shareholder approval and has been completed, upon
receipt of a payment demand, the corporation shall pay each dissenter who
complied with section 13 of this chapter the amount the corporation estimates
to be the fair value of the dissenter's shares.
(b) The payment must be accompanied by:
(1) the corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(2) a statement of the corporation's estimate of the fair value of the
shares; and
(3) a statement of the dissenters' right to demand payment under section
18 of this chapter.
23-1-44-16 [RETURN OF DEPOSITED CERTIFICATES--RELEASE OF TRANSFER
RESTRICTIONS].--(a) If the corporation does not take the proposed action
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within sixty (60) days after the date set for demanding payment and depositing
share certificates, the corporation shall return the deposited certificates
and release the transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 12 of this chapter and repeat the payment
demand procedure.
23-1-44-17 [WITHHOLDING PAYMENT].--(a) A corporation may elect to
withhold payment required by section 15 of this chapter from a dissenter
unless the dissenter was the beneficial owner of the shares before the date
set forth in the dissenters' notice as the date of the first announcement to
news media or to the shareholders of the terms of the proposed corporate
action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares and shall pay this amount to each dissenter who
agrees to accept it in full satisfaction of the dissenter's demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares and a statement of the dissenter's right to demand payment
under section 18 of this chapter.
23-1-44-18 [DISSENTERS' ESTIMATE].--(a) A dissenter may notify the
corporation in writing of the dissenter's own estimate of the fair value of
the dissenter's shares and demand payment of the dissenter's estimate (less
any payment under section 15 of this chapter), or reject the corporation's
offer under section 17 of this chapter and demand payment of the fair value of
the dissenter's shares, if:
(1) the dissenter believes that the amount paid under section 15 of this
chapter or offered under section 17 of this chapter is less than the fair
value of the dissenter's shares;
(2) the corporation fails to make payment under section 15 of this
chapter within sixty (60) days after the date set for demanding payment; or
(3) the corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within sixty (60) days after the date set for
demanding payment.
(b) A dissenter waives the right to demand payment under this section
unless the dissenter notifies the corporation of the dissenter's demand in
writing under subsection (a) within thirty (30) days after the corporation
made or offered payment for the dissenter's shares.
23-1-44-19 [APPRAISAL PROCEEDING].--(a) If a demand for payment under
IC 23-1-42-11 or under section 18 of this chapter remains unsettled, the
corporation shall commence a proceeding within sixty (60) days after receiving
the payment demand and petition the court to determine the fair value of the
shares. If the corporation does not commence the proceeding within the sixty
(60) day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(b) The corporation shall commence the proceeding in the circuit or
superior court of the county where a corporation's principal office (or, if
none in Indiana, its registered office) is located. If the corporation is a
foreign corporation without a registered office in Indiana, it shall commence
the proceeding in the county in Indiana where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters (whether or not residents
of this state whose demand remain unsettled parties in the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one (1)
or more persons as appraisers to
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receive evidence and recommend decision on the question of fair value. The
appraisers have the powers described in the order appointing them or in any
amendment to it. The dissenters are entitled to the same discovery rights as
parties in either civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment:
(1) for the amount, if any, by which the court finds the fair value of
the dissenter's shares, plus interest, exceeds the amount paid by the
corporation; or
(2) for the fair value, plus accrued interest, of the dissenter's after-
acquired shares for which the corporation elected to withhold payment under
section 17 of this chapter.
23-1-44-20 [DETERMINATION OF COSTS OF APPRAISAL PROCEEDING].--(a) The
court in an appraisal proceeding commenced under section 19 of this chapter
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court
shall assess the costs against such parties and in such amounts as the court
finds equitable.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable.
(2) against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with respect
to the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated and that
the fees for those services should not be assessed against the corporation,
the court may award to these counsel reasonable fees to be paid out of the
amounts awarded the dissenters who were benefited.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis, State of Minnesota, on the 8th day of August, 1994.
NORWEST CORPORATION
By: /s/ Richard M. Kovacevich
--------------------------
Richard M. Kovacevich
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed on the 8th day of August, 1994,
by the following persons in the capacities indicated:
/s/ Richard M. Kovacevich President and Chief Executive Officer
------------------------- (Principal Executive Officer)
Richard M. Kovacevich
/s/ John T. Thornton Executive Vice President and Chief
-------------------- Financial Officer
John T. Thornton (Principal Financial Officer)
/s/ Michael A. Graf Senior Vice President and Controller
------------------- (Principal Accounting Officer)
Michael A. Graf
DAVID A. CHRISTENSEN )
GERALD J. FORD )
PIERSON M. GRIEVE )
CHARLES M. HARPER )
N. BERNE HART ) A majority of the
WILLIAM A. HODDER ) Board of Directors*
GEORGE C. HOWE )
LLOYD P. JOHNSON )
REATHA CLARK KING )
RICHARD M. KOVACEVICH )
RICHARD S. LEVITT )
RICHARD D. McCORMICK )
CYNTHIA H. MILLIGAN )
JOHN E. PEARSON )
IAN M. ROLLAND )
STEPHEN E. WATSON )
MICHAEL W. WRIGHT )
- --------------------
*Richard M. Kovacevich, by signing his name hereto, does hereby sign this
document on behalf of each of the directors named above pursuant to powers of
attorney duly executed by such persons.
/s/ Richard M. Kovacevich
-------------------------
Richard M. Kovacevich
Attorney-in-Fact
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