<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 13, 1995
REGISTRATION NO. 33-62483
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
Form S-4
AMENDMENT NO. 1
TO REGISTRATION STATEMENT
Under
The Securities Act of 1933
______________
Norwest Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<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> <C>
Stanley S. Stroup, Esq.
Executive Vice President and General Counsel Copy to: Copy to:
Norwest Corporation Steve R. Wagner, Esq. Richard V. Smith, Esq.
Norwest Center Assistant General Counsel Daniel T. Judge, Esq.
Sixth and Marquette Norwest Financial, Inc. Orrick, Herrington & Sutcliffe
Minneapolis, Minnesota 55479-1026 206 Eighth Street Old Federal Reserve Bank Building
612-667-8858 Des Moines, Iowa 50309 400 Sansome Street
(Name, address, including zip code, and telephone San Francisco, California 94111
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. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Title of Securities Amount Proposed Maximum Proposed Maximum Amount of
to Be to Be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
----------------------------------------------------------------------------------------------------------------
Common Stock 2,000,000 N/A $4,598,475(3) $1,586
(par value $1 2/3 per share)(1) Shares(2)
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
<FN>
(1) Each share of the registrant's common stock includes one preferred stock
purchase right.
(2) Based upon the maximum number of shares that may be issued in the
transaction described herein.
(3) Estimated solely for purpose of computing the registration fee, in
accordance with Rule 457(f), based upon the book value, as of June 30,
1995, of all shares of common stock to be cancelled in the transaction
described herein.
_____________________
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
NORWEST CORPORATION
Cross Reference Sheet
Pursuant to Regulation S-K, Item 501(b)
Form S-4 Item Prospectus Heading
------------- ------------------
1. Forepart of Registration Statement Outside Front Cover Page
and Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Available Information;
Pages of Prospectus Incorporation of Certain
Documents by Reference;
Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Summary
Charges, and Other Information
4. Terms of the Transaction The Acquisition
5. Pro Forma Financial Information *
6. Material Contracts with the Company The Acquisition
Being Acquired
7. Additional Information Required for *
Reoffering by Persons and Parties
Deemed to be Underwriters
8. Interests of Named Experts and Counsel Legal Opinions
9. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
10. Information with Respect to S-3 Summary; Certain Regulatory
Registrants Considerations
11. Incorporation of Certain Information Incorporation of Certain
by Reference Documents by Reference;
Management of Norwest
and Additional Information
12. Information with Respect to S-2 or *
S-3 Registrants
<PAGE>
NORWEST CORPORATION
Cross Reference Sheet
Pursuant to Regulation S-K, Item 501(b)
Form S-4 Item Prospectus Heading
------------- ------------------
13. Incorporation of Certain Information *
by Reference
14. Information with Respect to *
Registrants Other Than S-2 or S-3
Registrants
15. Information with Respect to S-3 *
Companies
16. Information with Respect to *
S-2 or S-3 Companies
17. Information with Respect to Companies Summary -- Selected
Financial Data; Summary --
Other Than S-2 or S-3 Companies Comparative Per Common Share
Data; Information About
Orlandi Valuta
18. Information If Proxies, Consents, *
or Authorizations Are to Be Solicited
19. Information If Proxies, Consents, or *
Authorizations Are Not to Be Solicited
in an Exchange Offer
______________________
*Item is omitted because answer is negative or item is inapplicable.
<PAGE>
ORLANDI VALUTA
560 S. SPRING STREET
LOS ANGELES, CALIFORNIA 90013
September 15, 1995
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders of
Orlandi Valuta ("OV") to be held at OV, 560 S. Spring Street, Los Angeles,
California, on Friday, October 13, 1995, at 10:00 a.m., local
time. At the Special Meeting you will be asked to consider and vote on the
approval of a proposed reorganization whereby Norwest Corporation ("Norwest")
will acquire the assets of OV and Orlandi Valuta Nacional (the "Acquisition")
pursuant to the Agreement and Plan of Reorganization, dated as of May 18, 1995,
between OV, Orlandi Valuta Nacional and Norwest (the "Acquisition Agreement").
Under the terms of the Acquisition Agreement, upon effectiveness of the
Acquisition you will receive approximately 8.974 shares of Norwest Common Stock
for each share of OV which you own, as described in the accompanying Prospectus.
The enclosed Prospectus contains a more complete description of the terms
of the Acquisition. You are urged to read the Prospectus carefully.
The Board of Directors has approved the Acquisition Agreement as being in
the best interests of OV's shareholders and recommends that you vote in favor of
the Acquisition. In making this recommendation, the Board of Directors has
considered numerous factors including the consideration offered by Norwest and
the structure of the proposed Acquisition, which is designed to enhance the
value of the investment of OV's shareholders and to be tax-free for federal
income tax purposes to OV's shareholders receiving Norwest Common Stock.
Carter, Ledyard & Milburn, special tax counsel for OV, is providing its opinion
to the Board of Directors that the Acquisition will be treated as a
reorganization for U.S. Federal income tax purposes. This opinion is based on
certain assumptions and representations of OV, OVN, the shareholders of OV
and OVN, Norwest, and Norwest Financial Services, Inc. YOU SHOULD CONSULT YOUR
OWN TAX ADVISOR CONCERNING THE FEDERAL, AND ANY APPLICABLE FOREIGN, STATE, AND
LOCAL, INCOME TAX CONSEQUENCES TO YOU OF THE ACQUISITION.
Paolo Orlandi
CHAIRMAN OF THE BOARD
<PAGE>
ORLANDI VALUTA NACIONAL
560 S. SPRING STREET
LOS ANGELES, CALIFORNIA 90013
September 15, 1995
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders of
Orlandi Valuta Nacional ("OVN") to be held at OVN, 560 S. Spring Street, Los
Angeles, California, on Friday, October 13, 1995, at 10:00 a.m.,
local time. At the Special Meeting you will be asked to consider and vote on
the approval of a proposed reorganization whereby Norwest Corporation
("Norwest") will acquire the assets of OVN and Orlandi Valuta (the
"Acquisition") pursuant to the Agreement and Plan of Reorganization, dated as of
May 18, 1995, between OVN, Orlandi Valuta and Norwest (the "Acquisition
Agreement").
Under the terms of the Acquisition Agreement, upon effectiveness of the
Acquisition you will receive approximately 100 shares of Norwest Common Stock
for each share of OVN which you own, as described in the accompanying
Prospectus.
The enclosed Prospectus contains a more complete description of the terms
of the Acquisition. You are urged to read the Prospectus carefully.
The Board of Directors has approved the Acquisition Agreement as being in
the best interest of OVN's shareholders and recommends that you vote in favor of
the Acquisition. In making this recommendation, the Board of Directors has
considered numerous factors including the consideration offered by Norwest and
the structure of the proposed Acquisition, which is designed to enhance the
value of the investment of OVN's shareholders and to be tax-free for federal
income tax purposes to OVN's shareholders receiving Norwest Common Stock.
Carter, Ledyard & Milburn, special tax counsel for OVN, is providing its
opinion to the Board of Directors that the Acquisition will be treated as a
reorganization for U.S. Federal income tax purposes. This opinion is based
on certain assumptions and representations of OV, OVN, the shareholders of OV
and OVN, Norwest, and Norwest Financial Services, Inc. YOU SHOULD CONSULT YOUR
OWN TAX ADVISOR CONCERNING THE FEDERAL, AND ANY APPLICABLE FOREIGN, STATE, AND
LOCAL, INCOME TAX CONSEQUENCES TO YOU OF THE ACQUISITION.
Paolo Orlandi
CHAIRMAN OF THE BOARD
<PAGE>
ORLANDI VALUTA
560 S. SPRING STREET
LOS ANGELES, CALIFORNIA 90013
_____________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
ON OCTOBER 13, 1995
_____________________
A Special Meeting of Shareholders of Orlandi Valuta ("OV"), a California
corporation, will be held at OV, 560 S. Spring Street, Los Angeles, California,
on Friday, October 13, 1995, at 10:00 a.m., local time, to
consider and vote upon the Agreement and Plan of Reorganization, dated as of May
18, 1995 (the "Acquisition Agreement") between OV, Orlandi Valuta Nacional and
Norwest Corporation ("Norwest"), a Delaware corporation, a copy of which is
included in the accompanying Prospectus as Appendix A, under the terms of which
all of OV's assets and liabilities would be transferred to Norwest and then to a
wholly owned subsidiary of Norwest, following which OV would be dissolved (the
"Acquisition"), and for each outstanding share of common stock of OV ("OV Common
Stock") Norwest would issue approximately 8.974 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 OV as may be necessary or appropriate
to carry out the intent and purposes of the Acquisition.
Only shareholders of record on the books of OV at the close of business on
September 22, 1995, will be entitled to notice of and to vote at the Special
Meeting or any adjournment thereof.
Your attention is directed to the 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
Cynthia Orlandi
VICE PRESIDENT
September 15, 1995
<PAGE>
ORLANDI VALUTA NACIONAL
560 S. SPRING STREET
LOS ANGELES, CALIFORNIA 90013
_____________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
ON OCTOBER 13, 1995
_____________________
A Special Meeting of Shareholders of Orlandi Valuta Nacional ("OVN"), a
Nevada corporation, will be held at OVN, 560 S. Spring Street, Los Angeles,
California, on Friday, October 13, 1995, at 10:00 a.m., local
time, to consider and vote upon the Agreement and Plan of Reorganization, dated
as of May 18, 1995 (the "Acquisition Agreement") between OVN, Orlandi Valuta and
Norwest Corporation ("Norwest"), a Delaware corporation, a copy of which is
included in the accompanying Prospectus as Appendix A, under the terms of which
all of OVN's assets and liabilities would be transferred to Norwest and then to
a wholly owned subsidiary of Norwest, following which OVN would be dissolved
(the "Acquisition"), and for each outstanding share of common stock of OVN ("OVN
Common Stock") Norwest would issue approximately 100 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 OVN as may be necessary or appropriate
to carry out the intent and purposes of the Acquisition.
Only shareholders of record on the books of OVN at the close of business on
September 22, 1995, will be entitled to notice of and to vote at the Special
Meeting or any adjournment thereof.
Your attention is directed to the 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
Cynthia Orlandi
VICE PRESIDENT
September 15, 1995
<PAGE>
PROSPECTUS
OF
NORWEST CORPORATION
COMMON STOCK
This Prospectus of Norwest Corporation ("Norwest") relates to up to
2,000,000 shares of the common stock, par value $1 2/3 per share, of Norwest
("Norwest Common Stock") issuable to the shareholders of Orlandi Valuta, a
California corporation ("OV"), and Orlandi Valuta Nacional, a Nevada corporation
("OVN") (OV and OVN, collectively, "Orlandi"), upon consummation of the
acquisition (the "Acquisition") by Norwest of the assets and liabilities of OV
and OVN pursuant to the terms of the Agreement and Plan of Reorganization
between Orlandi and Norwest, dated as of May 18, 1995 (the "Acquisition
Agreement"). The Acquisition Agreement is set forth in Appendix A to this
Prospectus and is incorporated by reference herein.
Upon consummation of the Acquisition and the dissolution of OV and OVN,
except as described herein, holders of outstanding shares of common stock of
OV ("OV Common Stock") and OVN ("OVN Common Stock"), except shares with respect
to which statutory dissenters' rights have been exercised and not forfeited,
will receive shares of Norwest Common Stock, reduced to the extent by which
statutory dissenters' rights have been exercised. For a more complete
description of the Acquisition Agreement and the terms of the Acquisition, see
"THE ACQUISITION."
This Prospectus is first being mailed to shareholders of Orlandi on or
about September 13, 1995.
______________
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 PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
______________
The date of this Prospectus is September 13, 1995.
<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 filed by Norwest with the
Commission 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 with the New York Stock Exchange and the Chicago
Stock Exchange 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 Prospectus does not contain all of the information set forth in the
Registration Statement on Form S-4 and 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 and the securities offered hereby. Statements contained herein
concerning the provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the Commission or attached as an
appendix hereto.
______________
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO PURCHASE, THE NORWEST COMMON STOCK OFFERED BY THIS PROSPECTUS, IN ANY
JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER. NEITHER THE DELIVERY OF THIS 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 ORLANDI SINCE THE
DATE OF THIS PROSPECTUS.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS 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 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 __, 1995.
The following documents filed with the Commission by Norwest (File
No. 1-2979) pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1. Norwest's Annual Report on Form 10-K for the year ended December 31,
1994;
2. Norwest's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1995 and June 30, 1995; and
3. Norwest's Current Reports on Form 8-K dated January 9, 1995, January
27, 1995, February 17, 1995, April 21, 1995, July 3, 1995 and
September 13, 1995.
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.
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Norwest Corporation. . . . . . . . . . . . . . . . . . . . . . . . 7
Orlandi Valuta and Orlandi Valuta Nacional . . . . . . . . . . . . 8
Terms of the Acquisition. . . . . . . . . . . . . . . . . . . . . . . . 8
The Special Meeting and Vote Required . . . . . . . . . . . . . . . . . 8
The Special Meeting. . . . . . . . . . . . . . . . . . . . . . . . 8
Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Reasons for the Acquisition; Recommendations of the Boards of
Directors of OV and OVN. . . . . . . . . . . . . . . . . . . . . . 9
Closing Date and Time of the Acquisition. . . . . . . . . . . . . . . . 9
Conditions and Termination. . . . . . . . . . . . . . . . . . . . . . . 9
Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 10
Management and Operations After the Acquisition . . . . . . . . . . . . 10
Interests of Certain Persons in the Acquisition . . . . . . . . . . . . 10
Rights of Dissenting OV and OVN Shareholders. . . . . . . . . . . . . . 10
Certain U.S. Federal Income Tax Consequences. . . . . . . . . . . . . . 10
Markets and Market Prices . . . . . . . . . . . . . . . . . . . . . . . 11
Certain Differences in Rights of Shareholders . . . . . . . . . . . . . 11
Comparative Per Common Share Data . . . . . . . . . . . . . . . . . . . 11
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . 13
MEETING INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Date, Place, and Time . . . . . . . . . . . . . . . . . . . . . . . . . 17
Record Date; Vote Required. . . . . . . . . . . . . . . . . . . . . . . 17
Principal Shareholders and Security Ownership of Management . . . . . . 17
THE ACQUISITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Background of and Reasons for the Acquisition . . . . . . . . . . . . . 19
Terms of the Acquisition. . . . . . . . . . . . . . . . . . . . . . . . 19
Closing Date and Time of the Acquisition. . . . . . . . . . . . . . . . 20
Delivery of Certificates. . . . . . . . . . . . . . . . . . . . . . . . 20
Conditions to the Acquisition . . . . . . . . . . . . . . . . . . . . . 20
Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 21
Business Pending the Acquisition. . . . . . . . . . . . . . . . . . . . 22
Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Waiver, Amendment, and Termination. . . . . . . . . . . . . . . . . . . 23
Management and Operations After the Acquisition . . . . . . . . . . . . 23
Interests of Certain Persons in the Acquisition . . . . . . . . . . . . 23
Certain Differences in Rights of Shareholders . . . . . . . . . . . . . 23
Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Shareholder Vote Requirements. . . . . . . . . . . . . . . . . . . 26
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . 27
Vacancies on the Board of Directors. . . . . . . . . . . . . . . . 27
Amendments to the Certificate or Articles of Incorporation . . . . 28
4
<PAGE>
Page
----
Amendments to Bylaws . . . . . . . . . . . . . . . . . . . . . . . 28
Cumulative Voting. . . . . . . . . . . . . . . . . . . . . . . . . 28
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . 29
Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 30
Antitakeover Statutes. . . . . . . . . . . . . . . . . . . . . . . 30
Derivative Actions . . . . . . . . . . . . . . . . . . . . . . . . 31
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . 31
Indemnification and Limitation on Director Liability. . . . . . . . . . 32
Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . 33
Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Rights of Dissenting Orlandi Shareholders . . . . . . . . . . . . . . . 34
OV Shareholders Under California Law . . . . . . . . . . . . . . . 34
OVN Shareholders Under Nevada Law. . . . . . . . . . . . . . . . . 36
Certain U.S. Federal Income Tax Consequences. . . . . . . . . . . . . . 39
Resale of Norwest Common Stock. . . . . . . . . . . . . . . . . . . . . 39
Stock Exchange Listing. . . . . . . . . . . . . . . . . . . . . . . . . 40
Dividend Reinvestment and Optional Cash Payment Plan. . . . . . . . . . 40
Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . 40
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
INFORMATION ABOUT ORLANDI. . . . . . . . . . . . . . . . . . . . . . . . . . 41
Description of the Business . . . . . . . . . . . . . . . . . . . . . . 41
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Geography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Business Methods . . . . . . . . . . . . . . . . . . . . . . . . . 43
Sources of Funds . . . . . . . . . . . . . . . . . . . . . . . . . 43
Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . 44
Market for Common Equity and Related Stockholder Matters . . . . . 44
Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . 44
Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . 47
CERTAIN REGULATORY CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . 49
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Dividend Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . 49
Holding Company Structure . . . . . . . . . . . . . . . . . . . . . . . 49
Capital Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . 50
Federal Deposit Insurance Corporation Improvement Act of 1991 . . . . . 51
FDIC Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
MANAGEMENT OF NORWEST AND ADDITIONAL INFORMATION . . . . . . . . . . . . . . 53
5
<PAGE>
Page
----
INDEX TO ORLANDI FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . F-1
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION. . . . . . . . . . . . . A-1
APPENDIX B CALIFORNIA DISSENTERS' RIGHTS: SECTIONS 1300-1312
OF THE CALIFORNIA GENERAL CORPORATION LAW . . . . . . . . . . B-1
APPENDIX C NEVADA DISSENTERS' RIGHTS: SECTIONS 78.471-78.502
OF THE NEVADA REVISED STATUTES. . . . . . . . . . . . . . . . C-1
6
<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 PROSPECTUS, THE
APPENDICES HERETO AND THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN. AS USED
IN THIS PROSPECTUS, THE TERM "ORLANDI" REFERS TO OV, ITS MEXICAN SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V. AND OVN COLLECTIVELY. ALSO, THE TERMS "NORWEST"
AND "ORLANDI" REFER TO SUCH ENTITIES, RESPECTIVELY, AND WHERE THE CONTEXT
REQUIRES, SUCH ENTITIES AND THEIR RESPECTIVE SUBSIDIARIES. ALL INFORMATION
CONCERNING NORWEST INCLUDED IN THIS PROSPECTUS HAS BEEN FURNISHED BY NORWEST AND
ALL INFORMATION CONCERNING ORLANDI INCLUDED IN THIS PROSPECTUS HAS BEEN
FURNISHED BY ORLANDI TO NORWEST FOR INCLUSION HEREIN.
THE COMPANIES
NORWEST CORPORATION
Norwest Corporation is a diversified financial services 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"). 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
agency services, computer and data processing services, trust services, and
venture capital investment.
At June 30, 1995 Norwest had consolidated total assets of $66.6 billion,
total deposits of $38.2 billion, and total stockholders' equity of $4.7 billion.
Based on total assets at June 30, 1995, Norwest was the 12th largest commercial
banking organization in the United States.
Norwest regularly explores opportunities for acquisitions of financial
institutions and related businesses. Generally, management of Norwest does not
make a public announcement about an acquisition until a definitive agreement has
been signed. Norwest has entered into definitive agreements for the acquisition
of various financial institutions, including Orlandi, having aggregate total
assets at June 30, 1995, of $4.5 billion. Certain of these acquisitions were
consummated subsequent to June 30, 1995, and the others remain subject to
regulatory approval and are expected to be completed by the end of the first
quarter of 1996. None of these acquisitions is individually significant or
material to the financial statements of Norwest.
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 "INFORMATION OF CERTAIN
DOCUMENTS BY REFERENCE."
7
<PAGE>
ORLANDI VALUTA AND ORLANDI VALUTA NACIONAL
Orlandi is the largest independently owned money transmitter in the United
States. OV is licensed as a money transmitter by the States of California and
Illinois, and operates in the State of Florida under local exemptions. OVN is
licensed as a money transmitter by the State of Texas. As a licensed money
transmitter, Orlandi is empowered to receive funds from the public for the
purpose of transmitting the same, or its equivalent, to beneficiaries in foreign
countries. Orlandi conducts its business of receiving money for transmission
through three offices owned by Orlandi and the facilities of 1,360 agents
located in the states where Orlandi operates. Orlandi completes the money
transmission deliveries within the Republic of Mexico, through its Mexican
subsidiary. The Mexican subsidiary has over 80 exclusive paying agents and
offices in the Republic of Mexico, and also utilizes over 5,000 branch offices
of Mexican financial institutions located throughout the Republic of Mexico.
The headquarters of each of OV and OVN is located at 560 S. Spring Street,
Los Angeles, California, and the phone number for each of OV and OVN at that
location is (213) 623-7376. See "INFORMATION ABOUT ORLANDI."
TERMS OF THE ACQUISITION
The Acquisition Agreement provides for the acquisition by Norwest of the
assets and liabilities of OV and OVN. Upon consummation of the Acquisition,
and after the dissolution of OV and OVN in accordance with the Acquisition
Agreement, holders of the outstanding shares of OV Common Stock (assuming
there will be no shares as to which statutory dissenters' rights have been
exercised and not forfeited since, under the Acquisition Agreement, all of the
OV and OVN shareholders have agreed to vote in favor of the Acquisition) will
receive 1,750,000 shares of Norwest Common Stock, holders of the outstanding
shares of OVN Common Stock (assuming no shares as to which statutory
dissenters' rights have been exercised and not forfeited) will receive
250,000 shares of Norwest Common Stock, and OV and OVN will be dissolved, in
accordance with the provisions of the Acquisition Agreement. See "THE
ACQUISITION--Terms of the Acquisition."
THE SPECIAL MEETING AND VOTE REQUIRED
THE SPECIAL MEETING
The Special Meetings of Shareholders of OV and OVN to consider and vote on
the Acquisition will be held on Friday, October 13, 1995, at 10:00 a.m., local
time, at 560 S. Spring Street, Los Angeles, California. Only holders of record
of OV Common Stock and OVN Common Stock at the close of business on September
22, 1995, will be entitled to notice of and to vote at the Special Meetings. At
such date, there were 195,000 shares of OV Common Stock and 2,500 shares of OVN
Common Stock outstanding. Each share of OV Common Stock and OVN Common Stock is
entitled to one vote in the respective election. For additional information
relating to the Special Meetings, see "MEETING INFORMATION."
VOTE REQUIRED
Approval of the Acquisition Agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of each of OV Common Stock and
OVN Common Stock. See "MEETING INFORMATION--Record Date; Vote Required."
8
<PAGE>
As of the record date for the Special Meetings, directors and officers
owned beneficially or controlled the voting of 100% of the shares of each of OV
Common Stock and OVN Common Stock outstanding on that date. Orlandi's directors
and officers have informed Orlandi that they intend to vote all of their shares
in favor of the Acquisition. At the record date, directors and executive
officers of Norwest did not own beneficially any shares of OV Common Stock or
OVN Common Stock. See "MEETING INFORMATION--Record Date; Vote Required" and
"MEETING INFORMATION--Principal Shareholders and Security Ownership of
Management."
REASONS FOR THE ACQUISITION; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS OF OV
AND OVN
The Boards of Directors of OV and OVN who are also the sole shareholders
of OV and OVN have concluded that the Acquisition is in the best interests of
the holders of OV Common Stock and OVN Common Stock, who will receive, in a
tax-free exchange, stock of a much larger and more diversified enterprise that
is actively traded on national stock exchanges. In addition to the greater
liquidity provided to shareholders of OV and OVN, the Acquisition will provide
Orlandi with increased financial strength. See "THE ACQUISITION--Background
of and Reasons for the Acquisition." THE BOARDS OF DIRECTORS OF OV AND OVN
FORMALLY AND UNANIMOUSLY RECOMMEND THAT OV AND OVN SHAREHOLDERS VOTE FOR THE
ACQUISITION.
CLOSING DATE AND TIME OF THE ACQUISITION
Subject to the terms and conditions of the Acquisition Agreement, the
Acquisition will be effective at 11:58 p.m., Pacific time (the "Effective Time")
on the date specified in the Acquisition Agreement (the "Closing Date"). See
"THE ACQUISITION--Closing Date and Time of the Acquisition" and "THE
ACQUISITION--Conditions to the Acquisition."
CONDITIONS AND TERMINATION
The respective obligations of Norwest and Orlandi to consummate the
Acquisition are subject to certain conditions, including the receipt of
regulatory approvals, approval of the Acquisition Agreement by the shareholders
of OV and OVN, receipt by OV and OVN of certain tax opinions, and certain other
conditions customary in transactions of this nature. See "THE ACQUISITION--
Conditions to the Acquisition" and "THE ACQUISITION--Regulatory Approvals."
The Acquisition Agreement may be terminated at any time prior to the
Closing Date, whether prior to or after approval by shareholders of OV and OVN,
by either party under specified conditions, including if the Acquisition shall
not have been consummated by December 31, 1995, unless such failure of
consummation shall be due to the failure of the party seeking termination to
perform its respective covenants and agreements under the Acquisition Agreement.
See "THE ACQUISITION--Waiver, Amendment and Termination."
ACCOUNTING TREATMENT
Management of Norwest anticipates that the Acquisition will be accounted
for as a "pooling of interests" under generally accepted accounting principles.
See "THE ACQUISITION--Accounting Treatment."
9
<PAGE>
REGULATORY APPROVALS
On August 28, 1995, the Acquisition was approved by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") under
Section 4 of the BHC Act. The Acquisition is conditioned upon the
receipt of all licenses or permits required under applicable federal or state
law (and Mexican law) that are necessary for the subsidiaries established
by Norwest to operate the business of OV and OVN and OV's subsidiary in the
same manner as such business was operated by OV, OVN and OV's subsidiary on
May 18, 1995. Norwest has filed applications for the necessary licenses and
permits with state governmental authorities. There can be no assurance that
the state governmental authorities will grant the necessary licenses or
permits. There can also be no assurance that any such license or permit will
not contain a condition or requirement that causes it to fail to satisfy the
conditions to the consummation of the Acquisition. See "The Acquisition --
Regulatory Approvals".
MANAGEMENT AND OPERATIONS AFTER THE ACQUISITION
Following the Acquisition, Norwest intends to operate at Orlandi's present
locations and to continue to offer the services currently offered by Orlandi.
See "THE ACQUISITION--Management and Operations After the Acquisition."
INTERESTS OF CERTAIN PERSONS IN THE ACQUISITION
The two officers of OV and OVN, both of whom are also directors of both
OV and OVN, have direct and indirect interests in the consummation of the
Acquisition separate from their interests as the sole holders of OV Common
Stock and OVN Common Stock. Specifically, under the Acquisition Agreement,
each of such officers will be party to an employment agreement following the
Acquisition. See "THE ACQUISITION--Interests of Certain Persons in the
Acquisition."
RIGHTS OF DISSENTING OV AND OVN SHAREHOLDERS
Under applicable law dissenting shareholders who comply with the
requisite statutory procedures will be entitled to receive an appraised value
of their shares. The value so determined could be more than, the same as, or
less than the value of the consideration to be received by OV and OVN
shareholders, pursuant to the Acquisition Agreement, who do not dissent.
However, since all of the shareholders of OV and OVN have, under the
Acquisition Agreement, agreed to vote in favor of the Acquisition, it is
anticipated that there will be no dissenting shareholders. See "THE
ACQUISITION--Rights of Dissenting OV and OVN Shareholders."
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
Except as more fully described in this Prospectus, no gain or loss (other
than with respect to cash received in lieu of fractional shares or in
satisfaction of dissenters' rights) will be recognized to shareholders of OV
and OVN upon the issuance to such shareholders of Norwest Common Stock and
the dissolution of OV and OVN. Consummation of the Acquisition is
dependent upon, among other things, receipt by Orlandi of an opinion of
counsel dated as of the Closing Date, with respect to the Acquisition
qualifying as a reorganization for U.S. Federal income tax
purposes. HOWEVER, THE FEDERAL INCOME TAX CONSIDERATIONS RELATED TO THE
ACQUISITION MAY BE DIFFERENT TO PARTICULAR TYPES OF OV OR OVN SHAREHOLDERS,
OR IN LIGHT OF OV OR OVN SHAREHOLDERS' PERSONAL INVESTMENT CIRCUMSTANCES.
ACCORDINGLY, SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS IN
DETERMINING THE TAX CONSIDERATIONS THAT MAY BE RELEVANT TO
10
<PAGE>
THEM IN CONNECTION WITH THE ACQUISITION UNDER FEDERAL, STATE, LOCAL, AND ANY
OTHER APPLICABLE TAX LAWS. See "THE ACQUISITION--Certain U.S. Federal Income
Tax Consequences."
MARKETS AND MARKET PRICES
Norwest Common Stock is listed on the New York Stock Exchange and the
Chicago Stock Exchange. On May 18, 1995, the last trading day preceding public
announcement of the proposed Acquisition the closing price per share of Norwest
Common Stock was $27.25 and on September 12, 1995, the price was $31.00.
There is no public market for OV Common Stock or OVN Common Stock.
Shareholders of OV and OVN are advised to obtain current market quotations for
Norwest Common Stock. The market price for Norwest Common Stock will fluctuate
between the date of this Prospectus and the Closing Date, which may be a period
of several weeks or more. As a result, the market value of the Norwest Common
Stock that shareholders of OV and OVN ultimately receive in the Acquisition
could be more or less than its market value on the date of this Prospectus.
No assurance can be given concerning the market price of Norwest Common Stock
before or after the Closing Date.
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
Upon consummation of the Acquisition, shareholders of OV and OVN will
become stockholders of Norwest. As a result, such shareholders' rights will
change to some extent. See "THE ACQUISITION--Certain Differences in Rights of
Shareholders."
COMPARATIVE PER COMMON SHARE DATA
The following table presents selected comparative per common share data
for Norwest Common Stock on a historical basis and pro forma combined basis
for OV Common Stock and OVN Common Stock on a historical basis and pro forma
equivalent basis. This information is derived from the consolidated historical
financial statements of Norwest, including the related notes thereto,
incorporated by reference into this Prospectus and the historical financial
statements of OV and OVN, including the notes thereto, appearing elsewhere in
this Prospectus. This information should be read in conjunction with such
historical financial statements and the related notes thereto. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and "FINANCIAL STATEMENTS
OF ORLANDI."
11
<PAGE>
<TABLE>
<CAPTION>
COMPARATIVE PER COMMON SHARE DATA
Norwest Common Stock OV Common Stock OVN Common Stock(1)
-------------------- --------------- ----------------
Pro Forma Pro Forma Pro Forma
Historical Combined Historical Equivalent Historical Equivalent
---------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BOOK VALUE(2):
June 30, 1995 $12.91 12.85 21.73 115.36 144.45 1,290.16
December 31, 1994 10.79 10.73 25.90 96.40 200.00 1,077.87
DIVIDENDS DECLARED(3):
Six Months Ended
June 30, 1995 0.420 0.420 34.550 3.769 - 42.00
Year Ended
December 31, 1994 0.765 0.765 7.927 6.865 - 21.00
December 31, 1993 0.640 0.640 5.326 5.744 - -
December 31, 1992 0.540 0.540 2.821 4.846 - -
NET INCOME(LOSS)(4):
Six Months Ended
June 30, 1995 1.32 1.32 30.98 11.86 (55.55) 130.91
Year Ended
December 31, 1994 2.41 2.41 27.61 21.62 - -
December 31, 1993 1.86 1.85 4.40 16.59 - -
December 31, 1992 1.19 1.18 1.80 10.59 - -
<FN>
(1) OVN was incorporated on October 6, 1994 and commenced operations in 1995.
Historical and pro forma equivalent financial information reflect the recent
establishment of OVN and amounts for periods prior to OVN's date of
incorporation are not applicable.
(2) The pro forma combined book value per share of Norwest Common Stock is
based upon the historical total combined common stockholders' equity for Norwest
and Orlandi divided by total pro forma common shares of combined entities
assuming exchange of the outstanding OV Common Stock at a ratio of 8.974 shares
of Norwest Common Stock for each share of OV Common Stock (the "OV Exchange
Ratio") and of the outstanding OVN Common Stock at a ratio of 100 shares of
Norwest Common Stock for each share of OVN Common Stock (the "OVN Exchange
Ratio"). The pro forma equivalent book values per share of OV and OVN
represents the respective pro forma combined amount multiplied by the
applicable Exchange Ratio. The Exchange Ratios assume that the aggregate
number of shares of Norwest Common Stock issued in the Acquisition will be
2,000,000. See "THE ACQUISITION--Terms of the Acquisition."
(3) Assumes no changes in cash dividends per share by Norwest. Historical cash
dividends for OV represent Subchapter "S" distributions made to shareholders for
related individual income taxes and general purposes. The pro forma equivalent
dividends per share of OV Common Stock and OVN Common Stock represent cash
dividends declared per share of Norwest Common Stock multiplied by the
applicable Exchange Ratio.
(4) The pro forma combined net income per share of Norwest Common Stock (based
on fully diluted net income and weighted average shares outstanding) is based
upon the combined historical net income for Norwest and Orlandi divided by the
average pro forma common shares of the combined entities. The respective pro
forma equivalent net income per share of OV Common Stock and OVN Common Stock
represent the applicable pro forma combined net income per share multiplied by
the applicable Exchange Ratio.
</TABLE>
12
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth certain selected historical consolidated
financial information for Norwest and certain selected historical financial
information for Orlandi. The income statement and balance sheet data included
in the selected financial data for the five years ended December 31, 1994 are
derived from audited consolidated financial statements of Norwest and from
combined consolidated financial statements (audited only for the year ended
December 31, 1994) of Orlandi. The income statement and balance sheet data
included in the selected financial data for the six-month periods ended June 30,
1995 and 1994 are derived from unaudited consolidated financial statements of
Norwest and Orlandi. All financial information derived from unaudited financial
statements reflects, in the respective opinions of management of Norwest and
Orlandi, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such data. Results for the six months
ended June 30, 1995 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 combined
consolidated financial statements of Orlandi, including the notes thereto,
appearing elsewhere in this Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE" and "FINANCIAL STATEMENTS OF ORLANDI."
13
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
NORWEST CORPORATION AND SUBSIDIARIES
SIX MONTHS
ENDED JUNE 30 YEAR ENDED DECEMBER 31
----------------------------------------------------------------------
1995 1994 1994 1993(1) 1992(2) 1991 1990(3)
---- ---- ---- ------- ------- ---- -------
(In millions except per share amounts)
INCOME STATEMENT DATA
---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $2,677.1 2,066.6 4,393.7 3,946.3 3,806.4 4,025.9 3,885.8
Interest expense 1,135.2 719.4 1,590.1 1,442.9 1,610.6 2,150.3 2,320.1
-------- ------- ------- ------- ------- ------- -------
Net interest income 1,541.9 1,347.2 2,803.6 2,503.4 2,195.8 1,875.6 1,565.7
Provision for credit losses 130.0 60.0 164.9 158.2 270.8 406.4 433.0
Non-interest income 847.9 821.0 1,638.3 1,585.0 1,273.7 1,064.0 896.3
Non-interest expenses 1,586.9 1,528.1 3,096.4 3,050.4 2,553.1 2,041.5 1,744.5
-------- ------- ------- ------- ------- ------- -------
Income before income taxes 672.9 580.1 1,180.6 879.8 645.6 491.7 284.5
Income tax expense 221.8 187.6 380.2 266.7 175.6 73.4 115.1
-------- ------- ------- ------- ------- ------- -------
Income before cumulative
effect of a change in
accounting method 451.1 392.5 800.4 613.1 470.0 418.3 169.4
Cumulative effect on years
prior to 1992 of change in
accounting method -- -- -- -- (76.0) -- --
-------- ------- ------- ------- ------- ------- -------
Net income $ 451.1 392.5 800.4 613.1 394.0 418.3 169.4
-------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- -------
PER COMMON SHARE DATA
---------------------
Net income per share:
Primary:
Before cumulative effect
of a change in
accounting method $ 1.34 1.20 2.45 1.89 1.44 1.33 0.59
Cumulative effect on
years prior to 1992 of
change in accounting
method -- -- -- -- (0.25) -- --
-------- ------- ------- ------- ------- ------- -------
Net income $ 1.34 1.20 2.45 1.89 1.19 1.33 0.59
-------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- -------
Fully diluted:
Before cumulative effect of
a change in accounting
method $ 1.32 1.18 2.41 1.86 1.42 1.32 0.59
Cumulative effect on years
prior to 1992 of change in
accounting method -- -- -- -- (0.23) -- --
-------- ------- ------- ------- ------- ------- -------
Net income $ 1.32 1.18 2.41 1.86 1.19 1.32 0.59
-------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- -------
Dividends declared per
common share $0.420 0.370 0.765 0.640 0.540 0.470 0.423
BALANCE SHEET DATA
------------------
At period end:
Total assets $66,623.0 55,756.8 59,315.9 54,665.0 50,037.0 45,974.5 43,523.0
Long-term debt 12,382.1 7,255.2 9,186.3 6,850.9 4,553.2 3,686.6 3,066.0
Total stockholders' equity 4,726.0 3,836.6 3,846.4 3,760.9 3,371.8 3,192.3 2,434.0
14
<PAGE>
<FN>
(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.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
SELECTED COMBINED CONSOLIDATED FINANCIAL DATA
ORLANDI VALUTA, ORLANDI VALUTA NACIONAL
AND ORLANDI DE MEXICO, S.A. DE C.V.
Six Months Ended
June 30(1) Year Ended December 31(1)
---------------- --------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
(In thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
---------------------
Sales of wire transfers and
currencies $74,925.3 45,240.9 91,768.5 67,003.2 44,996.5 36,210.6 91,095.3
Cost of sales 60,809.3 39,301.3 77,446.9 60,296.6 40,095.3 31,404.9 82,302.0
--------- --------- --------- ---------- ---------- --------- ---------
Gross profit 14,116.0 5,939.6 14,321.6 6,706.6 4,901.2 4,805.7 8,793.3
Total operating expenses 8,309.1 3,773.4 8,935.3 5,910.0 4,597.7 5,242.6 6,550.2
--------- --------- --------- ---------- ---------- --------- ---------
Income from operations 5,806.9 2,166.2 5,386.3 796.6 303.5 (436.9) 2,243.1
Other income 150.9 27.1 78.4 69.8 54.3 343.3 9.1
--------- --------- --------- ---------- ---------- --------- ---------
Income before provision for
income taxes 5,957.8 2,193.3 5,464.7 866.4 357.8 (93.6) 2,252.2
Provision for income taxes 56.5 32.9 80.1 8.5 6.0 -- --
--------- --------- --------- ---------- ---------- --------- ---------
Net income (loss) $ 5,901.3 2,160.4 5,384.6 857.9 351.8 (93.6) 2,252.2
--------- --------- --------- ---------- ---------- --------- ---------
--------- --------- --------- ---------- ---------- --------- ---------
PER COMMON SHARE DATA(2)
------------------------
Net income (loss) $ 29.88 11.08 27.54 4.40 1.80 (0.48) 11.55
Dividends declared(3) 34.113 0.615 7.906 5.326 2.821 0.00 5.89
BALANCE SHEET DATA
------------------
At period end:
Total assets $ 7,586.5 4,430.8 7,224.4 2,466.6 2,071.0 4,261.3 4,171.7
Long-term debt 434.2 - 473.4 - - - -
Total stockholders' equity 4,598.0 3,452.0 5,551.3 1,504.2 1,842.5 1,843.2 1,937.2
<FN>
(1) The combined consolidated financial data include Orlandi Valuta and its 75%
owned foreign subsidiary, Orlandi de Mexico, S.A. de C.V., and Orlandi
Valuta Nacional. In 1991, Orlandi Valuta amended its articles of
incorporation changing its name from Telegrafo Nacionales to Orlandi
Valuta. On June 1, 1992 Orlandi Valuta merged with its principal agent
Orlandi Foreign Exchange, Inc. The selected consolidated financial data
include the combined results of the merged organizations.
Orlandi Valuta Nacional was incorporated on October 6, 1994 and commenced
operations in 1995. For the six months ended June 30, 1995, Orlandi Valuta
Nacional's net loss totalled $138.9 thousand. Total stockholders' equity
of Orlandi Valuta Nacional amounted to $361.1 thousand and $500.0 thousand
at June 30, 1995 and December 31, 1994, respectively.
(2) Based on weighted shares outstanding of 197,500 shares for the six months
ended June 30, 1995; 195,521 shares for the year ended December 31, 1994;
and 195,000 shares for the six months ended June 30, 1994 and the four-year
period ended December 31, 1993.
(3) Cash dividends represent Subchapter "S" distributions made to shareholders
of Orlandi Valuta for related individual income taxes and general purposes.
</TABLE>
16
<PAGE>
MEETING INFORMATION
GENERAL
This Prospectus is being furnished to holders of OV Common Stock and OVN
Common Stock in connection with the Special Meetings to be held on Friday,
October 13, 1995, and any adjournments thereof, to consider and take action upon
the approval of the Acquisition Agreement and such other business as may
properly come before the Special Meetings or any adjournments thereof.
This Prospectus is also furnished by Norwest to shareholders of OV and OVN
as a prospectus in connection with the issuance by Norwest of shares of Norwest
Common Stock upon consummation of the Acquisition. This Prospectus and the
attached Notice of Special Meeting are first being mailed to shareholders of OV
and OVN on or about September 13, 1995.
DATE, PLACE, AND TIME
The Special Meetings will be held at 560 S. Spring Street, Los Angeles,
California, on Friday, October 13, 1995, at 10:00 a.m., local time.
RECORD DATE; VOTE REQUIRED
The Boards of Directors of OV and OVN have fixed the close of business on
September 22, 1995, as the record date for the determination of shareholders of
OV and OVN entitled to receive notice of, and to vote at, the Special Meetings.
On the record date there were 195,000 shares of OV Common Stock and 2,500 shares
of OVN Common Stock outstanding. Each share of OV Common Stock or OVN Common
Stock outstanding on the record date is entitled to one vote at the applicable
Special Meeting. Approval of the Acquisition Agreement requires the affirmative
vote of the holders of a majority of the outstanding shares of each of OV Common
Stock and OVN Common Stock. The Acquisition cannot be consummated without both
OV and OVN shareholder approval of the Acquisition Agreement.
As of the record date for the Special Meetings, directors and executive
officers of OV and OVN owned beneficially or controlled the voting of an
aggregate of 100% of the shares of OV Common Stock and OVN Common Stock
outstanding on that date. Orlandi's directors and executive officers have
informed Orlandi that they intend to vote all of their shares of OV Common Stock
and OVN Common Stock in favor of the Acquisition Agreement. Information
regarding the shares of OV Common Stock and OVN Common Stock beneficially owned
by each director and executive officer of OV and OVN, and by all directors and
executive officers as a group, is set forth in the tables under the heading
"Principal Shareholders and Security Ownership of Management" below.
At the record date, directors and executive officers of Norwest did not own
beneficially any shares of OV Common Stock or OVN Common Stock.
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
Set forth below are the names, and, in the case of holders of 5% or more
the addresses, and the number of shares held as of the record date for the
Special Meeting by those persons who may be deemed to own beneficially, whether
directly or indirectly, 5% or more of the outstanding shares of OV Common Stock
and OVN Common Stock, by each director and executive officer of OV and OVN, and
by all directors and executive officers of each of OV and OVN as a group. Each
shareholder named below has sole voting and investment power over the shares
shown in the tables unless otherwise indicated. The
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<PAGE>
shares shown in the tables include all shares the named parties may be deemed
to own beneficially, including shares held by spouses.
<TABLE>
<CAPTION>
ORLANDI VALUTA
Number of Shares
Name and Address Beneficially Owned Percent of Class
---------------- ------------------ ----------------
<S> <C> <C>
Paolo Orlandi (1) 195,000(3) 100.00%
c/o Orlandi Valuta
560 S. Spring Street
Los Angeles, CA 90013
Cynthia Orlandi (2) 195,000(3) 100.00%
c/o Orlandi Valuta
560 S. Spring Street
Los Angeles, CA 90013
Directors and executive officers as a 195,000 100.00%
group (2 persons)
<FN>
__________________________
(1) Mr. Orlandi is Chairman of the Board and a director of OV.
(2) Ms. Orlandi is Vice President and a director of OV.
(3) Mr. Orlandi directly owns 130,000 Shares and Ms. Orlandi directly owns
65,000 shares. Mr. and Ms. Orlandi are husband and wife
and each of their shares are attributable to the other.
</TABLE>
ORLANDI VALUTA NACIONAL
<TABLE>
<CAPTION>
Number of Shares
Name and Address Beneficially Owned Percent of Class
---------------- ------------------ ----------------
<S> <C> <C>
Paolo Orlandi (1) 2,500(3) 100.00%
c/o Orlandi Valuta
560 S. Spring Street
Los Angeles, CA 900132,500100.00%
Cynthia Orlandi (2) 2,500(3) 100.00%
c/o Orlandi Valuta
560 S. Spring Street
Los Angeles, CA 900132,500100.00%
Directors and executive officers as a 2,500 100.00%
group (2 persons)
<FN>
__________________________
(1) Mr. Orlandi is Chairman of the Board and a director of OVN.
(2) Ms. Orlandi is Vice President and a director of OVN.
(3) Mr. Orlandi directly owns 1,666.7 Shares and Ms. Orlandi directly owns
833.3 shares. Mr. and Ms. Orlandi are husband and wife
and each of their shares are attributable to the other.
</TABLE>
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<PAGE>
THE ACQUISITION
This section of the Prospectus describes certain aspects of the
Acquisition. The following description does not purport to be complete and is
qualified in its entirety by reference to the Acquisition Agreement, which is
attached as Appendix A to this Prospectus and is incorporated by reference
herein. ALL SHAREHOLDERS OF OV AND OVN ARE URGED TO READ THE ACQUISITION
AGREEMENT IN ITS ENTIRETY.
BACKGROUND OF AND REASONS FOR THE ACQUISITION
Beginning in early 1993, the directors of OV and OVN, who own all the
outstanding shares of OV and OVN, determined that an acquisition of Orlandi
or other transaction under appropriate terms would inrease the liquidity of
their investment, as well as serve the best interests of Orlandi's customers,
by expanding the range of services Orlandi could offer. Orlandi received
several inquiries from third parties, including Norwest, who expressed
interest in acquiring a controlling ownership position in Orlandi. An exchange
of information and discussions with Norwest followed. In January 1995,
Norwest submitted a preliminary acquisition proposal covering all of the
assets and liabilities of OV and OVN for consideration by the Boards of
Directors of OV and OVN. Further negotiations between Orlandi and Norwest
followed, which resulted in Norwest's submitting a letter of intent to Orlandi
on February 15, 1995, which was unanimously approved by the Board of
Directors and signed on behalf of Orlandi on February 15, 1995. During the
next few weeks, Norwest conducted a due diligence review of Orlandi, and the
parties negotiated a definitive agreement which was approved by the Board of
Directors of Orlandi and executed by Norwest and Orlandi as of May 18, 1995.
As noted above, the directors who are the sole shareholders of OV and OVN
were interested in increasing the liquidity of their investment. The
shareholders of OV and OVN will be able to exchange their shares of OV and OVN
for the stock of Norwest, which is actively traded on the New York and Chicago
Stock Exchanges.
THE BOARDS OF DIRECTORS OF OV AND OVN FORMALLY AND UNANIMOUSLY RECOMMEND
THAT SHAREHOLDERS OF ORLANDI VOTE FOR APPROVAL OF THE ACQUISITION AGREEMENT.
TERMS OF THE ACQUISITION
At the Effective Time, OV and OVN will each transfer and deliver to Norwest
all of the properties and assets then owned by OV and OVN, respectively, except
certain items required by law to be retained by OV or OVN or necessary to effect
the liquidation of OV and OVN, and Norwest will assume specified liabilities,
contracts and other obligations of OV and OVN. At the Closing, Norwest shall
deliver to OV 1,750,000 shares of Norwest's Common Stock, and shall deliver to
OVN 250,000 shares of Norwest's Common Stock. OV and OVN will each distribute
the shares of Norwest's Common Stock which such company receives to its
respective shareholders, who will become legal owners of the Norwest Common
Stock distributed. Immediately after the transfers described above, Norwest
will transfer the assets and liabilities it acquired from OV to a newly formed
wholly owned subsidiary of Norwest Financial Services, Inc. ("Newco 1"), and the
assets and liabilities it acquired from OVN to another newly formed wholly owned
subsidiary of Norwest Financial Services, Inc.("Newco 2"). Thereafter, OV and
OVN will be dissolved.
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<PAGE>
The market price for Norwest Common Stock will fluctuate between the date
of this Prospectus and the Closing Date, which may be a period of several weeks.
As a result, the market value of the Norwest Common Stock that shareholders of
Orlandi ultimately receive in the Acquisition could be more or less than its
market value on the date of this Prospectus.
The Acquisition Agreement provides that if, between the date of the
Acquisition Agreement and the Effective Time, 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 ratios provided for in the Acquisition
Agreement will be adjusted accordingly.
Shares of Norwest Common Stock issued and outstanding immediately prior to
the Closing Date will remain issued and outstanding.
CLOSING DATE AND TIME OF THE ACQUISITION
The Effective Time will be 11:58 p.m., Pacific Daylight Time, on the
Closing Date. Subject to the terms and conditions set forth in the Acquisition
Agreement, the closing of the Acquisition will occur on a date (the "Closing
Date") agreed to by the parties to the Acquisition, but no later than ten
business days following the satisfaction or waiver of all conditions set forth
in the Acquisition Agreement, or on such other date upon which the parties
agree. Norwest and Orlandi anticipate that the Acquisition will close in the
fourth quarter of 1995, although there can be no assurance as to whether or
when the Acquisition will occur. See "Terms of the Acquisition," "Conditions
to the Acquisition," and "Regulatory Approvals."
DELIVERY OF CERTIFICATES
At the closing, which shall occur on the Closing Date (the "Closing"),
Norwest Bank Minnesota, National Association, acting in the capacity of transfer
agent for Norwest (the "Transfer Agent"), will deliver to OV and OVN each a
certificate representing Norwest Common Stock.
All Norwest Common Stock issued pursuant to the Acquisition will be deemed
issued as of the Effective Time. There shall be paid to the shareholder in
whose name the certificates representing shares of Norwest Common Stock issued
in connection with the Acquisition are registered, any dividends the record and
payment dates of which shall have been after the Closing Date. In no event
shall the persons entitled to receive such dividends be entitled to receive
interest on amounts payable as dividends.
CONDITIONS TO THE ACQUISITION
The Acquisition will occur only if the Acquisition Agreement is approved by
the requisite vote of shareholders of OV and OVN. Consummation of the
Acquisition is subject to the satisfaction of certain conditions, most of which
are customary in transactions such as the Acquisition. Such conditions may be
waived by the parties to the extent that waiver is permitted by applicable law.
Conditions to the obligations of both parties to consummate the Acquisition
include, but are not limited to (i) approval of the Acquisition Agreement by the
requisite vote of shareholders of OV and OVN, (ii) the receipt of all necessary
regulatory approvals, including the approval of the Acquisition by the Federal
Reserve Board, certain states and the Mexican government, and the expiration of
all applicable waiting and appeal periods, (iii) 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 Acquisition
Agreement, (iv) the receipt by Orlandi of an opinion of counsel to the effect
that for federal income tax
20
<PAGE>
purposes the Acquisition will be a tax-free reorganization, (v) receipt of
authorization for listing on the New York Stock Exchange and Chicago Stock
Exchange of the Norwest Common Stock to be issued in connection with the
Acquisition, and (vi) effectiveness of the registration statement pertaining to
such shares filed with the Securities and Exchange Commission.
Norwest's obligation to consummate the Acquisition is also subject, among
other things, to (i) the total number of shares of OV Common Stock and OVN
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 not having exceeded 195,000
and 2,500, respectively; (ii) the receipt of a certificate from specified
officers of OV and OVN concerning the accuracy and completeness of Orlandi's
financial information presented in this Prospectus and the absence of any
material changes in such information since the date of Orlandi's most recent
interim financial statements; (iii) 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 Orlandi 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 Orlandi; (iv) the
requirement that Orlandi shall not have sustained any material loss or
interference with its business from any civil disturbance or any fire,
explosion, flood, or other calamity, whether or not covered by insurance;
(v) the absence of any change or any circumstance which has had or might
reasonably be expected to have a material adverse effect on the financial
condition, results of operations, business, or prospects of Orlandi; (vi) the
execution by each of Paolo Orlandi, Cynthia Orlandi and Hector Gonzalez of a
separate employment agreement with Norwest; and (vii) the execution by each of
Paolo Orlandi and Cynthia Orlandi of an indemnification agreement with Norwest;
and the achievement by Orlandi of substantially the same level of wires and
profits in each month beginning with May 1995 as were achieved in the month of
April 1995.
REGULATORY APPROVALS
On August 28, 1995, the Acquisition was approved by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") under
Section 4 of the BHC Act. The Acquisition is conditioned upon the receipt
of all licenses or permits required under applicable federal or state law (and
Mexican law) that are necessary for the subsidiaries established by Norwest to
operate the business of OV and OVN and OV's subsidiary in the same manner as
such business was operated by OV, OVN and OV's subsidiary on May 18, 1995.
Norwest has filed applications for the necessary licenses and permits with
state governmental authorities. There can be no assurance that the state
governmental authorities will grant the necessary licenses or permits. There
can also be no assurance that any such license or permit will not contain a
condition or requirement that causes it to fail to satisfy the conditions to
the consummation of the Acquisition.
The approval of any application merely implies satisfaction of regulatory
criteria for approval, which do not include review of the transaction 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 transactions.
Norwest and Orlandi are not aware of any additional governmental approvals
or compliance with banking laws and regulations that would be required for
consummation of the Acquisition other than those described above. Should any
other approval or action be required, it is currently contemplated that such
approval or action would be sought. There can be no assurance that any such
approval or action, if
21
<PAGE>
needed, could be obtained and, if such approvals or actions are obtained, there
can be no assurance regarding the timing thereof. THE ACQUISITION CANNOT
PROCEED IN THE ABSENCE OF ALL REQUISITE REGULATORY APPROVALS.
SEE "THE ACQUISITION -- CONDITIONS TO THE ACQUISITION" AND "THE ACQUISITION --
REGULATORY APPROVALS."
BUSINESS PENDING THE ACQUISITION
By entering into the Acquisition Agreement, Orlandi has agreed to maintain
its corporate existence in good standing and to conduct its business in the
ordinary and usual manner. In the Acquisition Agreement Orlandi has also
agreed, among other things, that it will not, without the prior written consent
of Norwest: (i) enter into any material agreement, contract, or commitment in
excess of $25,000 or for a term of greater than one year; (ii) make any
investments except investments made in the ordinary course of business;
(iii) declare, set aside, make, or pay any dividend or other distribution with
respect to its capital stock, except as consistent with past practices and
provided that such dividend or distribution does not disqualify the Acquisition
as a "pooling of interests" for accounting purposes; (iv) increase the
compensation or benefits of any employees, officers, directors or executive
employees, except pursuant to existing compensation plans and practices and
bonus plans consistent with historical practices; (v) sell or otherwise dispose
of any shares of the capital stock of any subsidiary; or (vi) sell or otherwise
dispose of any of its assets or properties other than in the ordinary course of
business.
CERTAIN COVENANTS
The Acquisition Agreement includes a number of covenants of Orlandi which
are customary in transactions such as the Acquisition. The Acquisition
Agreement provides, among other things, that, prior to the Closing Date, Orlandi
will (i) make such adjustments as Norwest may request to conform Orlandi's
accounting practices to those of Norwest and Norwest's plans with respect to the
conduct of Orlandi's business following the Acquisition and to provide for costs
and expenses related to the consummation of the transactions contemplated by the
Acquisition Agreement; (ii) refrain from engaging in any business from and after
the Closing Date, promptly liquidate and dissolve as corporations, distribute
the shares of Norwest Common Stock received to its shareholders and complete
cancellation and redemption of shares of OV Common Stock and OVN Common Stock;
and (iii) not take any action with respect to Orlandi which would disqualify
the Acquisition as a "pooling of interests" for accounting purposes.
The Acquisition Agreement also includes a number of covenants of Norwest
which are customary in transactions such as the Acquisition. The Acquisition
Agreement provides, among other things, that, prior to the Closing Date, Norwest
will (i) file a Registration Statement on Form S-4 with the Securities and
Exchange Commission, and use its best efforts to cause the Registration
Statement to become effective, (ii) file all documents required for the shares
of Norwest Common Stock to be issued to Orlandi in connection with the
Acquisition to be listed on the New York Stock Exchange and the Chicago Stock
Exchange, (iii) use its best efforts to obtain all required Blue Sky approvals,
or (iv) not take any action which would disqualify the Acquisition from being
treated as a "pooling of interests" for accounting purposes or from being
treated as a tax free organization for income tax purposes.
Neither Orlandi nor any director, officer, representative, or agent of
Orlandi, will solicit, authorize the solicitation of, or enter into any
discussions with any party 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 common stock, or any other equity security of Orlandi; (ii) to make a tender
or exchange offer for any shares of such common stock or other
22
<PAGE>
equity security; (iii) to purchase, lease, or otherwise acquire the assets of
Orlandi except in the ordinary course of business; or (iv) to merge,
consolidate, or otherwise combine with Orlandi.
WAIVER, AMENDMENT, AND TERMINATION
Either Norwest or Orlandi may, in writing, give any consent, terminate the
Acquisition Agreement in accordance with its terms, 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 Acquisition Agreement.
At any time before the Closing Date the parties may amend the Acquisition
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 Acquisition by the
shareholders of Orlandi may adversely affect the consideration to be received by
the shareholders of Orlandi.
The Acquisition Agreement may be terminated at any time prior to the
Closing Date (i) by mutual written consent of the parties; (ii) by either party
by written notice to the other if the Acquisition shall not have been
consummated by December 31, 1995, 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 Acquisition 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 Acquisition Agreement.
MANAGEMENT AND OPERATIONS AFTER THE ACQUISITION
After the Acquisition, the Orlandi business will be continued through
Newco 1 and Newco 2 and will continue to operate at its present locations,
offering the same services currently offered by Orlandi.
INTERESTS OF CERTAIN PERSONS IN THE ACQUISITION
In considering the recommendation of Orlandi's Board of Directors with
respect to the Acquisition, shareholders of Orlandi should be aware that certain
officers and one director of Orlandi have certain direct or indirect interests
separate from their interests as holders of Orlandi Common Stock, as set forth
below.
After the Effective Time, two of Orlandi's officers will continue to be
officers of Newco 1 and Newco 2. One of the officers is also a director and
will continue to be a director of Newco 1 and Newco 2. These parties will hold
such positions until their successors are elected.
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
OV is incorporated as a corporation in the State of California, OVN is
incorporated as a corporation in the State of Nevada, and Norwest is
incorporated as a corporation in the State of Delaware. Shareholders of OV and
OVN, whose rights are governed by OV's Articles of Incorporation and By-Laws and
OVN's Articles of Incorporation and By-Laws, respectively, will, upon
consummation of the Acquisition, become stockholders of Norwest. Their rights
as Norwest stockholders will then be governed by Norwest's Restated Certificate
of Incorporation and By-Laws, each as amended, and by the
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<PAGE>
Delaware General Corporation Law. The following is a summary of certain
significant differences between the rights of shareholders of OV and OVN and the
rights of stockholders of Norwest.
CAPITAL STOCK
ORLANDI. OV's Articles of Incorporation authorize the issuance of
100,000,000 shares of common stock, no par value, and OVN's Articles of
Incorporation authorize the issuance of 2,500 shares of common stock, no par
value. All shares of OV Common Stock and OVN Common Stock currently outstanding
have equal rights and preferences with respect to voting, dividends and
distributions upon liquidation.
NORWEST. The Norwest Restated Certificate of Incorporation (the "Norwest
Certificate") authorizes the issuance of 500,000,000 shares of common stock, par
value $1 2/3 per share, 5,000,000 shares of preferred stock, without par value
and 4,000,000 shares of preference stock. At June 30, 1995, 338,450,558 shares
of Norwest Common Stock were issued, of which 325,026,015 were outstanding, and
13,424,543 were held as treasury shares, and 3,304,666 shares of preferred stock
were outstanding, consisting of 1,127,125 shares of 10.24% Cumulative Preferred
Stock, 980,000 shares of Cumulative Tracking Preferred Stock (of which 25,000
shares are held by a subsidiary of Norwest), 1,140,875 shares of Cumulative
Convertible Preferred Stock, Series B (the "Norwest Series B Preferred"), 13,647
shares of ESOP Cumulative Convertible Preferred Stock and 43,019 shares of 1995
ESOP Cumulative Convertible Preferred Stock. On July 28, 1995, Norwest gave
notice to the holders of the Norwest Series B Preferred that the Norwest
Series B Preferred would be redeemed by Norwest on September 1, 1995.
Pursuant to the terms of the Norwest Series B Preferred, the holders of
substantially all of the Norwest Series B Preferred converted such Preferred
Stock into Norwest Common Stock on or prior to September 1, 1995. The shares
of Norwest Series B Preferred that remained outstanding on September 1, 1995,
were redeemed by Norwest. In addition, 1,250,000 shares of preferred stock
are reserved for issuance under the Rights Agreement dated as of November 22,
1988, between Citibank, N.A. as Rights Agent, and Norwest (the "Rights
Agreement"). Norwest has also authorized for issuance from time to time and
registered with the Commission an additional 1,700,000 shares of preferred
stock. Norwest has also authorized for issuance from time to time and
registered or filed for registration with the SEC, pursuant to two universal
shelf registration statements, an indeterminate number of securities (the
"Shelf Securities") with an aggregate initial offering price, as of the date
of this Prospectus, not to exceed $3,025,000,000. The Shelf Securities may be
issued as preferred stock or as securities convertible into shares of
preferred stock or common stock. Based on the current number of shares of
preferred stock and preference stock authorized for issuance under the
Norwest Certificate, the maximum number of shares of preferred stock,
preference stock and common stock, respectively, that could be issued
pursuant to the effective shelf registration statements, when added to shares
of preferred stock and common stock already reserved for issuance, issued, or
outstanding, could not exceed respectively, 5,000,000 shares of preferred
stock 4,000,000 shares of preference stock and 500,000,000 shares of common
stock. All or any portion of the authorized but unissued preferred stock,
preference stock or Shelf Securities issuable as preferred stock or
convertible into preferred stock or common stock, may be issued by the Board
of Directors of Norwest (the "Norwest Board") without further action by
stockholders. Holders of preferred stock or preference stock have certain
rights and preferences with respect to dividends and upon liquidation that
are superior to those of holders of common stock. The relative rights and
preferences of any preferred stock or preference stock issued in the future
may be established by the Norwest Board without shareholder action, provided
that each share of preference stock will not be entitled to more than one
vote per share. Although Norwest has no current plans for the issuance of
any shares of preferred stock or preference stock, except as disclosed in
this Prospectus, such shares, when and if issued, could have dividend,
liquidation, voting and other rights superior to those of the common stock.
Subject to any prior rights of any preferred stock or preference stock
then outstanding, holders of common stock are entitled to receive such
dividends as are declared by the Norwest Board 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 or preference stock then
24
<PAGE>
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 or preference 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 shareholders 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 are, and the
shares offered hereby will be, fully paid and nonassessable. The transfer
agent and registrar for the Norwest 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, as described below.
The foregoing description of the material terms of the Norwest Common Stock
does not purport to be complete and is qualified in its entirety by reference to
Article Fourth of the Norwest Certificate, as amended.
On November 22, 1988, the Norwest Board 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 Acquisition, 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 the Norwest Board 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.
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").
Until a Right is exercised, the holder of a Right, as such, will have no rights
with respect to the Junior Preferred Shares including, without limitation, the
right to vote or receive dividends. 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.
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 Norwest Board 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.
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<PAGE>
(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 Norwest Board 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 such shares' 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
Norwest Board 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
Norwest Board without the consent of the holders of the Rights.
SHAREHOLDER VOTE REQUIREMENTS
CERTAIN BUSINESS COMBINATIONS
ORLANDI. Under California law, the affirmative vote of a
majority of the outstanding shares of OV entitled to vote is required to approve
a merger, or to approve the sale, lease, exchange, transfer or other disposition
of all or substantially all the corporation's assets, and the vote of
shareholders holding shares representing 50% or more of the voting power of the
corporation is required for a corporation to wind up and dissolve.
Under Nevada law, a merger must be approved by the affirmative vote of
a majority of the outstanding shares of OVN entitled to vote on such an action.
Additionally, certain business combinations, including mergers, of a "resident
domestic corporation" with an "interested stockholder" are prohibited for a
period of three years. Thereafter, combinations are prohibited unless certain
conditions are met, e.g., the vote of a majority of the outstanding shares not
owned by an interested stockholder.
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
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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 the Norwest Certificate, (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.
In addition to being subject to the laws of Delaware, Norwest, as a bank
holding company, is subject to various provisions of federal law with respect to
mergers, consolidations and certain other corporate transactions.
REMOVAL OF DIRECTORS
ORLANDI. As permitted under California law, OV's Bylaws provide
that a director, or the entire Board of Directors, may be removed with or
without cause by the affirmative vote of the holders of a majority of the
outstanding shares entitled to vote on such removal; PROVIDED, HOWEVER, that
unless the entire Board of Directors is removed, no individual director may be
removed when the votes cast against such director's removal or the shareholders
not consenting in writing to such removal would be sufficient to elect such
director.
Under Nevada law, any director of OVN may be removed by the vote of
stockholders representing two-thirds of the outstanding voting power.
NORWEST. Under Delaware law, any director, or the entire Norwest
Board, may be removed with or without cause by the affirmative vote of a
majority of the outstanding shares entitled to vote on such removal.
VACANCIES ON THE BOARD OF DIRECTORS
ORLANDI. As permitted under California law, OV's Bylaws provide
that a vacancy or vacancies on the Board of Directors, other than a vacancy
created by the removal of a director, may be filled by a majority of the
remaining directors, though less than a quorum, or by a sole remaining director.
A vacancy created by the removal of a director may be filled only by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute at least a majority of the required quorum) or by the written
consent of shareholders. The shareholders may elect a director at any time to
fill any vacancy not filled by the directors. Any such election by written
consent, other than to fill a vacancy created by removal, requires the consent
of a majority of the outstanding shares entitled to vote. Any such election by
written consent to fill a vacancy created by removal requires the consent of all
of the outstanding shares entitled to vote. If, after the filling of any
vacancy by the directors, the directors then in office who have been elected by
the shareholders constitute less than a majority of the directors then in
office, any holder or holders of an aggregate of five percent (5%) or more of
the shares outstanding at that time and having the right to vote for such
directors may call a special meeting of shareholders to be held to elect the
entire Board of Directors. The term of office of any director shall terminate
upon such election of a successor.
Under Nevada law, a vacancy or vacancies on OVN's Board of Directors
may be filled by a majority of the remaining directors, even if they constitute
less than a quorum. Stockholders have no statutory right to compel an election
even if, after filling vacancies by directors, the directors elected by
stockholders are less than a majority of the Board of Directors.
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NORWEST. Under Delaware law, if at the time of the filling of
any vacancies or newly created directorships, the directors then in office
constitute less than a majority of the entire Norwest Board, holders of at least
10% of the voting stock may seek a court-ordered stockholders meeting in order
to elect directors to fill the vacancies or to replace the directors chosen by
the Norwest Board.
AMENDMENTS TO THE CERTIFICATE OR ARTICLES OF INCORPORATION
ORLANDI. Under California law, a majority of the outstanding
shares entitled to vote thereon is required to amend the articles of
incorporation of OV, and a proposed amendment must also be approved by the vote
of a majority of outstanding shares of a class, whether or not such class is
entitled to vote thereon, under certain circumstances.
Under Nevada law, a majority of the outstanding shares entitled to
vote thereon is required to amend the articles of incorporation of OVN, and if
the amendment alters or changes any right of any class of outstanding shares,
the amendment must be approved by the affirmative vote of the majority of
holders of each class affected by the amendment, regardless of whether or not
the class is entitled to vote thereon.
NORWEST. Under Delaware law, holders of the outstanding shares
of stock of Norwest are entitled to vote on a proposed amendment whether or not
the class is entitled to vote thereon by the certificate of incorporation, if
the amendment would increase or decrease the aggregate number of shares, par
value, or otherwise adversely affect the rights of shares of such class.
AMENDMENTS TO BYLAWS
ORLANDI. As permitted under California law, pursuant to OV's
Bylaws, the Bylaws may be repealed or amended, and additional Bylaws may be
adopted, by either a vote of a majority of the full Board of Directors or by a
vote of the holders of a majority of the outstanding shares entitled to vote;
PROVIDED, HOWEVER, after issuance of shares, a bylaw specifying or changing a
fixed number of directors or the maximum or minimum number of directors or
changing from a fixed to a variable board or vice versa may only be adopted by
approval of the outstanding shares.
As permitted by Nevada law, pursuant to the Bylaws of OVN, the Bylaws
of the corporation may be adopted, amended or repealed by a majority vote of
either the Board of Directors or the shareholders entitled to vote thereon.
NORWEST. Under Delaware law, Norwest's Bylaws may be repealed or
amended, and additional Bylaws adopted, by either a vote of the majority of the
full Norhwest Board or the vote of the holders of a majority of the outstanding
shares entitled to vote. Bylaws may be amended by implication when the course
of conduct relied on to effect the change has continued for a period of time to
justify the inference that stockholders had knowledge of the change and
consented to it.
CUMULATIVE VOTING
Cumulative voting permits the holder of each share of stock entitled
to vote in the election of directors to cast that number of votes which equal
the number of directors to be elected. The holder may allocate all votes
represented by a share to a single candidate or may allocate those votes among
as many candidates as he or she chooses. Thus, a shareholder with a significant
minority percentage of the outstanding shares may be able to elect one or more
director if voting is cumulative. In contrast, the
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holder or holders of a majority of the shares entitled to vote in an election of
directors will be able to elect all the directors of Norwest.
ORLANDI. Under California law and OV's Bylaws, cumulative voting
in the election of directors is permitted under certain circumstances. Under
California law, in order to cumulate votes a shareholder must give notice at the
meeting, prior to the voting, of the shareholder's intention to vote
cumulatively. If any one shareholder gives such a notice, all shareholders may
cumulate their votes.
Under Nevada law, cumulative voting applies only when so provided in
the articles of incorporation of a corporation. OVN's Articles of Incorporation
do not provide for cumulative voting.
NORWEST. Under Delaware law, cumulative voting of stock applies
only when so provided in the certificate of incorporation of a corporation. The
Norwest Certificate, as amended, does not provide for cumulative voting.
DISSENTERS' RIGHTS
ORLANDI. Under California law, dissenters' rights are available to
OV's stockholders of record entitled to vote on a merger or exchange
reorganization. However, such rights are not available for any class of
securities listed on a national securities exchange certified by the California
Commissioner of Corporations or OTC margin stocks unless (i) more than 5% of the
class dissents; or (ii) shares are subject to a restriction on transfer (legal
or otherwise). The purchase price for dissenting shares is the fair market
value as of the day before the first announcement of the terms of the
reorganization, plus interest at the legal rate thereon. Dissenting shares
continue to have all rights and privileges of other shares until the fair market
value is agreed upon or determined by the court, except for any cash dividends
that are credited against price.
Under Nevada law, dissenters' rights are available to OVN shareholders
with respect to the following actions: (i) mergers, if the stockholder is
entitled to vote thereon; (ii) short form mergers; (iii) share exchanges, if OVN
is a party whose shares are being acquired and the stockholders have a right to
vote on the plan; and (iv) any corporate action taken pursuant to a vote of
stockholders to the extent that the articles, bylaws or board resolutions so
provide. However, the foregoing does not apply with respect to a plan of merger
or share exchange if the shares were listed on a national securities exchange or
the NASDAQ National Market or held by at least 2,000 shareholders of record,
unless the articles of incorporation provide otherwise or if the holders of the
class are required to accept cash or shares of a corporation that does not meet
either of the criteria for the exception. Where payment is required, the
corporation must pay each dissenter the estimated fair value, plus interest.
Dissenting stockholders retain all other rights of a stockholder until those
rights are cancelled or modified by corporate action.
See the more detailed discussion below under "Rights of Dissenting
Orlandi Shareholders."
NORWEST. Under Delaware law 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 consolidation 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
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to the Certificate of Incorporation. Because shares of Norwest Common Stock are
listed on both the New York Stock Exchange and the Chicago Stock Exchange, and
Norwest has more than 2,000 stockholders of record, its stockholders are not,
subject to the aforementioned exceptions, entitled to any rights of appraisal in
connection with mergers or consolidations involving Norwest.
SPECIAL MEETINGS
ORLANDI. As permitted by California law, OV's Bylaws provide that a
special meeting of the shareholders, for any purpose or purposes, may be
called by the Board of Directors, the Chairman of the Board of Directors, the
President, a Vice President, the Secretary or the holders of shares entitled
to cast not less than ten percent (10%) of the votes at the meeting.
Under Nevada law and pursuant to OVN's Bylaws, special meetings of
stockholders may be called by the Board of Directors, the Chairman or the
President, and shall be called by the Board of Directors upon the written
request of the holders of the majority of the shares entitled to vote at the
meeting.
NORWEST. Under Delaware law 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.
ANTITAKEOVER STATUTES
ORLANDI. Under California law, a corporation owning more than 50% of
the voting power of OV (a "parent corporation") but less than 90% of such voting
power may not accomplish a merger of OV with such parent corporation or a
subsidiary of such parent corporation unless: (a) the shareholders of OV receive
in the merger nonredeemable common shares of the surviving corporation of the
merger or the parent corporation; (b) all the shareholders of OV consent to the
merger; or (c) the California Commissioner of Corporations determines, following
a hearing at which all interested shareholders may attend and offer testimony,
that the terms of such merger are fair.
California law further provides that if a tender offer, or a written
proposal for approval of a reorganization or for a sale of all or substantially
all of the assets is made to OV's shareholders by an interested party, an
affirmative opinion in writing as to the fairness of the consideration to the
shareholders of OV shall be delivered in certain circumstances to the Board of
Directors and in other circumstances, to the shareholders of OV. In addition,
if a tender of shares or a vote or written consent is being sought pursuant to
an interested party proposal and a later tender offer or written proposal for a
reorganization or sale of assets that would require a vote or written consent of
shareholders is made to OV or its shareholders by any other person at least ten
days prior to the date for acceptance of the tendered shares or the vote or
notice of shareholder approval on the interested party proposal, then the
shareholders shall be informed of the later proposal, and the shareholders shall
be afforded a reasonable opportunity to withdraw any vote, consent, or proxy
previously given. For purposes of the foregoing, the term "interested party"
means a person who is a party to the transaction and (a) directly or indirectly
controls OV; (b) is, or is directly or indirectly controlled by, an officer or
director of OV; or (c) is an entity in which a material financial interest is
held by any director or executive officer of OV.
Under Nevada law, since OVN's articles of incorporation or Bylaws do
not otherwise state, a special meeting of shareholders may be called in the
event that a person acquires or offers to acquire a controlling interest in OVN.
At such meeting, OVN's shareholders would vote whether or not to grant
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voting rights to the shares acquired or offered to be acquired. If the shares
are accorded full voting rights, any other shareholder may demand full payment
for the fair value of its shares.
The foregoing discussion is provided by way of information only
since all of the shareholders of OV and OVN have agreed, pursuant to the
Acquisition Agreement, to vote in favor of the Acquisition.
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 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.
DERIVATIVE ACTIONS
ORLANDI. Under California law, a shareholder may bring an action on
behalf of OV if the plaintiff alleges in the complaint that plaintiff was a
shareholder, of record or beneficially, at the time of the transaction or any
part thereof of which the plaintiff complains (although a plaintiff who does not
meet this requirement may make a claim under certain circumstances), the
plaintiff alleges the plaintiff's efforts to secure from the Board of Directors
such action as the plaintiff desires and that the plaintiff has either informed
the corporation of the cause of action or delivered to the corporation a true
copy of the complaint.
Under Nevada law, a stockholder may bring an action on behalf of OVN
if the plaintiff alleges in the complaint that the plaintiff was a stockholder
at the time of the transaction or that the shares devolved on the plaintiff by
operation of law. The plaintiff must also describe the plaintiff's efforts to
secure from the Board of Directors such action as the plaintiff desires and the
reason for the failure of such efforts or for not making the effort. The
derivative action may not be maintained if it becomes apparent the plaintiff
does not adequately and fairly represent the interests of the stockholders in
the corporation.
NORWEST. Under Delaware law, a stockholder may bring an action on
behalf of the corporation if the plaintiff alleges in the complaint that the
plaintiff was a stockholder at the time of the transaction or that his shares
devolved on him by operation of law.
DIVIDENDS AND DISTRIBUTIONS
ORLANDI. Under California Law, OV may make a distribution to its
shareholders, by way of a cash dividend or otherwise, only if (i) its retained
earnings are at least equal to the amount of the proposed distribution, or
(ii) if the sum of the assets of the corporation (exclusive of goodwill,
capitalized research and development expenses and deferred charges) equals at
least 1 1/4 times its liabilities (not including deferred taxes, deferred income
and other deferred credits) and the corporation has current assets at least
equal to current liabilities (or, if the average of earnings of the corporation
before taxes
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on income and before interest expense for the two preceding fiscal years was
less than the average of the interest expense of the corporation for such fiscal
years, current assets must equal at least 1 1/4 times current liabilities).
Under Nevada law, OVN may make a distribution to its stockholders, by
way of a cash dividend or otherwise, unless after the distribution either of the
following two tests are met: (i) the corporation would not be able to pay its
debts as they become due in the usual course of business; or (ii) the sum of the
corporation's assets would be less than the sum of its total liabilities plus
the amount needed to pay preferred stockholders if the corporation were to be
dissolved at the time of distribution.
NORWEST. Under Delaware law, dividends may be paid out of Norwest's
surplus or, if there is no surplus, out of Norwest's net profits for the current
fiscal year and/or the preceding fiscal year. Distributions are prohibited when
Norwest's capital is impaired or the purchase or redemption of shares for cash
or other property would cause any such impairment to Norwest's capital. The
purchase or redemption from capital of any preferred shares (whether dividend or
liquidation) is permitted if the shares are retired upon acquisition and the
capital is reduced.
INDEMNIFICATION AND LIMITATION ON DIRECTOR LIABILITY
ORLANDI. Under California law OV may indemnify any person made, or
threatened to be made, a party to an action or proceeding, whether civil or
criminal, by reason of the fact that such person, such person's testate or
intestate, was a director, officer, employee or agent of such corporation,
against judgment, fines, amounts paid in settlement and reasonable expenses,
including attorney's fees, if such person acted in good faith, for a purpose
which such person reasonably believed to be in or not opposed to the best
interests of the corporation. A corporation may maintain additional
contractual arrangements with respect to indemnification of their directors,
officers, employees or other agents of the corporation. The Articles of
Incorporation of OV provide that liability of the directors of OV for monetary
damages shall be eliminated to the fullest extent permissible under California
Law.
Under Nevada law, OVN may indemnify any current or former directors,
officers, employees and agents and when the person (1) acted in good faith and
(2) in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the corporation. In the case of a criminal proceeding,
the indemnitee must also have had no reasonable cause to believe that the
indemnitee's conduct was unlawful.
NORWEST. Under Delaware law, Norwest may indemnify any current or
former director, officer, employee or agent of the corporation, against
judgment, fines, amounts paid in settlement and reasonable expenses, including
attorney's fees, if such person acted in good faith, for a purpose which such
person reasonably believed to be in or not opposed to the best interests of the
corporation.
INSPECTION RIGHTS
ORLANDI. Under California law, in addition to the right to inspect
the corporation's books, records, minutes and shareholders' list for a purpose
reasonably related to a shareholder's interests as a shareholder, shareholders
of OV have an absolute right to inspect and copy the shareholders' list if they
hold 5% or more of the corporation's total voting power, or hold 1% or more of
the corporation's total voting power and have filed a Schedule 14B with the
Commission relating to the election of directors.
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Under Nevada law, a stockholder who has owned shares in OVN for at
least six months or who holds or is authorized in writing by the holders of, at
least 5% of the outstanding shares of the corporation, has the right to inspect
the stockholder's list if the stockholder supplies an affidavit that states the
inspection is not (1) desired for a purpose that is in the business or object
other than the business of the corporation; and (2) the stockholder has not at
any time sold or offered for sale any list of stockholders of any corporation or
aided and abetted any other person for such purpose.
NORWEST. Under Delaware law, a stockholder of Norwest has the right
to inspect, copy and make extracts of the stockholder lists, including addresses
and other stockholder data, for a purpose reasonably related to the person's
interest as a stockholder. For ten days prior to and during a stockholders
meeting the stockholder list must be open to inspection by stockholders for any
purpose germane to the meeting and kept in the city where the meeting is to be
held.
DIRECTORS
STANDARD OF CARE
ORLANDI. Under California law, directors of OV are required to
act both in good faith and with due care, performing their duties with such
care, including reasonable inquiry, as an ordinarily prudent person in a like
position would use under similar circumstances. Absent conflicts of interest
(which, to the extent disclosed, can be ratified by a majority of disinterested
board members or stockholders) the business judgment rule protects acts of
ordinary negligence committed by directors.
Nevada law requires that directors of OVN exercise their powers in
good faith and with a view to the interests of the corporation.
NORWEST. Under Delaware law, a duty of care requires directors
of Norwest to inform themselves about all material information reasonably
available to them before making a business decision. The business judgment rule
protects good faith business decisions where the duty of care element is met and
reasonable diligence is met.
LIABILITY
ORLANDI. Under California law, OV directors who approve any
distribution of assets to stockholders prior to paying or adequately providing
for all known liabilities of the corporation after institution or dissolution
proceedings are jointly and severally liable to creditors. Damages recoverable
from a director are the amount of the illegal distribution (not in excess of the
liabilities of the corporation owed to non-consenting creditors at the time of
the violation). If the illegal distribution consists of property, the damages
shall be equal to the fair market value of such property at the time of the
illegal distribution (plus interest), together with all reasonable costs of
appraisal or other valuation (not in excess of the liabilities owed to
nonconsenting creditors at the time of the violation). OV's Articles of
Incorporation eliminate the liability of directors for monetary damages, except
in the case of (i) intentional misconduct, (ii) bad faith or breach of the duty
of loyalty, (iii) any transaction in which the director derived improper
personal benefit, (iv) reckless disregard of duty, (v) the abdication of duty,
(vi) transactions between the corporation and the director or corporations
having interrelated directors and (vii) unlawful distributions.
Under Nevada law, directors of OVN are liable only for acts of willful
or gross negligence, jointly and severally to the corporation and, in the case
of distribution or insolvency, to the creditors at the time of the improper
distribution. A director is fully protected in relying in good faith upon the
books
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and/or statements prepared by corporate officials as to the value and amount of
assets, liabilities or net profits or any fact pertinent to whether a
distribution is properly declared. The limitations period is three years.
Liability is limited to the lesser of (1) the amount of the distribution or
(2) the loss sustained by the corporation by reason of the distribution. OVN's
Articles of Incorporation eliminate the liability of directors for monetary
damages, except in the case of (i) intentional misconduct, and (ii) unlawful
distributions.
NORWEST. Under Delaware law, a director of Norwest who willfully
or negligently violates restrictions on payment of dividends or stock purchases
or redemptions is jointly and severally liable (at any time within six years
after such payment, purchase or redemption) to the corporation and, in the event
of dissolution or insolvency, its creditors, for the full amount unlawfully paid
with interest. The Norwest Certificate eliminates the liability of directors
for monetary damages, except in the case of (i) breach of the duty of loyalty,
(ii) bad faith or intentional misconduct, (iii) unlawful distributions and
(iv) any transaction in which the director derived improper personal benefit.
RIGHTS OF DISSENTING ORLANDI SHAREHOLDERS
OV SHAREHOLDERS UNDER CALIFORNIA LAW
Record holders of OV Common Stock will have the right to dissent with
respect to the Acquisition and, subject to certain conditions, receive a cash
payment equal to the fair market value of their shares under the California Law,
but, except in the case of shares which are restricted as to transfer, only if
demand for payment is made with respect to five percent or more of the
outstanding shares of OV Common Stock. In order to perfect his or her
dissenter's rights, a record holder of OV Common Stock must (i) vote his or her
dissenting shares against the Acquisition, (ii) make written demand upon OV not
later than the date of the OV Special Meeting, October 13, 1995, to purchase his
or her dissenting shares, (iii) submit the stock certificates representing his
or her dissenting shares to OV or its transfer agent, for notation that they
represent dissenting shares, within 30 days after the mailing by OV to
shareholders who voted against the Acquisition and who have made the written
demand as provided in clause (ii) above of a notice stating that the Acquisition
Agreement has been approved and adopted by the shareholders (the "Approval
Notice"), and (iv) file an action in court within six months after the date on
which notice stating that the Acquisition Agreement has been approved and
adopted by the shareholders is mailed to OV's shareholders who voted against the
Acquisition Agreement, but only if OV and the shareholder are unable to reach
agreement on the price to be paid for the dissenting shares, all as more
particularly described below. If demands for payment referred to in clause (ii)
above are not filed with respect to five percent or more of the outstanding
shares of OV Common Stock, no shareholder of OV, other than a holder of shares
which are restricted as to transfer, will have dissenters' rights, even if all
of the above conditions are otherwise satisfied.
Dissenters' rights cannot be validly exercised by persons other than
the record holders of OV Common Stock, regardless of the beneficial ownership
thereof. Persons who are beneficial owners of OV Common Stock but whose shares
are held of record by another person, such as a broker, a bank or a nominee,
should instruct the record holder to follow the procedure outlined below if they
wish to dissent from the Acquisition with respect to any or all of their shares.
Under Sections 1300 to 1312 of the California Law, any shareholder of
record of OV who votes any or all of his or her shares against the Acquisition
and who intends to enforce his or her dissenter's rights must, on or before the
date of the OV Special Meeting, October 13, 1995, submit to OV at its principal
executive offices, 560 S. Spring St., Los Angeles, CA 90013 a written demand
that OV purchase for cash some or all of his or her shares voted against the
Acquisition, which demand shall state
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the number and class of shares which he or she demands that OV purchase and the
amount which the shareholder claims to be the fair market value of those shares
as of May 18, 1995, the day before the first announcement of the terms of the
proposed Acquisition, excluding any appreciation or depreciation in consequence
of the proposed Acquisition.
Dissenters' rights may not be perfected with respect to any shares
unless such shares are voted against the Acquisition. A record shareholder may
vote part of the shares which he or she is entitled to vote in favor of or in
abstention with respect to the Acquisition without jeopardizing dissenters'
rights as to shares voted against the Acquisition, however, if a record
shareholder votes part of the shares he or she is entitled to vote in favor of
the Acquisition and fails to specify the number of shares he or she is voting in
favor of the Acquisition, it is conclusively presumed under the California Law
that his or her approving vote is with respect to all shares which he or she is
entitled to vote. A vote to abstain will not constitute a vote against the
Acquisition. Further, voting against the Acquisition will not of itself, absent
compliance with the provisions summarized herein, satisfy the requirements of
the California Law for exercise of dissenters' rights.
If any shareholder of OV has a right to require OV to purchase his or
her shares for cash under the provisions of the California Law, OV will mail to
each such shareholder an Approval Notice within ten (10) days after such
approval of the Acquisition, stating the price determined by OV to represent the
fair market value of the dissenting shares and briefly describing the procedure
to be followed if the shareholder desires to exercise his or her dissenters'
rights.
A dissenting shareholder must, within 30 days after OV mails to him or
her the Approval Notice, submit to OV at the address set forth above
certificates representing the dissenting shares which he or she demands that OV
purchase, to be stamped or endorsed with a statement that the shares are
dissenting shares or to be exchanged for certificates of appropriate
denomination so stamped or endorsed. The notice of shareholder approval of the
Acquisition will specify the date by which the submission of certificates for
endorsement must be made to OV and a submission made after such date will not be
effective for any purpose.
If OV and a dissenting shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, OV upon surrender of
the certificates evidencing such shares, will make payment of that amount (plus
interest thereon from the date of such agreement) within 30 days after such
agreement. Any agreement fixing the fair market value of any dissenting shares
between a dissenting shareholder and OV shall be filed with the Secretary of OV.
If OV denies that the shares are dissenting shares, or OV and the
dissenting shareholder fail to agree respecting the fair market value of the
shares, the dissenting shareholder may, within six months after the date on
which the Approval Notice was mailed to the shareholder, but not thereafter,
file a complaint in the Superior Court of the County of Los Angeles, State of
California, requesting that the Court determine whether the shares are
dissenting shares and/or the fair market value of such dissenting shares. The
costs of the action will be assessed or apportioned as the Court considers
equitable, but, if the fair market value is determined to exceed the price
offered to the shareholder by OV, OV will be required to pay the costs of the
action and may be required to pay counsel fees.
A dissenting shareholder may not withdraw his or her dissent or demand
for payment without the consent of OV by its Board of Directors. The rights of
dissenting shareholders to demand payment terminate if, among other things, the
Acquisition is abandoned or if the shares are transferred prior to submission
for endorsement as dissenting shares.
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<PAGE>
The foregoing summary does not purport to be a complete statement of the
provisions of Chapter 13 of the California General Corporation Law ("Chapter
13") and is qualified in its entirety by reference to the relevant provisions of
Chapter 13, the text of which is attached hereto as Exhibit B. Any shareholder
of OV who desires to exercise dissenters' appraisal rights should carefully
review and comply with the relevant provisions of Chapter 13. DISSENTERS'
RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF CHAPTER 13 ARE NOT FULLY
AND PRECISELY SATISFIED.
OVN SHAREHOLDERS UNDER NEVADA LAW
Except as provided in the following paragraph, an OVN stockholder is
entitled to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions: (a) consummation of a
plan of merger to which OVN is a party, if approval by the stockholders is
required for the merger by law or the articles of incorporation and the
stockholder is entitled to vote on the merger or if OVN is a subsidiary and is
merged with its parent; (b) consummation of a plan of exchange to which OVN is a
party as the corporation whose shares will be acquired, if the stockholder is
entitled to vote on the plan; and (c) any corporate action taken pursuant to a
vote of the stockholders to the extent that the articles of incorporation,
bylaws or a resolution of the board of directors provides that voting or
nonvoting stockholders are entitled to dissent and obtain payment for their
shares. A stockholder who is entitled to dissent and obtain payment under law
may not challenge the corporate action creating his entitlement unless the
action is unlawful or fraudulent with respect to the stockholder or OVN.
There is no right of dissent with respect to a plan of merger or
exchange in favor of holders of shares of any class or series which, at the
record date fixed to determine the stockholders entitled to receive notice of
and to vote at the meeting at which the plan of merger or exchange is to be
acted on, were either listed on a national securities exchange, designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc., or held by at least 2,000
stockholders of record, unless: (i) the articles of incorporation of OVN issuing
the shares provide otherwise; or (ii) the holders of the class or series are
required under the plan or merger or exchange to accept for such shares anything
except (1) cash, shares or shares and cash in lieu of fractional shares of the
surviving or acquiring corporation or any other corporation which, at the
effective date of the plan of merger or exchange, were either listed on a
national securities exchange, designated as a national market system security on
an interdealer quotation system by the National Association of Securities
Dealers, Inc., or held of record by at least 2,000 stockholders of record, or
(2) a combination of cash and shares of the kind described in clause (1).
A stockholder of record may assert dissenter's rights as to fewer than
all of the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies OVN in writing of the
name and address of each person on whose behalf he asserts dissenter's rights.
The rights of a partial dissenter are determined as if the shares as to which he
dissents and his other shares were registered in the names of different
stockholders. A beneficial stockholder may assert dissenter's rights as to
shares held on his behalf only if (i) he submits to OVN the written consent of
the stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights, and (ii) he does so with respect to all
shares of which he is the beneficial stockholder or over which he has power to
direct the vote.
If the proposed corporate action creating dissenter's rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under law, and be accompanied by a copy of the relevant sections of the Nevada
Revised Statutes.
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<PAGE>
If the corporate action creating dissenters' rights is taken without a vote of
the stockholders, OVN shall notify in writing all stockholders entitled to
assert dissenters' rights that the action was taken and send them the
dissenter's notice described in the Nevada Revised Statutes.
If the proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to
assert dissenter's rights (i) must deliver to OVN, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated, and (ii) must not vote his shares in favor of the
proposed action. A stockholder who does not satisfy the requirements of the
foregoing sentence is not entitled to payment for his shares under the Nevada
Revised Statutes.
If the proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, OVN shall deliver a written dissenter's
notice to all stockholders who satisfied the requirements to assert those
rights. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must (i) state where the demand for
payment must be sent and where and when certificates for certificated shares
must be deposited; (ii) inform the holders of uncertificated shares as to what
extent the transfer of the shares will be restricted after the demand for
payment is received; (iii) supply a form for demanding payment that includes the
date of the first announcement to the news media or to the stockholders of the
terms of the proposed corporate action and requires that the person asserting
dissenter's rights certify whether or not he acquired beneficial ownership of
the shares before that date; (iv) set a date by which OVN must receive the
demand for payment, which may not be less than 30 nor more than 60 days after
the date the notice is delivered; and (v) be accompanied by a copy of certain
sections of the Nevada Revised Statutes.
A stockholder to whom a dissenter's notice was sent must (i) demand
payment; (ii) certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and (iii) deposit his certificates in accordance with the terms
of the notice. The stockholder who demands payment and deposits his
certificates retains all other rights of a stockholder until those rights are
canceled or modified by the taking of the proposed corporate action. The
stockholder who does not demand payment or deposit his certificates where
required, each by the date set forth in the dissenter's notice, is not entitled
to payment for his shares under the Nevada Revised Statutes.
OVN may restrict the transfer of uncertificated shares from the date
the demand for their payment is received. The person for whom dissenter's
rights are asserted as to uncertificated rights retains all other rights of a
stockholder until those rights are canceled or modified by the taking of the
proposed corporate action.
Except as otherwise provided in the following paragraph, within 30
days after receipt of a demand for payment, OVN shall pay each dissenter who
complied with the Nevada Revised Statutes the amount OVN estimates to be the
fair value of his shares, plus accrued interest. The obligation of OVN under
this subsection may be enforced by certain district courts. The court shall
dispose of the complaint promptly. The payment must be accompanied by (i) OVN's
balance sheet as of the end of a fiscal year ending not more than 16 months
before the date of payment, a statement of income for that year, a statement of
changes in the stockholders' equity for that year, and the latest available
interim financial statements, if any; (ii) a statement of OVN's estimate of the
fair value of the shares; (iii) an explanation of how the interest was
calculated; (iv) a statement of the dissenter's rights to demand payment under
the second following paragraph; and (v) a copy of the relevant portions of the
Nevada Revised Statutes.
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<PAGE>
OVN may elect to withhold payment from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenter's
notice as the date of the first announcement to the news media or to the
stockholders of the terms of the proposed corporate action. To the extent OVN
elects to withhold payment, after taking the proposed corporate action, it shall
estimate the fair value of the shares, plus accrued interest, and shall offer to
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. OVN shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated, and
a statement of the dissenters' right to demand payment pursuant to the following
paragraph.
A dissenter may notify OVN in writing of his own estimate of the fair
value of his shares and the amount of interest due, and demand payment of his
estimate, less any payment pursuant to the second preceding paragraph, or reject
OVN's offer pursuant to the preceding paragraph and demand payment of the fair
value of his shares and interest due, if he believes that the amount paid
pursuant to the second preceding paragraph or offered pursuant to the preceding
paragraph is less than the fair value of his shares or that the interest due is
incorrectly calculated. A dissenter waives his right to demand payment pursuant
to this paragraph unless he notifies OVN of his demand in writing within 30 days
after OVN made or offered payment for his shares.
If a demand for payment remains unsettled, OVN shall commence a
proceeding within 60 days after receiving the demand and petition the court to
determine the fair value of the shares and accrued interest. If OVN does not
commence the proceeding within the 60-day period, it shall pay each dissenter
whose demand remains unsettled the amount demanded. OVN shall commence the
proceeding in the district court of the county where its registered office is
located. OVN shall make all dissenters, whether or not residents of Nevada,
whose demands remain unsettled, parties to the proceeding as in an action
against their shares. 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. The jurisdiction of the court in which the proceeding is
commenced is plenary and exclusive. The court may appoint one or more persons
as appraisers to receive evidence and recommend a decision on the question of
fair value. The appraisers have the powers described in the order appointing
them, or any amendment thereto. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings. Each dissenter who is
made a party to the proceeding is entitled to a judgment: (i) for the amount, if
any, by which the court finds the fair value of his shares, plus interest,
exceeds the amount paid by OVN; or (ii) for the fair value, plus accrued
interest, of his after-acquired shares for which OVN elected to withhold payment
pursuant to the Nevada Revised Statutes.
The court in a proceeding to determine fair value shall determine all
of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against OVN, except that the court may assess costs against all or some of
the dissenters, in amounts the court finds equitable, to the extent the court
finds the dissenters acted arbitrarily, vexatiously or not in good faith in
demanding payment.
The foregoing summary does not purport to be a complete statement of the
provisions of the Nevada Revised Statutes, Sections 78.471 - 78.502 (the
"Statutes") and is qualified in its entirety by reference to the relevant
provisions of the Statutes, the text of which is attached hereto as Exhibit C.
Any shareholder of OVN who desires to exercise dissenters' appraisal rights
should carefully review and comply with the relevant provisions of the Statutes.
DISSENTERS' RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF THE STATUTES
ARE NOT FULLY AND PRECISELY SATISFIED.
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<PAGE>
The foregoing discussion is provided by way of information only since
all of the shareholders of OV and OVN have agreed, pursuant to the
Acquisition Agreement, to vote in favor of the Acquisition.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain U.S. Federal income tax
consequences of the Acquisition under the Internal Revenue Code of 1986, as
amended (the "Code"), existing regulations thereunder (including final,
temporary or proposed regulations), and current administrative rulings and court
decisions, all of which are subject to change. Any such change, which may or
may not be retroactive, could alter the tax consequences described herein. THIS
SUMMARY SHOULD NOT BE REGARDED AS A SUBSTITUTE FOR AN INDIVIDUAL ANALYSIS OF THE
TAX CONSEQUENCES OF THE ACQUISITION TO AN OV OR OVN SHAREHOLDER. EACH OV OR OVN
SHAREHOLDER SHOULD CONSULT A TAX ADVISOR REGARDING THE PARTICULAR TAX
CONSEQUENCES OF THE ACQUISITION TO SUCH SHAREHOLDER'S OWN SITUATION.
None of Norwest, Newco 1, Newco 2, or Orlandi has requested a ruling from
the Internal Revenue Service (the "Service") in connection with the
Acquisition. Orlandi has requested and received from special tax counsel,
Carter, Ledyard & Milburn, an opinion to the effect that the Acquisition will
be treated for U.S. Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. Such opinion is subject to certain
assumptions and based on certain representations of Norwest, Norwest Financial
Services, Inc., OV, OVN, and the shareholders of OV and OVN. OV and OVN
shareholders should be aware that such opinion will not be binding upon the
Service nor will the Service be precluded from adopting a contrary position.
Assuming the Acquisition qualifies as a reorganization under Section 368(a)
of the Code, the following U.S. Federal income tax consequences will occur:
(a) No gain or loss will be recognized by Norwest, Newco 1, Newco 2 or
Orlandi in connection with the Acquisition;
(b) No gain or loss will be recognized by a holder of OV Common Stock or
OVN Common Stock who receives shares of Norwest Common Stock in
exchange therefor pursuant to the Acquisition;
(c) The aggregate tax basis of the shares of Norwest Common Stock to be
received by an OV or OVN shareholder in the Acquisition (including
any fractional share not actually received) will be equal to the
aggregate basis of the shares of OV Common Stock or OVN Common Stock
held by such shareholder (assuming that the amount received for
fractional shares constitutes a redemption of such shares and is not
separately bargained for consideration); and
(d) The holding period of the shares of Norwest Common Stock to be
received by an OV or OVN shareholder in the Acquisition will include
the holding period of the shares of OV Common Stock or OVN Common
Stock exchanged therefor by such shareholder, provided that such
shares of OV Common Stock or OVN Common Stock were held as capital
assets at the Effective Time.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS
FOR GENERAL INFORMATION ONLY. ACCORDINGLY, EACH HOLDER OF OV OR OVN SHARES
SHOULD CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF NORWEST COMMON
STOCK, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX
LAWS, AND OF CHANGES IN APPLICABLE TAX LAW.
RESALE OF NORWEST COMMON STOCK
The shares of Norwest Common Stock issuable to shareholders of OV and OVN
upon consummation of the Acquisition 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 OV,
OVN or Norwest as that term is defined in the rules under the Securities Act.
Norwest Common Stock received by those shareholders of Orlandi who are deemed to
be affiliates of Orlandi may be resold without registration as provided for by
Rule 145, or as otherwise permitted under the Securities Act. In the
Acquisition Agreement, Orlandi has agreed to use its best efforts to cause each
39
<PAGE>
executive officer, director, or shareholder of OV and OVN who may reasonably be
deemed to be an affiliate of OV or OVN 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
Acquisition except in compliance with the applicable provisions of the
Securities Act and the rules and regulations promulgated thereunder. This
Prospectus does not cover any resales of Norwest Common Stock received by
affiliates of OV or OVN.
STOCK EXCHANGE LISTING
The Acquisition Agreement provides for the filing by Norwest of listing
applications with the New York Stock Exchange (the "NYSE") and the Chicago Stock
Exchange (the "CHX") covering the shares of Norwest Common Stock issuable upon
consummation of the Acquisition. It is a condition to the consummation of the
Acquisition that such shares of Norwest Common Stock shall have been authorized
for listing on the NYSE and the CHX.
DIVIDEND REINVESTMENT AND OPTIONAL CASH PAYMENT PLAN
For those stockholders who elect to participate in Norwest's Dividend
Reinvestment and Optional Cash Payment Plan dividends on Norwest Common Stock
will be reinvested in shares of Norwest Common Stock at market price (as defined
in the Plan). 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 in the Plan) of such stock at the
time of purchase. It is anticipated that after the Effective Time, Norwest will
continue to offer its Dividend Reinvestment and Optional Cash Payment Plan and
that shareholders of OV and OVN who receive Norwest Common Stock in the
Acquisition will have the right to participate therein.
ACCOUNTING TREATMENT
It is anticipated that the Acquisition will be accounted for as a "pooling
of interests" transaction in accordance with generally accepted accounting
principles.
Under the pooling-of-interests method of accounting, the historical basis
of the assets and liabilities of Norwest and OV and OVN will be combined at the
Effective Time and carried forward at their previously recorded amounts, and the
stockholders' equity accounts of Orlandi will be combined with Norwest's on
Norwest's consolidated balance sheet. Income and other financial statements of
Norwest will not be restated retroactively because the Acquisition is not
material to the consolidated financial statements of Norwest.
In order for the Acquisition to qualify for pooling-of-interests accounting
treatment, among other things, substantially all (90% or more) of the
outstanding OV Common Stock and OVN Common Stock must be exchanged for Norwest
common stock. Orlandi has agreed not to take any action that would disqualify
the Acquisition from pooling-of-interests accounting treatment by Norwest.
The per common share data contained in this Prospectus has been prepared
using the pooling-of-interests method of accounting to account for the
Acquisition. See "SUMMARY--Comparative Per Common Share Data."
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<PAGE>
EXPENSES
Norwest and Orlandi will each pay their own expenses in connection with the
Acquisition and the transactions contemplated thereby, including fees and
expenses of their respective accountants and counsel.
INFORMATION ABOUT ORLANDI
DESCRIPTION OF THE BUSINESS
Orlandi is the largest independently owned money transmitter in the United
States. OV is licensed as a money transmitter by the States of California and
Illinois and operates in the State of Florida under local exemptions. OVN is
licensed as a money transmitter by the State of Texas. As a money transmitter,
Orlandi is empowered to receive funds from the public for the purpose of
transmitting such funds, or their equivalent, to beneficiaries in foreign
countries.
Orlandi receives money for transmission through three offices owned by
Orlandi and the facilities of 1,360 agents located in the states where Orlandi
operates. Orlandi completes the money transmission deliveries only within the
Republic of Mexico through OV's subsidiary Orlandi de Mexico, S.A. de C.V.,
which is a Mexican corporation permitted by the HACIENDA of Mexico to execute
payment orders originating in the United States to Mexican beneficiaries, both
through its own offices and the facilities of its Mexican paying agents which
are located throughout the Republic in nearly every State and major cities
within Mexico. Orlandi de Mexico has in excess of 80 exclusive paying agents
and offices in the Republic, and also utilizes over 5,000 branch offices of
Mexican financial institutions located throughout the Republic of Mexico.
OV was created from the merger of Telegrafo Nacionales and Orlandi Foreign
Exchange, Inc. Telegrafo Nacionales was formed in 1987 and received a permit
from the Federal Communications Commission to operate as an international
telegraph company, which allowed Telegrafo Nacionales to transmit telegraphs to
Mexico. Upon receiving the permit, Telegrafo Nacionales was also allowed to
enter the money transmitter business. Orlandi Foreign Exchange, Inc. was the
principal agent for Telegrafo Nacionales.
In 1990, after the State of California amended its money transmitter laws
to deny the exemption to telegraph companies, Telegrafo Nacionales applied for
and was granted a license to transmit money by the Banking Department of the
State of California.
Telegrafo Nacionales amended its articles of incorporation in the State of
California in 1991 to change its corporate name to "Orlandi Valuta." The
Banking Department of the State of California reissued a Money Transmitter
License under the new corporate name of "Orlandi Valuta." On June 1, 1992,
Orlandi Valuta merged with its principal agent Orlandi Foreign Exchange, Inc.
Orlandi Valuta Nacional was incorporated in Nevada on October 6, 1994.
Orlandi Valuta Nacional is licensed as a money transmitter by the State of Texas
and began operations in 1995.
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<PAGE>
OPERATIONS
A summary of Orlandi's gross profit for the six months ended June 30, 1995
and the years ended December 31, 1994 and 1993 is included below:
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31
June 30, ------------------------
(In thousands) 1995 1994 1993
-------------------- --------- ----------
<S> <C> <C> <C>
Sales of Wire Transfers and $ 74,925 91,769 67,003
Currencies
Cost of Sales 60,809 77,477 60,297
--------- --------- ---------
Gross Profit $ 14,116 14,322 6,706
--------- --------- ---------
</TABLE>
During 1994, Orlandi transmitted a total of 220,652 wires. The majority of
these wires originated in the State of California. In 1993, Orlandi transmitted
139,544 wires. During the first six months of 1995, Orlandi transmitted 242,167
wires. This represents a 144% increase compared with the first six months of
1994. The average size of the wire was $350 in 1994, $480 in 1993 and $325
during the first six months of 1995.
Orlandi's revenues derive primarily from fees earned on money transmission
services and arbitrage profits obtained during the currency conversion from U.S.
dollars to Mexican new pesos. Its primary expenses include the cost of paying
its agents' commissions, salaries, marketing expenses, transmission expenses,
bank fees, telephone expenses and taxes.
Orlandi has obtained a unique "niche" in its marketplace because of
(i) devotion of its corporate effort to serving only the Mexican community both
in the United States and Mexico, (ii) its agency network which receives the
highest commissions in the industry, and (iii) continent wide name recognition
due to intense advertising in the Hispanic media utilizing recognized Mexican
acting talent.
GEOGRAPHY
At June 30, 1995, Orlandi generated wires through three offices located in
the State of California and through 1,360 independent agents. The agents are
located in the following states:
<TABLE>
<CAPTION>
<S> <C>
Number of
State Agents
---------- ---------
California 825
Texas 325
Florida 65
Illinois 145
---------
1,360
---------
---------
</TABLE>
REGULATION
The business of money transmission is typically a state licensed activity.
The licensing laws are designed to provide assurance that the activity is
conducted honestly and fairly and efficiently and timely by competent,
experienced and financially responsible persons of good character and financial
condition and typically require the ability to pay refunds if money has not
been delivered within a specified period. Toward this end, there are certain
net worth and bonding/security deposit requirements that must be satisfied.
The amount required depends, in part, on the number and size of transactions
undertaken by the money transmitter.
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The scope of licensing laws extends, in some cases, to the licensee's
agents who accept money for transmission. These laws require that the agents,
in addition to the licensee, submit background information and obtain the
licensing authority's approval before engaging in money transmission activity.
State laws typically require legally enforceable agreements between the
customer and the money transmitter and between the money transmitter and its
agent that accepts the money from the customer for transmission. In some
states, trust relationships are created, either by a required provision in a
required agreement or by statute, between the money transmitter and its customer
and between the money transmitter and its agents.
At least one state requires compliance with its money laundering laws.
Some states require that money accepted for transmission be transmitted for
payment to the intended recipient within a specified period of time, and that
any exchange rate be disclosed.
Compliance with the various state laws is typically monitored by the
licensing authorities through record keeping and periodic reporting requirements
and on-site examinations. Licenses are revocable for cause. Orlandi has never
had any of its licenses revoked.
Federal regulation consists of the money laundering laws and regulations.
These laws and regulations require the maintenance of procedures for monitoring
for and reporting certain transactions.
Orlandi currently transfers funds only from the United States to The
Republic of Mexico, which does not regulate such activity except for a
transferable registration of the Mexico corporation whose function is the
payment of the transmitted money to the recipients.
BUSINESS METHODS
Orlandi has agreements with agents which require the agents to transmit
funds to Mexico solely on behalf of Orlandi and not to compete with Orlandi.
Orlandi provides its agents the necessary equipment, including telephone
hookups, fax machines and other incidental equipment.
Wires are generated primarily by Orlandi's independent agents.
Generally, when a customer decides to make a wire, the customer goes into the
agent's office and picks up a telephone which rings directly to the order
room in the home office of Orlandi. Orlandi collects information from the
customer including name, the amount to be transferred in U.S. dollars, and
the individual and location where the wire is to be sent. The system
generates a receipt showing the amount of U.S. dollars to be transferred and
the Mexican new peso equivalent as well as the cost of the service. The
transfer receipt is printed at the location of the agent at which time a copy
is given to the customer. The agent collects the money and deposits it into
a bank account.
The funds are available at Orlandi's disbursing agent's offices or at one
of the 5,000 offices located at banks in Mexico within a few minutes. The
disbursing agent or bank office verifies the identity of the recipient and pays
the recipient.
SOURCES OF FUNDS
Orlandi has historically funded its business primarily from cash generated
by the operations. In addition, Orlandi has borrowed amounts from time to time
from stockholders. At June 30, 1995, amounts payable to stockholders totaled
$1,483,559 compared with $555,546 due at December 31, 1994.
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See note 7 to the combined consolidated financial statements of Orlandi for the
years ended December 31, 1994 and 1993 for a description of the amounts payable
to the stockholders.
COMPETITION
The money transmission business consists of two significant companies:
First Data Corporation "Moneygram" (formerly American Express) and Western Union
Financial Services, Inc. In June 1995, First Data Corporation and First
Financial Management Corporation, the parent of Western Union Financial
Services, Inc. announced an agreement to merge. In addition, there are
numerous smaller licensed and unlicensed money transmitters which tend to
target niche markets.
Orlandi is significantly smaller than either First Data Corporation or
Western Union Financial Services, Inc.
EMPLOYEE RELATIONS
As of June 30, 1995, Orlandi employed approximately 250 persons. Orlandi
believes its employee relations are excellent.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
During 1994, 1993, and the first six months of 1995, the common stock of OV
was owned as follows: 130,000 shares by Paolo Orlandi and 65,000 shares by
Cynthia Genera Orlandi. From its inception on October 6, 1994, the common stock
of OVN has been owned as follows: 1,666.7 shares by Paolo Orlandi and 833.3
shares by Cynthia Genera Orlandi. There is no established public trading market
for the shares of either OV or OVN.
The aggregate amount of distributions paid by OV on its common stock each
quarter during 1994, 1993, and the first six months of 1995 were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, ------------------------
(In thousands) 1995 1994 1993
----------------- ---------- -----------
<S> <C> <C> <C>
First quarter $ 83,879 29,598 -
Second quarter 6,653,396 90,351 274,687
Third quarter 87,910 174,597
Fourth quarter 1,337,952 589,213
---------- ---------- ----------
Total $6,737,275 1,545,811 1,038,497
</TABLE>
Such distributions represent Subchapter "S" distributions made to
shareholders for related individual taxes and general purposes.
At December 31, 1994, OV had a committment to distribute to the
stockholders an amount sufficient to cover the stockholders' income tax
liabilities arising from undistributed taxable income for the year ended
December 31, 1994. Distributions were made in April 1995.
Orlandi Valuta Nacional has never paid distributions to its stockholders.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Orlandi Valuta Nacional did not begin operations until 1995. Therefore,
information prior to 1995 consists of the results of Orlandi Valuta.
Information related to the results of operations after December 31, 1994
includes the results of Orlandi Valuta and Orlandi Valuta Nacional ("Orlandi").
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<PAGE>
Orlandi's gross profit increased 114% in 1994 and 37% in 1993
($14.3 million in 1994 compared with $6.7 million in 1993 and $4.9 million in
1992). The increases were the result of an increase in the number of wires
combined with changes in the gross profit for each wire. In 1994, Orlandi
transmitted a total of 220,652 wires, a 58% increase compared with 139,544
wires transmitted during 1993. The number of wires increased 75% in 1993
compared with 1992. The gross profit per wire increased to $64.91 in 1994
compared with $48.06 in 1993 and $61.48 in 1992.
The increase in the number of wires transmitted was primarily due to an
increase in the number of independent agents. At the beginning of 1992,
wires were originated from 9 offices owned by Orlandi. At the end of 1993,
the number of independent agents was 190 while the number of offices owned by
Orlandi had declined to 8. By the end of 1994, the number of independent
agents had increased to 405 while the number of offices owned by Orlandi had
declined to 5.
Operating expenses increased 51% in 1994 and 29% in 1993 from the prior
annual periods ($8.9 million in 1994 compared with $5.9 million in 1993 and
$4.6 million in 1992). Employee compensation and related taxes and agency
fees and commissions represent the largest component of total operating
expenses. Employee compensation and related taxes increased 70% in 1994 and
19% in 1993 ($2.9 million in 1994 compared with $1.7 million in 1993 and $1.4
million in 1992). The increases were due to an increase in the number of
employees resulting from the increase in the volume of wires. At December
31, 1994, the total number of employees was 220 compared with 120 at December
31, 1993 and 89 at December 31, 1992.
Agency fees and commissions increased 64% in 1994 and 69% in 1993 from
the prior annual periods ($2.6 million in 1994 compared with $1.6 million in
1993 and $1.0 million in 1992). Agency fees and commissions are related to
the volume of wires transmitted. During 1994, the number of wires transmitted
increased 58% compared with 1993. The number of wires in 1993 increased 75%
compared with 1992.
All other operating expenses increased 31% in 1994 and 17% in 1993 ($3.4
million in 1994 compared with $2.6 million in 1993 and $2.2 million in 1992).
The increases related to the increase in the volume of wires. However, due
to efficiencies and economies of scale, all other expenses increased at a
slower rate than the increases in the number of wires.
At December 31, 1994, stockholders' equity in Orlandi totaled $5.6
million compared with $1.5 million at December 31, 1993. The increase was
primarily due to OV's net income. In addition, $0.5 million in common stock
was issued during 1994 in the formation of Orlandi Valuta Nacional. The
expansion of the business has been financed primarily by net cash provided by
operating activities. At December 31, 1994, the total notes, contracts, and
amounts payable to stockholder were $0.6 million; $0.5 million of which was
long-term debt. This compares with total notes, contracts, and amounts
payable to stockholder of $0.2 million at December 31, 1993; none of which
was long-term.
The gross profit of Orlandi increased 138% for the first six months of 1995
as compared to 1994 ($14.1 million in the first six months of 1995 compared with
$5.9 million in the first six months of 1994). This increase was the result of
a 144% increase in the number of wires transmitted. During the first six months
of 1995, Orlandi transmitted 242,167 wires compared with 99,218 during the first
six months of 1994. The increase in the number of wires transmitted was
primarily due to an increase in the number of independent agents. At June 30,
1994, there were 800 independent agents. By June 30, 1995, the number of
independent agents had increased to 1,360.
45
<PAGE>
Operating expenses increased 120% for the first six months of 1995 as
compared to 1994 ($8.3 million in the first six months of 1995 compared with
$3.8 million in 1994). Employee compensation and related taxes and agency fees
and commissions represent the largest component of total operating expenses.
Employee compensation and related taxes increased 106% in the first six months
of 1995 as compared to 1994 ($2.7 million in the first six months of 1995
compared with $1.3 million in the first six months of 1994). The increase
relates primarily to an increase in the number of employees from 160 at June 30,
1994 to 250 at June 30, 1995.
Agency fees and expenses increased 97% in the first six months of 1995 as
compared to 1994 ($2.2 million in the first six months of 1995 compared with
$1.1 million in the first six months of 1994). The increase was the result of
the increase in the number of wires transmitted in the first six months of 1995
compared with the same period in 1994.
At June 30, 1995, stockholders' equity of Orlandi totaled $4.6 million.
During the first six months of 1995, distributions to shareholders totaled $6.7
million. Total notes, contracts, and amounts payable to stockholder were $1.5
million at June 30, 1995 compared with $0.6 million at December 31, 1994.
Orlandi anticipates funding the expansion of the business primarily from net
cash provided by operations.
46
<PAGE>
SELECTED FINANCIAL DATA
ORLANDI VALUTA, ORLANDI VALUTA NACIONAL
AND ORLANDI DE MEXICO, S.A. DE C.V.
SELECTED FINANCIAL DATA
GROSS PROFIT, NET EARNINGS (LOSS), ASSETS AND LONG-TERM DEBT
(IN THOUSANDS)
(UNAUDITED, EXCEPT WITH RESPECT TO
YEAR ENDED DECEMBER 31, 1994)
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
------------------ --------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross profit $14,116 5,939 14,322 6,706 4,902 4,806 8,793
Net earnings(loss) 5,901 2,160 5,385 858 352 (94) 2,252
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
------------------ --------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $7,586 4,431 7,224 2,467 2,071 4,261 4,1721
Long-term 434 -- 473 -- -- -- --
</TABLE>
47
<PAGE>
Selected quarterly financial data for the first two quarters
of 1995 and during the years ended December 31, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
Earnings
Per Common
Sales Gross Profit Net Income Share
----- ------------- ---------- ----------
(In thousands except per share data)
Quarter Ended
-------------
<S> <C> <C> <C> <C>
March 31, 1993 $11,761 1,313 86 0.44
June 30, 1993 18,645 1,763 317 1.62
September 30, 1993 18,550 1,810 351 1.80
December 31, 1993 18,047 1,822 105 0.54
March 31, 1994 21,136 2,321 629 3.23
June 30, 1994 24,105 3,619 1,531 7.85
September 30, 1994 23,592 3,759 1,486 7.62
December 31, 1994 22,936 4,623 1,739 8.82
March 31, 1995 24,868 5,668 2,146 10.87
June 30, 1995 50,057 8,448 3,755 19.01
</TABLE>
Orlandi, during these periods, maintained a simple capital structure (only
common stock and no potentially dilutive securities).
48
<PAGE>
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
As a bank holding company, Norwest is subject to supervision and
examination by the Federal Reserve Board. Norwest's banking subsidiaries are
subject to supervision and examination by applicable federal and state banking
agencies. The deposits of Norwest's banking subsidiaries are insured by the
Bank Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC"), and
therefore such banking subsidiaries are subject to regulation by 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.
DIVIDEND RESTRICTIONS
Various federal and state statutes and regulations 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 regulation, 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 June
30, 1995, aggregate dividends of at least $231.9 million without obtaining prior
regulatory approval and without reducing the capital of the banks below their
respective minimum regulatory levels. Norwest also has several state bank
subsidiaries that are subject to state regulations limiting dividends; however,
the amount of dividends payable by Norwest's state bank subsidiaries, with or
without state regulatory approval, would represent an immaterial contribution to
Norwest's revenues.
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
FDIC-insured banks and bank holding companies should generally pay dividends
only out of current operating earnings.
HOLDING COMPANY STRUCTURE
Norwest is a legal entity separate and distinct from its banking and
nonbanking subsidiaries. Accordingly, the right of Norwest, and thus the rights
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.
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
49
<PAGE>
capital and surplus. 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.- Section- 55) permits the OCC to order the pro
rata assessment of shareholders 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 shareholders 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 banks chartered by such states. Norwest,
as the sole shareholder of certain of its subsidiary banks, is subject to
such provisions.
CAPITAL REQUIREMENTS
Under the Federal Reserve Board's risk-based capital guidelines for bank
holding companies, the minimum ratio of total capital to risk-adjusted assets
(including certain offbalance sheet items, such as stand-by letters of
credit) is 8%. At least half of the total capital is to be comprised of
common stock, minority interests and noncumulative perpetual preferred stock
("Tier I 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's final minimum "leverage ratio" (the ratio of Tier I capital to
quarterly average total assets) guidelines for bank holding companies provide
for a minimum leverage ratio of 3% for bank holding companies that meet
certain specified criteria, including that they have the highest regulatory
rating. All other bank holding companies are 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
Tier I leverage ratio" in evaluating proposals for expansion or new
activities. The tangible Tier I leverage ratio is the ratio of a banking
organization's Tier I 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
50
<PAGE>
foregoing. At June 30, 1995, Norwest's Tier I and total capital (the sum of
Tier I and Tier 2 capital) to risk-adjusted assets ratios were 8.04% and 10.18%,
respectively, and Norwest's leverage ratio was 5.85%. Neither Norwest nor any
subsidiary bank has been advised by the appropriate federal regulatory agency of
any specific leverage ratio applicable to it.
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 revised 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 regulators to take "prompt corrective
action" in respect of FDIC-insured depository institutions that do not meet
minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." Under applicable
regulations, an FDIC-insured depository institution is defined to be well
capitalized if it maintains a leverage ratio of at least 5%, a risk adjusted
Tier I capital ratio of at least 6% and a risk-adjusted total capital ratio of
at least 10%, and is not subject to a directive, order or written agreement to
meet and maintain specific capital levels. An insured depository institution is
defined to be adequately capitalized if its meets all of its minimum capital
requirements as described above. An insured depository institution will be
considered undercapitalized if it fails to meet any minimum required measure,
significantly undercapitalized if it has a risk-adjusted total capital ratio of
less than 6%, risk-adjusted Tier I capital ratio of less than 3% or a leverage
ratio of less than 3%, and critically undercapitalized if it fails to maintain a
level of tangible equity equal to at least 2% of total assets. An insured
depository institution may be deemed to be in a capitalization category that is
lower than is indicated by its actual capital position if it receives an
unsatisfactory examination rating.
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 a
wide range of limitations on operations and activities, including 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 were 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, as amended by the Riegle Community Development and Regulatory
Improvement Act of 1994 enacted on August 22, 1994, directs that each federal
banking agency prescribe standards, by regulation or guideline, for depository
institutions relating to internal controls, information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth,
51
<PAGE>
compensation, asset quality, earnings, stock valuation and such other
operational and managerial 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. On July 10, 1995, the federal banking agencies
published the final rule implementing three of the safety and soundness
standards required by FDICIA, including operational and managerial standards,
asset quality and earnings standards and compensation standards. The impact of
such regulations or guidelines on Norwest has not yet been fully ascertained,
but it is not believed to be material.
FDICIA also contains a variety of other provisions that may 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 (that is, deposits obtained through a person engaged in the
business of placing deposits with insured depository institutions or with
interest rates significantly higher than 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 "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" and that has not received a
waiver from the FDIC 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." At June 30, 1995, all of
Norwest's banking subsidiaries were well capitalized and therefore were not
subject to these restrictions.
FDIC INSURANCE
Effective January 1, 1993, the deposit insurance assessment rate for the
Bank Insurance Fund ("BIF") 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. Prior to September 30, 1995,
based on its capital and supervisory subgroups, each BIF member institution was
assigned an annual FDIC assessment rate ranging from 23 cents per $100 of
domestic deposits (for well capitalized Subgroup A institutions) to 31 cents
(for undercapitalized Subgroup C institutions). Adequately capitalized
institutions were assigned assessment rates ranging from 26 cents to 30 cents.
The FDIC has issued regulations that effective September 30, 1995 assign an
annual FDIC assessment rate for BIF member institutions ranging from 4 cents per
$100 of domestic deposits (for well capitalized Subgroup A institutions) to 31
cents (for undercapitalized Subgroup C institutions). Norwest incurred $79.2
million of FDIC insurance expense in 1994.
52
<PAGE>
EXPERTS
The consolidated financial statements of Norwest and subsidiaries as of
December 31, 1994 and 1993, and for each of the years in the three-year
period ended December 31, 1994, incorporated by reference herein, have been
incorporated herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The combined consolidated financial statements of Orlandi as of and for
the year ended December 31, 1994 included in this Prospectus have been
audited by Grobstein, Horwath & Company, independent auditors, as stated in
their report appearing herein, and have been so included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
LEGAL OPINIONS
A legal opinion to the effect that the shares of Norwest Common Stock
offered hereby, when issued in accordance with the Acquisition 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.
At March 31, 1995, Mr. Stroup was the beneficial owner of approximately
108,607 shares and held options to acquire 179,931 additional shares of
Norwest Common Stock.
Carter, Ledyard & Milburn, special tax counsel to Orlandi, has issued
a legal opinion to the effect that for U.S. Federal income tax purposes the
Acquisition will be treated as a reorganization. This opinion is based on
certain assumptions and representations of OV, OVN, the shareholders of
OV, and OVN, Norwest and Norwest Financial Services, Inc. At June 30, 1995,
none of the partners of Carter, Ledyard & Milburn, owned any shares of OV or
OVN.
MANAGEMENT OF NORWEST 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, 1994, which are incorporated in this Prospectus
by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
Shareholders of OV or OVN desiring copies of such documents may contact
Norwest at its address or phone number indicated under "AVAILABLE
INFORMATION" above.
53
<PAGE>
INDEX TO ORLANDI FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ANNUAL FINANCIAL STATEMENTS
Combined Consolidated Balance Sheets at December 31, 1994 and 1993...........F-2
Combined Consolidated Statements of Income for the years ended
December 31, 1994, 1993 and 1992...........................................F-3
Combined Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1994, 1993 and 1992.....................................F-4
Combined Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992..........................................F-7
Notes to Combined Consolidated Financial Statements..........................F-8
Report of Grobstein, Horwath & Company.......................................F-12
UNAUDITED INTERIM FINANCIAL STATEMENTS
Combined Consolidated Balance Sheets at June 30, 1995 and
June 30, 1994..............................................................F-13
Combined Consolidated Statements of Income for the quarters and six
months ended June 30, 1995 and 1994........................................F-14
Combined Consolidated Statements of Stockholders' Equity for the six
months ended June 30, 1995 and 1994........................................F-15
Combined Consolidated Statements of Cash Flows for the six months ended
June 30, 1995 and 1994.....................................................F-17
Notes to Combined Consolidated Financial Statements..........................F-18
</TABLE>
F-1
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
<TABLE>
<CAPTION>
Combined Consolidated Balance Sheets
December 31,
-------------------------------------
1994 1993
------ ------
(Unaudited)
<S> <C> <C>
Assets
------
Current assets
Cash $4,745,529 1,411,851
Accounts receivable 467,046 135,993
Prepaid expenses and other current assets 270,781 164,554
---------- ----------
Total current assets 5,483,356 1,712,398
---------- ----------
Property and equipment, net 468,073 310,730
---------- ----------
Other assets
Deposits 1,165,924 443,480
Other assets 107,096 --
---------- ----------
Total other assets 1,273,020 443,480
---------- ----------
Total assets $7,224,449 2,466,608
---------- ----------
---------- ----------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities
Accounts payable $ 604,519 723,247
Accrued expenses 388,953 66,206
Payable to stockholder 62,069 166,985
Income taxes payable 80,103 5,974
Current portion of note payable to stockholder 49,348 --
Current portion of contract payable 14,760 --
---------- ---------
Total current liabilities 1,199,752 962,412
---------- ---------
Long-term debt
Note payable to stockholder 444,129 --
Contract payable 29,277 --
---------- ---------
Total long-term debt 473,406 --
---------- ---------
Lease commitments and contingencies
Stockholders' equity
Common stock 550,508 50,508
Retained earnings 5,250,982 1,412,223
Cumulative foreign currency exchange translation adjustment (250,199) 41,465
---------- ----------
Total stockholders' equity 5,551,291 1,504,196
---------- ----------
Total liabilities and stockholders' equity $7,224,449 2,466,608
---------- ----------
---------- ----------
</TABLE>
See notes to combined consolidated financial statements.
F-2
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
<TABLE>
<CAPTION>
Combined Consolidated Statements of Income
Years Ended December 31,
--------------------------------------------------
1994 1993 1992
---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Sales of wire transfers and currencies $91,768,557 67,003,241 44,996,514
Cost of sales 77,446,915 60,296,638 40,095,346
----------- ----------- -----------
Gross profit 14,321,642 6,706,603 4,901,168
----------- ----------- ----------
Operating expenses
Employee compensation and related taxes 2,913,790 1,718,156 1,441,269
Agency fees and commissions
Domestic 1,521,284 653,325 278,928
Mexico (including administrative costs) 1,123,080 955,059 674,467
Other expenses 780,930 198,914 158,395
Rents 556,309 558,409 551,785
Telephone 523,370 365,705 218,441
Professional services 320,670 269,799 211,514
Office supplies 245,078 151,541 157,624
Travel and employee expenses 231,581 151,797 140,934
Security 229,928 269,451 235,921
Insurance 184,620 169,978 98,746
Advertising and promotion 170,327 302,327 248,268
Depreciation 134,375 145,592 181,406
----------- ----------- -----------
Total operating expenses 8,935,342 5,910,053 4,597,698
----------- ----------- -----------
Income from operations 5,386,300 796,550 303,470
Other income 78,373 69,827 54,257
----------- ----------- -----------
Income before provision for income taxes 5,464,673 866,377 357,727
Provision for income taxes 80,103 8,478 5,974
----------- ----------- -----------
Net income $ 5,384,570 857,899 351,753
----------- ----------- -----------
----------- ----------- -----------
Earnings per common share $27.54 4.40 1.80
Weighted average number of shares of
Orlandi Valuta (parent company) and
Orlandi Valuta Nacional 195,521 195,000 195,000
</TABLE>
See notes to combined consolidated financial statements.
F-3
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
<TABLE>
<CAPTION>
Consolidated Statement of Stockholders' Equity
Year Ended December 31, 1992 (Unaudited)
Shares Outstanding
-----------------------------
Cumulative Foreign Total
Orlandi de Mexico Currency Exchange Stockholders'
Orlandi Valuta S.A. de C.V. Common Stock Retained Earnings Adjustments Equity
-------------- ------------ ------------ ----------------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1992 195,000 457,000 $50,508 1,791,068 1,616 1,843,192
Distributions to
stockholders (550,000) (550,000)
Net income for the year
ended December 31, 1992 351,753 351,753
Foreign currency exchange
translation adjustment for
the year ended December 31, 1992 (2,434) (2,434)
-------- -------- -------- -------- -------- --------
Balance at December 31,
1992 195,000 457,000 $50,508 1,592,821 (818) 1,642,511
------- ------- ------- ---------- ----- ----------
------- ------- ------- ---------- ----- ----------
Authorized shares: Orlandi Valuta 100,000,000, no par value
Orlandi de Mexico, S.A. de C.V. 40,000 fixed capital shares and 417,000 variable capital shares
issued, one peso per share par value
</TABLE>
See notes to combined consolidated financial statements.
F-4
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
<TABLE>
<CAPTION>
Combined Consolidated Statement of Stockholders' Equity
Year Ended December 31, 1993 (Unaudited)
Shares Outstanding
-----------------------------
Cumulative Foreign Total
Orlandi de Mexico Currency Exchange Stockholders'
Orlandi Valuta S.A. de C.V. Common Stock Retained Earnings Adjustments Equity
-------------- ------------ ------------ ----------------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993 195,000 457,000 $50,508 1,592,821 (818) 1,642,511
Distributions
to stockholders (1,038,497) (1,038,497)
Net income for the year ended
December 31, 1993 857,899 857,899
Foreign currency exchange
translation adjustment for
the year ended December
31, 1993 42,283 42,283
------- ------- ------- ---------- ------- ----------
Balance at December 31,
1993 195,000 457,000 $50,508 1,412,223 41,465 1,504,196
------- ------- ------- ---------- ------- ----------
------- ------- ------- ---------- ------- ----------
Authorized shares: Orlandi Valuta 100,000,000, no par value
Orlandi de Mexico, S.A. de C.V. 40,000 fixed capital shares and 417,000 variable capital shares
issued, one peso per share par value
</TABLE>
See notes to combined consolidated financial statements.
F-5
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
Combined Consolidated Statement of Stockholders' Equity
Year ended December 31, 1994
<TABLE>
<CAPTION>
Shares Outstanding
--------------------------------------
Cumulative Foreign
Orlandi Orlandi de Mexico Orlandi Valuta Currency Exchange Total Stockholders'
Valuta S.A. de C.V. Nacional Common Stock Retained Earnings Adjustments Equity
------ ------------ -------- ------------ ----------------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1, 1994 195,000 457,000 $50,508 1,412,223 41,465 1,504,196
Issuance of common
stock - Orlandi
Valuta Nacional 2,500 500,000 500,000
Distributions to
stockholders (1,545,811) (1,545,811)
Net income for
the year ended
December 31,
1994 5,384,570 5,384,570
Foreign currency
exchange
translation
adjustment for
the year ended
December 31, 1994 (291,664) (291,664)
-------- -------- -------- -------- -------- ---------- ----------
Balance at
December 31, 1994 195,000 457,000 2,500 $550,508 5,250,982 (250,199) 5,551,291
------- ------- ----- -------- ---------- --------- ----------
<FN> ------- ------- ----- -------- ---------- --------- ----------
Authorized shares: Orlandi Valuta 100,000,000, no par value
Orlandi de Mexico, S.A. de C.V. 40,000 fixed capital shares and 417,000 variable capital shares
issued, one peso per share par value
Orlandi Valuta Nacional 2,500, no par value
</TABLE>
See notes to combined consolidtaed financial statements.
F-6
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
<TABLE>
<CAPTION>
Combined Consolidated Statements of Cash Flow
Years Ended December 31,
----------------------------------------------
1994 1993 1992
---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash flows from operating activities
Net income $5,384,570 857,899 351,753
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 134,375 145,592 181,406
Net changes in
operating assets and liabilities:
Accounts receivable (341,692) (121,491) 428,033
Prepaid expenses and other current assets (17,965) (65,399) 4,866
Accounts payable (122,702) 337,166 (56,826)
Accrued expenses 257,747 29,573 (29,129)
Payable to stockholder (119,540) 473,999 (214,805)
Income taxes payable 80,103 -- 5,974
----------- ----------- -----------
Net cash provided by operating activities 5,254,896 1,657,339 671,272
----------- ----------- -----------
Cash flows from investing activities
Expenditures for property and equipment (449,683) (182,600)
Proceeds from disposition of property and equipment 119,573 40,330
(Increase) decrease in deposits (722,444) 344,087 (337,456)
(Increase) decrease in other assets (68,703) -- --
----------- ----------- -----------
Net cash provided by investing activities (1,121,257) 161,487 (297,126)
----------- ----------- -----------
Cash flows from financing activities
Contract payable, net 44,037 -- --
Note payable to stockholders 493,477 -- --
Issuance of common stock 500,000 -- --
Distributions to stockholders (1,545,811) (1,038,497) (550,000)
Foreign currency exchange translation adjustment (291,664) 42,283 (2,434)
----------- ----------- -----------
Net cashed used in financing activities (799,961) (996,214) (552,434)
----------- ----------- -----------
Increase (decrease) in cash 3,333,678 822,612 (178,288)
Cash at beginning of year 1,411,851 589,239 767,527
----------- ----------- -----------
Cash at end of year $4,745,529 1,411,851 589,239
----------- ----------- -----------
</TABLE>
See notes to combined consolidated financial statements.
F-7
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
Notes to Combined Consolidated Financial Statements
(Information at December 31, 1993 and for the years
ended December 31, 1993 and 1992 is unaudited)
NOTE 1 - Business Activity and Summary of Significant Accounting Policies
This summary of significant accounting policies is presented to assist the
reader in understanding and evaluating the combined consolidated financial
statements. These policies are in conformity with generally accepted
accounting principles.
PRINCIPLES OF COMBINATION AND CONSOLIDATION
The combined consolidated financial statements include the accounts of
Orlandi Valuta, a California corporation, and its 75% owned foreign
subsidiary, Orlandi de Mexico, S.A. de C.V. (Orlandi Valuta and Orlandi de
Mexico), and Orlandi Valuta Nacional (Nacional), which have been combined
based upon common ownership (collectively referred to as the Companies).
All significant intercompany accounts and transactions have been eliminated
in preparing the combined consolidated financial statements.
The remaining 25% ownership interest in Orlandi de Mexico is held by the
Companies' stockholders and family members. Accordingly, this ownership
interest has been presented as a component of combined consolidated
stockholders' equity instead of as a minority interest.
In 1991, Orlandi Valuta amended its articles of incorporation changing its
name from Telegrafo Nacionales to Orlandi Valuta. On June 1, 1992, Orlandi
Valuta merged with its principal agent Orlandi Foreign Exchange, Inc. The
financial statements presented include the combined results of the merged
organizations.
BUSINESS ACTIVITY
The Companies' primary business is the transmission of funds to Mexico,
through branch operations and agents in California, Texas, Florida, and
Mexico. The Companies anticipate expanding operations to other states in
1995.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is provided by
straight-line and accelerated methods over the estimated useful lives of
the related assets, which range from three to seven years. Leasehold
improvements are amortized over the length of the lease, if shorter than
the asset's useful life.
INCOME Taxes
The Companies file separate income tax returns. No provision for income
taxes has been provided for Orlandi Valuta or Nacional as their
stockholders have elected to be taxed as S-Corporations. Accordingly, all
taxable earnings of these Companies are taxed to the individual
stockholders and Orlandi Valuta incurs only a state franchise tax
liability. Orlandi de Mexico pays an annual tax based on net assets which
has been classified with other operating expenses for financial reporting
purposes. The provision for income taxes is primarily current.
FOREIGN CURRENCY TRANSLATION
Orlandi de Mexico's assets and liabilities have been translated at the rate
of exchange in effect as of the balance sheet date. Revenues and expenses
have been translated at the average of the rates of exchange in effect
during the period covered by the income statement. The resulting
cumulative foreign currency exchange translation adjustments have been
reflected as a component of stockholders' equity.
EARNINGS PER SHARE
Earnings per share are computed using the weighted average number of
common shares outstanding during the periods. There are no potentially
dilutive common stock equivalents.
F-8
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
Notes to Combined Consolidated Financial Statements (continued)
(Information at December 31, 1993 and for the years
ended December 31, 1993 and 1992 is unaudited)
NOTE 2 - Financial Instruments with Off-Balance Sheet Risk
The Companies maintain their cash in bank accounts which, at times, may
exceed federally insured limits. The Companies have not experienced any
losses in such accounts. The Companies believe they are not exposed to any
significant risk on their cash balances.
NOTE 3 - Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following:
<TABLE>
<CAPTION>
December 31,
------------
1994 1993
---- ----
<S> <C> <C>
Prepaid expenses $241,327 159,814
Other receivables 29,454 4,740
-------- ---------
$270,781 164,554
-------- --------
-------- --------
</TABLE>
NOTE 4 - Property and Equipment
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
------------
1994 1993
---- ----
<S> <C> <C>
Office equipment $ 756,847 545,939
Furniture and fixtures 171,814 144,894
Automobiles 144,282 90,392
Leasehold improvements 106,726 106,726
---------- --------
1,179,669 887,951
Less Accumulated
Depreciation (711,596) (577,221)
---------- --------
$ 468,073 310,730
---------- --------
---------- --------
</TABLE>
NOTE 5 - Deposits
Deposits include U.S. Treasury bills and letters of credit pledged as
security for use in maintaining money transmitter licenses in California,
Texas and Illinois.
F-9
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
Notes to Combined Consolidated Financial Statements (continued)
(Information at December 31, 1993 and for the years
ended December 31, 1993 and 1992 is unaudited)
NOTE 6 - Contract Payable
The contract payable is secured by an automobile, bears interest at 9.5%
per annum, and is payable in monthly installments of principal and interest
of $1,230 over three years.
Maturities of the contract payable are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1995 $14,760
1996 14,760
1997 14,517
--------
$44,037
--------
--------
</TABLE>
NOTE 7 - Obligations Payable to Stockholders
The payable to stockholder included in current liabilities is non-interest
bearing and due on demand.
The note payable to stockholders is unsecured, bears interest at prime plus
2% per annum (10.5% at December 31, 1994), with principal and interest
payable monthly through December 31, 2004.
Maturities of the note payable to stockholders are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1995 $49,348
1996 49,348
1997 49,348
1998 49,348
1999 49,348
Thereafter 246,737
--------
$493,477
--------
--------
</TABLE>
NOTE 8 - Lease Commitments and Contingency
LEASE COMMITMENTS
The Companies lease various office facilities under operating leases that
require minimum monthly payments of approximately $50,000. Orlandi Valuta
also rents two branches on a month-to-month basis, and has subleased two
former branches.
Orlandi Valuta also leases two automobiles that require minimum monthly
payments of approximately $4,900 over two year lease terms.
F-10
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
Notes to Combined Consolidated Financial Statements (continued)
(Information at December 31, 1993 and for the years
ended December 31, 1993 and 1992 is unaudited)
LEASE COMMITMENTS (CONTINUED)
The following is a schedule of future minimum lease payments required under
operating leases that have initial or remaining noncancelable lease terms
in excess of one year as of December 31, 1994:
<TABLE>
<CAPTION>
Operating Sublease Net Lease
Year Ending December 31, Leases Income Commitment
------------------------ ------ ------ ----------
<S> <C> <C> <C>
1995 $ 631,544 (41,183) 590,361
1996 448,792 (43,225) 405,567
1997 430,204 (45,411) 384,793
1998 149,121 (43,771) 105,350
1999 25,736 (21,682) 4,054
--------- --------- ---------
Total future minimum
lease payments required $1,685,397 (195,272) 1,490,125
---------- --------- ----------
---------- --------- ----------
</TABLE>
Total expense for all operating leases for the years ended December 31,
1994, 1993, and 1992 was $705,101, $692,619, and $679,193, respectively.
CONTINGENCIES
A predecessor corporation of Orlandi Valuta has been subjected to an
Internal Revenue Service audit, and a California Franchise Tax Board audit
is in the initial stage. The predecessor corporation was a C-Corporation.
Management disagrees with the various agents' findings and has filed an
appeal with the Internal Revenue Service. In the event Orlandi Valuta is
not successful, Cynthia Genera, the predecessor corporation's stockholder,
has agreed to indemnify Orlandi Valuta of any financial responsibility
arising from the audits.
Orlandi Valuta is, from time to time, involved in legal actions of a
routine nature incidental to its business, none of which, individually or
in the aggregate, in the opinion of management of Orlandi Valuta, are
likely to have a material effect on the nature and conduct of the business
of Orlandi Valuta.
NOTE 9 - DISTRIBUTIONS TO STOCKHOLDERS
Subsequent to December 31, 1994, Orlandi Valuta intends to make a
distribution to its stockholders to cover the stockholders' income tax
liabilities arising from the Companies' undistributed taxable income for
the year ended December 31, 1994.
F-11
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Board of Directors
Orlandi Valuta, its Subsidiary Orlandi de Mexico, S.A. de C.V.
and Orlandi Valuta Nacional
Los Angeles, California
We have audited the accompanying combined consolidated balance sheet of Orlandi
Valuta, its subsidiary Orlandi de Mexico, S.A. de C.V., and Orlandi Valuta
Nacional as of December 31, 1994, and the related combined consolidated
statements of income, stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on the financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined consolidated financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the combined consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall combined consolidated financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined consolidated financial position of Orlandi
Valuta, its subsidiary Orlandi de Mexico, S.A. de C.V., and Orlandi Valuta
Nacional as of December 31, 1994, and the results of their operations and cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
March 15, 1995 /s/ Grobstein, Horwath & Company
Sherman Oaks, California --------------------------------
GROBSTEIN, HORWATH & COMPANY
F-12
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
<TABLE>
<CAPTION>
Combined Consolidated Balance Sheets
June 30, 1995 June 30,1994
Assets ------------- ------------
------ (Unaudited) (Unaudited)
<S> <C> <C>
Current assets
Cash $4,722,055 3,102,007
Accounts receivable 1,093,008 404,900
Prepaid expenses and other current assets 91,764 124,410
---------- ----------
Total current assets 5,906,827 3,631,317
---------- ----------
Property and equipment, net 501,768 305,687
---------- ----------
Other assets - deposits 1,177,870 493,801
---------- ----------
Total assets $7,586,465 4,430,805
---------- ----------
---------- ----------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities
Accounts payable $ 904,649 749,125
Accrued expenses 538,340 190,829
Current portion of note payable to stockholder 1,049,348 --
Income taxes payable 61,927 38,874
---------- ----------
Total current liabilities 2,554,264 978,828
---------- ----------
Long-term debt
Note payable to stockholder 434,211 --
---------- ----------
Lease commitments and contingency
Stockholders' equity
Common stock 550,508 50,508
Retained earnings 4,415,014 3,452,674
Cumulative foreign currency exchange translation adjustments (367,532) (51,205)
---------- ----------
Total stockholders' equity 4,597,990 3,451,977
---------- ----------
Total liabilities and stockholders' equity $7,586,465 4,430,805
---------- ----------
---------- ----------
</TABLE>
See notes to combined consolidated financial statements.
F-13
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
Combined Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended June 30, Months Ended June 30,
---------------------- ---------------------
1995 1994 1995 1994
----- ----- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales of wire transfers and currencies $50,057,192 $24,104,949 $74,925,292 $45,240,870
Cost of sales 41,609,566 20,485,741 60,809,280 39,301,287
----------- ----------- ------------ -----------
Gross profit 8,447,626 3,619,208 14,116,012 5,939,583
----------- ----------- ------------ -----------
Operating expenses
Employee compensation and related taxes 1,449,699 708,886 2,737,338 1,331,310
Agency fees and commissions
Domestic 1,241,672 359,739 1,859,411 594,216
Mexico (including administrative costs) 179,280 266,050 327,989 513,677
Office Supplies 379,984 138,584 714,632 230,498
Advertising and promotion 348,324 36,921 571,445 62,034
Telephone 341,000 148,552 539,923 229,450
Travel and employee expenses 155,441 46,270 254,844 89,738
Rents 102,076 140,686 230,115 281,108
Professional services 100,393 57,912 363,249 109,440
Security 37,781 58,504 79,028 115,663
Depreciation 32,360 26,230 64,297 52,482
Insurance 24,637 11,617 32,534 22,870
Other expenses 282,278 84,877 534,297 140,885
----------- ----------- ----------- -----------
Total operating expenses 4,674,925 2,084,828 8,309,102 3,773,371
Income from operations 3,772,701 1,534,380 5,806,910 2,166,212
Other income 18,720 20,381 150,850 27,088
----------- ----------- ----------- ----------
Income before provision for income taxes 3,791,421 1,554,761 5,957,760 2,193,300
----------
Provision for income taxes 35,926 23,322 56,453 32,900
----------- ----------- ----------- ----------
Net income $ 3,755,495 1,531,439 5,901,307 2,160,400
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Earnings per common share $19.01 7.85 29.88 11.08
Weighted average number of shares of
Orlandi Valuta (parent company) and
Orlandi Valuta Nacional 197,500 195,000 197,500 195,000
</TABLE>
See notes to combined consolidated financial statements.
F-14
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
<TABLE>
<CAPTION>
Combined Consolidated Statement of Stockholders' Equity
Six Months Ended June 30, 1995 (Unaudited)
Shares Outstanding
--------------------------------------
Cumulative Foreign
Orlandi Orlandi de Mexico Orlandi Valuta Currency Exchange Total Stockholders'
Valuta S.A. de C.V. Nacional Common Stock Retained Earnings Adjustments Equity
------ ------------ -------- ------------ ----------------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1, 1995 195,000 457,000 2,500 $550,508 5,250,982 (250,199) 5,551,291
Distributions to
stockholders (6,737,275) (6,737,275)
Net income for
the six months
ended June 30,
1995 5,901,307 5,901,307
Foreign currency
exchange translation
adjustment for
the six months
ended June 30,
1995 (117,333) (117,333)
------- ------- ----- -------- ---------- ---------- ----------
Balance at June 30,
1995 195,000 457,000 2,500 $550,508 4,415,014 (367,532) 4,597,990
------- ------- ----- -------- ---------- ---------- -----------
------- ------- ----- -------- ---------- ---------- -----------
Authorized shares: Orlandi Valuta 100,000,000, no par value
Orlandi de Mexico, S.A. de C.V. 40,000 fixed capital shares and 417,000 variable capital shares
issued, one peso per share par value
Orlandi Valuta Nacional 2,500, no par value
</TABLE>
See notes to combined consolidated financial statements.
F-15
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
<TABLE>
<CAPTION>
Consolidated Statement of Stockholders' Equity
Six Months Ended June 30, 1994 (Unaudited)
Shares Outstanding
-----------------------------
Cumulative Foreign Total
Orlandi de Mexico Currency Exchange Stockholders'
Orlandi Valuta S.A. de C.V. Common Stock Retained Earnings Adjustments Equity
-------------- ------------ ------------ ----------------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 195,000 457,000 $50,508 1,412,223 41,465 1,504,196
Distributions to stockholders (119,949) (119,949)
Net income for the six
months ended June 30,
1994 2,160,400 2,160,400
Foreign currency exchange
translation adjustment
for the six months ended June
30, 1994 (92,670) (92,670)
------- ------- ------- ---------- -------- ----------
Balance at June 30, 1994 195,000 457,000 $50,508 3,452,674 (51,205) 3,451,977
------- ------- ------- ---------- -------- ----------
------- ------- ------- ---------- -------- ----------
Authorized shares: Orlandi Valuta 100,000,000, no par value
Orlandi de Mexico, S.A. de C.V. 40,000 fixed capital shares and 417,000 variable capital shares
issued, one peso per share par value
</TABLE>
See notes to combined consolidated financial statements.
F-16
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
Combined Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $5,901,307 2,160,400
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 64,297 52,482
Net changes in operating assets and liabilities:
Accounts receivable (625,963) (268,907)
Prepaid expenses and other current assets 286,115 40,143
Accounts payable 300,129 25,878
Accrued expenses 149,386 124,624
Income taxes payable(18,176) (18,176) 32,900
Payable to stockholder 928,013 (166,985)
Net cash provided by operating activities 6,985,108 2,000,535
----------- ----------
Cash flows from investing activities
Expenditures for property and equipment (97,992) (47,439)
Increase in deposits (11,945) (50,321)
----------- ----------
Net cash used in investing activities (109,937) (97,760)
----------- ----------
Cash flows from financing activities
Contract payable, net (44,037)
Distributions to stockholders (6,737,275) (119,949)
Foreign currency exchange translation adjustment (117,333) (92,670)
----------- ----------
Net cash used in financing activities (6,898,645) (212,619)
----------- ----------
Increase (decrease) in cash (23,474) 1,690,156
Cash at beginning of period 4,745,529 1,411,851
----------- ----------
Cash at end of period $4,722,055 3,102,007
----------- ----------
</TABLE>
See notes to combined consolidated financial statements.
F-17
<PAGE>
ORLANDI VALUTA, ITS SUBSIDIARY
ORLANDI DE MEXICO, S.A. DE C.V.
AND ORLANDI VALUTA NACIONAL
Notes to Combined Consolidated Interim Financial Statements (Unaudited)
The accompanying unaudited financial statements and notes have been prepared
in accordance with the accounting policies set forth in the notes to the
combined consolidated financial statements relating to Orlandi Valuta, Orlandi
de Mexico, S.A. de C.V., and Orlandi Valuta Nacional as of December 31, 1994
and for each of the three years in the period ended December 31, 1994. The
combined consolidated financial information presented as of June 30, 1995 and
for the three and six month periods ended June 30, 1995 and 1994 is
unaudited, but in the opinion of the Companies' management, includes all
adjustments necessary for a fair presentation of the financial position of
the Companies and the results of their operations and cash flows. Results for
the interim periods are not necessarily indicative of results of the entire
year. The accompanying combined consolidated interim financial statements
should be read in conjunction with the Companies' 1994 combined consolidated
financial statements and related notes.
NOTE 1 - Principles of Combination and Consolidation
The combined consolidated financial statements include the accounts of
Orlandi Valuta, a California corporation, and its 75% owned foreign
subsidiary, Orlandi de Mexico, S.A. de C.V. (Orlandi Valuta and
Orlandi de Mexico), and Orlandi Valuta Nacional (Nacional), which have
been combined based upon common ownership (collectively referred to as
the Companies). Nacional commenced operations January 1, 1995. All
significant intercompany accounts and transactions have been eliminated
in preparing the combined consolidated financial statements.
The remaining 25% ownership interest in Orlandi de Mexico is held by
the Companies' stockholders and family members. Accordingly, this
ownership interest has been presented as a component of combined
consolidated stockholders' equity instead of as a minority interest.
NOTE 2 - Distributions to Stockholders
During the six months ended June 30, 1995, aggregate distributions of
$6,737,275 were made to stockholders of Orlandi Valuta. Such
distributions represent Subchapter "S" distributions to shareholders for
related individual income taxes and general purposes.
NOTE 3 - Pending Acquisition by Norwest
On May 18, 1995 Orlandi Valuta and Orlandi Valuta Nacional entered into
an Agreement and Plan of Reorganization (Acquisition Agreement) with
Norwest. The Acquisition Agreement provides for the acquisition of the
Companies' assets and liabilities by exchanging all outstanding shares
of Orlandi Valuta and Orlandi Valuta Nacional for Norwest common stock.
The acquisition is subject to stockholder and regulatory approval.
F-18
<PAGE>
APPENDIX A
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into
as of the 18th day of May, 1995, by and between Orlandi Valuta, a California
corporation ("OV"), and Orlandi Valuta Nacional, a Nevada corporation ("OVN")
(collectively "Orlandi"), and NORWEST CORPORATION ("Norwest"), a Delaware
corporation.
WHEREAS, OV wishes to transfer its business and substantially all of
its assets to Norwest solely in exchange for voting shares of Norwest and the
assumption by Norwest of certain liabilities of OV in a transaction intended to
qualify as a "reorganization" within the meaning of Internal Revenue Code
("Code") Section 368(a)(1)(C) of the 1986 Code, it being contemplated by OV and
Norwest that OV will thereafter, as an integral part of the transaction, change
its name, distribute the shares of Norwest to OV's shareholders in complete
liquidation of OV and dissolve and Norwest will transfer the business and assets
and assumed liabilities of OV to a subsidiary of Norwest Financial Services,
Inc. ("NFSI") (Newco 1).
WHEREAS, OVN wishes to transfer its business and substantially all of
its assets to Norwest solely in exchange for voting shares of Norwest and the
assumption by Norwest of certain liabilities of OVN in a transaction intended to
qualify as a "reorganization" within the meaning of Internal Revenue Code
("Code") Section 368(a)(1)(C) of the 1986 Code, it being contemplated by OVN and
Norwest that OVN will thereafter, as an integral part of the transaction, change
its name, distribute the shares of Norwest to OVN's shareholders in complete
liquidation of OVN and dissolve, and Norwest will transfer the business, assets
and assumed liabilities of OVN to Newco 2, a subsidiary of NFSI.
WHEREAS, Newco 1 and Newco 2 will change their names to Orlandi Valuta
and Orlandi Valuta Nacional.
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) TRANSFER OF OV AND OVN ASSETS. On the Closing Date, OV and OVN
shall each transfer and deliver to Norwest all of the properties and assets then
owned by OV and OVN, respectively (including without limitation the names
"Orlandi Valuta" and "Orlandi Valuta Nacional" and the exclusive and perpetual
right to use said names and any derivation or modification thereof, and any and
all tradenames, trademarks, service marks, slogans, logos, or the like now used
by OV and OVN or used in the past by OV or OVN or any of its predecessor or
affiliated corporations or in which OV or OVN or either of their predecessor or
affiliated corporations has any interest whatsoever), except (i) OV's and OVN's
respective corporate seal, if any, corporate minute book, stock record books,
and such other books and records as OV or OVN are required by law to retain;
(ii) rights that lawfully cannot be transferred by OV or OVN (provided, however,
that such rights shall be held by OV or OVN for the benefit of Norwest and that
Norwest at its option may act as OV and OVN's agent in order to enforce and
obtain for Norwest the benefits of such rights); and (iii) OV's and OVN's rights
under this Agreement. To pay its liabilities for the expenses and costs
incurred by it in connection with this Agreement and the transactions
contemplated herein, including its liquidation and dissolution, OV and OVN may
retain in cash on the Closing Date the remainder, if any, of $150,000.00
(cumulatively for OV and OVN)
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minus the amount expended by it between the date hereof and the Closing Date for
such expenses and costs. Promptly after payment of the liabilities of OV and
OVN that are to be paid from the cash retained on the Closing Date, OV and OVN
shall deliver to Norwest the cash remaining, if any, from the amount so
withheld.
OV, OVN and Norwest shall, prior to the Closing Date, agree upon
payments to be made to certain non-shareholder employees of OV and/or OVN; these
agreed upon payments shall not exceed $1,250,000 and any such agreed to payments
shall be accrued as liabilities by OV and/or OVN, as applicable, which
liabilities shall be assumed by Norwest.
(b) TRANSFER OF NORWEST SHARES. (i) At the Closing, as hereinafter
defined, Norwest shall deliver to OV a certificate or certificates representing
1,750,000 shares of Norwest's fully paid and nonassessable voting Common Stock
of the par value of $1-2/3 per share ("Norwest Common Stock"). (ii) At the
closing, Norwest shall deliver to OVN a certificate or certificates representing
250,000 shares of Norwest Common Stock.
(c) NORWEST COMMON STOCK ADJUSTMENTS. If between the date hereof and
the closing 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, stock split, 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 OV or OVN Common Stock shall be converted pursuant
to subparagraph (b), above, will be appropriately and proportionately adjusted
so that the number of such shares of Norwest Common Stock into which a share of
OV or OVN Common Stock shall be converted will equal the number of shares of
Norwest Common Stock which holders of shares of OV or OVN Common Stock would
have received pursuant to such reclassification, recapitalization, stock split,
split-up, combination, exchange of shares or readjustment, or stock dividend had
the record date therefor been immediately following the closing.
(d) ASSUMPTION OF OV'S AND OVN'S LIABILITIES. At the Closing, as
hereinafter defined, Norwest shall assume and pay, discharge, and perform when
lawfully due all liabilities, contracts, and other obligations of OV and OVN
respectively as the same shall exist on the Closing Date, excluding (i) any
federal, state, county, local and foreign income, withholding, social security,
unemployment, workers compensation, franchise, ad valorem, premium, excise or
sales tax liabilities including, without limitation, any taxes, interest and
penalties related to Paulo Orlandi and/or Cynthia Orlandi for tax years
beginning prior to January 1, 1995 and for the tax year within which falls the
Closing Date, and any liability in connection with a proposed gross receipts tax
assessment by the City of Los Angeles; (ii) any liability, costs, and expenses
including, without limitation, reasonable attorneys fees, associated with any
litigation described at Schedule 2(l); (iii) any liabilities, contracts, and
other obligations of OV and OVN that are required by this Agreement to be
disclosed to Norwest on or before the Closing Date and that were not so
disclosed; and (iv) any liabilities for the expenses and costs incurred by OV or
OVN in connection with this Agreement and the transactions contemplated herein,
including their liquidation and dissolution, but not excluding the liabilities
described in the last paragraph of Section 1(a) above, which shall be assumed by
Norwest.
(e) TRANSFER OF ASSETS AND LIABILITIES BY NORWEST. Immediately after
the Effective Time of the Transfers, as hereinafter defined, Norwest shall
transfer the business, assets, and assumed liabilities of OV and OVN,
respectively, to separate newly formed subsidiaries of NFSI ("Newco 1" and
"Newco 2").
(f) TIME AND PLACE OF CLOSING. The transfers of the business, assets
and assumed liabilities of OV and OVN to Norwest (the "Transfers") shall, unless
otherwise agreed to by the parties hereto, occur within ten (10) business days
after receipt by Norwest or NFSI or Newco 1 and Newco 2 of the last of the
regulatory approvals, consents, licenses, qualifications, notifications, and
registrations necessary for operation of the businesses of OV and OVN and
Subsidiary, as hereinafter defined, in accordance with law and using the names
Orlandi Valuta and Orlandi Valuta Nacional, and the expiration of all required
waiting periods (the "Closing Date"). These transfers shall be effective as of
11:58 p.m. Pacific Daylight Time on the Closing Date (the "Effective Time of the
Transfers"). The closing of the transactions contemplated by this Agreement
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(the "Closing") shall take place on the Closing Date at the offices of Norwest,
Norwest Center, Sixth and Marquette, Minneapolis, Minnesota.
(g) DOCUMENTS TO BE DELIVERED BY OV AND OVN. At the Closing, OV and
OVN will each deliver to Norwest (i) such instruments of transfer (including
consents and approvals of third parties) as will be sufficient or requisite in
the opinion of Norwest's counsel to vest in Norwest, its successors and assigns,
the full legal and equitable title of OV or OVN to the properties to be
transferred by OV and OVN to Norwest hereunder, (ii) an instrument satisfactory
to counsel for Norwest appointing Norwest as the true and lawful attorney in
fact for OV and OVN to institute and prosecute (in its own name or in the name
of OV or OVN but for the benefit of Norwest) any proceedings deemed by Norwest
to be necessary or appropriate to collect, assert, or enforce its right, title,
and interest to the properties to be transferred to Norwest hereunder; (iii) the
documents referred to in Section 7 hereof; (iv) written resignations, effective
on acceptance, of such directors of Subsidiary as Norwest may request prior to
the Closing Date; and (v) such evidences as counsel for Norwest may reasonably
require as to OV or OVN compliance with provisions of California and Nevada law
relating to the change of OV's and OVN's corporate name, the sale of all or
substantially all of its assets, and its liquidation and dissolution pursuant to
the provisions of this Agreement.
(h) CERTIFICATES AND DOCUMENTS TO BE DELIVERED BY NORWEST. At the
Closing, Norwest will cause to be delivered to OV and OVN (i) certificates
representing the number of shares of Norwest Common Stock to be delivered to OV
and OVN hereunder; (ii) the documents referred to in Section 6 hereof; and
(iii) an instrument satisfactory to counsel for OV and OVN evidencing the
assumption by Norwest of the liabilities to be assumed by Norwest hereunder.
2. REPRESENTATIONS AND WARRANTIES OF ORLANDI. Except as
specifically noted below each of the above-named Orlandi corporations severally
represents and warrants to Norwest as set forth below. The representations and
warranties as to Orlandi de Mexico, S.A. De C.V., a Mexico corporation,
("Subsidiary") are made by OV. When either OV or OVN is specially named below,
only the named corporation represents and warrants to Norwest as set forth
below.
(a) ORGANIZATION AND AUTHORITY. It is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
or Nevada, as stated above, 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 it and has corporate power and
authority to own its properties and assets and to carry on its business as it is
now being conducted. It has furnished Norwest true and correct copies of its
articles of incorporation and by-laws, as amended.
(b) SUBSIDIARIES. OVN has no subsidiaries. OV has no subsidiaries
other than Subsidiary. All shares of the outstanding capital stock of
Subsidiary shall be owned directly by Norwest as of the Effective Time of the
Transfers. To accomplish this, OV shall cause each of the other shareholders of
Subsidiary to, prior to the Closing Date, enter into a stock purchase agreement
with Norwest in substantially the form attached as Exhibit A. No equity
security of 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 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 are fully paid and nonassessable and are owned by OV free and clear of
any lien, claim, charge, option, encumbrance or agreement with respect thereto.
Subsidiary is a corporation duly organized, validly existing, duly qualified to
do business and in good standing under the laws of Mexico, 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. Neither OV nor OVN owns
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 (other than Subsidiary), and neither OV nor
OVN, is, directly or indirectly, a partner in any partnership or party to any
joint venture.
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(c) CAPITALIZATION OF OV. The authorized capital stock of OV
consists of 1,000,000 shares of common stock, $1.00 par value, of which as of
the close of business on December 31, 1994, 195,000 shares were outstanding and
no shares were held in the treasury. The maximum number of shares of OV Common
Stock (assuming for this purpose that phantom shares and other share-equivalents
constitute OV Common Stock) that would be outstanding as of the Effective Time
of the Transfers if all options, warrants, conversion rights and other rights
with respect thereto were exercised is 195,000. All of the outstanding shares
of capital stock of OV 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 OV or Subsidiary to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of
capital stock of OV or Subsidiary. Since December 31, 1994, no shares of OV
capital stock have been purchased, redeemed or otherwise acquired, directly or
indirectly, by OV or Subsidiary and no dividends or other distributions have
been declared, set aside, made or paid to the shareholders of OV, other than in
the ordinary course of business which distributions are set forth at Schedule
2(c).
(d) CAPITALIZATION OF OVN. The authorized capital stock of OVN
consists of 2500 shares of common stock, $1.00 par value, of which as of the
close of business on December 31, 1994, 2500 shares were outstanding and no
shares were held in the treasury. The maximum number of shares of OVN Common
Stock (assuming for this purpose that phantom shares and other share-equivalents
constitute OVN Common Stock) that would be outstanding as of the Effective Date
of the Transfer if all options, warrants, conversion rights and other rights
with respect thereto were exercised is 2500. All of the outstanding shares of
capital stock of OVN 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 OVN to issue, sell or otherwise
dispose of, or to purchase, redeem or otherwise acquire, any shares of capital
stock of OVN. Since December 31, 1994 no shares of OVN capital stock have been
purchased, redeemed or otherwise acquired, directly or indirectly, by OVN and no
dividends or other distributions have been declared, set aside, made or paid to
the shareholders of OVN, other than in the ordinary course of business which
distributions are set forth at Schedule 2(d).
(e) AUTHORIZATION. It has the corporate power and authority to enter
into this Agreement and, subject to any required approvals of its shareholders,
to carry out its obligations hereunder. The execution, delivery and performance
of this Agreement by it and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by its Board of Directors. Subject
to such approvals of shareholders and of government agencies and other governing
boards having regulatory authority over it and Subsidiary as may be required by
statute or regulation, this Agreement is a valid and binding obligation of it
enforceable against it in accordance with its respective terms. Except as set
forth on Schedule 2(e), neither the execution, delivery and performance by it of
this Agreement, nor the consummation of the transactions contemplated hereby,
nor compliance by it with any of the provisions hereof, 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 it or 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 it or Subsidiary is a party
or by which it may be bound, or to which it or Subsidiary or any of the
properties or assets of it or Subsidiary may be subject, or (ii) violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to it or 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 Bank Holding Company Act of 1956 ("BHC Act"), or the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act"), and filings
required to change its name and liquidate and dissolve its corporate status, no
notice to, filing with,
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exemption or review by, or authorization, consent or approval of, any public
body or authority is necessary for the consummation by it or Subsidiary of the
transactions contemplated by this Agreement.
(f) FINANCIAL STATEMENTS. The statements of financial condition of
OVN and the consolidated statements of financial condition of OV and Subsidiary
all as of December 31, 1994 and related consolidated statements of income,
shareholders' equity and cash flows for the year ended December 31, 1994,
together with the notes thereto, certified by Grobstein & Company, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis and present fairly (subject to normal recurring adjustments)
the consolidated financial position of it and Subsidiary at the date and the
consolidated results of operations of it and Subsidiary for the periods stated
therein. The year-end balance sheet of OVN for 1993 and the consolidated
year-end balance sheet of OV and Subsidiary for 1993, and the statements of
income, shareholder's equity and cash flows for 1992 and 1993 were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and present fairly the financial position and results of operations for
the periods stated therein.
(g) REPORTS. It and Subsidiary has filed all reports, registrations
and statements, together with any required amendments thereto, that it was
required to file with any applicable state lending or insurance authorities, the
failure to file of which could result in a material penalty or a material
disruption of it or Subsidiary or could have any other material adverse effect
on it or Subsidiary. All such reports and statements filed with any such
regulatory body or authority are collectively referred to herein as the
"Reports". As of their respective dates, the Reports complied in all material
respects with all the rules and regulations promulgated by applicable state
lending or insurance 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.
(h) PROPERTIES AND LEASES. Except as may be reflected in its or
Subsidiary's Financial Statements, it and Subsidiary have good title free and
clear of any liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in its consolidated
balance sheet as of December 31, 1994, 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 pursuant to which it or Subsidiary, as lessee, leases real or
personal property (except for leases of personal property which may be
terminated by it or Subsidiary by giving one month or less notice), which leases
are described on Schedule 2(h), are valid and effective in accordance with their
respective terms, and there is not, under any such lease, any existing material
default by it or Subsidiary or any event which, with notice or lapse of time or
both, would constitute such a material default. Its and Subsidiary's leased
premises and equipment in regular use have been well maintained and are in good
and serviceable condition, reasonable wear and tear excepted.
(i) TAXES. OV and Subsidiary and OVN have filed all federal, state,
county, local and foreign tax returns, including information returns, required
to be filed by it and Subsidiary, and paid all taxes owed by it and Subsidiary,
including, without limitation, any taxes, interest and penalties related to
compensation paid to Paolo Orlandi and/or Cynthia Orlandi and 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 and Subsidiary or assessments received by it and
Subsidiary are delinquent. OV and OVN are S Corporations as defined in Section
1361 of the Internal Revenue Code of 1986 (the "Code") and such status has been
effective for OV for all tax years beginning on or after May 1, 1990 and for OVN
for all tax years since the beginning of its corporate existence. OV and OVN
have taken no action, nor failed to take any action, including but not limited
to, limiting stock ownership in OV and OVN to 35 or fewer U.S. citizens,
limiting ownership interests of OV and OVN in any subsidiary to less than 80%,
and limiting outstanding stock of OV and OVN to a single class of stock, which
action or failure to act would result in the loss of their S Corporation
elections. The federal income tax returns of OV for the fiscal year ended
December 31, 1991, 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; however OV has waived the statute of limitations into 1996 with respect
to OV's
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tax year ended April 30, 1990. The foreign income tax returns of
Subsidiary for the fiscal year ended December 31, 1990, and for all fiscal years
prior thereto, are for the purposes of routine audit by foreign taxing
authorities closed because of the statute of limitations, and no claims for
additional taxes for such fiscal years are pending. Except only as set forth on
Schedule 2(i), neither OV nor OVN 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 or taxes, interest, penalties,
assessments or deficiencies and (ii) no issue has been raised by any federal,
state, county, local or foreign taxing authority in connection with an audit or
examination of the tax returns, business or properties which has not been
settled, resolved and fully satisfied. OV and OVN have paid all taxes owed or
which it is required to withhold from amounts owing to employees, creditors or
other third parties. The financial statements referred to in paragraph 2(f)
hereof, includes adequate provision for all accrued but unpaid federal, state,
county, local and foreign taxes, interest, penalties, assessments or
deficiencies with respect to all periods through the date thereof.
(j) ABSENCE OF CERTAIN CHANGES. Since December 31, 1994 there has
been no change in the business, financial condition or results of operations of
it or 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 it or Subsidiary.
(k) COMMITMENTS AND CONTRACTS. Except as set forth on Schedule 2(k),
neither it nor Subsidiary is a party or subject to any of the following (whether
written, oral, express or implied):
(i) any employment contract or agreement (including any obligations
with respect to severance or termination pay liabilities or fringe
benefits) with any present or former officer, director, employee,
consultant, attorney or accountant (other than those which are terminable
at will by it or Subsidiary);
(ii) any plan, contract or agreement 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 containing covenants which limit the ability of it
or Subsidiary to compete in any line of business or with any person or
which involve any restriction of the geographical area in which, or method
by which, it or Subsidiary may carry on its business (other than as may be
required by law or applicable regulatory authorities); or
(v) any other contract or agreement which is a material contract or
which was not made in the ordinary course of business.
(l) LITIGATION AND OTHER PROCEEDINGS. It has furnished Norwest
copies of all attorney responses to the request of its independent auditors for
it with respect to loss contingencies as of December 31, 1994 in connection with
its financial statements and a written list of legal and regulatory proceedings
filed against it or Subsidiary since said date. Except as set forth on Schedule
2(l), neither it nor Subsidiary is a party to any pending or threatened claim,
action, suit, investigation or proceeding, or is subject to any order, judgment
or decree.
(m) INSURANCE. It and Subsidiary is presently insured, and during
each of the past five calendar years (or during such lesser period of time as OV
has owned Subsidiary), has been insured under the insurance policies and for
such risks and amounts listed on Schedule 2(m), and has maintained all insurance
required by applicable law and regulation.
(n) COMPLIANCE WITH LAWS. It and Subsidiary has all permits,
licenses, authorizations, orders and approvals of, and has made all filings,
applications and registrations with governmental or regulatory
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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; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect and no suspension or cancellation of any of them is threatened;
and all such filings, applications and registrations are current. The conduct
by it and 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 law, statute, ordinance, license or regulation. Neither it nor
Subsidiary is in default under any written order, license, regulation or demand
of any federal, state, municipal or other governmental agency or with respect to
any written order, writ, injunction or decree of any court. Except for
statutory or regulatory restrictions of general application, and except as set
forth in Schedule 2(n), no governmental authority has placed any restriction on
the business or properties of it or Subsidiary which reasonably could be
expected to have an adverse effect on the business or properties of it or
Subsidiary.
(o) LABOR. No work stoppage involving it or Subsidiary is pending or
threatened. Neither it nor Subsidiary is involved in or threatened with or
affected by, any labor dispute, labor arbitration, labor lawsuit or labor
administrative proceeding. Employees of it and Subsidiary are not represented
by any labor union nor are any collective bargaining agreements otherwise in
effect with respect to such employees.
(p) MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth on
Schedule 2(p), no officer or director of it or Subsidiary, or any "associate"
(as such term is defined in Rule 14a-1 under the Securities Exchange Act of 1934
which, together with the rules and regulations thereunder, will be referred to
as 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 it or Subsidiary.
(q) BENEFIT PLANS.
(i) No employee or officer of it or Subsidiary participates as an
employee or officer in any "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), for which it or Subsidiary acts as the plan sponsor as
defined in ERISA Section 3(16)(B). Neither it nor Subsidiary acts as a
plan sponsor as defined in ERISA Section 3(16)(B) for any "employee benefit
plan" within the meaning of Section 3(3) of ERISA.
(ii) Except as disclosed in Schedule 2(q), neither the execution and
delivery of this Agreement and the Merger Agreements nor the consummation
of the transactions contemplated hereby and thereby will (A) result in any
payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director
or employee or former employee of it or Subsidiary under any "employee
benefit plan" or otherwise, (B) increase any benefits otherwise payable by
it or Subsidiary or (C) result in the acceleration of the time of payment
or vesting of any benefits to be paid by it or Subsidiary.
(iii) The Orlandi Valuta Profit Sharing Plan and its related Trust
(together, the "Plan") have been terminated and liquidated in accordance
with applicable law and there are no related liabilities or contingent
liabilities. The Plan was at all times operated in compliance with its
terms and the requirements prescribed by applicable law. The Plan was
qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code") and has received a favorable determination letter from
the Internal Revenue Service as to its qualified status, and nothing has
occurred which would cause the loss of such qualification for any Plan
year. There are no suits, actions, disputes, claims (other than routine
claims for benefits), arbitrations, administrative or other proceedings
pending or threatened with respect to the Plan or OV as the sponsor or
fiduciary thereof. All annual reports of the Plan required to be filed and
all necessary summary plan descriptions or summary annual reports required
to be furnished to participants in the Plan have been timely furnished to
such participants. An Application for Determination Upon Termination on
Internal Revenue Service Form 5310 has been submitted to the Internal
Revenue Service to request a determination as to the qualified status,
under Section 401(a) of the Code, of the Plan upon termination, and the
Plan or OVN has received a
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favorable determination letter from the Internal Revenue Service as to the
Plan's qualified status upon termination.
(r) REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information regarding it and Subsidiary supplied or to be supplied by it 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 it pursuant to the provisions of this Agreement (the
"Registration Statement"), (ii) the proxy statement to be mailed to its
shareholders in connection with the meeting to be called to consider the
Transfers (the "Proxy Statement"), or (iii) any other documents to be filed with
the Securities Exchange Commission ("SEC") or any regulatory authority in
connection with the transactions contemplated hereby 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 in light of the circumstances, 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 in light of the
circumstances, 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 it and Subsidiary are responsible
for filing with any regulatory authority in connection with the Mergers will
comply as to form in all material respects with the provisions of applicable
law.
(s) REGISTRATION OBLIGATIONS. Neither it nor Subsidiary is under any
obligation, contingent or otherwise, which will survive the Closing by reason of
any agreement to register any of its securities under the Securities Act of 1933
and the rules and regulations thereunder (the "Securities Act").
(t) BROKERS AND FINDERS. Except for the following, neither it nor
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 finder's fees, and no other such
person has acted directly or indirectly for it or Subsidiary in connection with
this Agreement or the transactions contemplated hereby and thereby: (i) the
employment of Charles Benninghoff ("Benninghoff") by it in the capacity as
lawyer; and, (ii) the employment of Mandich & Associates ("Mandich") by it in
the contingent capacity as "Merger & Acquisitions" consultant. Benninghoff and
Mandich have been paid in full as of the Closing Date.
(u) NO DEFAULTS. Neither it nor Subsidiary is in default in any
material respect, nor has any event occurred which, with the passage of time or
the giving of notice, or both, would constitute a default in any material
respect, under any written agreement, indenture, or loan agreement, any oral
agreement, indenture or loan agreement disclosed (or which should be disclosed)
on Schedule 2(k), or any 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. All
parties with whom it or Subsidiary has leases, written agreements or written
contracts or who owe to it or Subsidiary obligations 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 in the imposition of, on it or
Subsidiary, any liability arising from the release of hazardous substances,
including, without limitation, asbestos, 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 threatened against it or Subsidiary; there is no
reasonable basis for any such proceeding, claim or action; and neither it nor
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.
(w) GENERAL LIABILITIES. Except as set forth on Schedule 2(w) or any
other Schedule to this Agreement or shown on its Financial Statements, neither
it nor Subsidiary has any material liabilities, whether accrued, contingent or
otherwise, including without limitation, liabilities under guaranties or
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indemnification agreements. For purposes of this paragraph 2(w) only,
"material" means more than $25,000 with respect to any liability or more than
$100,000 with respect to all such liabilities in the aggregate.
(x) TRANSFER OF PROPERTY. Each instrument of conveyance, assignment
and transfer delivered by it to Norwest pursuant to the Agreement will vest in
Norwest good title to the property conveyed, assigned and transferred; it will
transfer to Norwest all property required by Norwest in order to continue to
operate the business in the same manner as operated by it, as of the date of
this Agreement, except property that is non-transferrable by law.
3. REPRESENTATIONS AND WARRANTIES OF NORWEST. Norwest represents and
warrants to OV and OVN 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, 1994, of Norwest's Significant Subsidiaries (as
defined in Regulation S-X promulgated by the SEC) (individually a "Norwest
Subsidiary" and collectively the "Norwest Subsidiaries"), all shares of the
outstanding capital stock of each of which, except as set forth in Schedule
3(b), are owned directly or indirectly by Norwest. No equity security of any
Norwest Subsidiary is or may be required to be issued to any person or entity
other than Norwest by reason of any option, warrant, scrip, right to subscribe
to, call or commitment of any character whatsoever relating to, or security or
right convertible into, shares of any capital stock of such subsidiary, and
there are no contracts, commitments, understandings or arrangements by which any
Norwest Subsidiary is bound to issue additional shares of its capital stock, or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock. Subject to 12 U.S.C. Section 55 (1982), all of such shares so
owned by Norwest are fully paid and nonassessable and are owned by it free and
clear of any lien, claim, charge, option, encumbrance or agreement with respect
thereto. Each Norwest Subsidiary is a corporation or national banking
association duly organized, validly existing, duly qualified to do business and
in good standing under the laws of its jurisdiction of incorporation, and has
corporate power and authority to own or lease its properties and assets and to
carry on its business as it is now being conducted.
(c) NORWEST CAPITALIZATION. The authorized capital stock of Norwest
consists of (i) 5,000,000 shares of Preferred Stock, without par value, of which
as of the close of business on December 31, 1994, 1,127,125 shares of 10.24%
Cumulative Preferred Stock at $100 stated value, 980,000 shares of Cumulative
Tracking Preferred Stock, 1,143,675 shares of Cumulative Tracking Preferred
Stock, Series B, at $200 stated value and 14,265 shares of ESOP Cumulative
Convertible Preferred Stock at $1000 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, 1994, 309,144,857 shares were outstanding and
13,939,617 shares were held in the treasury.
(d) AUTHORIZATION. No approval or consent by the stockholders of
Norwest is necessary for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. Subject to approval of
the transactions contemplated hereby by 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, nor the consummation of the transactions contemplated hereby, nor
compliance by Norwest with any of the provisions hereof, will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an
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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, (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.
(e) NORWEST FINANCIAL STATEMENTS. The consolidated statements of
financial condition of Norwest and Norwest's subsidiaries as of December 31,
1994 and 1993 and related consolidated statements of income, stockholders'
equity and cash flows for the three years ended December 31, 1994, together with
the notes thereto, certified by KPMG Peat Marwick LLP and included in Norwest's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (the
"Norwest 10-K") as filed with the SEC, (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) 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.
(g) 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 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 law, statute, ordinance, license
or regulation. Neither Norwest nor any Norwest Subsidiary is in default under
any written order, license, regulation or demand of any federal, state,
municipal or other governmental agency or with respect to any written order,
writ, injunction or decree of any court. Except for statutory or regulatory
restrictions of general application, no 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.
(h) ABSENCE OF CERTAIN CHANGES. Since December 31, 1994, there has
been no change in the business, financial condition or results of operations of
Norwest or any Norwest Subsidiary which has had, or may reasonably be expected
to have, a material adverse effect on the business, financial condition or
results of operations of Norwest and its subsidiaries taken as a whole.
(i) 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 known, to the best knowledge of Norwest,
to be owed by it, including those with respect to income, withholding, social
security, unemployment, workers compensation,
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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(i), (i)
neither Norwest nor any Norwest Subsidiary is a party to any pending action or
proceeding, nor to the best knowledge of Norwest, 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 known, to the best knowledge of Norwest, to be owed or which it is
required to withhold from amounts owing to employees, creditors or other third
parties.
(j) REPORTS. Since January 1, 1987, 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 any
applicable state lending or insurance authorities the failure to file of which
could result in a material penalty or a material disruption of Norwest and its
subsidiaries taken as a whole or could have any other material adverse effect on
Norwest and its subsidiaries taken as a whole. 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 applicable state lending or insurance 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.
4. COVENANTS OF ORLANDI. OV and OVN each covenant and agree with Norwest
as follows:
(a) Except as otherwise permitted or required by this Agreement or
except as otherwise permitted with Norwest's prior approval, from the date
hereof until the Effective Time of the Transfers, it and Subsidiary will:
maintain its corporate existence in good standing; maintain the general
character of its business and conduct its business in its ordinary and usual
manner (including, without limitation, the disposition of its assets); maintain
proper business and accounting records in accordance with generally accepted
principles; maintain its election under Section 1362 of the Code as an S
Corporation; maintain current investment practices; maintain its properties in
good repair and condition, ordinary wear and tear excepted; maintain presently
existing insurance coverage; 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; obtain any approvals or consents
required to maintain existing leases and other contracts in effect following the
Transfers, including, without limitation, landlord's consents; comply with all
material obligations and duties imposed upon them by laws, regulations,
ordinances, codes, orders, licenses and permits applicable to the properties and
operations of it and Subsidiary; provided that Norwest shall not unreasonably
interfere with the conduct of its or Subsidiary's business, permit Norwest and
its representatives (including KPMG, Peat Marwick LLP and Deloitte Touche) to
examine its and Subsidiary's 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 it or
Subsidiary herein expressed.
(b) Except as otherwise contemplated or required by this Agreement,
from the date hereof until the Effective Time of the Transfers, it and
Subsidiary will not (without the prior written consent of Norwest): amend or
otherwise change its articles of incorporation or by-laws; 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
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conversion of, any shares of its capital stock, phantom shares or other
share-equivalents, or any other of its securities; authorize or incur any
long-term debt, mortgage, pledge or subject to lien or other encumbrance any of
its properties; enter into any agreement, contract or commitment in excess of
$25,000 or for a term of longer than one year; make any investments other than
in the ordinary course of business; declare, set aside, make or pay any dividend
or other distribution with respect to its capital stock, except as consistent
with past practices, provided, however, no such dividend or other distribution
shall disqualify either of the Transfers as a "pooling of interests" for
accounting purposes; redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock; increase the compensation or benefits of
any employees, officers, directors or executive employees, except pursuant to
existing compensation plans and practices and bonus plans consistent with
historical practices; sell or otherwise dispose of any shares of the capital
stock of any Subsidiary; or sell or otherwise dispose of any of its assets or
properties other than in the ordinary course of business.
(c) Its Board of Directors will duly call, and will cause to be held
not later than twenty-five (25) business days following the effective date of
the Registration Statement referred to in paragraph 5(c) hereof, a meeting of
its shareholders and will direct that this Agreement be submitted to a vote at
such meeting. Its Board of Directors will (i) cause proper notice of such
meeting to be given to its shareholders in compliance with the 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 (iii) use its best efforts to
solicit from its shareholders proxies to vote its common stock in favor thereof.
(d) It will furnish or cause to be furnished to Norwest all the
information concerning it and Subsidiary 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. The financial statement for the
1994 fiscal year provided under this paragraph must include the audit opinion
and the consent of Grobstein & Company to use such opinion in such Registration
Statement. Other financial information provided under this paragraph must have
been reviewed by Grobstein & Company in accordance with generally accepted
auditing standards and OV and OVN must provide Norwest with a copy of such
review report.
(e) It 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 it to carry out the transactions contemplated by
this Agreement and will cooperate with Norwest to obtain all such approvals,
licenses and consents required of Norwest, including, without limitation, the
change of the names of Newco 1 and Newco 2 to Orlandi Valuta and Orlandi Valuta
Nacional, respectively.
(f) It 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.
(g) It will hold in confidence all documents and information
concerning Norwest and its 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 Norwest (except to the extent that such information can be
shown to be previously known to OV or OVN, in the public domain, or later
acquired by it 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 it, nor Subsidiary, 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 it or Subsidiary, (ii) to make a tender or exchange offer for any
shares of such common stock or other equity
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security, (iii) to purchase, lease or otherwise acquire the assets of it or
Subsidiary, or (iv) to merge, consolidate or otherwise combine with it or
Subsidiary. If any corporation, partnership, person or other entity or group
makes an offer or inquiry to it or Subsidiary concerning any of the foregoing,
it or Subsidiary will promptly disclose such offer or inquiry, including the
terms thereof, to Norwest.
(i) Neither it nor Subsidiary shall take any action which with
respect to it would disqualify the transactions contemplated under the Agreement
as a "pooling of interests" for accounting purposes.
(j) It shall use its best efforts to obtain and deliver at least 32
days prior to the Effective Date of the Transfers signed representations
substantially in the form attached hereto as Exhibit B to Norwest by each
executive officer, director or shareholder of it who may reasonably be deemed an
"affiliate" of it within the meaning of such term as defined in Rule 144 and as
used in Rule 145 under the Securities Act.
(k) It shall make such adjustments immediately before the Effective
Time of the Transfers to be effective as of such dates as Norwest may request,
as may be necessary to conform its accounting practices and methods to those of
Norwest and Norwest's plans with respect to the conduct of its business
following the Closing and to provide for the costs and expenses relating to the
consummation by it of the transactions contemplated by this Agreement.
(l) Not later than the Closing Date, all salaries, wages, bonuses,
commissions and any other amounts now or hereafter due present or former
employees, officers, directors and others relating to services rendered to it or
Subsidiary up to and including the Effective Time of the Transfers will have
been paid or properly accrued on its books.
(m) Immediately after the Effective Time of Transfers, OV and OVN
will each amend its Articles of Incorporation so as to change their corporate
name to Orlandi Valuta Liquidation Corporation and Orlandi Valuta Nacional
Liquidating Corporation, respectively and will thereafter take such action as
may be requested by Norwest to transfer its present corporation name to them.
(n) From and after the Closing Date, neither OV nor OVN will engage
in any business, and each will promptly liquidate and dissolve as a corporation,
and will distribute the shares of Norwest Common Stock received pursuant to this
Agreement to its shareholders in complete cancellation and redemption of their
shares of OV and OVN capital stock, except that neither OV nor OVN shall
distribute any fractional interests in shares of Norwest Common Stock but shall
arrange for the sale, for the account of its shareholders, of a sufficient
number of shares of Norwest Common Stock to enable it to distribute cash in lieu
of any fractional interests to which its shareholders would otherwise be
entitled.
(o) OV and OVN will each make available for inspection and copying
all books and records retained by it to Norwest upon reasonable request for
access thereto, and if at any time OV or OVN proposes to discard or destroy such
books and records, it will first offer to transfer them without charge to
Norwest.
(p) OV and OVN, cumulatively, will not pay more than $150,000 in
respect of the liabilities for expenses and costs described in the first
paragraph of paragraph 1(a).
(q) It shall cooperate with Norwest, and execute and deliver, or use
its best efforts to cause to be executed and delivered, all such other
instruments, including instruments of conveyance, assignment and transfer and
consent, and take all such other actions as it may reasonably be requested to
take by Norwest from time to time, consistent with the terms of this Agreement,
in order to effectuate the provisions and purposes of this Agreement and the
transactions contemplated hereby.
5. COVENANTS OF NORWEST. Norwest covenants and agrees with OV and OVN as
follows:
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(a) From the date hereof until the Effective Time of the Transfers,
Norwest will maintain its corporate existence in good standing; conduct, and
cause the Norwest Subsidiaries to conduct, their respective businesses in
compliance with all material obligations and duties imposed on them by all laws,
governmental regulations, rules and ordinances, and judicial orders, judgments
and decrees applicable to Norwest or the Norwest Subsidiaries, their businesses
or their properties; maintain all books and records of it and the Norwest
Subsidiaries, including all financial statements, in accordance with the
accounting principles and practices consistent with those used for the Norwest
Financial Statements, except for changes in such principles and practices
required under generally accepted accounting principles.
(b) Norwest will furnish to it all the information concerning Norwest
required for inclusion in a proxy statement or statements to be sent to the
shareholders of OV and OVN, or in any statement or application made by OV or OVN
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 OV
and OVN, and will use its best efforts to cause the Registration Statement to
become effective.
(d) Norwest will file all documents required to be filed to list the
Norwest Common Stock to be issued pursuant to this Agreement on the New York
Stock Exchange and the Chicago Stock Exchange and use its best efforts to effect
said listings.
(e) The shares of Norwest Common Stock to be issued by Norwest to OV
and OVN pursuant to this Agreement will, upon such issuance and delivery to said
corporations pursuant to this Agreement be duly authorized, validly issued,
fully paid and nonassessable. The shares of Norwest Common Stock to be
delivered to OV and OVN pursuant to this Agreement will, when issued, be free
and clear of all liens and encumbrances and 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 Transfers 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 OV and OVN to obtain all such approvals and consents required by OV and
OVN.
(h) Norwest will file any documents or agreements required to be
filed in connection with this Agreement under the applicable Business
Corporation Act.
(i) 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.
(j) Neither Norwest nor any Norwest Subsidiary shall take any action
which with respect to Norwest would disqualify any of the transactions
contemplated under this Agreement as a "pooling of interests" for accounting
purposes.
Norwest shall use its best efforts to obtain and deliver to OV and
OVN, prior to the Closing Date, signed representations from the directors and
executive officers of Norwest to the effect that, except for de minimus
dispositions which will not disqualify the Transfers as a pooling of interests,
they will not dispose of shares of Norwest or OV and OVN during the period
commencing 30 days prior to the Effective Date and
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ending upon publication by Norwest of financial results including at least 30
days of combined operations of OV and OVN and Norwest.
(k) Exclusive of acts contemplated by the Agreement Norwest shall do
no act, or forbear from acting, such that the result of the act, or refraining
from acting, by themselves shall cause said Agreement to not constitute a tax
free organization.
6. CONDITIONS PRECEDENT TO OBLIGATION OF ORLANDI. The obligations of OV
and OVN to effect the Transfers shall be subject to the satisfaction at or
before the Closing of each of the following further conditions, any or all of
which may be waived in writing by OV and OVN:
(a) Except to the extent such representations and warranties are by
their express provisions made as of a specified date, 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 Effective Time of the Transfers.
(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 at or before the Effective Time of the
Transfers.
(c) OV and OVN shall each have received a favorable certificate,
dated as of the Effective Date of the Transfers, 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 shall have been approved by the affirmative vote
of the holders of the percentage of the outstanding shares of OV and OVN
required for approval of the Transfers in accordance with the provisions of its
Articles of Incorporation and the applicable Business Corporation Act.
(e) Norwest shall have received the approval of its Board of
Directors of the transactions contemplated by this Agreement. OV, OVN and
Norwest shall have received approval by such governmental agencies as may be
required by law of the transactions contemplated by this Agreement, the failure
to obtain of which would have a material adverse effect on the ability of
Norwest to operate the businesses of OV and OVN Subsidiary in the manner said
businesses were operated by OV, OVN and Subsidiary, and all waiting periods
prescribed by applicable law or regulation shall have expired.
(f) No court or governmental authority of competent jurisdiction
shall have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(g) The shares of Norwest Common Stock to be delivered to OV and OVN
pursuant to this Agreement shall have been authorized for listing on the New
York Stock Exchange and the Chicago Stock Exchange.
(h) OV and OVN shall each have received an opinion, dated the Closing
Date, of counsel to OV and OVN, substantially to the effect that, for federal
income tax purposes: (i) the consummation of the transactions contemplated by
this Agreement will constitute a reorganization as defined in IRC Section
368(a)(1)(C) of the Code; (ii) no gain or loss will be recognized to OV/or OVN
upon the receipt of Norwest Common Stock in exchange for its business and
substantially all of its assets as contemplated in this Agreement; (iii) no gain
or loss will be recognized to the stockholders of OV or OVN upon the exchange of
their shares of capital stock of OV or OVN in complete liquidation of OV and OVN
as contemplated by this Agreement, for the shares of Norwest Common Stock
received by OV and OVN pursuant hereto; (iv) no gain or loss will be recognized
to OV or OVN on the transfer of its property to Norwest; (v) the basis of the OV
and OVN property in the hands of Norwest will be the same as the basis of such
property in the hands of OV and OVN immediately prior to
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the reorganization; (vi) the holding period of the OV and OVN property in the
hands of Norwest will include the period during which such property was held by
OV or OVN (vii) the basis of the shares of Norwest Common stock received by the
OV and OVN shareholders will be the same as the basis of the shares of OV and
OVN Common Stock exchanged therefor; and (viii) the holding period for the
shares of Norwest Common Stock received by shareholders of OV and OVN will
include the period during which they held the shares of OV and OVN Common Stock
exchanged therefor, provided such OV and OVN Common Stock constituted a capital
asset in their hands on the date of the exchange.
(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) Norwest shall cooperate with OV and OVN and take all such actions
as it may reasonably be requested to take by OV or OVN from time to time,
consistent with the terms of this Agreement, in order to effectuate the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
7. CONDITIONS PRECEDENT TO OBLIGATION OF NORWEST. The obligation of
Norwest to effect the transactions contemplated by this Agreement shall be
subject to the satisfaction at or before the Closing of each of the following
conditions, any or all of which may be waived in writing by Norwest:
(a) Except to the extent such representations and warranties are by
their express provisions made as of a specified date, the representations and
warranties contained in paragraph 2 hereof shall be true and correct in all
respects material to OV, OVN or Subsidiary as if made at the Effective Time of
the Transfers.
(b) OV and OVN 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 Effective Time of the
Transfers.
(c) This Agreement shall have been approved by the affirmative vote
of the holders of the percentage of the outstanding shares of OV and OVN
required for any approval of the transactions contemplated under this Agreement
in accordance with the provisions of its Articles of Incorporation and the
applicable Business Corporation Act.
(d) Norwest shall have received a favorable certificate dated as of
the Closing Date signed by the Chairman or President and by the Secretary or
Assistant Secretary of OV and OVN, 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 (i) in order for Norwest to operate the business of OV, OVN
and Subsidiary in the same manner as said business was operated by OV, OVN and
Subsidiary as of the date of this Agreement, and (ii) by law of the transactions
contemplated by this 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 OV, OVN or Subsidiary that, in the good faith judgment
of Norwest, is unreasonably burdensome to Norwest.
(f) OV, OVN and Subsidiary shall have obtained any and all consents
or waivers from other parties to loan agreements, leases or other contracts
required for the consummation of the transactions contemplated under this
Agreement, and OV, OVN and Subsidiary shall have obtained any and all permits,
authorizations, consents, waivers and approvals required for the lawful
consummation by it of the transactions contemplated under this Agreement.
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(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
OV and OVN Common Stock outstanding and subject to issuance upon exercise
(assuming for this purpose that phantom shares and other share-equivalents
constitute OV or OVN 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 195,000 for OV and 2500 for OVN.
(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 OV and OVN letters, dated as of the effective date of
the Registration Statement and updated through the date of Closing, in form and
substance satisfactory to Norwest, to the effect that:
(i) the unaudited financial statements of OV and OVN 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 OV and OVN.
(ii) the amounts reported in the unaudited financial statements of OV
and OVN agree with the general ledger of OV and OVN;
(iii) the annual and quarterly financial statements of OV, OVN and
Subsidiary 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, 1994 (or, if later, since the date of the most
recent unaudited consolidated financial statements of OV, OVN and
Subsidiary, 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 are no increases in long-term debt, changes in
the capital stock or decreases in stockholders' equity of OV, OVN and
Subsidiary, except in each case for de minimis changes, increases or
decreases, changes, increases or decreases which occur in the ordinary
course of OV and OVN's business, or as a result of the declaration and
payment of the dividends described in Section 4(b) hereof or 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
per share amounts of OV, OVN and Subsidiary, or in income before equity in
undistributed income of subsidiaries, in each case as compared with the
comparable period of the preceding year, except in each case for de minimis
changes, increases or decreases, changes, increases or decreases which
occur in the ordinary course of OV and OVN's business, or as a result of
the declaration and payment of the dividends described in Section 4(b)
hereof or 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 OV, OVN and the Subsidiary, 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 OV, OVN and the
Subsidiary, and have found them to be in agreement with
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financial records and analyses prepared by OV and OVN included in the
annual and quarterly financial statements, except as disclosed in such
letters.
(k) OV, OVN and Subsidiary considered as a whole shall not have
sustained any material loss or material interference with their business from
any civil disturbance or any fire, explosion, flood, earthquake 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 OV, OVN or Subsidiary of, any material 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.
(m) 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 OV, OVN and
Subsidiary.
(n) Norwest and Paolo Orlandi and Cynthia Orlandi and Hector Gonzalez
shall have entered into separate mutually satisfactory employment agreements
under which Paolo Orlandi and Cynthia Orlandi and Hector Gonzalez will each
continue to be employed by Norwest or an affiliate thereof.
(o) Paolo Orlandi and Cynthia Orlandi shall have executed and
delivered to Norwest an Indemnification Agreement in form and substance as
Exhibit C hereto.
(p) Any accounting adjustments requested by Norwest pursuant to
paragraph 4(k) shall have been made.
(q) OV and OVN cumulatively shall have achieved substantially the
same number of wires and amount of profit in each month, beginning with May,
1995 and through the end of the month immediately prior to the month in which
the Closing occurs, as OV and OVN achieved cumulatively in April, 1995.
8. TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated at any time prior to the Closing
Date:
(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 Closing shall not have been consummated by December 31, 1995
unless such failure of consummation shall be due to the failure of the
party seeking to terminate to perform or observe in all material respects
the covenants and agreements hereof to be performed or observed by such
party;
(iii) by OV, OVN 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;
(iv) by Norwest if there has been a misrepresentation or breach in
any material respect on the part of OV or OVN in the representations and
warranties of OV or OVN set forth herein and such breach or
misrepresentation, after due notice, has not been corrected, or if, after
due notice, there has been a failure on the part of OV or OVN to comply in
any material respect with its agreements or covenants hereunder, or if any
condition precedent set forth in paragraph 7 is not satisfied.
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(v) by OV or OVN if there has been a misrepresentation or breach in
any material respect on the part of Norwest in the representations and
warranties of Norwest set forth herein and such breach or
misrepresentation, after due notice, has not been corrected, or if, after
due notice, there has been a failure on the part of Norwest to comply in
any material respect with its agreements or covenants hereunder, or if any
condition precedent set forth in paragraph 6 is not satisfied.
(vi) by Norwest or OV or OVN if each of the employment agreements
referred to in paragraph 7(o) are not executed concurrently with this
Agreement;
(vii) by Norwest if the Indemnification Agreement in form and
substance as Exhibit C hereto, and the voting letters in form and substance
as Exhibit D hereto, and an agreement regarding notice to Norwest of sale
of Norwest Common Stock in form and substance as Exhibit E are not executed
by Paolo Orlandi and Cynthia Orlandi before or concurrently with this
Agreement.
(b) Termination of this Agreement under this paragraph 8 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 wilful
and material breach of the warranties and representations made by it, or wilful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, and the obligations under paragraphs 4(g) and
9 shall survive such termination.
9. EXPENSES. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees incurred by OV, OVN and Subsidiary shall be borne by OV, OVN,
and Subsidiary, and all such expenses incurred by Norwest shall be borne by
Norwest.
10. 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.
11. 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 by telephone facsimile or shall be mailed by overnight courier or
first class registered or certified mail, postage prepaid, in any case addressed
as follows:
If to Norwest:
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Attention: Secretary
and
Norwest Financial, Inc.
206 8th Street
Des Moines, Iowa 50309
Attention: General Counsel
If to OV:
Orlandi Valuta
560 S. Spring Street
Los Angeles, California 90013
Attention: Paolo Orlandi
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If to OVN:
Orlandi Valuta Nacional
560 S. Spring Street
Los Angeles, California 90013
Attention: Paolo Orlandi
or to such other address with respect to a party as such party shall notify the
other in writing as above provided.
12. COMPLETE AGREEMENT. This Agreement and the Exhibits and Schedules
attached hereto, which by this reference are made an integral part hereof,
contain the complete agreement between the parties hereto with respect to the
transactions contemplated hereby and supersede all prior agreements and
understandings between the parties hereto with respect thereto.
13. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement.
14. WAIVER AND OTHER ACTION. Either party hereto may, by a signed
writing, give any consent, take any action pursuant to paragraph 8 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.
15. AMENDMENT. At any time before the Closing, 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 OV or
OVN shall be made which changes in a manner adverse to such shareholders the
consideration to be provided to said shareholders pursuant to this Agreement.
16. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
17. PUBLIC STATEMENTS. Neither OV nor OVN nor Norwest will, except with
the prior written consent of the other party, make any public disclosure, or
permit any public disclosure to be made regarding this Agreement or the
transactions contemplated hereby, provided that nothing herein shall prohibit
either party from making any disclosure which is a communication directed to its
employees or the employees of any of its affiliates. Provided further, Norwest
may make any such disclosure required by law or regulation (in which case,
Norwest will notify OV and OVN at least 48 hours prior to making such disclosure
unless in the reasonable judgment of counsel for Norwest, immediate disclosure
or disclosure before the expiration of such 48-hour period is required under
applicable law).
18. REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in this Agreement (i) apply only to events occurring before the
Closing or the termination of this Agreement; and (ii) shall survive the Closing
Date for a 6-year period beginning on the Closing Date for the limited purpose
of determining the rights and remedies of the parties hereto and any successors
and assigns under the Indemnification Agreement referred to in paragraph 7(o).
Except as set forth in paragraph 8(b) and this paragraph 18, no representation
or warranty contained in this Agreement shall survive the termination of this
Agreement.
19. THIRD PARTIES. 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.
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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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
NORWEST CORPORATION ORLANDI VALUTA
By: /s/ Richard M. Kovacevich By: /s/ Paolo Orlandi
-------------------------- -----------------------------
Chairman
Its: President and Chief
Executive Officer
--------------------------
By: /s/ Cynthia Genera Orlandi
-----------------------------
Vice-President
ORLANDI VALUTA NACIONAL
By: /s/ Paolo Orlandi
-----------------------------
Chairman
By: /s/ Cynthia Genera Orlandi
-----------------------------
Vice President
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APPENDIX B
CALIFORNIA GENERAL CORPORATION LAW
CHAPTER 13
DISSENTERS' RIGHTS
SECTION 1300. RIGHT TO REQUIRE PURCHASE -- "DISSENTING SHARES" AND
"DISSENTING SHAREHOLDER" DEFINED.
(a) If the approval of the outstanding shares (Section 152) of a
corporation is required for a reorganization under subdivisions, (a) and (b) or
subdivision (e) or (f) of Section 1201, each shareholder of the corporation
entitled to vote on the transaction and each shareholder of a subsidiary
corporation in a short-form merger may, by complying with this chapter, require
the corporation in which the shareholder holds shares to purchase for cash at
their fair market value the shares owned by the shareholder which are dissenting
shares as defined in subdivision (b). The fair market value shall be determined
as of the day before the first announcement of the terms of the proposed
reorganization or short-form merger, excluding any appreciation or depreciation
in consequence of the proposed action, but adjusted for any stock split, reverse
stock split or share dividend which becomes effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which
come within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or
short-form merger either (A) listed on any national securities exchange
certified by the Commissioner of Corporations under subdivision (o) of
Section 25100 or (B) listed on the list of OTC margin stocks issued by the
Board of Governors of the Federal Reserve System, and the notice of meeting
of shareholders to act upon the reorganization summarizes this Section and
Sections 1301, 1302, 1303 and 1304; PROVIDED, HOWEVER, that this provision
does not apply to any shares with respect to which there exists any
restriction on transfer imposed by the corporation or by any law or
regulation; and, provided, further, that this provision does not apply to
any class of shares described in clause (A) or (B) if demands for payment
are filed with respect to 5 percent or more of the outstanding shares of
that class.
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted
in favor of the reorganization or, (B) if described in clause (A) or (B) of
paragraph (1) (without regard to the provisos in that paragraph), were
voted against the reorganization, or which were held of record on the
effective date of a short-form merger, PROVIDED, HOWEVER, that clause (A)
rather than clause (B) of this paragraph applies in any case where the
approval required by Section 1201 is sought by written consent rather than
at a meeting.
(3) Which the dissenting shareholder has demanded that the
corporation purchase at their fair market value, in accordance with Section
1301.
(4) Which the dissenting shareholder has submitted for
endorsement, in accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of record.
SECTION 1301. DEMAND FOR PURCHASE.
(a) If, in the case of a reorganization, any shareholders of a
corporation have a right under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, to require the corporation to
purchase their shares for cash, such corporation shall mail to each such
shareholder a notice of the approval of the reorganization by its outstanding
shares (Section 152) within 10 days after the date of such
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approval, accompanied by a copy of Sections 1300, 1302, 1303, 1304 and this
Section, a statement of the price determined by the corporation to represent the
fair market value of the dissenting shares, and a brief description of the
procedure to be followed if the shareholder desires to exercise the
shareholder's right under such Sections. The statement of price constitutes an
offer by the corporation to purchase at the price stated any dissenting shares
as defined in subdivision (b) of Section 1300, unless they lose their status as
dissenting shares under Section 1309.
(b) Any shareholder who has a right to require the corporation to
purchase the shareholder's shares for cash under Section 1300, subject to
compliance with paragraphs (3) and (4) of subdivision (b) thereof, and who
desires the corporation to purchase such shares shall make written demand upon
the corporation for the purchase of such shares and payment to the shareholder
in cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of
record by the shareholder which the shareholder demands that the corporation
purchase and shall contain a statement of what such shareholder claims to be the
fair market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market
value constitutes an offer by the shareholder to sell the shares at such price.
SECTION 1302. ENDORSEMENT OF SHARES
Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder, the shareholder shall submit to the corporation at
its principal office or at the office of any transfer agent thereof, (a) if the
shares are certificated securities, the shareholder's certificates representing
any shares which the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or endorsed
or (b) if the shares are uncertificated securities, written notice of the number
of shares which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the corporation,
the new certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together with the name
of the original dissenting holder of the shares.
SECTION 1303. AGREED PRICE -- TIME FOR PAYMENT
(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the
fair market value of any dissenting shares as between the corporation and the
holders thereof shall be filed with the secretary of the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair
market value of dissenting shares shall be made within 30 days after the amount
thereof has been agreed or within 30 days after any statutory or contractual
conditions to the reorganization are satisfied, whichever is later, and in the
case of certificated securities, subject to surrender of the certificates
therefor, unless provided otherwise by agreement.
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SECTION 1304. DISSENTER'S ACTION TO ENFORCE PAYMENT
(a) If the corporation denies that the shares are dissenting shares,
or the corporation and the shareholder fail to agree upon the fair market value
of the shares, then the shareholder demanding purchase of such shares as
dissenting shares or any interested corporation, within six months after the
date on which notice of the approval by the outstanding shares (Section 152) or
notice pursuant to subdivision (i) of Section 1110 was mailed to the
shareholder, but not thereafter, may file a complaint in the superior court of
the proper county praying the court to determine whether the shares are
dissenting shares or the fair market value of the dissenting shares or both or
may intervene in any action pending on such a complaint.
(b) Two or more dissenting shareholders may join as plaintiffs or be
joined as defendants in any such action and two or more such actions may be
consolidated.
(c) On the trial of the action, the court shall determine the issues.
If the status of the shares as dissenting shares is in issue, the court shall
first determine that issue. If the fair market value of the dissenting shares
is in issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.
SECTION 1305. APPRAISERS' REPORT -- PAYMENT -- COSTS
(a) If the court appoints an appraiser or appraisers, they shall
proceed forthwith to determine the fair market value per share. Within the time
fixed by the court, the appraisers, or a majority of them, shall make and file a
report in the office of the clerk of the court. Thereupon, on the motion of any
party, the report shall be submitted to the court and considered on such
evidence as the court considers relevant. If the court finds the report
reasonable, the court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a
response within 10 days from the date of their appointment or within such
further time as may be allowed by the court or the report is not confirmed by
the court, the court shall determine the fair market value of the dissenting
shares.
(c) Subject to the provisions of Section 1306, judgment shall be
rendered against the corporation for payment of an amount equal to the fair
market value of each dissenting share multiplied by the number of dissenting
shares which any dissenting shareholder who is a party, or who has intervened,
is entitled to require the corporation to purchase, with interest thereon at the
legal rate from the date on which judgment was entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including, in the
discretion of the court, attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301).
SECTION 1306. DISSENTING SHAREHOLDER'S STATUS AS CREDITOR
To the extent that the provisions of Chapter 5 prevent the payment to
any holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgment until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.
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SECTION 1307. DIVIDENDS PAID AS CREDIT AGAINST PAYMENT
Cash dividends declared and paid by the corporation upon the
dissenting shares after the date of approval of the reorganization by the
outstanding shares (Section 152) and prior to payment for the shares by the
corporation shall be credited against the total amount to be paid by the
corporation therefor.
SECTION 1308. CONTINUING RIGHTS AND PRIVILEGES OF DISSENTING
SHAREHOLDERS
Except as expressly limited in this chapter, holders of dissenting
shares continue to have all the rights and privileges incident to their shares,
until the fair market value of their shares is agreed upon or determined. A
dissenting shareholder may not withdraw a demand for payment unless the
corporation consents thereto.
SECTION 1309. TERMINATION OF DISSENTING SHAREHOLDER STATUS
Dissenting shares lose their status as dissenting shares and the
holders thereof cease to be dissenting shareholders and cease to be entitled to
require the corporation to purchase their shares upon the happening of any of
the following:
(a) The corporation abandons the reorganization. Upon abandonment of
the reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys' fees.
(b) The shares are transferred prior to their submission for
endorsement in accordance with Section 1302 or are surrendered for conversion
into shares of another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon
the status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.
SECTION 1310. SUSPENSION OF PROCEEDINGS FOR PAYMENT PENDING
LITIGATION
If litigation is instituted to test the sufficiency or regularity of
the votes of the shareholders in authorizing a reorganization, any proceedings
under Sections 1304 and 1305 shall be suspended until final determination of
such litigation.
SECTION 1311. EXEMPT SHARES
This chapter, except Section 1312, does not apply to classes of shares
whose terms and provisions specifically set forth the amount to be paid in
respect to such shares in the event of a reorganization or merger.
SECTION 1312. ATTACKING VALIDITY OF ACQUISITION OR REORGANIZATION
(a) No shareholder of a corporation who has a right under this
chapter to demand payment of cash for the shares held by the shareholder shall
have any right at law or in equity to attack the validity of the reorganization
or short-form merger, or to have the reorganization or short-form merger set
aside or rescinded, except in an action to test whether the number of shares
required to authorize or approve the
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reorganization have been legally voted in favor thereof; but any holder of
shares of a class whose terms and provisions specifically set forth the amount
to be paid in respect to them in the event of a reorganization or short-form
merger is entitled to payment in accordance with those terms and provisions or,
if the principal terms of the reorganization are approved pursuant to
subdivision (b) of Section 1202, is entitled to payment in accordance with the
terms and provisions of the approved reorganization.
(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash for
such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside or
rescinded, the shareholder shall not thereafter have any right to demand payment
of cash for the shareholder's shares pursuant to this chapter. The court in any
action attacking the validity of the reorganization or short-form merger or to
have the reorganization or short-form merger set aside or rescinded shall not
restrain or enjoin the consummation of the transaction except upon 10 days'
prior notice to the corporation and upon a determination by the court that
clearly no other remedy will adequately protect the complaining shareholder or
the class of shareholders of which such shareholder is a member.
(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of any party so controlled.
B-5
<PAGE>
APPENDIX C
NEVADA REVISED STATUES, SECTIONS 78.471 - 78.502
RIGHTS OF DISSENTING STOCKHOLDERS
SECTION 78.471 DEFINITIONS. As used in NRS 78.471 to 78.502,
inclusive, the words and terms defined in NRS 78.472 to 78.479, inclusive, have
the meanings ascribed to them in those sections.
SECTION 78.472 "BENEFICIAL STOCKHOLDER" DEFINED. "Beneficial
stockholder" means the person who is a beneficial owner of shares held in a
voting trust or by a nominee as the stockholder of record.
SECTION 78.473 "CORPORATION" DEFINED. "Corporation" means the issuer
of the shares held by a dissenter before the corporate action, or the surviving
or acquiring corporation of that issuer by merger or exchange of shares.
SECTION 78.474 "DISSENTER" DEFINED. "Dissenter" means a stockholder
who is entitled to dissent from corporate action under NRS 78.481 and who
exercises that right when and in the manner required by NRS 78.491 to 78.499,
inclusive.
SECTION 78.476 "FAIR VALUE" DEFINED. "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 he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
SECTION 78.477 "INTEREST" DEFINED. "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 of the circumstances.
SECTION 78.478 "STOCKHOLDER" DEFINED. "Stockholder" means the
stockholder of record or the beneficial stockholder.
SECTION 78.479 "STOCKHOLDER OF RECORD" DEFINED. "Stockholder of
record" means the person in whose name shares are registered in the records of a
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the corporation.
SECTION 78.481 RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPORATE
ACTIONS AND TO OBTAIN PAYMENT FOR SHARES.
1. Except as otherwise provided in NRS 78.482, a stockholder is
entitled to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party:
(1) If approval by the stockholders is required for the merger
by NRS 78.453 or the articles of incorporation and the stockholder is entitled
to vote on the merger; or
(2) If the corporation is a subsidiary and is merged with its
parent under NRS 78.457.
(b) Consummation of a plan of exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the stockholder is
entitled to vote on the plan.
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(c) Any corporate action taken pursuant to a vote of the stockholders
to the extent that the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting stockholders are entitled
to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment under
NRS 78.471 to 78.502, inclusive, may not challenge the corporate action creating
his entitlement unless the action is unlawful or fraudulent with respect to the
stockholder or the corporation.
SECTION 78.482 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION WITH
RESPECT TO PLAN OF MERGER OR EXCHANGE. There is no right of dissent with
respect to a plan of merger or exchange in favor of holders of shares of any
class or series which, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting at which the plan of
merger or exchange is to be acted on, were either listed on a national
securities exchange, designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc., or held by at least 2,000 stockholders of record, unless:
1. The articles of incorporation of the corporation issuing the
shares provide otherwise; or
2. The holders of the class or series are required under the plan or
merger or exchange to accept for such shares anything except:
(a) Cash, shares or shares and cash in lieu of fractional shares
of:
(1) The surviving or acquiring corporation; or
(2) Any other corporation which, at the effective date of
the plan of merger or exchange, were either listed on a national securities
exchange, designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc., or
held of record by at least 2,000 stockholders of record; or
(b) A combination of cash and shares of the kind described in
subparagraphs (1) and (2) of paragraph (a).
SECTION 78.483 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO
PORTIONS ONLY TO SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL
STOCKHOLDER.
1. A stockholder of record may assert dissenter's rights as to fewer
than all of the shares registered in his name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the corporation
in writing of the name and address of each person on whose behalf he asserts
dissenter's rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to
shares held on his behalf only if:
(a) He submits to the corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the
beneficial stockholder or over which he has power to direct the vote.
SECTION 78.491 NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF
DISSENT.
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1. If the proposed corporate action creating dissenter's rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under NRS 78.471 to 78.502, inclusive, and be accompanied by a copy of those
sections.
2. If the corporate action creating dissenters' rights is taken
without a vote of the stockholders, the corporation shall notify in writing all
stockholders entitled to assert dissenters' rights that the action was taken and
send them the dissenter's notice described in NRS 78.493.
SECTION 78.492 PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES.
1. If the proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to
assert dissenter's rights:
(a) Must deliver to the corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection
1 is not entitled to payment for his shares under this chapter.
SECTION 78.493 DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED
TO ASSERT RIGHTS; CONTENTS.
1. If the proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, the corporation shall deliver a written
dissenter's notice to all stockholders who satisfied the requirements to assert
those rights.
2. The dissenter's notice must be sent no later than 10 days after
the effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where
and when certificates for certificated shares must be deposited;
(b) Inform the holders of uncertificated shares as to what
extent the transfer of the shares will be restricted after the demand for
payment is received;
(c) Supply a form for demanding payment that includes the date
of the first announcement to the news media or to the stockholders of the terms
of the proposed corporate action and requires that the person asserting
dissenter's rights certify whether or not he acquired beneficial ownership of
the shares before that date;
(d) Set a date by which the corporation must receive the demand
for payment, which may not be less than 30 nor more than 60 days after the date
the notice is delivered; and
(e) Be accompanied by a copy of NRS 78.471 to 78.502, inclusive.
SECTION 78.494 DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES;
RETENTION OF RIGHTS OF STOCKHOLDER.
1. A stockholder to whom a dissenter's notice was sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the
shares before the date required to be set forth in the dissenter's notice for
this certification; and
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<PAGE>
(c) Deposit his certificates in accordance with the terms of the
notice.
2. The stockholder who demands payment and deposits his certificates
retains all other rights of a stockholder until those rights are canceled or
modified by the taking of the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under NRS 78.471 to 78.502,
inclusive.
SECTION 78.496 UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER
AFTER DEMAND FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER.
1. The corporation may restrict the transfer of uncertificated
shares from the date the demand for their payment is received.
2. The person for whom dissenter's rights are asserted as to
uncertificated rights retains all other rights of a stockholder until those
rights are canceled or modified by the taking of the proposed corporate action.
SECTION 78.497 PAYMENT FOR SHARES: GENERAL REQUIREMENTS.
1. Except as otherwise provided in NRS 78.498, within 30 days after
receipt of a demand for payment, the corporation shall pay each dissenter who
complied with NRS 78.494 the amount the corporation estimates to be the fair
value of his shares, plus accrued interest. The obligation of the corporation
under this subsection may be enforced by the district court:
(a) Of the county where the corporation's registered office is
located; or
(b) At the election of any dissenter residing or having its
registered office in Nevada, of the county where the dissenter resides or has
its registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement of
income for that year, a statement of changes in the stockholders' equity for
that year, and the latest available interim financial statements, if any;
(b) A statement of the corporation's estimate of the fair value
of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment
under NRS 78.499; and
(e) A copy of NRS 78.471 to 78.502, inclusive.
SECTION 78.498 PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE
OF DISSENTER'S NOTICE.
1. A corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed corporate action.
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<PAGE>
2. To the extent the corporation elects to withhold payment, after
taking the proposed corporate action, it shall estimate the fair value of the
shares, plus accrued interest, and shall offer to pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated, and a
statement of the dissenters' right to demand payment pursuant to NRS 78.499.
SECTION 78.499 DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF
CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE.
1. A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 78.497, or
reject the corporation's offer pursuant to NRS 78.498 and demand payment of the
fair value of his shares and interest due, if he believes that the amount paid
pursuant to NRS 78.497 or offered pursuant to NRS 78.498 is less than the fair
value of his shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the corporation of his demand in writing within 30
days after the corporation made or offered payment for his shares.
SECTION 78.501 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF
CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER.
1. If a demand for payment remains unsettled, the corporation shall
commence a proceeding within 60 days after receiving the demand and petition the
court to determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the 60-day period, it shall
pay each dissenter whose demand remains unsettled the amount demanded.
2. A corporation shall commence the proceeding in the district court
of the county where a corporation's registered office is located. If the
corporation is a foreign corporation without a resident agent in the state, it
shall commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
3. The corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. 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.
4. The jurisdiction of the court in which the proceeding is
commenced under subsection 2 is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend a decision
on the question of fair value. The appraisers have the powers described in the
order appointing them, or any amendment thereto. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled
to a judgment:
(a) For the amount, if any, by which the court finds the fair
value of his shares, plus interest, exceeds the amount paid by the corporation;
or
(b) For the fair value, plus accrued interest, of his after-
acquired shares for which the corporation elected to withhold payment pursuant
to NRS 78.498.
SECTION 78.502 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT
OF COSTS AND FEES.
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<PAGE>
1. The court in a proceeding to determine fair value shall determine
all of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the corporation, except that the court may assess costs against
all or some of the dissenters, in amounts the court finds equitable, to the
extent the court finds the dissenters acted arbitrarily, vexatiously or not in
good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel
and experts for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of all dissenters if
the court finds the corporation did not substantially comply with the
requirements of NRS 78.491 to 78.499, inclusive; or
(b) 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 NRS 78.471 to 78.502, inclusive.
3. 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 those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to subsection 1 of NRS 78.497,
the court may assess the costs against the corporation, except that the court
may assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding
commenced pursuant to NRS 78.501 or subsection 1 of NRS 78.497 from applying the
provisions of N.R.C.P. 68 or NRS 17.115.
C-6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes indemnification
of directors and officers of a Delaware corporation under certain circumstances
against expenses, judgments and the like in connection with an action, suit or
proceeding. Article Fourteenth of Norwest's Restated Certificate of
Incorporation provides for broad indemnification of directors and officers.
Item 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
8 -- Opinion of Carter, Ledyard & Milburn.
23.2 -- Consent of Carter, Ledyard & Milburn (included as part of Exhibit 8
filed herewith).
Item 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period, in which offers or sales are being made, a
posteffective amendment to this registration statement (i) to include
any prospectus required by section 10(a)(3) of the Securities Act of
1933, (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent posteffective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement and (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such posteffective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a posteffective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public offering of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to re-offerings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(d) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
II-1
<PAGE>
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE>
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 13th day of September, 1995.
NORWEST CORPORATION
By: *
---------------------------
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 13th day of
September, 1995, by the following persons in the capacities indicated:
* 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 )
WILLIAM A. HODDER )
LLOYD P. JOHNSON ) A majority of the
REATHA CLARK KING ) Board of Directors*
RICHARD M. KOVACEVICH )
RICHARD S. LEVITT )
RICHARD D. McCORMICK )
CYNTHIA H. MILLIGAN )
IAN M. ROLLAND )
STEPHEN E. WATSON )
________________
*John T. Thornton, 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/ John T. Thornton
--------------------------------------
John T. Thornton
Attorney-in-Fact
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Form of
Number Description* Filing
-------- ------------ ---------
<S> <C> <C>
8 Opinion of Carter, Ledyard & Milburn. Electronic
Transmission
23.2 Consent of Carter, Ledyard & Milburn (included as part of Exhibit 8
filed herewith).
</TABLE>
<PAGE>
EXHIBIT 8
September 8, 1995
Orlandi Valuta
Orlandi Valuta Nacional
560 S. Spring Street
Los Angeles, California 90013
Gentlemen and Ladies:
We have acted as special tax counsel for Orlandi Valuta, a California
corporation ("OV"), and Orlandi Valuta Nacional, a Nevada corporation ("OVN")
(OV and OVN, collectively "Orlandi"), in connection with the contemplated
acquisition by Norwest of the assets and liabilities of OV and OVN (the
"Acquisition") pursuant to the terms of the Agreement and Plan of Reorganization
between Orlandi and Norwest, dated as of May 18, 1995 (the "Agreement"). The
delivery of this opinion, dated as of the effective time of the Acquisition, is
a condition to the Agreement pursuant to section 6(h) of the Agreement.
In rendering our opinion, we have examined and relied upon the accuracy and
completeness of the facts, information, covenants and representations contained
in originals or copies, certified or otherwise identified to our satisfaction,
of the Agreement, the Registration Statement of Norwest (Form S-4) as filed with
the Securities and Exchange Commission on September 8, 1995 (the "Registration
Statement"), including the prospectus constituting a part thereof (the
"Prospectus"), and such other documents as we have deemed necessary or
appropriate as a basis for the opinion set forth below. In addition, we have
relied upon certain written and oral statements and representations made by
Norwest, Orlandi, Norwest Financial Services, Inc., Newco1 and Newco2, and
others. Our opinion is conditioned on, among other things, the initial
and continuing accuracy of the documents, information, covenants and
representations described above.
In our examinations we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such documents. We also have assumed that the transactions
<PAGE>
Orlandi Valuta
Orlandi Valuta Nacional -2-
related to the Acquisition or contemplated by the Agreement will be consummated
in accordance with the Agreement and as described in the Prospectus.
In rendering our opinion, we have considered the applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
promulgated thereunder, pertinent judicial authorities, interpretive rulings of
the Internal Revenue Service and such other authorities as we have considered
relevant. It should be noted that statutes, regulations, judicial decisions and
administrative interpretations are subject to change at any time and, in some
circumstances, with retroactive effect. A change in the authorities upon which
our opinion is based could affect our conclusions.
Based solely upon the foregoing, we are of the opinion that under current
law, the Acquisition will be treated as a reorganization within the meaning of
section 368(a) of the Code and that, accordingly, for Federal income tax
purposes:
(i) no gain or loss will be recognized by OV or OVN as a result of the
Acquisition;
(ii) no gain or loss will be recognized by the shareholders of OV or
OVN on the receipt of Norwest Common Stock in the liquidation of OV and OVN
pursuant to the Agreement;
(iii) the aggregate tax basis of the Norwest Common Stock received by
shareholders of OV and OVN pursuant to the Acquisition will be the same as
the aggregate tax basis of the OV or OVN stock, as the case may
be, surrendered in the liquidation; and
(iv) the holding period of the shares of Norwest Common Stock received
will include the period during which the shares of OV or OVN, as the case
may be, surrendered in exchange therefor were held, provided that such
shares of OV or OVN, as the case may be, were held as capital assets at the
Effective Time.
The foregoing opinion may not be applicable to shareholders of OV or OVN
who acquired their shares pursuant to the exercise of employee stock options or
rights or otherwise as compensation.
Except as set forth above, we express no opinion to any party as to the tax
consequences, whether Federal, state, local or foreign, of the Acquisition, or
of any transactions related to the Acquisition or contemplated by the Agreement
or the Prospectus. We are furnishing this opinion to you solely in connection
with section 6(h) of the Agreement; this opinion is solely for your benefit and,
except as described below, is not to be used, circulated, quoted or otherwise
referred to for any purpose without our express written permission.
<PAGE>
Orlandi Valuta
Orlandi Valuta Nacional -3-
We hereby consent to the reference made to us under the heading "THE
ACQUISITION--Certain Federal Income Tax Consequences" in the Prospectus and to
the filing of this opinion as Exhibit (8) to the Registration Statement. In
giving such consent we do not hereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended or the rules or regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Carter, Ledyard & Milburn
--------------------------------
CARTER, LEDYARD & MILBURN
