<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1997
REGISTRATION NO. 333-20263
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
NORWEST CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 6711 41-0449260
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
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)
---------------
STANLEY S. STROUP
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
NORWEST CORPORATION
NORWEST CENTER
SIXTH AND MARQUETTE
MINNEAPOLIS, MINNESOTA 55479-1026
612-667-8858
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
ROBERT J. KAUKOL THEODORE L. EISSFELDT
NORWEST CORPORATION DAVID G. KABBES
NORWEST CENTER SCHIFF HARDIN & WAITE
SIXTH AND MARQUETTE 300 HAMILTON BOULEVARD, SUITE 100
MINNEAPOLIS, MINNESOTA 55479-1026 PEORIA, ILLINOIS 61602
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of the Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[FNB LETTERHEAD]
February 18, 1997
Dear Stockholder:
A special meeting of stockholders of Farmers National Bancorp, Inc. ("FNB")
will be held on March 20, 1997 to approve the Agreement and Plan of
Reorganization dated November 22, 1996 (the "Reorganization Agreement")
between FNB and Norwest Corporation ("Norwest") and the related Agreement and
Plan of Merger dated January 31, 1997 (the "Plan of Merger"). The
Reorganization Agreement and Plan of Merger provide for the merger of a
wholly-owned subsidiary of Norwest with and into FNB (the "Merger"). FNB, as
the surviving corporation in the Merger, will become a wholly-owned subsidiary
of Norwest.
If the Reorganization Agreement and Plan of Merger are approved and the
Merger becomes effective, you will be entitled to receive, in exchange for
each share of FNB common stock owned by you immediately prior to the Merger,
shares of Norwest common stock valued at $100. The exchange value of $100 will
be measured by the average closing prices of a share of Norwest common stock,
as reported on the New York Stock Exchange during the 20 trading day period
ending on the last trading day before the special meeting. The number of
shares of Norwest common stock you will be entitled to receive in the Merger
for each share of FNB common stock will equal the exchange value of $100
divided by this average. For example, if this average is $40, you will be
entitled to receive 2.5 shares of Norwest common stock for each share of FNB
common stock; if this average is $45, you will be entitled to receive
approximately 2.22 shares of Norwest common stock. The closing price of a
share of Norwest common stock on the effective date of the Merger may be
higher or lower than the average used to calculate the number of shares of
Norwest common stock you will be entitled to receive in the Merger.
Enclosed with this letter are a notice of special meeting, which sets forth
the time and location of the special meeting, and a Proxy Statement-
Prospectus, which describes in more detail the terms and conditions of the
Merger. Please carefully review and consider the information in the Proxy
Statement-Prospectus. Copies of the Reorganization Agreement and the Plan of
Merger are included in the Proxy Statement-Prospectus as Appendix A and
Appendix B, respectively. Additional information concerning Norwest, including
its most recent annual report on Form 10-K and its quarterly reports on Form
10-Q for 1996, may be obtained from Norwest as indicated in the Proxy
Statement-Prospectus under the section entitled "Incorporation of Certain
Documents by Reference."
FNB's board of directors has approved the Reorganization Agreement and the
Plan of Merger as being advisable and in your best interests as a stockholder
of FNB and RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE REORGANIZATION
AGREEMENT AND PLAN OF MERGER. Howe Barnes Investments, Inc., FNB's financial
advisor in connection with the Merger, has rendered an opinion to FNB's board
of directors that, as of the date of this letter, the consideration to be
received in the Merger by stockholders of FNB is fair from a financial point
of view. A copy of this opinion is included in the Proxy Statement-Prospectus
as Appendix C.
YOUR VOTE IS VERY IMPORTANT. The Merger will not occur unless it is approved
by the holders of a majority of the outstanding shares of FNB common stock.
Please mark, date, sign and return the enclosed proxy in the enclosed
postage prepaid envelope as soon as possible, regardless of whether you plan
to attend the special meeting. A failure to vote, either by not returning the
enclosed proxy or by checking the "Abstain" box thereon, will have the same
effect as a vote against approval of the Reorganization Agreement and the Plan
of Merger. If you attend the meeting, you may vote in person if you wish, even
though you have previously returned your proxy.
Gaylon E. Martin
President
<PAGE>
FARMERS NATIONAL BANCORP, INC.
121 WEST FIRST STREET
GENESEO, ILLINOIS 61254
(309) 944-5361
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 20, 1997
----------------
A special meeting (the "Special Meeting") of stockholders of Farmers
National Bancorp, Inc., a Delaware corporation ("FNB"), will be held at 121
West First Street, Geneseo, Illinois, on March 20, 1997, at 10:00 a.m.,
central time, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and Plan
of Reorganization dated November 22, 1996 (the "Reorganization Agreement")
between FNB and Norwest Corporation ("Norwest"), a copy of which is
attached as Appendix A to the accompanying Proxy Statement-Prospectus, and
the related Agreement and Plan of Merger dated January 31, 1997 (the "Plan
of Merger"), a copy of which is attached as Appendix B to the accompanying
Proxy Statement-Prospectus. Pursuant to the Reorganization Agreement and
the Plan of Merger, a wholly-owned subsidiary of Norwest will merge with
and into FNB and FNB will become a wholly-owned subsidiary of Norwest, all
upon the terms and subject to the conditions set forth in the
Reorganization Agreement and the Plan of Merger.
2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
Only stockholders of record on the books of FNB at the close of business on
February 10, 1997 will be entitled to vote at the Special Meeting or any
adjournments or postponements thereof.
Your attention is directed to the Proxy Statement-Prospectus accompanying
this notice for a more complete statement regarding the matters to be acted
upon at the Special Meeting.
By Order of the Board of Directors
Wayne A. Hulting
Secretary
February 18, 1997
- -------------------------------------------------------------------------------
PLEASE COMPLETE, SIGN AND DATE YOUR PROXY AND PROMPTLY MAIL IT IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
YOU MAY REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE PROXY
STATEMENT-PROSPECTUS AT ANY TIME BEFORE IT IS EXERCISED.
PLEASE DO NOT SEND IN ANY SHARE CERTIFICATES AT THIS TIME.
- -------------------------------------------------------------------------------
<PAGE>
FARMERS NATIONAL BANCORP, INC.
PROXY STATEMENT
FOR A SPECIAL MEETING OF STOCKHOLDERS
--------------
NORWEST CORPORATION
PROSPECTUS
SHARES OF COMMON STOCK
--------------
This Proxy Statement-Prospectus is being provided to you in connection with
the solicitation of your proxy by the board of directors of Farmers National
Bancorp, Inc. ("FNB") for use at a special meeting of FNB's stockholders to be
held on March 20, 1997 (the "Special Meeting"). FNB's board of directors has
called the Special Meeting to approve the Agreement and Plan of Reorganization
dated November 22, 1996 (including all exhibits, the "Reorganization
Agreement") between FNB and Norwest Corporation ("Norwest") and the related
Agreement and Plan of Merger dated January 31, 1997 (the "Plan of Merger").
The Reorganization Agreement and Plan of Merger provide for the merger of a
wholly-owned subsidiary of Norwest with and into FNB (the "Merger"). FNB, as
the surviving corporation in the Merger, will become a wholly-owned subsidiary
of Norwest. If the Reorganization Agreement and Plan of Merger are approved
and the Merger becomes effective, you will be entitled to receive shares of
Norwest common stock, par value $1 2/3 per share ("Norwest Common Stock"),
valued at $100 (the "exchange value") for each share of FNB common stock, par
value $5.00 per share ("FNB Common Stock"), owned by you immediately prior to
the Merger.
The exchange value of $100 will be measured by the average of the closing
prices of a share of Norwest common stock as reported on the New York Stock
Exchange ("NYSE") during the period of 20 trading days ending on the last
trading day before the Special Meeting. This average is referred to in this
document and in the Reorganization Agreement as the "Norwest Measurement
Price." The number of shares of Norwest Common Stock you will be entitled to
receive in the Merger in exchange for each share of FNB Common Stock (the
"exchange ratio") will equal $100 divided by the Norwest Measurement Price.
For example, if the Norwest Measurement Price is $40, you will be entitled to
receive 2.5 shares of Norwest Common Stock for each share of FNB Common Stock;
if the Norwest Measurement Price is $45, you will be entitled to receive
approximately 2.22 shares of Norwest Common Stock. The closing price of a
share of Norwest Common Stock on the effective date of the Merger may be
higher or lower than the Norwest Measurement Price.
Copies of the Reorganization Agreement and Plan of Merger are included in
this Proxy Statement-Prospectus as Appendix A and Appendix B, respectively,
and are incorporated herein by reference. For purposes of the remainder of
this document, unless otherwise indicated or the context otherwise requires,
references to the Reorganization Agreement will be deemed to include the Plan
of Merger.
Norwest has filed a registration statement on Form S-4 (File No. 333-20263)
(the "Registration Statement") with the Securities and Exchange Commission
(the "Commission") registering under the Securities Act of 1933, as amended
(the "Securities Act"), the shares of Norwest Common Stock to be issued in the
Merger. In addition to serving as the proxy statement of FNB in connection
with the Special Meeting, this document constitutes the prospectus of Norwest
filed as part of the Registration Statement.
Norwest Common Stock trades on the NYSE and the Chicago Stock Exchange
("CHX") under the symbol NOB. The closing price of Norwest Common Stock as
reported on the NYSE Composite Tape on February 5, 1997 was $47.50 per share.
FNB Common Stock is quoted on the NASDAQ Bulletin Board; however, an active
trading market has not developed. The last NASDAQ Bulletin Board trade of FNB
Common Stock was on January 24, 1997 at a price of $90.00 per share.
--------------
NORWEST, ITS BANKING SUBSIDIARIES AND MANY OF ITS NONBANKING SUBSIDIARIES
ARE SUBJECT TO EXTENSIVE REGULATION BY A NUMBER OF FEDERAL AND STATE AGENCIES.
THIS REGULATION MAY AFFECT, AMONG OTHER THINGS, NORWEST'S EARNINGS AND/OR
RESTRICT ITS ABILITY TO PAY DIVIDENDS ON NORWEST COMMON STOCK. SEE "CERTAIN
REGULATORY AND OTHER CONSIDERATIONS PERTAINING TO NORWEST."
THE SHARES OF NORWEST COMMON STOCK OFFERED BY THIS PROXY STATEMENT-
PROSPECTUS ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK
OR NONBANK SUBSIDIARY OF NORWEST AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------
All information concerning Norwest contained in this Proxy Statement-
Prospectus has been provided by Norwest, and all information concerning FNB
contained in this Proxy Statement-Prospectus has been provided by FNB.
This Proxy Statement-Prospectus is dated as of February 18, 1997 and,
together with the accompanying form of proxy, is first being mailed to
stockholders of FNB on or about February 18, 1997.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 4
DOCUMENTS ENCLOSED WITH THIS PROXY STATEMENT-PROSPECTUS................... 5
EXPLANATORY NOTE AND DEFINITIONS OF CERTAIN TERMS......................... 6
SUMMARY................................................................... 7
Parties to the Merger................................................... 7
Special Meeting and Vote Required....................................... 8
The Merger.............................................................. 8
Market Information...................................................... 10
Comparison of Rights of Holders of FNB Common Stock and Norwest Common
Stock.................................................................. 10
Comparative Per Common Share Data....................................... 10
Selected Consolidated Financial Data.................................... 11
Comparative Per Common Share Prices and Dividends....................... 15
MEETING INFORMATION....................................................... 16
General................................................................. 16
Record Date; Voting Rights; Vote Required............................... 16
Voting and Revocation of Proxies........................................ 16
Solicitation of Proxies................................................. 17
THE MERGER................................................................ 18
General................................................................. 18
Merger Consideration.................................................... 18
Background of the Merger................................................ 19
Reasons for the Merger.................................................. 19
Opinion of FNB's Financial Advisor...................................... 20
Dissenters' Rights...................................................... 24
Surrender of Certificates............................................... 26
Conditions to the Merger................................................ 27
Regulatory Approvals.................................................... 28
Conduct of Business Pending the Merger.................................. 28
No Solicitation......................................................... 29
Certain Additional Agreements........................................... 29
Termination of the Reorganization Agreement............................. 29
Amendment of Reorganization Agreement................................... 31
Waiver of Performance of Obligations.................................... 31
Effect on Employee Benefit Plans........................................ 31
Interests of Certain Persons in the Merger.............................. 31
U. S. Federal Income Tax Consequences................................... 32
Resale of Norwest Common Stock.......................................... 33
Stock Exchange Listing.................................................. 33
Accounting Treatment.................................................... 33
Expenses................................................................ 33
COMPARISON OF RIGHTS OF HOLDERS OF FNB COMMON STOCK AND NORWEST COMMON
STOCK.................................................................... 34
General................................................................. 34
Directors............................................................... 34
Amendment of Certificate of Incorporation and Bylaws.................... 34
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Stockholder Approval of Mergers and Asset Sales........................... 35
Appraisal Rights.......................................................... 35
Special Meetings.......................................................... 36
Action Without a Meeting.................................................. 36
Limitation of Director Liability.......................................... 36
Indemnification of Officers and Directors................................. 37
Dividends................................................................. 38
Proposal of Business; Nomination of Directors............................. 38
CERTAIN REGULATORY AND OTHER CONSIDERATIONS PERTAINING TO NORWEST........... 38
Bank Regulatory Agencies.................................................. 39
Bank Holding Company Activities; Interstate Banking....................... 39
Dividend Restrictions..................................................... 40
Holding Company Structure................................................. 40
Regulatory Capital Standards and Related Matters.......................... 41
FDIC Insurance............................................................ 43
Fiscal and Monetary Policies.............................................. 44
Competition............................................................... 44
EXPERTS..................................................................... 45
LEGAL OPINIONS.............................................................. 45
MANAGEMENT OF NORWEST AND ADDITIONAL INFORMATION............................ 45
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION
APPENDIX B AGREEMENT AND PLAN OF MERGER
APPENDIX C OPINION OF HOWE BARNES INVESTMENTS, INC.
APPENDIX D SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
</TABLE>
3
<PAGE>
AVAILABLE INFORMATION
Norwest and FNB are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file annual, quarterly and current reports, proxy
statements and other information with the Commission. You may review and copy
such reports, proxy statements and other information at the public reference
facilities of the Commission, located in Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located
at 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You
may also access these materials through the Commission's Web site on the
Internet located at http://www.sec.gov. You may obtain copies of these
materials at prescribed rates by writing to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549. You may also review
annual, quarterly and current reports, proxy statements and other information
concerning Norwest 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.
As permitted by the Commission, this Proxy Statement-Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits thereto. You may review or obtain a copy of the Registration
Statement in the manner described above.
In deciding whether to approve the Reorganization Agreement, you should rely
only on the information contained or incorporated by reference in this Proxy
Statement-Prospectus or in the documents enclosed with this Proxy Statement-
Prospectus. Neither Norwest nor FNB has authorized any person to provide you
with any additional or contrary information or representations concerning
either company or the Merger.
The information contained in this Proxy Statement-Prospectus is as of
February 18, 1997. You should not assume that the delivery to you of this
Proxy Statement-Prospectus or the issuance to you of shares of Norwest Common
Stock means that there has been no change in the business prospects, financial
condition or other affairs of Norwest or FNB since February 18, 1997 or that
the information contained or incorporated by reference in this Proxy
Statement-Prospectus is correct or complete as of any time after February 18,
1997. The Commission allows Norwest and FNB to update much of the information
contained or incorporated by reference in this Proxy Statement-Prospectus
pursuant to their subsequent filings with the Commission (see "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE" below).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
As permitted by the Commission, Norwest has incorporated into this Proxy
Statement-Prospectus certain information contained in documents filed by
Norwest with the Commission. These documents contain important information
concerning Norwest and its business prospects and financial condition. Except
to the extent superseded by the information contained in this Proxy Statement-
Prospectus, the information contained in each document incorporated by
reference is considered to be part of this Proxy Statement-Prospectus and
therefore to have been provided to you at the time you receive this Proxy
Statement-Prospectus. In addition, each document filed by Norwest with the
Commission subsequent to the date hereof and prior to the Special Meeting will
be incorporated into and considered part of this Proxy Statement-Prospectus.
There may be information contained in these documents that supersedes or
modifies statements and other information contained or incorporated by
reference in this Proxy Statement-Prospectus. Generally, you will not receive
a copy of any of these documents unless you request a copy in the manner
described below.
4
<PAGE>
The following Norwest documents have been incorporated by reference in this
Proxy Statement-Prospectus. Each document was filed with the Commission under
file number 1-2979.
(1) Norwest's annual report on Form 10-K for the year ended December 31,
1995;
(2) Norwest's quarterly reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996 and September 30, 1996;
(3) Norwest's current reports on Form 8-K dated January 17, 1996,
February 20, 1996, as amended pursuant to Form 8-K/A, February 26, 1996,
April 17, 1996, July 2, 1996, July 15, 1996, October 14, 1996 and January
16, 1997;
(4) Norwest's current report on Form 8-K dated April 30, 1996 containing
a description of the Norwest Common Stock; and
(5) Norwest's registration statement on Form 8-A dated December 6, 1988,
as amended pursuant to Form 8-A/A dated June 29, 1993, relating to
preferred stock purchase rights attached to shares of Norwest Common Stock.
YOU MAY OBTAIN COPIES OF THE FOREGOING DOCUMENTS (OTHER THAN CERTAIN
EXHIBITS) UPON REQUEST IN WRITING OR BY TELEPHONE AS FOLLOWS:
CORPORATE SECRETARY
NORWEST CORPORATION
NORWEST CENTER
SIXTH AND MARQUETTE
MINNEAPOLIS, MN 55479-1026
TELEPHONE (612) 667-8655
FAX (612) 667-4399
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, YOUR REQUEST SHOULD BE RECEIVED
BY NORWEST BY MARCH 13, 1997.
DOCUMENTS ENCLOSED WITH THIS PROXY STATEMENT-PROSPECTUS
As permitted by the Commission, FNB has elected to provide you with copies
of the following documents rather than including certain information contained
in these documents in this Proxy Statement-Prospectus:
(1) FNB's 1996 annual report to stockholders; and
(2) FNB's annual report on Form 10-KSB for the year ended December 31,
1996.
ADDITIONAL COPIES OF THESE DOCUMENTS ARE AVAILABLE UPON REQUEST IN WRITING
OR BY TELEPHONE AS FOLLOWS:
CORPORATE SECRETARY
FARMERS NATIONAL BANCORP, INC.
121 WEST FIRST STREET
GENESEO, ILLINOIS
TELEPHONE (309) 944-5361
FAX (309) 944-4897
TO ENSURE TIMELY DELIVERY OF ANY OF THESE DOCUMENTS, YOUR REQUEST SHOULD BE
RECEIVED BY FNB BY NO LATER THAN MARCH 13, 1997.
5
<PAGE>
EXPLANATORY NOTE AND DEFINITIONS OF CERTAIN TERMS
FNB and Norwest are incorporated under the laws of the state of Delaware
and, for that reason, are governed by the Delaware General Corporation Law
(the "DGCL"). FNB and Norwest are also governed by their respective
certificates of incorporation and bylaws. FNB's certificate of incorporation
and bylaws are referred to herein as the "FNB Certificate" and "FNB Bylaws,"
respectively. Norwest's certificate of incorporation and bylaws are referred
to herein as the "Norwest Certificate" and "Norwest Bylaws," respectively.
6
<PAGE>
SUMMARY
The following is a summary of certain information relating to the Merger.
There may be additional information contained elsewhere in this document or in
the documents incorporated by reference that may affect your decision whether
to approve the Merger. For that reason, you should read this document
(including the appendices), as well as the documents incorporated by reference
and the documents enclosed herewith, in their entirety. See "DOCUMENTS ENCLOSED
WITH THIS PROXY STATEMENT-PROSPECTUS" for a list of documents concerning FNB
accompanying this Proxy Statement-Prospectus. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" for a list of the documents concerning Norwest
incorporated by reference and instructions on how to obtain copies of these
documents.
PARTIES TO THE MERGER
Norwest. Norwest Corporation ("Norwest") is a diversified financial services
company organized under the laws of Delaware in 1929 and registered under the
Bank Holding Company Act of 1956, as amended (the "Bank Holding Company Act").
Through its subsidiaries and affiliates, Norwest provides retail, commercial
and corporate banking services, as well as a variety of other financial
services, including 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, mortgage-backed securities servicing, and venture capital
investment.
At December 31, 1996, Norwest had consolidated total assets of $80.2 billion,
total deposits of $50.1 billion and total stockholders' equity of $6.1 billion.
Based on total assets at December 31, 1996, Norwest was the 12th largest
commercial banking organization in the United States.
Norwest's principal executive offices are located at Norwest Center, Sixth
and Marquette, Minneapolis, Minnesota 55479, and its telephone number is (612)
667-1234. As used in this Prospectus, the term "Norwest" means Norwest and its
consolidated subsidiaries.
Additional information concerning Norwest is included in Norwest's documents
incorporated herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
FNB. FNB, a Delaware corporation organized in 1981, is a bank holding company
registered under the Bank Holding Company Act. FNB owns all of the issued and
outstanding shares of The Farmers National Bank of Geneseo (the "Bank"), a
national banking association. FNB has no other subsidiaries. Substantially all
of FNB's revenues are derived from the Bank.
The Bank was founded in 1876 and is currently in its 121st year of
operations. The Bank is engaged in a general, full-service banking business
through its four full-service banking facilities in Henry and Rock Island
Counties, Illinois.
At December 31, 1996, FNB had consolidated total assets of $187 million,
total deposits of $165 million, and total stockholders' equity of $16 million.
Additional information regarding FNB is included in the FNB documents delivered
herewith. See "DOCUMENTS ENCLOSED WITH THIS PROXY STATEMENT-PROSPECTUS."
7
<PAGE>
SPECIAL MEETING AND VOTE REQUIRED
Special Meeting. The Special Meeting will be held on March 20, 1997 at 121
West First Street, Geneseo, Illinois for the purpose of voting on a proposal to
approve the Reorganization Agreement. Only holders of record of FNB Common
Stock at the close of business on February 10, 1997 (the "Record Date") will be
entitled to receive notice of and to vote at the Special Meeting. At the Record
Date, there were 306,316 shares of FNB Common Stock outstanding and entitled to
vote at the Special Meeting. For additional information relating to the Special
Meeting, see "MEETING INFORMATION."
Vote Required. Approval of the Reorganization Agreement requires the
affirmative vote of the holders of a majority of the outstanding shares of FNB
Common Stock. Holders of FNB Common Stock are entitled to one vote per share
owned of record on the Record Date. If a majority of the votes eligible to be
cast by the holders of FNB Common Stock do not vote in favor of approval of the
Reorganization Agreement, FNB will remain a separate entity. In such an event,
FNB thereafter will hold an annual meeting of stockholders to elect directors.
See "MEETING INFORMATION--Record Date; Voting Rights; Vote Required."
THE MERGER
Effect of the Merger. If the Reorganization Agreement is approved and the
Merger becomes effective, a wholly-owned subsidiary of Norwest will merge with
FNB, with FNB being the surviving corporation in the Merger and becoming a
wholly-owned subsidiary of Norwest. In the Merger, each share of FNB Common
Stock outstanding immediately prior to the Effective Time of the Merger will be
automatically converted into and exchanged for the right to receive $100 worth
of Norwest Common Stock, as measured by the Norwest Measurement Price. See "THE
MERGER--Merger Consideration."
Recommendation of the FNB Board. At a meeting of FNB's board of directors
(the "FNB Board") held on November 22, 1996, after considering the terms and
conditions of the Reorganization Agreement, the FNB Board approved the
Reorganization Agreement. The FNB Board believes that the Merger is advisable
and in the best interests of FNB and its stockholders and recommends that
stockholders of FNB approve the Reorganization Agreement. For a discussion of
the circumstances surrounding the Merger and the factors considered by the FNB
Board in making its recommendation, see "THE MERGER--Background of the Merger"
and "--Reasons for the Merger."
Opinion of FNB's Financial Advisor. The FNB Board retained Howe Barnes
Investments, Inc. ("HBI") to act as financial advisor in connection with the
Merger. HBI delivered on November 22, 1996, its written opinion to the FNB
Board that, as of such date, the consideration to be received in the Merger by
FNB's stockholders is fair from a financial point of view. HBI has confirmed
this opinion by delivery to the FNB Board of a written opinion dated the date
of this Proxy Statement-Prospectus. A copy of the opinion of HBI dated the date
of this Proxy Statement-Prospectus is attached as Appendix C to this Proxy
Statement-Prospectus. Stockholders are urged to read this opinion and the
section of this Proxy Statement-Prospectus entitled "THE MERGER--Opinion of
FNB's Financial Advisor" in their entirety for a description of the procedures
followed, matters considered and limitations on the reviews undertaken in
connection therewith.
8
<PAGE>
Conditions to the Merger; Termination of the Reorganization Agreement. The
obligations of Norwest and FNB to effect the Merger are subject to the
satisfaction or, if permissible under the Reorganization Agreement, waiver of a
number of conditions, in addition to approval of the Reorganization Agreement
by FNB's stockholders. The Reorganization Agreement is subject to termination
by one or more parties at any time prior to the Effective Time of the Merger
upon the occurrence of certain specified events. See "THE MERGER--Conditions to
the Merger" and "--Termination of the Reorganization Agreement."
Regulatory Approvals. The Merger is subject to the approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"). Norwest
has filed an application with the Federal Reserve Board requesting approval of
the Merger; however, there can be no assurance that the necessary regulatory
approval will be obtained or as to the timing or conditions of such approval.
See "THE MERGER--Regulatory Approvals."
Effective Time and Closing of the Merger. If the Reorganization Agreement is
approved at the Special Meeting and all other conditions to the Merger have
been satisfied or waived, the parties expect the Merger to become effective at
11:59 p.m. on the date the required documents relating to the Merger are filed
with and accepted by the Delaware Secretary of State in accordance with the
relevant provisions of the DGCL (the "Effective Time of the Merger"). The
parties expect to file the required documents as soon as practicable following
approval of the Reorganization Agreement at the Special Meeting. See "THE
MERGER--Conditions to the Merger" and "--Regulatory Approvals."
No Solicitation. Subject to certain exceptions, FNB and the Bank, and their
respective directors, officers, representatives and agents, are prohibited
under the Reorganization Agreement from directly or indirectly soliciting,
authorizing the solicitation of or entering into any discussions with any party
other than Norwest concerning certain transactions involving the acquisition of
FNB's or the Bank's capital stock or assets. See "THE MERGER--No Solicitation."
Interests of Certain Persons in the Merger. In the Merger, FNB's directors
and executive officers will receive the same consideration for their shares of
FNB Common Stock as the other stockholders of FNB will receive for their shares
of FNB Common Stock. Certain members of the FNB Board and management, however,
may be deemed to have interests in the Merger that are in addition to and
separate from the interests of FNB's stockholders generally. These interests
include, among others, an employment agreement in the case of an officer and
provisions in the Reorganization Agreement relating to the continuation of
certain director and officer indemnification rights and the maintenance of
certain directors' and officers' liability insurance policies. See "THE
MERGER--Interests of Certain Persons in the Merger."
Directors and Officers of FNB after the Merger. Following the Effective Time
of the Merger, Norwest will be the sole stockholder of FNB and, for that
reason, will be in a position to elect or appoint all of the directors and
officers of FNB.
Dissenters' Rights. Holders of FNB Common Stock will have the right to
dissent with respect to their shares of FNB Common Stock and, subject to
certain conditions, receive a cash payment equal to the fair value of their
shares. For more information concerning dissenters' rights and the procedures
to be followed to exercise such rights, see "THE MERGER--Dissenters' Rights."
U.S. Federal Income Tax Consequences. FNB has received the opinion of the law
firm of Schiff Hardin & Waite that the Merger will qualify as a tax-free
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Code"), which should result in no gain
or loss being recognized by FNB's stockholders upon the receipt of Norwest
Common Stock
9
<PAGE>
solely in exchange for such FNB Common Stock pursuant to the Merger (except to
the extent of other cash received in lieu of fractional shares or as a result
of exercising dissenters' appraisal rights). The Merger's effectiveness is
conditioned upon the receipt by FNB of an updated written opinion dated as of
the effective date of the Merger of its counsel to that effect. See "THE
MERGER--U.S. Federal Income Tax Consequences."
THE U.S. FEDERAL INCOME TAX CONSIDERATIONS OF THE MERGER MAY BE DIFFERENT FOR
PARTICULAR TYPES OF FNB STOCKHOLDERS OR IN LIGHT OF EACH FNB STOCKHOLDER'S
PERSONAL INVESTMENT CIRCUMSTANCES. FOR THAT REASON, FNB STOCKHOLDERS ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX
CONSEQUENCES THAT MAY BE RELEVANT TO THEM IN CONNECTION WITH THE MERGER, AS
WELL AS THE APPLICATION TO THEM OF ANY STATE, LOCAL, FOREIGN, OR OTHER TAX LAWS
AND THE POSSIBLE EFFECT OF CHANGES IN SUCH LAWS.
MARKET INFORMATION
On November 22, 1996 (the last business day preceding public announcement of
the Reorganization Agreement) and on February 5, 1997 (the last practicable
date prior to the mailing of this Proxy Statement-Prospectus), the closing
price per share of Norwest Common Stock (as reported on the NYSE composite
tape) was $45.375 and $47.50, respectively. FNB is quoted on the NASDAQ
Bulletin Board; however, an active trading market has not developed. The last
NASDAQ Bulletin Board trade of FNB Common Stock prior to public announcement of
the Merger was on October 10, 1996 at a price of $65.00 per share.
COMPARISON OF RIGHTS OF HOLDERS OF FNB COMMON STOCK AND NORWEST COMMON STOCK
As of the date of this Proxy Statement-Prospectus, the rights of FNB's
stockholders are governed by the DGCL and the FNB Certificate and FNB Bylaws.
At the Effective Time of the Merger, FNB's stockholders will become
stockholders of Norwest. For that reason, their rights will thereafter be
governed by the DGCL and the Norwest Certificate and Norwest Bylaws. See
"COMPARISON OF RIGHTS OF HOLDERS OF FNB COMMON STOCK AND NORWEST COMMON STOCK."
COMPARATIVE PER COMMON SHARE DATA
The following table presents selected comparative per common share data for
Norwest Common Stock on a historical and pro forma combined basis and for FNB
Common Stock on a historical and pro forma equivalent basis giving effect to
the Merger using the purchase method of accounting. (For a description of the
purchase method of accounting and the related effects on the historical
financial statements of Norwest, see "THE MERGER--Accounting Treatment.") The
historical data for Norwest and FNB for the year ended December 31, 1996 are
derived from the respective consolidated financial statements of Norwest and
FNB (including the related notes thereto).
The data in the table are based on the assumption that 765,790 shares of
Norwest Common Stock will be issued in the Merger. This number is based on an
assumed Norwest Measurement Price of $40 and the resulting exchange ratio of
2.5 shares of Norwest Common Stock for each share of FNB Common Stock. The
exchange ratio of 2.5 shares of Norwest Common Stock for each share of FNB
Common Stock is referred to in the footnotes to the table as the "assumed
exchange ratio." The actual Norwest Measurement Price (and thus the actual
exchange ratio) will not be determined until the end of the last trading day
before the Special Meeting. See "THE MERGER--Merger Consideration" for
information regarding how the Norwest Measurement Price will be determined.
10
<PAGE>
The data are not necessarily indicative of the results of the future
operations of the combined entity or the actual results that would have
occurred had the Merger become effective prior to the periods indicated. The
above-referenced consolidated financial statements of FNB are included in FNB's
1996 annual report to stockholders. See "DOCUMENTS ENCLOSED WITH THIS PROXY
STATEMENT-PROSPECTUS."
COMPARATIVE PER COMMON SHARE DATA
<TABLE>
<CAPTION>
NORWEST COMMON STOCK FNB COMMON STOCK
-------------------- ---------------------
PRO FORMA PRO FORMA
HISTORICAL COMBINED HISTORICAL EQUIVALENT
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
BOOK VALUE (1):
December 31, 1996.................. $15.94 15.95 52.56 39.88
DIVIDENDS DECLARED (2):
Year Ended December 31, 1996....... 1.05 1.05 2.30 2.63
NET INCOME (3):
Year Ended December 31, 1996....... 3.07 3.07 7.93 7.68
</TABLE>
- --------
(1) The pro forma combined book value per share of Norwest Common Stock
represents the historical total combined common stockholders' equity for
Norwest and FNB divided by total pro forma common shares of the combined
entities. The pro forma equivalent book value per share of Norwest Common
Stock represents the pro forma combined book value per share multiplied by
the assumed exchange ratio of 2.5.
(2) Assumes no changes in cash dividends per share by Norwest. The pro forma
equivalent dividends per share of FNB Common Stock represent cash dividends
declared per share of Norwest Common Stock multiplied by the assumed
exchange ratio of 2.5.
(3) The pro forma combined net income per share of Norwest Common Stock (based
on fully diluted net income and weighted average number of common and
common equivalent shares) is based upon the combined historical net income
for Norwest and FNB divided by the average pro forma common and common
equivalent shares of the combined entities. The pro forma equivalent net
income per share of FNB Common Stock represents the pro forma combined net
income per share multiplied by the assumed exchange ratio of 2.5.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected historical consolidated
financial information for Norwest and FNB. The income statement and balance
sheet data for Norwest included in the selected consolidated financial data for
each of the four years ended December 31, 1995 are derived from the audited
consolidated financial statements of Norwest for such four-year period. The
income statement and balance sheet data for Norwest included in the selected
consolidated financial data for the year ended December 31, 1996 are derived
from the unaudited consolidated financial statements of Norwest for such year.
All financial data derived from unaudited financial statements reflect, in the
opinion of Norwest's management, all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of such data. The
income statement and balance sheet data for FNB included in the selected
consolidated financial data for each of the two years ended December 31, 1996
are derived from the audited consolidated financial statements of FNB for such
two-year period.
11
<PAGE>
The data for Norwest should be read in conjunction with Norwest's
consolidated financial statements (including the related notes thereto)
incorporated herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE." The data for FNB should be read in conjunction with FNB's
consolidated financial statements (including the related notes thereto)
included in FNB's 1996 annual report to stockholders. See "DOCUMENTS ENCLOSED
WITH THIS PROXY STATEMENT-PROSPECTUS."
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
NORWEST CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------------------------
1996 1995 1994 1993(1) 1992(2)
--------- -------- -------- -------- --------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income................. $ 6,318.3 5,717.3 4,393.7 3,946.3 3,806.4
Interest expense................ 2,617.0 2,448.0 1,590.1 1,442.9 1,610.6
--------- -------- -------- -------- --------
Net interest income............ 3,701.3 3,269.3 2,803.6 2,503.4 2,195.8
Provision for credit losses..... 394.7 312.4 164.9 158.2 270.8
Non-interest income............. 2,564.6 1,848.2 1,638.3 1,585.0 1,273.7
Non-interest expenses........... 4,089.7 3,382.3 3,096.4 3,050.4 2,553.1
--------- -------- -------- -------- --------
Income before income taxes..... 1,781.5 1,422.8 1,180.6 879.8 645.6
Income tax expense.............. 627.6 466.8 380.2 266.7 175.6
--------- -------- -------- -------- --------
Income before cumulative effect
of a change in accounting
method......................... 1,153.9 956.0 800.4 613.1 470.0
Cumulative effect on years prior
to 1992 of change in accounting
method......................... -- -- -- -- (76.0)
--------- -------- -------- -------- --------
Net income...................... $ 1,153.9 956.0 800.4 613.1 394.0
========= ======== ======== ======== ========
PER COMMON SHARE DATA
Net income per share:
Primary:
Before cumulative effect of a
change in accounting method. $ 3.07 2.76 2.45 1.89 1.44
Cumulative effect on years
prior to 1992 of change in
accounting method........... -- -- -- -- (0.25)
--------- -------- -------- -------- --------
Net income................... $ 3.07 2.76 2.45 1.89 1.19
========= ======== ======== ======== ========
Fully diluted:
Before cumulative effect of a
change in accounting method. $ 3.07 2.73 2.41 1.86 1.42
Cumulative effect on years
prior to 1992 of change in
accounting method........... -- -- -- -- (0.23)
--------- -------- -------- -------- --------
Net income................... $ 3.07 2.73 2.41 1.86 1.19
========= ======== ======== ======== ========
Dividends declared per common
share......................... $ 1.050 0.900 0.765 0.640 0.540
BALANCE SHEET DATA
At period end:
Total assets................... $80,175.4 72,134.4 59,315.9 54,665.0 50,037.0
Long-term debt................. 13,082.2 13,676.8 9,186.3 6,850.9 4,553.2
Total stockholders' equity..... 6,064.2 5,312.1 3,846.4 3,760.9 3,371.8
</TABLE>
- --------
(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 of interests 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 charges 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 of interests 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.
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
FARMERS NATIONAL BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
-----------------
1996 1995
-------- --------
(IN THOUSANDS
EXCEPT PER SHARE
DATA)
<S> <C> <C>
INCOME STATEMENT DATA
Interest Income............................................ $ 13,054 $ 13,058
Interest expense........................................... 6,846 6,902
-------- --------
Net interest income...................................... 6,208 6,156
Provision for loan losses.................................. 0 0
-------- --------
Net interest income after
provision for loan losses............................... 6,208 6,156
Noninterest income......................................... 1,020 958
Noninterest expense........................................ 4,012 4,145
-------- --------
Income before income tax expense......................... 3,216 2,969
Income tax expense......................................... 782 696
-------- --------
Net income................................................. $ 2,434 $ 2,273
======== ========
PER COMMON SHARE DATA
Net income................................................. $ 7.93 $ 7.00
Dividends declared......................................... $ 2.30 $ 1.96
BALANCE SHEET DATA
At period end:
Assets................................................... $187,408 $182,355
Long-term debt........................................... $ 0 $ 0
Total stockholders' equity............................... $ 16,099 $ 14,769
</TABLE>
14
<PAGE>
COMPARATIVE PER COMMON SHARE PRICES AND DIVIDENDS
The following table sets forth the high and low sales prices per share of the
Norwest Common Stock and FNB Common Stock, and the cash dividends paid on such
Norwest Common Stock and FNB Common Stock, for the below quarterly periods,
which correspond to the companies' respective quarterly fiscal periods for
financial reporting purposes. The prices for Norwest Common Stock are as
reported on the NYSE Composite Tape. The prices for FNB Common Stock are based
on FNB's management's knowledge of the sales prices of trades in FNB Common
Stock that occurred during the periods presented. FNB Common Stock is quoted on
the NASDAQ Bulletin Board; however, there is not an active trading market for
FNB Common Stock. Because the sales prices set forth below are based on the
knowledge of FNB's management, the prices may not reflect the prices of all
trades that occurred during such periods.
<TABLE>
<CAPTION>
NORWEST COMMON STOCK FNB COMMON STOCK
------------------------ ---------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
------- ------ --------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
1993
First Quarter.................. $26.000 20.625 0.145 44.00 43.00 0.30
Second Quarter................. 28.375 22.875 0.165 44.00 43.00 0.30
Third Quarter.................. 28.000 25.625 0.165 44.00 43.00 0.30
Fourth Quarter................. 29.000 22.500 0.165 45.50 44.00 0.80
1994
First Quarter.................. 27.375 22.250 0.185 45.00 44.00 0.32
Second Quarter................. 28.250 23.125 0.185 47.00 44.00 0.32
Third Quarter.................. 27.500 24.750 0.185 64.00 47.00 0.32
Fourth Quarter................. 25.000 21.000 0.210 63.00 45.00 0.87
1995
First Quarter.................. 26.250 22.625 0.210 48.00 45.00 0.32
Second Quarter................. 29.375 25.125 0.210 63.00 55.00 0.32
Third Quarter.................. 32.750 26.875 0.240 56.50 55.00 0.32
Fourth Quarter................. 34.750 29.250 0.240 62.50 55.50 1.00
1996
First Quarter.................. 37.125 30.500 0.240 62.00 62.00 0.35
Second Quarter................. 37.500 33.000 0.270 62.50 62.00 0.35
Third Quarter.................. 41.000 32.000 0.270 * * 0.35
Fourth Quarter................. 46.875 40.750 0.270 65.00 65.00 1.25
1997
First Quarter.................. 48.625 42.750 ** 90.00 88.00 --
(through February 5, 1997)
</TABLE>
- --------
* FNB's management has no knowledge of the sales prices for trades of FNB
Common Stock that occurred during this period.
**The Norwest Board has declared a cash dividend of $0.30 per share payable on
March 1, 1997 to stockholders of record on February 7, 1997.
15
<PAGE>
MEETING INFORMATION
GENERAL
This Proxy Statement-Prospectus is being furnished to holders of FNB Common
Stock in connection with the solicitation of proxies by the FNB Board for use
at the Special Meeting to be held on March 20, 1997 and at any adjournments or
postponements thereof. At the Special Meeting, stockholders of FNB will
consider and vote upon a proposal to approve the Reorganization Agreement. The
FNB Board is not aware as of the date of this Proxy Statement-Prospectus of
any business to be acted upon at the Special Meeting other than the proposal
to approve the Reorganization Agreement. If other matters are properly brought
before the Special Meeting or any adjournments or postponements thereof, the
persons appointed as proxies will have discretion to vote or act on such
matters according to their best judgment. The grant of a proxy will also
confer discretionary authority on the persons named in the proxy to vote in
accordance with their best judgment on matters incident to the conduct of the
Special Meeting. The Special Meeting may be adjourned to another date and/or
place for any proper purpose, including for the purpose of soliciting
additional proxies.
RECORD DATE; VOTING RIGHTS; VOTE REQUIRED
The FNB Board has fixed the close of business on February 10, 1997 as the
record date for the determination of stockholders of FNB entitled to receive
notice of and to vote at the Special Meeting (the "Record Date"). On the
Record Date there were 306,316 shares of FNB Common Stock outstanding and
entitled to vote. Holders of FNB Common Stock are entitled to one vote per
share held of record on the Record Date. The presence in person or by proxy at
the Special Meeting of the holders of a majority of the shares of FNB Common
Stock outstanding on the Record Date will constitute a quorum for the
transaction of business at the Special Meeting.
Under the DGCL and the FNB Certificate and FNB Bylaws, approval of the
Reorganization Agreement will require the affirmative vote of the holders of a
majority of the outstanding shares of FNB Common Stock. Directors and
executive officers of FNB and their affiliates beneficially owned as of the
Record Date an aggregate of 76,079, or approximately 24.8%, of the outstanding
shares of FNB Common Stock.
A failure to vote, either by not returning the enclosed proxy or by checking
the "Abstain" box thereon, will have the same effect as a vote against
approval of the Reorganization Agreement.
If a majority of the votes eligible to be cast by the holders of FNB Common
Stock do not vote in favor of approval of the Reorganization Agreement, FNB
will remain a separate entity. In such an event, FNB thereafter will hold an
annual meeting of stockholders to elect directors.
VOTING AND REVOCATION OF PROXIES
Shares of FNB Common Stock represented by a proxy properly signed and
received at or prior to the Special Meeting, unless subsequently revoked, will
be voted at the Special Meeting in accordance with the instructions thereon.
If a proxy is signed and returned without indicating any voting instructions,
shares of FNB Common Stock represented by such proxy will be voted FOR
approval of the Reorganization Agreement. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before the
proxy is voted by filing either an instrument revoking it or a duly executed
proxy bearing a later date with the secretary of FNB prior to or at the
Special Meeting or by voting the shares subject to the proxy in person at the
Special Meeting. Attendance at the Special Meeting will not by itself
constitute a revocation of a proxy.
A proxy may indicate that all or a portion of the shares represented thereby
are not being voted with respect to a specific proposal. This could occur, for
example, when a broker is not permitted to
16
<PAGE>
vote shares held in street name on certain proposals in the absence of
instructions from the beneficial owner. Shares that are not voted with respect
to a specific proposal will be considered as not present for such proposal,
even though such shares will be considered present for purposes of determining
a quorum and voting on other proposals. Abstentions on a specific proposal
will be considered as present but will not be counted as voting in favor of
such proposal. The proposal to approve the Reorganization Agreement must be
approved by the holders of a majority of the shares of FNB Common Stock
outstanding on the Record Date. Because the proposal to approve the
Reorganization Agreement requires the affirmative vote of a specified
percentage of outstanding shares, the nonvoting of shares or abstentions with
regard to this proposal will have the same effect as votes against the
proposal.
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers and employees of
FNB and the Bank may solicit proxies from the stockholders of FNB, either
personally or by telephone or other form of communication. None of the
foregoing persons who solicit proxies will be specifically compensated for
such services. Nominees, fiduciaries and other custodians will be requested to
forward soliciting materials to beneficial owners and will be reimbursed for
their reasonable expenses incurred in sending proxy material to beneficial
owners. FNB will bear its own expenses in connection with any solicitation of
proxies for the Special Meeting. See "THE MERGER--Expenses."
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT IMPORTANCE
TO THE STOCKHOLDERS OF FNB. STOCKHOLDERS ARE URGED TO READ AND CAREFULLY
CONSIDER THE INFORMATION PRESENTED IN THIS PROXY STATEMENT-PROSPECTUS AND TO
COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO FNB
IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
17
<PAGE>
THE MERGER
This section of the Proxy Statement-Prospectus describes certain aspects of
the Merger. The following description does not purport to be complete and is
qualified in its entirety by reference to the Reorganization Agreement and the
Plan of Merger, copies of which are attached as Appendix A and Appendix B,
respectively, to this Proxy Statement-Prospectus and incorporated herein by
reference. Stockholders are urged to read the Reorganization Agreement and
Plan of Merger in their entirety.
Parenthetical references are to sections of the Reorganization Agreement.
FNB and the Bank are referred to in the Reorganization Agreement as "Bancorp"
and "Bancorp Subsidiary," respectively.
GENERAL
At the Effective Time of the Merger, a wholly-owned subsidiary of Norwest
will be merged with FNB, with FNB being the surviving corporation in the
Merger and becoming a wholly-owned subsidiary of Norwest. Except with respect
to fractional shares and shares as to which dissenters' rights have been
exercised, if the Reorganization Agreement is approved and the Merger becomes
effective, each share of FNB Common Stock outstanding immediately prior to the
Effective Time of the Merger will be automatically converted into and
exchanged for the right to receive $100 worth of Norwest Common Stock, as
measured by the Norwest Measurement Price. See "--Merger Consideration" below.
Following the Effective Time of the Merger, Norwest will be the sole
stockholder of FNB. Shares of Norwest Common Stock issued and outstanding
immediately before the Effective Time of the Merger will remain issued and
outstanding immediately after the Effective Time of the Merger.
MERGER CONSIDERATION
Shares of Norwest Common Stock. Except with respect to fractional shares as
described below and shares as to which dissenters' rights have been exercised,
if the Reorganization Agreement is approved and the Merger becomes effective,
you will be entitled to receive shares of Norwest Common Stock valued at $100
(the "exchange value") for each share of FNB Common Stock owned by you
immediately prior to the Effective Time of the Merger. The exchange value of
$100 will be measured by the average of the closing prices of a share of
Norwest common stock as reported on the New York Stock Exchange during the
period of 20 trading days ending on the last trading day before the Special
Meeting. This average is referred to in this document and in the
Reorganization Agreement as the "Norwest Measurement Price." (Section 1(a))
The number of shares of Norwest Common Stock you will be entitled to receive
in the Merger in exchange for each share of FNB Common Stock (the "exchange
ratio") will equal the exchange value of $100 divided by the Norwest
Measurement Price. For example, if the Norwest Measurement Price is $40, you
will be entitled to receive 2.5 shares of Norwest Common Stock for each share
of FNB Common Stock; if the Norwest Measurement Price is $45, you will be
entitled to receive approximately 2.22 shares of Norwest Common Stock. The
actual Norwest Measurement Price will not be determined until the end of the
day before the Special Meeting. The Norwest Measurement Price may be higher or
lower than the actual closing price of a share of Norwest Common Stock on the
effective date of the Merger. (Section 1(a))
Cash in lieu of Remaining Fractional Shares. In the event the aggregate
number of shares of Norwest Common Stock to be received in the Merger by a FNB
stockholder does not equal a whole number, the holder will receive cash in
lieu of the fractional share. The cash payment will be equal to the product of
the fractional part of the share of Norwest Common Stock multiplied by the
Norwest Measurement Price. (Section 1(c))
18
<PAGE>
BACKGROUND OF THE MERGER
The FNB Board has, since 1991, periodically reviewed the strategic options
available to FNB while keeping in mind the FNB Board's desire to act in the
best interest of its stockholders, employees, customers and banking community.
Since 1991, FNB has held informal preliminary discussions with various banking
organizations regarding the possibility of forming strategic business
alliances or other business combinations.
During 1993 the FNB Board began to review with increased focus the strategic
options of FNB to determine if FNB should remain independent by acquiring
other financial institutions, seek proposals to affiliate with other financial
institutions or continue its present course of business. During the next
several months thereafter, management of FNB was contacted by, and held
informal meetings with, representatives of several regional bank holding
companies to discuss possible affiliations. In August 1994, Norwest made a
written proposal to acquire FNB. Several meetings between officers of FNB and
Norwest were held thereafter for the purpose of negotiating a transaction with
Norwest. On August 18, 1994, the FNB Board approved and entered into a non-
binding letter of intent to be acquired by Norwest. The letter of intent,
which was to expire on October 15, 1994, was extended by both parties until
January 15, 1995. During this time period, Norwest representatives conducted a
due diligence investigation of FNB. As part of this investigation, FNB
discovered a release of gasoline and coal tar on a vacant lot owned by the
Bank. Due to the uncertainties relating to the environmental testing and costs
of clean-up, if any, on the lot, FNB terminated its discussions with Norwest
in November 1994, and FNB and Norwest mutually agreed to terminate the letter
of intent on November 3, 1994.
From November 1994 until early 1996, FNB held no discussions with possible
acquirors. During such time, FNB and its environmental consultants continued
to investigate the environmental problem and develop a remediation plan. In
July 1996, FNB prepared and submitted a preliminary site investigation and
risk evaluation report to the Illinois Environmental Protection Agency. The
report proposed that FNB monitor the site to determine if any contaminants
appear to be migrating off the property and that no soil remediation be done
at this time. Additional evaluation was also proposed for a non-aqueous phase
liquid (NAPL) layer found in one monitoring well. In addition, effective July
1, 1996, the Illinois Brownfields legislation lessened the prior stringent
clean-up requirements for environmental problems, which reduced the potential
remediation costs for the property.
In early 1996, FNB resumed acquisition discussions with Norwest and another
regional bank holding company. These discussions continued until July 1996,
when Norwest made a written offer to acquire FNB. No written offer was
received from the other potential acquiror. On July 26, 1996, the FNB Board
agreed to enter into a second letter of intent with Norwest. The second letter
of intent, which was to expire on August 2, 1996, was subsequently extended to
November 18, 1996. From August through October, 1996 Norwest conducted its due
diligence review of FNB, including a review of the environmental matters, and
the parties negotiated, with the assistance of their respective legal counsel,
the terms and provisions of the Reorganization Agreement. On November 22,
1996, the FNB Board approved the Reorganization Agreement. Norwest and FNB
executed the Reorganization Agreement later that day.
REASONS FOR THE MERGER
The terms of the Reorganization Agreement are the result of arm's length
negotiations between FNB and Norwest and their respective representatives. The
FNB Board believes that the Merger is fair to, and in the best interests of,
the stockholders of FNB. In reaching its decision to approve and recommend the
Merger, the FNB Board did not assign any relative or specific weights to the
individual factors considered. Among other things, the FNB Board considered,
both from a short-term and long-term perspective, the following factors:
(i) The FNB Board's familiarity with and review of its financial
condition, results of operations and prospects, including, but not limited
to, the potential growth and profitability of FNB.
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(ii) The current and prospective banking and financial services
environment in which FNB and Norwest operate, including national and local
economic conditions, the competitive environment in the banking and
financial services industries generally, the increased regulatory and
technological burdens on financial institutions generally and on smaller,
local institutions more specifically, the trend toward consolidation in the
financial services industry and the likely effect of the foregoing matters
on FNB's potential growth and profitability.
(iii) The financial condition, results of operations, businesses and
prospects of Norwest as well as the market price and book value of Norwest
Common Stock.
(iv) The written opinion of HBI dated November 22, 1996, that, as of such
date, the consideration to be received by FNB stockholders in the Merger is
fair, from a financial point of view, to the holders of FNB Common Stock.
See "THE MERGER--Opinion of FNB's Financial Advisor."
(v) The recent and historical trading prices of FNB Common Stock.
(vi) Information relating to the financial terms and conditions of other
recent stock merger transactions in the banking industry.
(vii) The review of the possible alternatives to the Merger of remaining
independent or pursuing discussions with other potential acquirors,
including a review of the history of preliminary indications of interest
from, and initial discussions with, other potential acquirors.
(viii) The fact that the shares of Norwest Common Stock to be received in
the Merger by the holders of FNB Common Stock will be listed for trading on
the New York Stock Exchange, which should provide FNB stockholders with
increased investment liquidity due to the increased market capitalization
of Norwest.
(ix) The structure of the Merger, which will permit holders of FNB Common
Stock to receive shares of Norwest Common Stock without, in general,
recognizing gain or loss for U.S. federal income tax purposes.
(x) The terms and the course of negotiations resulting in the financial
and other terms of the Reorganization Agreement, including terms which
could permit FNB to consider and accept a superior acquisition proposal
from another potential acquiror (subject to the payment of a $1.5 million
termination fee to Norwest under certain conditions). See "THE MERGER--
Termination of the Reorganization Agreement."
(xi) The likelihood of the Merger being approved by the appropriate
regulatory authorities.
(xii) The compatibility of the respective businesses and management
philosophies of FNB and Norwest and the impact of the Merger on the various
constituencies served by FNB.
Based on the foregoing factors and others, the FNB Board concluded that the
Merger is in the best interests of FNB's stockholders, customers and community
served. ACCORDINGLY, THE FNB BOARD RECOMMENDS THAT THE FNB STOCKHOLDERS VOTE
IN FAVOR OF THE APPROVAL OF THE MERGER AGREEMENT.
OPINION OF FNB'S FINANCIAL ADVISOR
Any forecast, prediction or other forward looking statement concerning the
future earnings or other measure of future performance of Norwest or FNB
contained in this section is made solely by HBI in connection with the
discussion of the procedures followed and matters considered by HBI for
purposes of rendering its fairness opinion to the FNB Board. Any such
forecast, prediction or other forward looking statement should not be
considered or otherwise relied upon as having been made, adopted or endorsed
by Norwest or FNB.
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At the meeting of the FNB Board on November 22, 1996, at which the terms of
the proposed Merger were discussed and considered, HBI rendered a written
opinion to FNB's Board that, as of the date of such opinion and based upon the
matters set forth in such opinion, the consideration to be received in the
Merger by FNB's stockholders in exchange for their shares of FNB Common Stock
(the "Merger Consideration") was fair, from a financial point of view, to the
holders of FNB Common Stock. HBI has confirmed its November 22, 1996 opinion
by delivery of an updated written opinion to the FNB Board dated the date of
this Proxy Statement-Prospectus stating that, as of the date hereof and based
on the matters set forth in such opinion, the Merger Consideration is fair,
from a financial point of view, to the holders of FNB Common Stock.
The full text of HBI's opinion dated the date hereof, which sets forth
assumptions made, procedures followed, matters considered, and limits on the
review undertaken by HBI, is attached as Appendix C and is incorporated herein
by reference. The description of the HBI opinion set forth in this Proxy
Statement-Prospectus is qualified in its entirety by reference to the full
text of such opinion. FNB stockholders are urged to read the HBI opinion in
its entirety.
HBI's opinion as expressed herein is limited to the fairness, from a
financial point of view, of the Merger Consideration to the holders of FNB
Common Stock and does not address FNB's underlying business decision to
proceed with the Merger, nor does it express an opinion as to the prices at
which shares of Norwest Common Stock issued in the Merger may trade if and
when they are issued or at any future time. The opinion is directed only to
the Merger Consideration in the Merger and does not constitute a
recommendation to any holder of FNB Common Stock as to how such holder should
vote with respect to the Reorganization Agreement at any meeting of holders of
FNB Common Stock.
HBI, as part of its investment banking business, is regularly engaged in the
valuation of banks and bank holding companies, thrifts and thrift holding
companies, and various other financial services companies, in connection with
mergers and acquisitions, initial and secondary offerings of securities, and
valuations for other purposes. The FNB Board selected HBI on the basis of its
familiarity with FNB and the financial services industry, its qualifications,
ability, previous experience, and its reputation with respect to such matters.
For purposes of its opinion dated the date hereof and in connection with its
review of the proposed transaction with Norwest, HBI, among other things: (i)
participated in discussions with representatives of FNB concerning the
financial condition, businesses, assets, earnings, prospectus, and such senior
management's views as to the future financial performance; (ii) reviewed the
terms of the Reorganization Agreement; (iii) reviewed this Proxy Statement-
Prospectus; (iv) reviewed certain publicly available financial statements,
both audited (where available) and unaudited, and related financial
information of FNB and Norwest, including those included in their respective
Annual Reports on Form 10-K for the three years ended December 31, 1995 and
the respective Quarterly Reports on Form 10-Q for the periods ended March 31,
1996, June 30, 1996 and September 30, 1996, as well as other internally
generated reports; (v) reviewed certain financial forecasts and projections of
FNB prepared by its management and reviewed publicly available information,
earnings estimates, and research reports available for Norwest as to the
expected future financial performance of Norwest; (vi) discussed and reviewed
certain aspects of the past and current business operations, financial
condition, and future prospects of FNB with certain members of management;
(vii) reviewed reported market prices and historical trading activity of FNB
Common Stock and Norwest Common Stock; (viii) reviewed certain aspects of the
financial performance of FNB and Norwest and compared such financial
performance of FNB and Norwest, together with stock market data relating to
FNB Common Stock and Norwest Common Stock, with similar data available for
certain other financial institutions and certain of their publicly traded
securities; and (ix) reviewed certain of the financial terms, to the extent
publicly available, of certain recent business combinations involving other
financial institutions.
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In conducting its review and rendering its opinion dated the date hereof,
HBI assumed and relied, without independent verification, upon the accuracy
and completeness of all of the financial and other information that has been
provided to HBI by FNB, Norwest, their respective representatives, and of the
publicly available information that was reviewed by HBI. HBI is not an expert
in the evaluation of allowances for loan losses and has not independently
verified such allowances, and has relied on and assumed that the aggregate
allowances for loan losses set forth in the balance sheets of each of FNB and
Norwest at September 30, 1996 are adequate to cover such losses and complied
fully with applicable law, regulatory policy, and sound banking practice as of
the date of such financial statements. HBI was not retained to and did not
conduct a physical inspection of any of the properties or facilities of FNB or
Norwest, did not make any independent evaluation or appraisal of the assets,
liabilities or prospects of FNB or Norwest, was not furnished with any such
evaluation or appraisal, and did not review any individual credit files. HBI's
opinion is necessarily based on economic, market, and other conditions as in
effect on, and the information made available to us as of, the date hereof.
The following is a brief summary of the analyses presented by HBI to the FNB
Board in connection with HBI's written opinion.
Stock Trading History. HBI examined the history of trading prices and volume
for Norwest Common Stock and the relationship between the movements of such
trading prices to movements of the Standard & Poor's 500 Index, other
financial indices, and of the trading prices of the common stocks of the
companies in the Norwest Peer Group (consisting of BankAmerica Corporation,
Bank of New York Company, Inc., Bank of Boston Corporation, Bankers Trust New
York Corporation, Citicorp, The Chase Manhattan Corporation, First Chicago NBD
Corporation, Fleet Financial Group, Inc., First Union Corporation, J.P. Morgan
& Company, Incorporated, KeyCorp, NationsBank Corporation, Banc One
Corporation, PNC Bank Corp., Republic New York Corporation, and Wells Fargo &
Company), all of which are publicly-traded U.S. bank holding companies with
total assets greater than $50 billion. Bank holding companies in the Norwest
Peer Group are similar in size to Norwest, and operates in an economic,
geographic, and demographic environment that HBI deemed to be similar to the
environment in which Norwest operates. Comparative financial statistics were
reviewed and particular attention was given to the one-year period leading up
to the date of the fairness opinion.
HBI examined the history of trading prices and volume for FNB Common Stock.
FNB Common Stock is quoted on the NASDAQ Bulletin Board; however, an active
trading market has not developed. The last NASDAQ Bulletin Board trade of FNB
Common Stock was on October 10, 1996 at a price of $65.00 per share. FNB
Common Stock traded a total of 1,300 shares on the NASDAQ Bulletin Board from
January 1, 1996 to December 31, 1996.
Comparable Company Analysis. HBI calculated, reviewed, and compared selected
publicly-available financial data and ratios (at or for the twelve months
ended September 30, 1996) and trading multiples (as of November 13, 1996) for
Norwest to the corresponding ratios and multiples of the Norwest Peer Group.
The trading multiples used in comparing Norwest to the Norwest Peer Group were
market price as a multiple of: (i) book value (which was 2.86x for Norwest as
compared to a mean of 2.12x for the Norwest Peer Group); (ii) tangible book
value (which was 3.48x for Norwest as compared to a mean of 2.71x for the
Norwest Peer Group); (iii) earnings per share ("EPS") for the twelve months
ended September 30, 1996 (which was 14.9x for Norwest compared to a mean of
14.4x for the Norwest Peer Group); (iv) 1996 estimated EPS (which was 14.4x
for Norwest compared to a mean of 13.3x for the Norwest Peer Group); and (v)
1997 EPS (which was 12.7 for Norwest compared to a mean of 11.8x for the
Norwest Peer Group). HBI used earnings estimates as published by the
Institutional Brokers Estimate System ("IBES"), where available, for the
companies comprising the Norwest Peer Group. IBES is a data service which
monitors and publishes a compilation of earnings estimates produced by
selected research analysts on companies of interest to investors. Where IBES
estimates were not available, HBI used consensus earnings estimates from
alternate publicly-recognized earnings estimate services.
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Since FNB Common Stock does not trade on any organized exchange and an
active market for FNB Common Stock has not developed, the usefulness of
comparing trading multiples of FNB to a comparable company peer group is
diminished.
Comparable Transaction Analysis. As part of its analyses, HBI reviewed 14
completed or pending comparable mergers and acquisitions of commercial banks
and bank holding companies headquartered in the Midwest announced from January
1, 1995 to November 12, 1996 in which total assets of the acquired company
were in the approximate range of $100 million to $250 million ("Midwest
Transactions"). The Midwest Transactions involved the following pairs of
institutions (acquiree/acquiror): First National Bancorp/AMCORE Financial,
Inc., Regional Bancshares, Inc./Mercantile Bancorporation Inc., American Bank
Moorhead/Norwest Corporation, Farmers Deposit Bancorp/Premier Financial
Bancorp, Union National Bancorp/First Merchants Corporation, River Bend
Bancshares/Magna Group, Inc., Bank One Pikeville, NA/Matewan Bancshares, F&M
Bankshares of Reedsburg Inc./Associated Banc-Corp, Pleasant Hope
Bancshares/Central Bancompany, City National Bancorp/Old National Bancorp, GN
Bancorp, Inc./Associated Banc-Corp, Dickinson Bancorporation, Inc./Norwest
Corporation, Bright Financial Services, Inc./First Financial Bancorp, and
Southwest Bancshares/Mercantile Bancorporation Inc. For each transaction for
which data was available, HBI calculated the multiple of the offer value to
the acquired company's: (i) EPS for the twelve months preceding ("LTM"); (ii)
book value per share; (iii) tangible book value per share; and (iv) premium to
core deposits.
The calculations for the Midwest Transactions yielded a range of multiplies
of offer value to LTM EPS of 9.4x to 18.0x, with a mean of 13.2x and a median
of 13.1x; a range of multiples of offer value to tangible book value of 1.36x
to 2.84x, with a mean of 1.95x and a median of 1.85x; and a range of
percentages of offer value premium to core deposits of 4.74% to 14.5%, with a
mean of 9.59% and a median of 8.80%.
HBI compared these multiples with the corresponding multiples for the
Merger, valuing the exchange ratio at $100.00 (the "exchange value"). In
calculating the multiples for the Merger, HBI used FNB's EPS for the twelve
months ended September 30, 1996, and book value per share, tangible book value
per share, and core deposits as of September 30, 1996. HBI calculated that the
exchange value of $100 represented multiples of 12.3x FNB's LTM EPS, 1.95x its
book value per share, and 1.98x its tangible book value per share, and a core
deposit premium of 10.7%.
No company or transaction used in the above analyses as a comparison is
identical to FNB, Norwest, or the Merger. Accordingly, an analysis of the
results of the foregoing is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial operating
characteristics, including, among other things, differences in revenue
composition and earnings performance among the companies, and other facts that
could affect the public trading value of the companies to which they are being
compared.
Discounted Cash Flow Analysis. Using discounted cash flow analysis, HBI
estimated the future dividend streams that FNB could produce over the period
from September 30, 1996 through September 30, 2001, assuming a minimum
required tangible equity level of 7.0% of tangible total assets, if FNB
performed in accordance with recent historical trends and the future outlook
of FNB management. HBI calculated terminal values as a perpetuity with asset
growth rates ranging from 3.0% to 5.0%. The dividend streams and terminal
value were discounted to present values as of September 30, 1996 using
discount rates ranging from 12.0% to 14.0%, which reflect different
assumptions regarding the required rates of return to holders and prospective
buyers of FNB Common Stock. The range of present values per share of FNB
common stock resulting from this analysis was $70.90 to $86.86.
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In connection with its written opinion dated as of the date of this Proxy
Statement-Prospectus, HBI performed procedures to update certain of its
analyses and reviewed the assumptions on which such analyses were based and
the factors considered in connection therewith. In updating its opinion, HBI
did not utilize any methods of analysis in addition to those described.
The foregoing is a summary of the material financial analyses performed by
HBI and presented to the FNB Board, but does not purport to be a complete
description of the analyses performed by HBI. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible to partial
analysis or summary description. Furthermore, in arriving at its opinion, HBI
did not attribute any particular weight to any analysis or factor considered
by it, but rather made qualitative judgments as to the significance and
relevance of each analysis and factor. Selecting portions of the analyses or
of the summary set forth above, without considering the analyses as a whole,
could create an incomplete view of the processes underlying HBI's opinion. The
ranges of valuations resulting from any particular analysis described above
should not be taken to be HBI's view of the actual value of FNB, or the
current or future trading price for Norwest Common Stock.
In performing its analyses, HBI made numerous assumptions with respect to
industry performance, business and economic conditions and other matters, many
of which are beyond the control of FNB and Norwest. The analyses performed by
HBI are not necessarily indicative of actual values of future results, which
may be significantly more or less favorable than suggested by such analyses.
Such analyses were prepared solely as part of HBI's analysis of the fairness
of the Merger Consideration, from a financial point of view, to the holders of
FNB Common Stock. The analyses do not purport to be appraisals or to reflect
the prices at which a company or its securities may actually be bought or
sold.
Pursuant to the terms of a letter agreement dated November 22, 1996, FNB
agreed to pay HBI for its services in connection with the Merger, including
the rendering of its opinion. FNB has paid HBI $25,000 for its FNB Board
presentation and written opinion rendered November 22, 1996, and an additional
$25,000 payable upon receipt by FNB of HBI's updated written fairness opinion
and supporting analysis for use in the Proxy Statement-Prospectus. In
addition, FNB agreed to indemnify HBI against certain liabilities arising out
of its engagement, including liabilities under the federal securities laws.
HBI may, in the ordinary course of its business, actively trade securities
of FNB and Norwest for its own account or for the accounts of customers and
thus may hold long or short positions in such securities at any time.
DISSENTERS' RIGHTS
Under Section 262 of the DGCL, any holder of FNB Common Stock who does not
wish to accept the Merger Consideration pursuant to the Merger has the right
to seek an appraisal and be paid the "fair value" in cash for his or her FNB
Common Stock at the Effective Time of the Merger (exclusive of any element of
value arising from the accomplishment or expectation of the Merger), as
judicially determined, provided that such holder complies with the provisions
of Section 262 of the DGCL.
The following is a summary of the material statutory procedures to be
followed by a holder of FNB Common Stock in order to dissent from the Merger
and perfect appraisal rights under Delaware law. This summary is qualified in
its entirety by reference to Section 262 of the DCGL, the text of which is set
forth in Appendix D hereto. Any stockholder considering demanding appraisal is
advised to consult legal counsel.
Holders of record of FNB Common Stock who desire to exercise their appraisal
rights must fully satisfy all of the following conditions. A written demand
for appraisal of FNB Common Stock (which
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demand must identify the holder and request appraisal) must be delivered
before the taking of the vote on the approval and adoption of the
Reorganization Agreement to: Farmers National Bancorp, Inc., 121 West First
Street, Geneseo, Illinois 61254, Attention: Secretary. Such written demand for
appraisal of FNB Common Stock must be in addition to and separate from any
proxy or vote abstaining from or voting against the approval and adoption of
the Reorganization Agreement. Voting against, abstaining from or failing to
vote will not constitute a demand for appraisal under Section 262.
Holders of FNB Common Stock electing to exercise their appraisal rights
under Section 262 must not vote for the approval and adoption of the
Reorganization Agreement or consent thereto in writing. Voting in favor of the
approval and adoption of the Reorganization Agreement, or delivering a proxy
in connection with the Special Meeting (unless the proxy votes against, or
expressly abstains from the vote on, the approval and adoption of the
Reorganization Agreement), will constitute a waiver of the stockholder's right
of appraisal and will nullify any written demand for appraisal submitted by
the stockholder.
Under Section 262, where a merger is to be submitted for approval at a
meeting of stockholders, as in the case of the Special Meeting, not less than
20 days prior to the meeting, a constituent corporation must notify each of
the holders of its stock for which appraisal rights are available that such
appraisal rights are available and include in each such notice a copy of
Section 262. This Proxy Statement-Prospectus constitutes such notice to the
record holders of FNB Common Stock.
A demand for appraisal must be executed by or for the holder of record of
FNB Common Stock, fully and correctly, as such stockholder's name appears on
the stock certificates. If shares of FNB Common Stock are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, such demand
must be executed by the fiduciary in such capacity. If shares of FNB Common
Stock are owned of record by more than one person, as in a joint tenancy or
tenancy in common, such demand must be executed by all joint owners. An
authorized agent, including an agent for two or more joint owners, may execute
the demand for appraisal for a stockholder of record; however, the agent must
identify the record owner and expressly disclose the fact that, in exercising
the demand, he is acting as agent for the record owner. Any stockholder
seeking appraisal rights must hold the shares of FNB Common Stock for which
appraisal is sought on the date of the making of the demand and must
continuously hold such shares through the Effective Time of the Merger.
A record owner, such as a broker, who holds shares of FNB Common Stock as a
nominee for others, may exercise appraisal rights with respect to the shares
held for all or less than all beneficial owners of shares as to which the
holder is the record owner. In such case the written demand must set forth the
number of shares of FNB Common Stock covered by such demand. When the number
of shares of FNB Common Stock is not expressly stated, the demand will be
presumed to cover all shares of FNB Common Stock outstanding in the name of
such record owner. Beneficial owners who are not record owners and who intend
to exercise appraisal rights should instruct the record owner to comply
strictly with the statutory requirements with respect to the exercise of
appraisal rights before the date of the Special Meeting.
FNB must, within ten days after the Effective Time of the Merger, provide
notice of the Effective Time of the Merger to all stockholders who have
complied with Section 262 and have not voted for approval and adoption of the
Reorganization Agreement.
Within 120 days after the Effective Time of the Merger, either FNB or any
holder of FNB Common Stock who has complied with the required conditions of
Section 262 and who is otherwise entitled to appraisal rights may file a
petition in the Delaware Chancery Court demanding a determination of the fair
value of such shares of FNB Common Stock. If a petition for an appraisal is
timely filed, after a hearing on such petition, the Chancery Court will
determine which stockholders are entitled to appraisal rights and thereafter
will appraise the shares of FNB Common Stock owned by such
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stockholders to determine the fair value of such shares, exclusive of any
element of value arising from the accomplishment or expectation of the Merger,
together with a fair rate of interest, if any, to be paid, upon the amount
determined to be the fair value. In determining fair value, the Chancery Court
is required to take into account all relevant factors.
Holders of FNB Common Stock considering appraisal should understand that the
fair value of their shares of FNB Common Stock determined under Section 262
could be more than, the same as, or less than the consideration to be received
in the Merger. The cost of the appraisal proceeding may be determined by the
Chancery Court and charged to the parties as the Chancery Court deems
equitable in the circumstances. Upon application of a dissenting stockholder,
the Chancery Court may order that all or a portion of the expenses incurred by
any dissenting stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys' fees and the fees and
expenses of experts, be charged pro rata against the value of all shares
entitled to appraisal. In the absence of such a determination or assessment,
each party bears its own expenses.
Any holder of FNB Common Stock who has duly demanded appraisal in compliance
with Section 262 will not, after the Effective Time of the Merger, be entitled
to vote such shares of FNB Common Stock subject to such demand for any purpose
or to receive payment of dividends or other distributions on such shares,
except for dividends or other distributions payable to stockholders of record
at a date prior to the Effective Time of the Merger.
At any time within 60 days after the Effective Time of the Merger, any
former holder of shares of FNB Common Stock will have the right to withdraw
his or her demand for appraisal and to accept the consideration to be received
in the Merger. After this period, such holder may withdraw his or her demand
for appraisal only with the consent of the surviving corporation. If no
petition for appraisal is filed with the Chancery Court within 120 days after
the Effective Time of the Merger, stockholders' rights to appraisal shall
cease and all stockholders shall be entitled to receive the consideration to
be received in the Merger. However, no petition timely filed in the Chancery
Court demanding appraisal shall be dismissed as to any stockholder without the
approval of the Chancery Court and such approval may be conditioned upon such
terms as the Chancery Court deems just.
FAILURE TO FOLLOW ANY STEP REQUIRED BY SECTION 262 IN CONNECTION WITH THE
EXERCISE OF APPRAISAL RIGHTS MAY RESULT IN THE TERMINATION OF SUCH APPRAISAL
RIGHTS.
SURRENDER OF CERTIFICATES
Promptly following the Effective Time of the Merger, Norwest Bank Minnesota,
National Association, acting in the capacity of exchange agent for Norwest
(the "Exchange Agent"), will mail to each holder of record of shares of FNB
Common Stock a form of letter of transmittal, together with instructions for
the exchange of such holder's stock certificates for a certificate
representing Norwest Common Stock.
STOCKHOLDERS OF FNB SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE
THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of one or more certificates for FNB
Common Stock together with a properly completed letter of transmittal, there
will be issued and mailed to the holder a certificate representing the number
of whole shares of Norwest Common Stock to which such holder is entitled and,
if applicable, a check for the amount representing any remaining fractional
share (without interest). A certificate for Norwest Common Stock may be issued
in a name other than the name in which the surrendered certificate is
registered only if (i) the certificate surrendered is properly endorsed and is
otherwise in proper form for transfer and (ii) the person requesting the
issuance of such certificate either pays to the Exchange Agent any transfer or
other taxes required by reason of
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the issuance of a certificate for such shares in a name other than the
registered holder of the certificate surrendered or establishes to the
satisfaction of the Exchange Agent that such taxes have been paid or are not
due.
All Norwest Common Stock issued pursuant to the Merger will be deemed issued
as of the Effective Time of the Merger. No dividends in respect of the Norwest
Common Stock with a record date after the Effective Time of the Merger will be
paid to the former stockholders of FNB entitled to receive certificates for
shares of Norwest Common Stock until such stockholders surrender their
certificates representing shares of FNB Common Stock. Upon such surrender,
there shall be paid to the stockholder in whose name the certificates
representing such shares of Norwest Common Stock are issued any dividends the
record and payment dates of which shall have been after the Effective Time of
the Merger and before the date of such surrender. After such surrender, there
shall be paid to the person in whose name the certificate representing such
shares of Norwest Common Stock is issued, on the appropriate dividend payment
date, any dividend on such shares of Norwest Common Stock which shall have a
record date after the Effective Time of the Merger, as the case may be, and
prior to the date of surrender, but a payment date subsequent to the
surrender. In no event shall the persons entitled to receive such dividends be
entitled to receive interest on amounts payable as dividends.
CONDITIONS TO THE MERGER
Conditions to the Obligations of Norwest and FNB. The obligations of both
Norwest and FNB to effect the Merger are subject to the satisfaction as of the
Effective Time of the Merger or, if permissible under the Reorganization
Agreement, waiver of a number of conditions, including, among others, the
following: (i) the approval of the Reorganization Agreement by the requisite
vote of FNB's stockholders; (ii) the receipt of all requisite regulatory
approvals; (iii) the absence of any order issued by any court or governmental
authority of competent jurisdiction restraining, enjoining or otherwise
prohibiting consummation of the Merger; and (iv) the effectiveness of the
Registration Statement. (Sections 6 and 7)
Conditions to the Obligation of FNB. The obligation of FNB to effect the
Merger is subject to the satisfaction as of the Effective Time of the Merger
or, if permissible under the Reorganization Agreement, waiver of certain
additional conditions, including, among others, the following: (i) the
performance by Norwest in all material respects of the agreements made by
Norwest in the Reorganization Agreement and the truthfulness in all material
respects of the representations made by Norwest in the Reorganization
Agreement; (ii) the approval for listing on the NYSE and CHX of the shares of
Norwest Common Stock to be issued in the Merger; and (iii) the receipt of an
opinion of counsel to FNB at the closing of the Merger regarding certain
federal income tax consequences of the Merger. (Section 6) See "-- U.S.
Federal Income Tax Consequences."
Conditions to the Obligation of Norwest. The obligation of Norwest to effect
the Merger is subject to the satisfaction as of the Effective Time of the
Merger or, if permissible under the Reorganization Agreement, waiver of
certain additional conditions, including, among others, the following: (i) the
performance by FNB in all material respects of the agreements made by FNB in
the Reorganization Agreement and the truthfulness in all material respects of
the representations made by FNB in the Reorganization Agreement; (ii) the
absence of any condition or requirement in any approval, license or consent
relating to the Merger that, in the good faith judgment of Norwest, is
unreasonably burdensome to Norwest; and (iii) at any time since November 22,
1996 (the date of the Reorganization Agreement) the total number of shares of
FNB Common Stock outstanding and subject to issuance upon exercise (assuming
for this purpose that phantom shares and other share equivalents constitute
FNB Common Stock) of all warrants, options, conversion rights (including
equity securities convertible into FNB Common Stock), phantom shares or other
share equivalents shall not have exceeded 306,316.
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See Sections 6 and 7 of the Reorganization Agreement for additional
conditions to the Merger becoming effective.
REGULATORY APPROVALS
The Merger is subject to prior approval by the Federal Reserve Board under
the Bank Holding Company Act. Norwest filed an application on January 8, 1997
with the Federal Reserve Board requesting approval of the Merger; however,
there can be no assurance that the necessary regulatory approval will be
obtained or as to the timing of or conditions placed on such approval.
The approval of any application merely implies satisfaction of regulatory
criteria for approval, which do not include review of the Merger from the
standpoint of the adequacy of the consideration to be received by, or fairness
to, stockholders. Regulatory approvals do not constitute an endorsement or
recommendation of the proposed Merger.
Norwest and FNB are not aware of any governmental approvals or compliance
with banking laws and regulations that are required for the Merger to become
effective other than those described above. The parties currently intend to
seek to obtain any other approval and to take any other action that may be
required to effect the Merger. There can be no assurance that any required
approval or action can be obtained or taken prior to the Special Meeting. The
receipt of all necessary regulatory approvals is a condition to effecting the
Merger. See "--Conditions to the Merger" and "--Termination of the
Reorganization Agreement."
CONDUCT OF BUSINESS PENDING THE MERGER
By FNB. FNB and the Bank are each required to maintain their corporate
existence in good standing, maintain the general character of their business
and conduct their business in the ordinary and usual manner. In addition,
without the prior written consent of Norwest, neither FNB nor the Bank may (a)
make make any new loan or modify, restructure or renew any existing loan
(except pursuant to commitments made prior to the date of the Reorganization
Agreement) to any borrower if the amount of the resulting loan, when
aggregated with all other loans or extensions of credit to such person, would
exceed $300,000; (b) enter into any material agreement, contract, commitment
or capital improvement exceeding $25,000 (other than banking transactions in
the ordinary course of business and in accordance with policies and procedures
in effect on the date of the Reorganization Agreement); (c) make any
investments except in the ordinary course of business for terms of up to one
year and in amounts of $100,000 or less; (d) issue or sell or authorize for
issuance or sale, or grant any options or make other agreements with respect
to the issuance or sale or conversion of, any shares of its capital stock; (e)
sell or otherwise dispose of any of its assets or properties other than in the
ordinary course of business; (f) declare, set aside, make or pay any dividend
or other distribution with respect to its capital stock except (1) prior to
the Effective Time of the Merger FNB may declare and pay dividends, in
accordance with applicable law and regulation, out of its net earnings between
the date of the Reorganization Agreement and the Effective Time of the Merger,
in an amount not to exceed (A) $1.25 per share of FNB Common Stock, payable on
January 1, 1997, plus (B) if the Effective Time of the Merger is after the
record date for the regular June 1, 1997 cash dividend on Norwest Common
Stock, $0.57 per share of FNB Common Stock, payable immediately prior to any
accrual/reserve adjustments required under the Reorganization Agreement, and
(2) any dividend declared by the Bank's board of directors in accordance with
applicable law and regulation; (g) redeem, purchase or otherwise acquire,
directly or indirectly, any of the capital stock of FNB; or (h) increase the
compensation of any director, officer or executive employee of FNB, except
pursuant to existing employment agreements, compensation plans and practices
(including bonus plans). (Section 4)
By Norwest. Norwest is required to conduct and to cause its significant
subsidiaries to conduct their respective businesses in compliance with all
material obligations and duties imposed by laws, regulations, rules and
ordinances or by judicial orders, judgments and decrees applicable to them or
to their businesses or properties. (Section 5)
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See Sections 4 and 5 of the Reorganization Agreement for additional
restrictions on the conduct of business by FNB and Norwest pending the Merger.
NO SOLICITATION
FNB and the Bank, and their respective directors, officers, representatives
and agents, are prohibited under the Reorganization Agreement from directly or
indirectly soliciting, authorizing the solicitation of or, except to the
extent that the FNB Board shall conclude in good faith, after taking into
account the advice of its outside counsel, that to fail to do so could
reasonably be determined to violate its fiduciary obligations under applicable
law, entering into any discussions with any third party concerning any offer
or possible offer to (i) purchase (A) any shares of common stock, (B) any
option or warrant to purchase shares of common stock, (C) any security
convertible into shares of common stock or (D) any other equity security of
FNB or the Bank; (ii) make a tender or exchange offer for any shares of common
stock or other equity security of FNB or the Bank; (iii) purchase, lease or
otherwise acquire the assets of FNB or the Bank except in the ordinary course
of business; or (iv) merge, consolidate or otherwise combine with FNB or the
Bank. If any third party makes an offer or inquiry to FNB or the Bank
concerning any of the foregoing, FNB or the Bank, as applicable, is required
to promptly disclose such offer or inquiry (including the terms thereof) to
Norwest. (Section 4(h))
CERTAIN ADDITIONAL AGREEMENTS
FNB. FNB has also agreed under the Reorganization Agreement to (i) if
requested by Norwest, amend, effective as of the Effective Time of the Merger,
certain employee benefit plans of FNB and the Bank; (ii) establish,
immediately prior to the Effective Time of the Merger, such additional
accruals and reserves as may be necessary to conform FNB's accounting and
credit loss reserve practices and methods to those of Norwest and Norwest's
plans with respect to the conduct of FNB's business after the Effective Time
of the Merger and, to the extent permitted by generally accepted accounting
principles, provide for costs and expenses related to effecting the
transactions contemplated by the Reorganization Agreement; (iii) obtain and
deliver title commitments, boundary surveys and appraisals for each of its
bank facilities; and (iv) use its best efforts to obtain and deliver to
Norwest prior to the Effective Time of the Merger signed representations
substantially in the form attached as Exhibit B to the Reorganization
Agreement from each executive officer, director or stockholder of FNB who may
reasonably be deemed an "affiliate" of FNB within the meaning of each term
used in Rule 145 of the Securities Act. (Section 4)
Norwest. Norwest has agreed under the Reorganization Agreement to (i) take
certain action to maintain FNB's directors' and officers' liability insurance
policies in effect as of the date of the Reorganization Agreement; and (ii)
for a period of up to 15 days prior to the Closing, permit FNB and its
representatives to examine the books, records and properties of Norwest and to
interview officers, employees and agents of Norwest. For more information
concerning the directors' and officers' liability insurance policies, see "--
Interests of Certain Persons in the Merger."
For information concerning additional agreements and covenants of FNB and
Norwest, see Sections 4 and 5 of the Reorganization Agreement.
TERMINATION OF THE REORGANIZATION AGREEMENT
By Norwest or FNB. Subject to the satisfaction of certain notice
requirements, either Norwest or FNB may terminate the Reorganization Agreement
at any time prior to the Effective Time of the Merger, whether before or after
approval of the Reorganization Agreement by FNB's stockholders, pursuant to
the mutual written consent of each party or upon the occurrence or existence
of either of the following events or conditions: (i) the Merger has not become
effective by June 30, 1997, unless such failure of the Merger to become
effective 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 Reorganization Agreement; or (ii) any court or
governmental authority of competent
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jurisdiction shall have issued a final order restraining, enjoining or
otherwise prohibiting the transactions contemplated by the Reorganization
Agreement.
By FNB. Subject to the satisfaction of certain notice requirements, FNB may
terminate the Reorganization Agreement if the FNB Board shall have determined
in good faith that a Takeover Proposal (as defined below) constitutes a
Superior Proposal (as defined below), provided FNB is not entitled to
terminate the Reorganization Agreement for this reason unless (i) it has not
breached any of its nonsolicitation covenants contained in the Reorganization
Agreement and (ii) it delivers to Norwest the termination fee as described
below.
By Norwest. Subject to the satisfaction of certain notice requirements,
Norwest may terminate the Reorganization Agreement if (i) the FNB Board fails
to recommend approval of the Reorganization Agreement or withdraws or modifies
in a manner materially adverse to Norwest its approval or recommendation of
approval of the Reorganization Agreement; (ii) after an agreement to engage in
or the occurrence of an Acquisition Event (as defined below) or after a third
party shall have made a proposal to FNB or FNB's stockholders to engage in an
Acquisition Event, the Reorganization Agreement is not approved by FNB's
stockholders at the Special Meeting; or (iii) a meeting of FNB's stockholders
to approve the Reorganization Agreement is not held by June 30, 1997 and FNB
has failed to comply with its obligations to call and cause to be held such
meeting as provided in the Reorganization Agreement. A termination of the
Reorganization Agreement pursuant to (i), (ii) or (iii) above is referred to
herein as a "Nonperformance Termination Event."
Definitions. For purposes of the Reorganization Agreement:
"Acquisition Event" means any of the following: (i) a merger,
consolidation or similar transaction involving FNB, the Bank or any
successor to FNB or the Bank, (ii) a purchase, lease or other acquisition
in one or a series of related transactions of assets of FNB or the Bank
representing 25% or more of the consolidated assets of FNB and the Bank or
(iii) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or any similar transaction) in one or a
series of related transactions of beneficial ownership of securities
representing 25% or more of the voting power of FNB or the Bank in each
case with or by a person or entity other than Norwest or an affiliate of
Norwest.
"Superior Proposal" means a bona fide proposal or offer made by a person
to acquire FNB pursuant to a tender or exchange offer, a merger,
consolidation or other business combination or an acquisition of all or
substantially all of the assets of FNB and the Bank on terms which the FNB
Board shall determine in good faith to be more favorable to FNB and its
stockholders than the transactions contemplated by the Reorganization
Agreement.
"Takeover Proposal" means a bona fide proposal or offer by a person to
make a tender or exchange offer, or to engage in a merger, consolidation or
other business combination involving FNB or to acquire in any manner a
substantial equity interest in, or all or substantially all of the assets
of, FNB.
Termination Fee. FNB is required to pay Norwest a termination fee in the
amount of $1,500,000 upon the occurrence of a Nonperformance Termination
Event, provided such fee will be due only if prior to such termination or
within 6 months after such termination either (i) FNB or the Bank or any
successor to FNB or the Bank shall have entered into an agreement to engage in
an Acquisition Event or an Acquisition Event shall have occurred or (ii) the
FNB Board shall have authorized or approved an Acquisition Event or shall have
publicly announced an intention to authorize or approve or shall have
recommended that FNB's stockholders approve or accept an Acquisition Event.
See Section 9 of the Reorganization Agreement for more information
concerning the circumstances under which the Reorganization Agreement may be
terminated and the consequences to the parties of such termination. The
foregoing discussion is qualified in its entirety by reference to Section 9 of
the Reorganization Agreement.
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AMENDMENT OF REORGANIZATION AGREEMENT
The Reorganization Agreement may be amended by the parties thereto, pursuant
to action taken by their respective boards of directors or pursuant to
authority delegated by their respective boards of directors, at any time
before or after approval of the Reorganization Agreement by FNB's
stockholders, provided that, after the Reorganization Agreement is approved by
FNB's stockholders, no amendment can be made to the Reorganization Agreement
that changes in a manner adverse to FNB's stockholders the consideration to be
received by FNB's stockholders in the Merger. (Section 17)
WAIVER OF PERFORMANCE OF OBLIGATIONS
Any of the parties to the Reorganization Agreement may, by a signed writing,
give any consent, take any action with respect to the termination of the
Reorganization Agreement or otherwise, or waive any inaccuracies in the
representations and warranties of the other party or compliance by the other
party with any of the covenants or conditions contained in the Reorganization
Agreement. (Section 16)
EFFECT ON EMPLOYEE BENEFIT PLANS
The Reorganization Agreement provides that, subject to any eligibility
requirements applicable to such plans, employees of FNB shall be entitled to
participate in those Norwest employee benefit and welfare plans specified in
the Reorganization Agreement. The eligible employees of FNB shall enter each
of such plans no later than the first day of the calendar quarter which begins
at least 32 days after the Effective Time of the Merger. FNB's employees will
generally continue to participate in welfare and retirement plans maintained
by FNB until entering Norwest's plans. FNB employees will receive credit for
past service with FNB for the purpose of satisfying any eligibility and
vesting periods under certain, but not all, of Norwest's benefit plans. FNB
employees will not be subject to any pre-existing condition exclusions when
entering a Norwest welfare benefit plan, except for the Norwest Long Term Care
Plan. (Section 8)
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the FNB Board and management may have interests, as
described below, in the Merger in addition to their interests as holders of
FNB Common Stock. The FNB Board was aware of these factors and considered
them, among other matters, in approving the Reorganization Agreement and the
transactions contemplated thereby.
Pursuant to the Reorganization Agreement, Norwest has agreed to ensure that
all rights to indemnification and all limitations of liability in favor of any
director or officer of FNB or the Bank pursuant to the FNB Certificate, FNB
Bylaws and the Bank's similar governing documents will continue in full force
and effect with respect to claims arising from (i) facts or events that
occurred before the Effective Time of the Merger or (ii) the Reorganization
Agreement or any transactions contemplated therein, regardless of when
asserted or occurring. In addition, Norwest has agreed to continue, for a
period of three years after the Effective Time of the Merger, FNB's existing
directors' and officers' liability insurance policy (or a substantially
similar policy with no less advantageous coverage). Norwest is required to pay
an annual premium for such policy up to 150% of the amount of the premium on
FNB's policy existing on November 22, 1996; provided, that if the cost of such
policy exceeds such amount, Norwest will purchase the most advantageous policy
for such maximum premium amount.
On the date the Reorganization Agreement was entered into, Norwest, FNB and
the Bank entered into an employment agreement with Gaylon E. Martin, which
agreement will not be effective until the day after the Merger is consummated
(the "New Employment Agreement"). Mr. Martin is currently employed by the Bank
pursuant to an employment agreement with the Bank dated May 11, 1992 (the
"Existing Employment Agreement"). The New Employment Agreement, which has a
term of one year, provides that Mr. Martin will be employed by the Bank at an
agreed upon salary and benefits. The
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Existing Employment Agreement provides that within 365 days of a change of
control of FNB or the Bank (the Merger would constitute such a change of
control), Mr. Martin can terminate the Existing Employment Agreement and
receive 2.99 years total compensation. The New Employment Agreement provides
that in consideration of the termination of the Existing Employment Agreement,
Mr. Martin will be paid, subject to certain excess payment limits in the Code,
an amount equal to 2.99 times his then current base salary. The New Employment
Agreement also provides that on the last day of the twelfth month following
the consummation of the Merger, Mr. Martin will be paid $120,000 in
consideration of agreeing not to engage in the business of banking in the
counties of Rock Island, Mercer, Knox, Whiteside, Bureau and Henry, Illinois,
for a period of eighteen months thereafter. In addition, the New Employment
Agreement contemplates that Mr. Martin, subject to the approval of the Human
Resources Committee of the Norwest Board, will be granted options to purchase
2,000 shares of Norwest Common Stock at an exercise price equal to the fair
market value on the date of the grant. The options will vest and become
exercisable one year after the date of grant, provided Mr. Martin is employed
by Norwest on the vesting date. The terms of the New Employment Agreement were
obtained through arms-length negotiations between Norwest and Mr. Martin.
U.S. FEDERAL INCOME TAX CONSEQUENCES
General. FNB has received a favorable opinion of the law firm of Schiff
Hardin & Waite, Chicago, Illinois, that the Merger will constitute a
reorganization within the meaning of Sections 268(a)(1)(A) and 368(a)((2)(E)
of the Code. The following is a summary of the opinion of Schiff Hardin &
Waite, which has been filed as an exhibit to the Registration Statement, and
the anticipated material federal income tax consequences of the Merger to FNB
stockholders. The Merger's effectiveness is conditioned upon the receipt by
FNB of an updated written opinion of Schiff Hardin & Waite, dated as of the
effective date of the Merger, substantially to the same effect as summarized
below. The following summary is based upon the parties' understanding of the
federal income tax laws as currently interpreted and does not address issues
of state, local or foreign taxation.
Because of the complexities of the proposed transaction, it is strongly
recommended that FNB stockholders consult their own tax advisers concerning
the specific tax consequences of the Merger as summarized below.
This summary is limited to those persons who hold shares of FNB Common Stock
as "capital assets" (generally property held for investment) within the
meaning of Section 1221 of the Code (any reference herein to a "section" is a
reference to a section of the Code, unless otherwise specified). The tax
consequences to any particular FNB stockholder may be affected by matters not
discussed below. For example, certain taxpayers, such as life insurance
companies, tax-exempt organizations and foreign taxpayers may be subject to
special rules not addressed herein. Assuming that the Merger satisfies all
requirements of Sections 368(a)(1)(A) and 368(a)(2)(E), it will have the
federal income tax consequences described below.
Receipt of Norwest Common Stock in Exchange for FNB Stock. A FNB stockholder
who receives shares of Norwest Common Stock in exchange for shares of FNB
Common Stock will to that extent not recognize federal gain or loss on the
exchange. The stockholder's tax basis in the Norwest Common Stock received
will be the same as the stockholder's tax basis in the shares of FNB Common
Stock exchanged in the Merger, and the holding period of the Norwest Common
Stock received will include the holding period of the FNB Common Stock
exchanged.
Receipt of Cash for Norwest Common Stock or FNB Common Stock. Cash received
by a FNB stockholder as a result of his or her exercise of dissenters' rights
will be treated as having been received as a distribution in redemption of his
or her shares of FNB Common Stock subject to the provisions and limitations of
Section 302. If, after such distribution, a FNB stockholder does not own any
shares of Norwest Common Stock directly or indirectly under the constructive
ownership rules of Section 318(a), the distribution will be treated as a
complete termination of the stockholder's interest
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within the meaning of Section 302(b)(3) and will be treated as a distribution
in full payment in exchange for the shares redeemed, as provided in Section
302(a). A FNB stockholder will recognize gain or loss under Section 1001 on
the basis of the difference between the amount of cash received and his or her
adjusted basis in the FNB Common Stock surrendered.
Receipt of Cash in Lieu of Fractional Shares. The payment to a holder of FNB
Common Stock of cash in lieu of fractional shares of Norwest Common Stock will
be treated as if the fractional shares had been distributed to the stockholder
as part of the exchange and then redeemed by Norwest. However, because the
payment of cash in lieu of fractional share interests is undertaken solely for
the purposes of saving Norwest the expense and inconvenience of issuing and
transferring fractional shares, and is not separately bargained-for
consideration, these payments will be treated as having been received as
distributions in full payment in exchange for the stock redeemed, as provided
in Section 302(a).
RESALE OF NORWEST COMMON STOCK
The shares of Norwest Common Stock issuable to stockholders of FNB upon the
Merger becoming effective have been registered under the Securities Act. Such
shares may be traded freely and without restriction by those stockholders not
deemed to be "affiliates" of FNB or Norwest, as that term is defined in the
rules under the Securities Act. Norwest Common Stock received by those
stockholders of FNB who are deemed to be "affiliates" of FNB may be resold
without registration as provided for by Rule 145 or as otherwise permitted
under the Securities Act. Persons who may be deemed to be affiliates of FNB
generally include individuals or entities that control, are controlled by or
are under common control with, FNB and may include the executive officers and
directors of FNB as well as certain principal stockholders of FNB. In the
Reorganization Agreement, FNB has agreed to use its best efforts to obtain and
deliver prior to the Effective Time of the Merger signed representations by
each executive officer, director or stockholder of FNB who may reasonably be
deemed an affiliate of FNB that such affiliate will not sell, transfer or
otherwise dispose of the shares of Norwest Common Stock to be received by such
person in the Merger except in compliance with the applicable provisions of
the Securities Act and the rules and regulations promulgated thereunder.
(Section 4(k)) This Proxy Statement-Prospectus does not cover any resales of
Norwest Common Stock received by affiliates of FNB.
STOCK EXCHANGE LISTING
The Reorganization Agreement provides for the filing by Norwest of listing
applications with the NYSE and the CHX covering the shares of Norwest Common
Stock issuable upon the Merger becoming effective. Consummation of the Merger
is conditioned on the authorization for listing of such shares on the NYSE and
CHX. (Section 6)
ACCOUNTING TREATMENT
Norwest will account for the acquisition of FNB using the purchase method of
accounting. For that reason, the consideration to be paid in the Merger will
be allocated to assets acquired and liabilities assumed based on their
estimated fair values at the Effective Time of the Merger.
The unaudited pro forma data included in this Proxy Statement-Prospectus for
the Merger have been prepared using the purchase method of accounting. See
"SUMMARY--Comparative Per Common Share Data."
EXPENSES
Except as otherwise provided in the Reorganization Agreement, Norwest and
FNB will each pay their own expenses in connection with the Merger, including
fees and expenses of their respective independent auditors and counsel.
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COMPARISON OF RIGHTS OF HOLDERS OF
FNB COMMON STOCK AND NORWEST COMMON STOCK
GENERAL
FNB and Norwest are incorporated under the laws of the state of Delaware.
The rights of FNB's stockholders are currently governed by the DGCL and the
FNB Certificate and FNB Bylaws. If FNB's stockholders approve the
Reorganization Agreement and the Merger becomes effective, stockholders of FNB
will become stockholders of Norwest. For that reason, after the Effective Time
of the Merger, their rights will be governed by the DGCL and the Norwest
Certificate and Norwest Bylaws.
The following is a comparison of certain rights of holders of FNB Common
Stock with the rights of holders of Norwest Common Stock. It is not intended
to be complete and is qualified in its entirety by reference to the relevant
provisions of the laws and documents discussed below. Additional information
concerning the rights of holders of Norwest Common Stock is provided in
Norwest's current report on Form 8-K dated April 30, 1996 filed with the
Commission and incorporated herein by reference. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
DIRECTORS
FNB. The FNB Certificate provides for a board of directors consisting of not
less than 5 nor more than 21 persons, with the exact number determined by the
FNB Board from time to time. The number of directors of FNB is currently fixed
at 10. The FNB Certificate provides that the members of the FNB Board will be
divided into three classes, and at each annual meeting of FNB stockholders,
one such class of directors is elected to serve for a term of three years.
Directors of FNB may be removed only for cause by the affirmative vote of the
holders of a majority of the shares of FNB capital stock entitled to vote
thereon. Vacancies on the FNB Board may be filled only by a majority of the
remaining directors or, in the event a vacancy is not so filled or if no
director remains, by the stockholders. Directors of FNB are elected by
plurality of the votes of shares of FNB capital stock entitled to vote thereon
present in person or by proxy at the meeting at which directors are elected.
The FNB Certificate does not currently permit cumulative voting for the
election of directors.
Norwest. The Norwest Bylaws provide for a board of directors consisting of
not less than 10 nor more than 23 persons, each serving for a term of one year
or until his or her earlier death, resignation or removal. The number of
directors of Norwest is currently fixed at 14. Directors of Norwest may be
removed with or without cause by the affirmative vote of the holders of a
majority of the shares of Norwest capital stock entitled to vote thereon.
Vacancies on the Norwest Board may be filled by a majority of the remaining
directors or, in the event a vacancy is not so filled or if no director
remains, by the stockholders. Directors of Norwest are elected by plurality of
the votes of shares of Norwest capital stock entitled to vote thereon present
in person or by proxy at the meeting at which directors are elected. The
Norwest Certificate does not currently permit cumulative voting in the
election of directors.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
FNB. Under the DGCL, the FNB Certificate may be amended by the affirmative
vote of a majority of the outstanding shares of FNB entitled to vote thereon,
unless a greater vote is specified in the FNB Certificate. Certain Articles of
the FNB Certificate, as stated therein, may not be altered, amended or
repealed except by the affirmative vote of the holders of at least eighty
percent (80%) of the voting power of the outstanding shares of FNB. The FNB
Certificate provides that the FNB Bylaws may be amended by a majority of the
FNB Board or by the affirmative vote of the holders of at least eighty percent
(80%) of the voting power of the outstanding shares of FNB entitled to vote
generally in the election of directors.
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Norwest. The Norwest Certificate may be amended only if the proposed
amendment is approved by the Norwest Board and thereafter approved by a
majority of the outstanding stock entitled to vote thereon and by a majority
of the outstanding stock of each class entitled to vote thereon as a class.
The Norwest Bylaws may be amended by a majority of the Norwest Board or by a
majority of the outstanding stock entitled to vote thereon. Shares of Norwest
Preferred Stock and Norwest Preference Stock currently authorized in the
Norwest Certificate may be issued by the Norwest Board without amending the
Norwest Certificate or otherwise obtaining the approval of Norwest's
stockholders.
STOCKHOLDER APPROVAL OF MERGERS AND ASSET SALE
In addition to being subject to the laws of Delaware, as discussed below,
both FNB and Norwest, as bank holding companies, are subject to various
provisions of federal law with respect to mergers, consolidations and certain
other corporate transactions. See "CERTAIN REGULATORY AND OTHER CONSIDERATIONS
PERTAINING TO NORWEST."
FNB. Except as described below, the affirmative vote of a majority of the
outstanding shares of FNB Common Stock entitled to vote thereon is required to
approve a merger or consolidation involving FNB or the sale, lease or exchange
of all or substantially all of FNB's corporate assets. As permitted by the
DGCL, the FNB Certificate provides that FNB is governed by Section 203 of the
DGCL which regulates certain business combinations involving Delaware
corporations. In general, Section 203 prevents an "Interested Stockholder"
(defined generally as an owner of 15% or more of a corporation's voting stock)
from engaging in a "Business Combination" (defined as a variety of
transactions, including mergers and tender offers) with a Delaware corporation
for three years following the date such person became an Interested
Stockholder unless: (i) before such person became an Interested Stockholder,
the Board of Directors of the corporation approved the transaction in which
the Interested Stockholder became an Interested Stockholder; (ii) upon
consummation of the transaction which resulted in the Interested Stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding for the purposes of determining the number of
shares outstanding those shares owned by directors who are also officers and
by employee stock plans in which employee participants do not have the right
to determine confidentially whether plan shares will be tendered in a tender
offer or exchange offer); or (iii) following the transaction in which such
person became an Interested Stockholder, the Business Combination is (x)
approved by the Board of Directors of the corporation and (y) authorized at a
meeting of stockholders by the affirmative vote of the holders of 66 2/3% of
the outstanding voting stock of the corporation not owned by the Interested
Stockholder. The FNB Board has, by resolution, determined that neither Norwest
nor its wholly-owned subsidiary that will be merged with FNB will be deemed an
"Interested Stockholder" within the meaning of Section 203. Accordingly, the
supermajority vote requirement described above will not apply to the
Reorganization Agreement.
Norwest. Except as described below, the affirmative vote of a majority of
the outstanding shares of Norwest Common Stock entitled to vote thereon is
required to approve a merger or consolidation involving Norwest or the sale,
lease or exchange of all or substantially all of Norwest's corporate assets.
No vote of the stockholders is required, however, in connection with a merger
in which Norwest is the surviving corporation and (i) the agreement of merger
for the merger does not amend in any respect the Norwest Certificate, (ii)
each share of capital stock outstanding immediately before the merger is to be
an identical outstanding or treasury share of Norwest after the merger, and
(iii) the number of shares of capital 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's capital stock
outstanding immediately before the merger.
APPRAISAL RIGHTS
FNB. Stockholders of Delaware corporations are entitled generally to
exercise certain dissenters' rights in the event of a merger or consolidation.
Under Section 262 of the DGCL, however, appraisal rights are not available to
holders of any class or series of stock that, at the record date fixed to
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determine stockholders entitled to receive notice of and to vote at a meeting
to act upon the agreement of merger or consolidation, was either (i) listed on
a national securities exchange or designated as a national market security on
an interdealer quotation system by the National Association of Securities
Dealers, Inc. or (ii) held of record by more than 2,000 stockholders, so long
as stockholders receive shares of the surviving corporation or another
corporation whose shares are so listed or designated or held by more than
2,000 stockholders. Norwest Common Stock is listed on the NYSE and the CHX and
currently held by more than 2,000 stockholders; however, FNB Common Stock is
not listed on a national securities exchange and is not held of record by more
than 2,000 holders. For these reasons, holders of FNB Common Stock will have
appraisal rights in connection with the Merger. See "THE MERGER--Dissenters'
Rights."
Norwest. Section 262 of the DGCL provides for stockholder appraisal rights
in connection with mergers and consolidations generally; however, appraisal
rights are not available to holders of any class or series of stock that, at
the record date fixed to determine stockholders entitled to receive notice of
and to vote at the meeting to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 stockholders, so long as stockholders receive shares
of the surviving corporation or another corporation whose shares are so listed
or designated or held by more than 2,000 stockholders. Norwest Common Stock is
listed on the NYSE and the CHX and currently held by more than 2,000
stockholders. For these reasons, assuming that the other conditions described
above are satisfied, holders of Norwest Common Stock will not have appraisal
rights in connection with mergers and consolidations involving Norwest.
SPECIAL MEETINGS
FNB. Under the DGCL, special meetings of stockholders may be called by the
board of directors or by such persons as may be authorized in the certificate
of incorporation or bylaws. The FNB Bylaws provide that a special meeting of
stockholders may be called only by a majority of the whole FNB Board. As such,
holders of FNB Common Stock do not have the ability to call a special meeting
of stockholders.
Norwest. Under the DGCL, special meetings of stockholders may be called by
the board of directors or by such persons as may be authorized in the
certificate of incorporation or bylaws. The Norwest Bylaws provide that 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 Norwest Board. As
such, holders of Norwest Common Stock do not have the ability to call a
special meeting of stockholders.
ACTION WITHOUT A MEETING
FNB. The FNB Certificate provides that any action required or permitted to
be taken by the stockholders of FNB must be effected at an annual or special
meeting of FNB stockholders and may not be effected by any consent in writing
by such stockholders.
Norwest. As permitted by Section 228 of the DGCL and the Norwest
Certificate, any action required or permitted to be taken at a stockholders'
meeting may be taken without a meeting pursuant to the written consent of the
holders of the number of shares that would have been required to effect the
action at an actual meeting of the stockholders.
LIMITATION OF DIRECTOR LIABILITY
FNB. The FNB Certificate provides that a director of FNB shall not have any
personal liability to FNB or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability arising out of (i) any
breach of the director's duty of loyalty to FNB or its stockholders, (ii) acts
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or omissions by the director not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) payment of a dividend or
approval of a stock repurchase in violation of Section 174 of the DGCL, (iv)
any transaction from which the director derived an improper personal benefit
or (v) any act or omission occurring prior to September 18, 1987, the date
such provision of the FNB Certificate became effective.
Norwest. The Norwest Certificate provides that a director (including an
officer who is also a director) of Norwest shall not be liable personally to
Norwest or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability arising out of (i) any breach of the
director's duty of loyalty to Norwest or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) payment of a dividend or approval of a stock
repurchase in violation of Section 174 of the DGCL, or (iv) any transaction
from which the director derived an improper personal benefit. This provision
protects Norwest's directors against personal liability for monetary damages
from breaches of their duty of care. It does not eliminate the director's duty
of care and has no effect on the availability of equitable remedies, such as
an injunction or rescission, based upon a director's breach of his duty of
care.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
FNB. The FNB Certificate provides that FNB will, to the full extent
permitted by Section 145 of the DGCL, indemnify all persons who it may
indemnify pursuant thereto. Accordingly, FNB shall indemnify any person who
was or is a party or is threatened to be made a party to any civil, criminal,
administrative or investigative action, suit or proceeding by reason of the
fact that such person is or was a director, officer, employee or agent of FNB
or is or was serving at the request of FNB as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise. Section 145 allows for the advancement of expenses in defending
such proceedings and permits the purchase of insurance on behalf of directors,
officers, employees and agents against liabilities, regardless of whether FNB
would have the power to indemnify such person against such liabilities under
the provisions of Section 145. Pursuant to such provision, FNB has purchased
such insurance on behalf of its directors and officers.
Norwest. The Norwest Certificate provides that Norwest must indemnify, to
the fullest extent authorized by the DGCL, each person who was or is made a
party to, is threatened to be made a party to, or is involved in, any action,
suit, or proceeding because he is or was a director or officer of Norwest (or
was serving at the request of Norwest as a director, trustee, officer,
employee, or agent of another entity) while serving in such capacity against
all expenses, liabilities, or loss incurred by such person in connection
therewith, provided that indemnification in connection with a proceeding
brought by such person will be permitted only if the proceeding was authorized
by the Norwest Board. The Norwest Certificate also provides that Norwest must
pay expenses incurred in defending the proceedings specified above in advance
of their final disposition, provided that if so required by the DGCL, such
advance payments for expenses incurred by a director or officer may be made
only if he undertakes to repay all amounts so advanced if it is ultimately
determined that the person receiving such payments is not entitled to be
indemnified.
The Norwest Certificate authorizes Norwest to provide similar
indemnification to employees or agents of Norwest.
Pursuant to the Norwest Certificate, Norwest may maintain insurance, at its
expense, to protect itself and any directors, officers, employees or agents of
Norwest or another entity against any expense, liability or loss, regardless
of whether Norwest has the power or obligation to indemnify that person
against such expense, liability or loss under the DGCL.
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The right to indemnification is not exclusive of any other right which any
person may have or acquire under any statute, provision of the Norwest
Certificate or Norwest Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.
DIVIDENDS
In addition to restrictions imposed under Delaware law, as discussed below,
Norwest and FNB are subject to Federal Reserve Board policies regarding
payment of dividends, which generally limit dividends to operating earnings.
See "CERTAIN REGULATORY AND OTHER CONSIDERATIONS PERTAINING TO NORWEST."
FNB and Norwest. Delaware corporations may pay dividends out of surplus or,
if there is no surplus, out of net profits for the fiscal year in which
declared and for the preceding fiscal year. Section 170 of the DGCL also
provides that dividends may not be paid out of net profits if, after the
payment of the dividend, capital is less than the capital represented by the
outstanding stock of all classes having a preference upon the distribution of
assets.
PROPOSAL OF BUSINESS; NOMINATION OF DIRECTORS
FNB. The FNB Bylaws contain detailed advance notice and informational
procedures with regard to the nomination, other than by or at the direction of
FNB Board, of persons for election as directors. Generally, such procedures
require a FNB stockholder to give notice of a proposed nominee within a
specific time frame in advance of the stockholders meeting at which directors
will be elected. In addition, the FNB Bylaws contain detailed advance notice
and informational requirements for business, other than the election of
directors, to be brought before an annual meeting of stockholders of FNB,
other than by or at the direction of the FNB Board. Again, such procedures
generally require notice of the proposed business to FNB within a specific
time frame in advance of the annual meeting of stockholders.
Norwest. The Norwest Bylaws contain detailed advance notice and
informational procedures which must be complied with in order for a
stockholder to nominate a person to serve as a director. The Norwest Bylaws
generally require a stockholder to give notice of a proposed nominee in
advance of the stockholders meeting at which directors will be elected. In
addition, the Norwest Bylaws contain detailed advance notice and informational
procedures which must be followed in order for a Norwest stockholder to
propose an item of business for consideration at a meeting of Norwest
stockholders.
CERTAIN REGULATORY AND OTHER
CONSIDERATIONS PERTAINING TO NORWEST
Norwest and its banking subsidiaries are subject to extensive regulation by
federal and state agencies. The regulation of bank holding companies and their
subsidiaries is intended primarily for the protection of depositors, federal
deposit insurance funds and the banking system as a whole and is not in place
to protect stockholders or other investors.
As discussed in more detail below, this regulatory environment may, among
other things,
(a) restrict Norwest's ability to pay dividends on Norwest Common Stock, (b)
require Norwest to provide financial support to one or more of its banking
subsidiaries, (c) require Norwest and its banking subsidiaries to maintain
capital balances in excess of those desired by management, and/or (d) require
Norwest to pay higher deposit insurance premiums as a result of the
deterioration in the financial condition of depository institutions in
general.
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BANK REGULATORY AGENCIES
Norwest Corporation, as a bank holding company, is subject to regulation by
the Federal Reserve Board under the Bank Holding Company Act.
Norwest's national banking subsidiaries are regulated primarily by the
Office of the Comptroller of the Currency ("OCC"). Its state-chartered banking
subsidiaries are regulated primarily by the Federal Deposit Insurance
Corporation ("FDIC") and applicable state banking agencies. Its savings and
loan association subsidiary is regulated primarily by the Office of Thrift
Supervision ("OTS"). Norwest's federally insured banking subsidiaries and
savings and loan subsidiary are also subject to regulation by the FDIC.
Norwest has other financial services subsidiaries that are subject to
regulation by the Federal Reserve Board and other applicable federal and state
agencies. For example, Norwest's brokerage subsidiary is subject to regulation
by the Securities and Exchange Commission, the National Association of
Securities Dealers, Inc. and state securities regulators. Norwest's insurance
subsidiaries are subject to regulation by applicable state insurance
regulatory agencies. Other nonbank subsidiaries of Norwest are subject to the
laws and regulations of both the federal government and the various states in
which they conduct business.
BANK HOLDING COMPANY ACTIVITIES; INTERSTATE BANKING
A bank holding company is generally prohibited under the Bank Holding
Company Act from engaging in nonbanking (i.e., commercial or industrial)
activities, subject to certain exceptions. Specifically, the activities of a
bank holding company, and those companies that it controls or in which it
holds more than 5% of the voting stock, are limited to banking or managing or
controlling banks, furnishing services to its subsidiaries and such other
activities that the Federal Reserve Board determines to be so closely related
to banking as to be a "proper incident thereto." In determining whether an
activity is sufficiently related to banking, the Federal Reserve Board will
consider whether the performance of such activity by the bank holding company
can reasonably be expected to produce benefits to the public (e.g., greater
convenience, increased competition or gains in efficiency) that outweigh
possible adverse effects (e.g., undue concentration of resources, decreased or
unfair competition, conflicts of interest or unsound banking practices).
Under the Reigle-Neal Interstate Banking and Branching Act of 1994 (the
"Interstate Banking Act"), which became effective on September 29, 1995, a
bank holding company may acquire banks in states other than its home state,
subject to any state requirement that the bank has been organized and
operating for a minimum period of time, not to exceed five years, and the
requirement that the bank holding company not control, prior to or following
the proposed acquisition, more than 10% of the total amount of deposits of
insured depository institutions nationwide or, unless it is the bank holding
company's initial entry into the state, more than 30% of such deposits in the
state (or such lesser or greater amount set by the state).
The Interstate Banking Act also authorizes banks to merge across state lines
(thereby creating interstate branches) effective June 1, 1997. States may opt
out of the Interstate Banking Act (thereby prohibiting interstate mergers in
the state) or opt in early (thereby allowing interstate mergers prior to June
1, 1997). Norwest will be unable to consolidate its banking operations in one
state with those of another state if either state in question has opted out of
the Interstate Banking Act. The state of Texas has opted out of the Interstate
Banking Act. The state of Montana has opted out until at least the year 2000.
Norwest's acquisitions of banking institutions and other companies generally
are subject to the prior approval of the Federal Reserve Board and other
applicable federal or state regulatory
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authorities. In determining whether to approve a proposed bank acquisition,
federal banking regulators will consider, among other factors, the effect of
the acquisition on competition, the public benefits expected to be received
from the consummation of the acquisition, the projected capital ratios and
levels on a post-acquisition basis, and the acquiring institution's record of
addressing the credit needs of the communities it serves, including the needs
of low and moderate income neighborhoods, consistent with the safe and sound
operation of the bank, under the Community Reinvestment Act of 1977, as
amended.
DIVIDEND RESTRICTIONS
Norwest is a legal entity separate and distinct from its banking and other
subsidiaries. Its principal source of funds to pay dividends on its common and
preferred stock and debt service on its debt is dividends from its
subsidiaries. Various federal and state statutes and regulations limit the
amount of dividends that may be paid to Norwest by its banking subsidiaries
without regulatory approval.
Most of Norwest's banking subsidiaries are national banks. A national bank
must obtain the prior approval of the OCC to pay a dividend if the total of
all dividends declared by the bank in any calendar year would exceed the
bank's net income for that year combined with its retained net income for the
preceding two calendar years, less any required transfers to surplus or a fund
for the retirement of any preferred stock.
The OTS imposes substantially similar restrictions on the payment of
dividends to Norwest by its savings and loan association subsidiary. Norwest's
state-chartered banking subsidiaries also are subject to dividend restrictions
under applicable state law.
If, in the opinion of the applicable federal regulatory agency, a depository
institution 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), the regulator may require,
after notice and hearing, that such bank cease and desist from such practice.
The OCC has indicated that the payment of dividends would constitute an unsafe
and unsound practice if the payment would deplete a depository institution's
capital base to an inadequate level. Under the Federal Deposit Insurance Act,
an insured depository institution may not pay any dividend if the institution
is undercapitalized or if the payment of the dividend would cause the
institution to become undercapitalized. In addition, federal bank regulatory
agencies have issued policy statements which provide that depository
institutions and their holding companies should generally pay dividends only
out of current operating earnings.
The ability of Norwest's banking subsidiaries to pay dividends to Norwest
may also be affected by various minimum capital requirements for banking
organizations, as described below. In addition, the right of Norwest to
participate in the assets or earnings of a subsidiary is subject to the prior
claims of creditors of the subsidiary.
HOLDING COMPANY STRUCTURE
Transfer of Funds from Banking Subsidiaries. Norwest's banking subsidiaries
are subject to restrictions under federal law that limit the transfer of funds
or other items of value from such subsidiaries to Norwest and its nonbanking
subsidiaries (including Norwest, "affiliates") in so-called "covered
transactions." In general, covered transactions include loans and other
extensions of credit, investments and asset purchases, as well as other
transactions involving the transfer of value from a banking subsidiary to an
affiliate or for the benefit of an affiliate. Unless an exemption applies,
covered transactions by a banking subsidiary with a single affiliate are
limited to 10% of the banking subsidiary's capital and surplus and, with
respect to all affiliates in the aggregate, to 20% of the banking subsidiary's
capital and surplus. Also, loans and extensions of credit to affiliates
generally are required to be secured in specified amounts.
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Source of Strength Doctrine. The Federal Reserve Board has a policy that a
bank holding company is expected to act as a source of financial and
managerial strength to each of its subsidiary banks and, under appropriate
circumstances, to commit resources to support each such subsidiary bank. This
support may be required at times when the bank holding company may not have
the resources to provide it. Capital loans by a bank holding company to any of
its subsidiary banks are subordinate in right of payment to deposits and
certain other indebtedness of the subsidiary bank. In addition, 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.
Depositor Preference. The Federal Deposit Insurance Act (the "FDI Act")
provides that, in the event of the "liquidation or other resolution" of an
insured depository institution, the claims of depositors of the institution
(including the claims of the FDIC as subrogee of insured depositors) and
certain claims for administrative expenses of the FDIC as a receiver will have
priority over other general unsecured claims against the institution. If an
insured depository institution fails, insured and uninsured depositors, along
with the FDIC, will have priority in payment ahead of unsecured, nondeposit
creditors, including the institution's parent holding company.
Liability of Commonly Controlled Institutions. Under the FDI Act, an insured
depository institution is generally liable for any loss incurred, or
reasonably expected to be incurred, by the FDIC in connection with (a) the
default of a commonly controlled insured depository institution or (b) any
assistance provided by the FDIC to a commonly controlled 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.
REGULATORY CAPITAL STANDARDS AND RELATED MATTERS
Risk-Based Capital. The Federal Reserve Board, the OCC and the FDIC have
adopted substantially similar risk-based and leverage capital guidelines for
banking organizations. The guidelines are intended to ensure that banking
organizations have adequate capital given the risk levels of their assets and
off-balance sheet commitments.
The risk-based capital ratio is determined by classifying assets and certain
off-balance sheet financial instruments into weighted categories, with higher
levels of capital being required for those categories perceived as
representing greater risk. Under the capital guidelines, a banking
organization's total capital is divided into two tiers. "Tier 1 capital"
consists of common equity, retained earnings, qualifying noncumulative
perpetual preferred stock, a limited amount of qualifying cumulative perpetual
preferred stock and minority interests in the equity accounts of consolidated
subsidiaries, less certain items such as goodwill and certain other intangible
assets. "Tier 2 capital" consists of hybrid capital instruments, perpetual
debt, mandatory convertible debt securities, a limited amount of subordinated
debt, preferred stock that does not qualify as Tier 1 capital, and a limited
amount of the allowance for credit losses.
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 off-balance sheet items, such as stand-by letters of
credit) is currently 8%. The minimum Tier 1 capital to risk-adjusted assets is
4%. As of December 31, 1996, Norwest's total capital and Tier 1 capital to
risk-adjusted assets ratios were 10.42% and 8.63%, respectively.
The Federal Reserve Board also requires bank holding companies to comply
with minimum leverage ratio guidelines. The leverage ratio is the ratio of a
bank holding company's Tier 1 capital to its total consolidated quarterly
average assets, less goodwill and certain other intangible assets. The
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guidelines require a minimum leverage ratio of 3% for bank holding companies
that meet certain specified criteria, including having the highest supervisory
rating. All other bank holding companies are required to maintain a minimum
leverage ratio of 4% to 5%. The Federal Reserve Board has not advised Norwest
of any specific leverage ratio applicable to it. As of December 31, 1996,
Norwest's leverage ratio was 6.15%.
The Federal Reserve Board's capital guidelines provide that banking
organizations experiencing internal growth or making acquisitions are expected
to maintain strong capital positions substantially above the minimum
supervisory levels, without significant reliance on intangible assets. Also,
the guidelines indicate that the Federal Reserve Board will consider a
"tangible Tier 1 leverage ratio" in evaluating proposals for expansion or new
activities. The tangible Tier 1 leverage ratio is the ratio of a banking
organization's Tier 1 capital (excluding intangibles) to total assets
(excluding intangibles).
Norwest's banking subsidiaries are subject to risk-based and leverage
capital guidelines substantially similar to those imposed by the Federal
Reserve Board on bank holding companies.
Other Measures of Capital Adequacy and Safety and Soundness. In assessing a
banking organization's capital adequacy, federal bank regulatory agencies will
also consider the organization's credit concentration risk and risks
associated with nontraditional activities, as well as the organization's
ability to manage those risks. This evaluation will be performed as part of
the organization's regular safety and soundness examination.
Effective January 1, 1998, federal bank regulatory agencies will require
banking organizations that engage in significant trading activity to calculate
a charge for market risk. Organizations may opt to comply effective January 1,
1997. Significant trading activity, for this purpose, means trading activity
of at least 10% of total assets or $1 billion, calculated on a consolidated
basis for bank holding companies. Federal bank regulators may apply the market
risk measure to other banks and bank holding companies if the agency deems
necessary or appropriate for safe and sound banking practices. Each agency may
exclude organizations that it supervises that otherwise meet the criteria
under certain circumstances. The market risk charge will be included in the
calculation of an organization's risk-based capital ratios. Norwest did not
engage in significant trading activity during the year ended December 31,
1996.
As an additional means to identify problems in the financial management of
depository institutions, the FDI Act requires federal bank regulatory agencies
to establish certain non-capital safety and soundness standards for
institutions for which they are the primary federal regulator. The standards
relate generally to operations and management, asset quality, interest rate
exposure and executive compensation. The agencies are authorized to take
action against institutions that fail to meet such standards.
Prompt Corrective Action. The FDI Act requires federal bank regulatory
agencies to take "prompt corrective action" with respect to FDIC-insured
depository institutions that do not meet minimum capital requirements. A
depository institution's treatment for purposes of the prompt corrective
action provisions will depend upon how its capital levels compare to various
capital measures and certain other factors, as established by regulation.
Federal bank regulatory agencies have adopted regulations that classify
insured depository institutions into one of five capital-based categories. The
regulations use the total capital ratio, the Tier 1 capital ratio and the
leverage ratio as the relevant measures of capital. A depository institution
is (a) "well capitalized" if it has a risk-adjusted total capital ratio of at
least 10%, a Tier 1 capital ratio of at least 6% and a leverage ratio of at
least 5% and is not subject to any order or written directive to maintain a
specific capital level; (b) "adequately capitalized" if it has a risk-adjusted
total capital ratio of at least 8%, a Tier 1 capital ratio of at least 4% and
a leverage ratio of at least 4% (3% in some
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cases) and is not well capitalized; (c) "undercapitalized" if it has a risk-
adjusted total capital ratio of less than 8%, a Tier 1 capital ratio of less
than 4% or a leverage ratio of less than 4% (3% in some cases); (d)
"significantly undercapitalized" if it has a risk-adjusted total capital ratio
of less than 6%, a Tier 1 capital ratio of less than 3% or a leverage ratio of
less than 3%; and (e) "critically undercapitalized" if its tangible equity is
less than 2% of total assets. As of December 31, 1996, all of Norwest's
insured depository institutions met the criteria for well capitalized
institutions as set forth above.
A depository institution's primary federal bank regulator is authorized to
downgrade the institution's capital category to the next lower category upon a
determination that the institution is engaged in an unsafe or unsound
condition or is engaged in an unsafe or unsound practice. An unsafe or unsound
practice can include receipt by the institution of a less than satisfactory
rating on its most recent examination with respect to its asset quality,
management, earnings or liquidity.
The FDI Act 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 as a
result be undercapitalized. Undercapitalized depository institutions are
subject to a wide range of limitations on operations and activities (including
asset growth) 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 the plan. The aggregate liability of the parent holding company is
limited to the lesser of (a) 5% of the depository institution's total assets
at the time it became undercapitalized or (b) the amount which is necessary
(or would have been necessary) to bring the institution into compliance with
all capital standards applicable with respect to the institution as of the
time it fails to comply with the plan. If an undercapitalized 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.
FDIC INSURANCE
The FDIC insures the deposits of Norwest's depository institution
subsidiaries through the Bank Insurance Fund (BIF) or, in the case of deposits
held by its savings and loan association subsidiary or deposits held by
banking subsidiaries as a result of savings and loan associations acquired by
Norwest, through the Savings Association Insurance Fund (SAIF). The amount of
FDIC assessments paid by each BIF member institution is based on its relative
risk of default as measured by regulatory capital ratios and other factors.
Specifically, the assessment rate is based on the institution's capitalization
risk category and supervisory subgroup category. An institution's
capitalization risk category is based on the FDIC's determination of whether
the institution is well capitalized, adequately capitalized or less than
adequately capitalized. An institution's supervisory subgroup category is
based on the FDIC's assessment of the financial condition of the institution
and the probability that FDIC intervention or other corrective action will be
required. 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.
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The BIF assessment rate currently ranges from zero to 27 cents per $100 of
domestic deposits, with Subgroup A institutions assessed at a rate of zero and
Subgroup C institutions assessed at a rate of 27 cents. The FDIC may increase
or decrease the assessment rate schedule on a semiannual basis. An increase in
the rate assessed one or more of Norwest's banking subsidiaries could have a
material adverse effect on Norwest's earnings, depending on the amount of the
increase. The FDIC is authorized to terminate a depository institution's
deposit insurance upon a finding by the FDIC that the institution's financial
condition is unsafe or unsound or that the institution has engaged in unsafe
or unsound practices or has violated any applicable rule, regulation, order or
condition enacted or imposed by the institution's regulatory agency. The
termination of deposit insurance with respect to one or more of Norwest's
subsidiary depository institutions could have a material adverse effect on
Norwest's earnings, depending on the collective size of the particular
institutions involved.
Deposits insured by SAIF are currently assessed at the BIF rate of zero to
27 cents per $100 of domestic deposits. The SAIF assessment rate may increase
or decrease as is necessary to maintain the designated SAIF reserve ratio of
1.25% of insured deposits.
Effective January 1, 1997, all FDIC-insured depository institutions must pay
an annual assessment to provide funds for the payment of interest on bonds
issued by the Financing Corporation, a federal corporation chartered under the
authority of the Federal Housing Finance Board. The bonds (commonly referred
to as FICO bonds) were issued to capitalize the Federal Savings and Loan
Insurance Corporation. Until December 31, 1999 or when the last savings and
loan association ceases to exist, whichever occurs first, depository
institutions will pay approximately 6.4 cents per $100 of SAIF-assessable
deposits and approximately 1.3 cents per $100 of BIF-assessable deposits.
Subject to certain conditions, BIF and SAIF will be merged into one
insurance fund effective January 1, 1999.
FISCAL AND MONETARY POLICIES
Norwest's business and earnings are affected significantly by the fiscal and
monetary policies of the federal government and its agencies. Norwest is
particularly affected by the policies of the Federal Reserve Board, which
regulates the supply of money and credit in the United States. Among the
instruments of monetary policy available to the Federal Reserve are (a)
conducting open market operations in United States government securities, (b)
changing the discount rates of borrowings of depository institutions, (c)
imposing or changing reserve requirements against depository institutions'
deposits, and (d) imposing or changing reserve requirements against certain
borrowing by banks and their affiliates. These methods are used in varying
degrees and combinations to directly affect the availability of bank loans and
deposits, as well as the interest rates charged on loans and paid on deposits.
For that reason alone, the policies of the Federal Reserve Board have a
material effect on the earnings of Norwest's banking subsidiaries and, thus,
those of Norwest.
COMPETITION
The financial services industry is highly competitive. Norwest's
subsidiaries compete with traditional financial services providers, such as
banks, savings and loan associations, credit unions, finance companies,
mortgage banking companies, insurance companies, and money market and mutual
fund companies. They also face increased competition from non-banking
institutions such as brokerage houses and insurance companies, as well as from
financial services subsidiaries of commercial and manufacturing companies.
Many of these competitors enjoy the benefits of advanced technology, fewer
regulatory constraints and lower cost structures.
The financial services industry is likely to become even more competitive as
further technological advances enable more companies to provide financial
services. These technological advances may diminish the importance of
depository institutions and other financial intermediaries in the transfer of
funds between parties.
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EXPERTS
The consolidated financial statements of Norwest and subsidiaries as of
December 31, 1995 and 1994, and for each of the years in the three-year period
ended December 31, 1995, 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
report of KPMG Peat Marwick LLP covering the December 31, 1995 financial
statements refers to a change in accounting for mortgage servicing rights.
The consolidated financial statements of FNB and the Bank for the two years
ended December 31, 1996 included in FNB's 1996 annual report to stockholders,
a copy of which accompanies this Proxy Statement-Prospectus, were included
therein in reliance upon the report of Clifton Gunderson L.L.C., independent
certified public accountants, upon the authority of said firm as experts in
accounting and auditing. The consolidated financial statements of FNB and the
Bank for the year ended December 31, 1994 included in FNB's 1996 annual report
to stockholders were included therein in reliance upon the report of McGladrey
& Pullen, LLP, independent certified public accountants, upon the authority of
said firm 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 Reorganization Agreement,
will be validly issued and fully paid and nonassessable, has been rendered by
Stanley S. Stroup, Executive Vice President and General Counsel of Norwest
Corporation. At September 30, 1996, Mr. Stroup was the beneficial owner of
104,247 shares and held options, exercisable within 60 days from September 30,
1996, to acquire 240,493 additional shares of Norwest Common Stock.
The material U.S. Federal income tax consequences of the Merger to FNB's
stockholders will be passed upon for FNB by the law firm of Schiff Hardin &
Waite.
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, 1995, which is incorporated in this Proxy Statement-
Prospectus by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE." Stockholders of FNB desiring copies of such documents may contact
Norwest at the addresses or phone numbers indicated under "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as of
the 22nd day of November, 1996, by and between FARMERS NATIONAL BANCORP, INC.
("Bancorp"), a Delaware corporation, and NORWEST CORPORATION ("Norwest"), a
Delaware corporation.
WHEREAS, the parties hereto desire to effect a reorganization whereby a
wholly-owned subsidiary of Norwest will merge with and into Bancorp (the
"Merger") pursuant to an agreement of merger (the "Merger Agreement") in
substantially the form attached hereto as Exhibit A, which provides, among
other things, for the conversion and exchange of the shares of Common Stock of
Bancorp of the par value of $5 per share ("Bancorp Common Stock") outstanding
immediately prior to the time the Merger becomes effective in accordance with
the provisions of the Merger Agreement (the "Effective Time of the Merger")
into shares of voting Common Stock of Norwest of the par value of $1 2/3 per
share ("Norwest Common Stock").
NOW, THEREFORE, to effect such reorganization and in consideration of the
premises and the mutual covenants and agreements contained herein, the parties
hereto do hereby represent, warrant, covenant and agree as follows:
1. BASIC PLAN OF REORGANIZATION
(a) Merger. Subject to the terms and conditions contained herein, a wholly-
owned subsidiary of Norwest (the "Merger Co.") will be merged by statutory
merger with and into Bancorp pursuant to the Merger Agreement, with Bancorp as
the surviving corporation, in which merger each share of Bancorp Common Stock
outstanding immediately prior to the Effective Time of the Merger (other than
shares as to which statutory dissenters' appraisal rights have been exercised)
will be converted into and exchanged for a number of shares of Norwest Common
Stock determined by dividing the Adjusted Norwest Shares by the number of
shares of Bancorp Common Stock then outstanding. The "Adjusted Norwest Shares"
shall be a number equal to $30,631,600 divided by the Norwest Measurement
Price. The "Norwest Measurement Price" is defined as the average of the
closing prices of a share of Norwest Common Stock as reported on the
consolidated tape of the New York Stock Exchange during the period of 20
trading days ending on the day immediately preceding the meeting of
shareholders required by paragraph 4(c) of this Agreement.
(b) Norwest Common Stock Adjustments. If between the date hereof and the
Effective Time of the Merger shares of Norwest Common Stock shall be changed
into a different number of shares or a different class of shares by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or if a stock dividend thereon shall be declared with
a record date within such period (a "Common Stock Adjustment"), then the
number of shares of Norwest Common Stock into which a share of Bancorp Common
Stock shall be converted pursuant to subparagraph (a), above, will be
appropriately and proportionately adjusted so that the number of such shares
of Norwest Common Stock into which a share of Bancorp Common Stock shall be
converted will equal the number of shares of Norwest Common Stock which
holders of shares of Bancorp Common Stock would have received pursuant to
Common Stock Adjustment had the record date therefor been immediately
following the Effective Time of the Merger.
(c) Fractional Shares. No fractional shares of Norwest Common Stock and no
certificates or scrip certificates therefor shall be issued to represent any
such fractional interest, and any holder thereof shall be paid an amount of
cash equal to the product obtained by multiplying the fractional share
interest to which such holder is entitled by the Norwest Measurement Price.
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(d) Mechanics of Closing Merger. Subject to the terms and conditions set
forth herein, the Merger Agreement shall be executed and it or a Certificate
of Merger shall be filed with the Secretary of State of the State of Delaware
within ten (10) business days following the satisfaction or waiver of all
conditions precedent set forth in Sections 6 and 7 of this Agreement or on
such other date as may be agreed to by the parties (the "Closing Date"). Each
of the parties agrees to use its best efforts to cause the Merger to be
completed as soon as practicable after the receipt of final regulatory
approval of the Merger and the expiration of all required waiting periods. The
time that the filing referred to in the first sentence of this paragraph is
made is herein referred to as the "Time of Filing". The day on which such
filing is made and accepted is herein referred to as the "Effective Date of
the Merger". The Effective Time of the Merger shall be 11:59 p.m. Minneapolis,
Minnesota time on the Effective Date of the Merger. At the Effective Time of
the Merger on the Effective Date of the Merger, the separate existence of
Merger Co. shall cease and Merger Co. will be merged with and into Bancorp
pursuant to the Merger Agreement.
The closing of the transactions contemplated by this Agreement and the
Merger Agreement (the "Closing") shall take place on the Closing Date at the
offices of Norwest, Norwest Center, Sixth and Marquette, Minneapolis,
Minnesota.
2. REPRESENTATIONS AND WARRANTIES OF BANCORP. Bancorp represents and
warrants to Norwest as follows:
(a) Organization and Authority. Bancorp 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 Bancorp and the Bancorp 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. Bancorp is
registered as a bank holding company with the Federal Reserve Board under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). Bancorp has
furnished Norwest true and correct copies of its certificate of incorporation
and by-laws, as amended.
(b) Bancorp's Subsidiaries. Schedule 2(b) sets forth a complete and correct
list of all of Bancorp's subsidiaries as of the date hereof (individually a
"Bancorp Subsidiary" and collectively the "Bancorp Subsidiaries"), all shares
of the outstanding capital stock of each of which, except as set forth on
Schedule 2(b), are owned directly or indirectly by Bancorp. No equity security
of any Bancorp Subsidiary is or may be required to be issued by reason of any
option, warrant, scrip, right to subscribe to, call or commitment of any
character whatsoever relating to, or security or right convertible into,
shares of any capital stock of such subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Bancorp Subsidiary is
bound to issue additional shares of its capital stock, or any option, warrant
or right to purchase or acquire any additional shares of its capital stock.
Subject to 12 U.S.C. (S) 55 (1982) and the Delaware General Corporation Law,
all of such shares so owned by Bancorp 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 Bancorp 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. Except as set forth on Schedule 2(b), Bancorp does not own
beneficially, directly or indirectly, more than 5% of any class of equity
securities or similar interests of any corporation, bank, business trust,
association or similar organization, and is not, directly or indirectly, a
partner in any partnership or party to any joint venture.
(c) Capitalization. The authorized capital stock of Bancorp consists of
600,000 shares of common stock, $5.00 par value, of which as of the close of
business on June 30, 1996, 306,316 shares were
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outstanding and 68,684 shares were held in the treasury. The maximum number of
shares of Bancorp Common Stock (assuming for this purpose that phantom shares
and other share-equivalents constitute Bancorp Common Stock) that would be
outstanding as of the Effective Date of the Merger if all options, warrants,
conversion rights and other rights with respect thereto were exercised is
306,316. All of the outstanding shares of capital stock of Bancorp 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 Bancorp or any Bancorp Subsidiary to issue, sell or otherwise
dispose of, or to purchase, redeem or otherwise acquire, any shares of capital
stock of Bancorp or any Bancorp Subsidiary. Since June 30, 1996, no shares of
Bancorp capital stock have been purchased, redeemed or otherwise acquired,
directly or indirectly, by Bancorp or any Bancorp Subsidiary and, except as
permitted by this Agreement and except for cash dividends of $0.35 per share
paid by Bancorp on July 1, 1996 and October 1, 1996, no dividends or other
distributions have been declared, set aside, made or paid to the shareholders
of Bancorp.
(d) Authorization. Bancorp has the corporate power and authority to enter
into this Agreement and the Merger Agreement and, subject to any required
approvals of its shareholders, to carry out its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
Merger Agreement by Bancorp and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Bancorp. Subject to such approvals of shareholders and of
government agencies and other governing boards having regulatory authority
over Bancorp as may be required by statute or regulation, this Agreement and
the Merger Agreement are valid and binding obligations of Bancorp enforceable
against Bancorp in accordance with their respective terms.
Except as set forth on Schedule 2(d), neither the execution, delivery and
performance by Bancorp of this Agreement or the Merger Agreement, nor the
consummation of the transactions contemplated hereby and thereby, nor
compliance by Bancorp with any of the provisions hereof or thereof, will (i)
violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration of, or result in the creation of, any lien, security interest,
charge or encumbrance upon any of the properties or assets of Bancorp or any
Bancorp 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 Bancorp or any Bancorp Subsidiary is a party
or by which it is bound, or to which Bancorp or any Bancorp Subsidiary or any
of the properties or assets of Bancorp or any Bancorp Subsidiary is subject,
or (ii) subject to compliance with the statutes and regulations referred to in
the next paragraph, to the best knowledge of Bancorp, violate any judgment,
ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to Bancorp or any Bancorp Subsidiary or any of their respective
properties or assets.
Other than in connection or in compliance with the provisions of the
Securities Act of 1933 and the rules and regulations thereunder (the
"Securities Act"), the Securities Exchange Act of 1934 and the rules and
regulations thereunder (the "Exchange Act"), the securities or blue sky laws
of the various states or filings, consents, reviews, authorizations, approvals
or exemptions required under the BHC Act or the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act"), and filings required to effect the
Merger under Delaware law, no notice to, filing with, exemption or review by,
or authorization, consent or approval of, any public body or authority is
necessary for the consummation by Bancorp of the transactions contemplated by
this Agreement and the Merger Agreement.
(e) Bancorp Financial Statements. The consolidated statements of financial
condition of Bancorp and Bancorp's Subsidiaries as of December 31, 1995 and
1994 and related consolidated statements of income, shareholders' equity and
cash flows for the three years ended December 31, 1995, together
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with the notes thereto, certified by Clifton, Gunderson and Co.(and by
McGladrey & Pullen for the years ended 1994 and earlier) and included in
Bancorp's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1995 (the "Bancorp 10-K") as filed with the Securities and Exchange Commission
(the "SEC"), and the unaudited consolidated statements of financial condition
of Bancorp and Bancorp's Subsidiaries as of June 30, 1996 and the related
unaudited consolidated statements of income, shareholders' equity and cash
flows for the six (6) months then ended included in Bancorp's Quarterly Report
on Form 10-QSB for the fiscal quarter ended June 30, 1996 as filed with the
SEC (collectively, the "Bancorp 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 Bancorp and Bancorp's Subsidiaries at the
dates and the consolidated results of operations and cash flows of Bancorp and
Bancorp's Subsidiaries for the periods stated therein.
(f) Reports. Since December 31, 1990, Bancorp and each Bancorp Subsidiary
has filed all reports, registrations and statements, together with any
required amendments thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-KSB, Forms 10-QSB and proxy
statements, (ii) the Federal Reserve Board, (iii) the Federal Deposit
Insurance Corporation (the "FDIC"), (iv) the United States Comptroller of the
Currency (the "Comptroller") and (v) any applicable state securities or
banking authorities. All such reports and statements filed with any such
regulatory body or authority are collectively referred to herein as the
"Bancorp Reports". As of their respective dates, the Bancorp Reports complied
in all material respects with all the rules and regulations promulgated by the
SEC, the Federal Reserve Board, the FDIC, the Comptroller and applicable state
securities or banking authorities, as the case may be, and did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Copies
of all the Bancorp Reports have been made available to Norwest by Bancorp.
(g) Properties and Leases. Except as may be reflected in the Bancorp
Financial Statements and except for any lien for current taxes not yet
delinquent, Bancorp and each Bancorp Subsidiary have good title free and clear
of any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Bancorp's
consolidated balance sheet as of June 30, 1996 included in Bancorp's Quarterly
Report on Form 10-QSB for the period then ended, and all real and personal
property acquired since such date, except such real and personal property as
has been disposed of in the ordinary course of business. All leases of real
property and all other leases material to Bancorp or any Bancorp Subsidiary
pursuant to which Bancorp or such Bancorp Subsidiary, as lessee, leases real
or personal property, which leases are described on Schedule 2(g), are valid
and effective in accordance with their respective terms, and there is not,
under any such lease, any material existing default by Bancorp or such Bancorp
Subsidiary or any event which, with notice or lapse of time or both, would
constitute such a material default. Substantially all Bancorp's and each
Bancorp Subsidiary's buildings and equipment in regular use have been well
maintained and are in good and serviceable condition, reasonable wear and tear
excepted.
(h) Taxes. Each of Bancorp and the Bancorp Subsidiaries has filed all
federal, state, county, local and foreign tax returns, including information
returns, required to be filed by it, and paid all taxes due and owed by it,
including those with respect to income, withholding, social security,
unemployment, workers compensation, franchise, ad valorem, premium, excise and
sales taxes, and no taxes shown on such returns to be owed by it or
assessments received by it are delinquent. The federal income tax returns of
Bancorp and the Bancorp Subsidiaries for the fiscal year ended December 31,
1992, and for all fiscal years prior thereto, are for the purposes of routine
audit by the Internal Revenue Service closed because of the statute of
limitations, and no claims for additional taxes for such fiscal years are
pending. Except only as set forth on Schedule 2(h), (i) neither Bancorp nor
any Bancorp Subsidiary is a party to any pending action or proceeding, nor is
any such action or proceeding threatened in writing
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by any governmental authority, for the assessment or collection of taxes,
interest, penalties, assessments or deficiencies and (ii) no issue has been
raised by any federal, state, local or foreign taxing authority in connection
with an audit or examination of the tax returns, business or properties of
Bancorp or any Bancorp Subsidiary which has not been settled, resolved and
fully satisfied. Each of Bancorp and the Bancorp Subsidiaries has paid or
withheld all taxes owed or which it is required to withhold from amounts owing
to employees, creditors or other third parties. The consolidated balance sheet
as of December 31, 1995, referred to in paragraph 2(e) hereof, includes
adequate provision for all accrued but unpaid federal, state, county, local
and foreign taxes, interest, penalties, assessments or deficiencies of Bancorp
and the Bancorp Subsidiaries with respect to all periods through the date
thereof.
(i) Absence of Certain Changes. Since December 31, 1995 there has been no
change in the business, financial condition or results of operations of
Bancorp or any Bancorp 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 Bancorp and the Bancorp Subsidiaries
taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 2(j), neither
Bancorp nor any Bancorp Subsidiary is a party or subject to any of the
following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination pay
liabilities or fringe benefits) with any present or former officer,
director, employee or consultant (other than those which are terminable at
will by Bancorp or such Bancorp Subsidiary);
(ii) any plan, contract or understanding providing for any bonus,
pension, option, deferred compensation, retirement payment, profit sharing
or similar arrangement with respect to any present or former officer,
director, employee or consultant;
(iii) any labor contract or agreement with any labor union;
(iv) any contract not made in the ordinary course of business containing
covenants which limit the ability of Bancorp or any Bancorp 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, Bancorp
or any Bancorp Subsidiary may carry on its business (other than as may be
required by law or applicable regulatory authorities);
(v) any other contract or agreement which is a "material contract" within
the meaning of Item 601(b)(10) of Regulation S-K;
(vi) any lease with annual rental payments aggregating $10,000 or more;
(vii) any agreement or commitment with respect to the Community
Reinvestment Act with any state or federal bank regulatory authority or any
other party; or
(viii) any current or past agreement, contract or understanding with any
current or former director, officer, employee, consultant, financial
adviser, broker, dealer, or agent providing for any rights of
indemnification in favor of such person or entity.
(k) Litigation and Other Proceedings. Bancorp has furnished Norwest copies
of (i) all attorney responses to the request of the independent auditors for
Bancorp with respect to loss contingencies as of December 31, 1995 in
connection with the Bancorp financial statements included in the Bancorp 10-
KSB, and (ii) a written list of legal and regulatory proceedings filed against
Bancorp or any Bancorp Subsidiary since said date. Neither Bancorp nor any
Bancorp Subsidiary is a party to any pending or, to the best knowledge of
Bancorp, threatened, claim, action, suit, investigation or proceeding, or is
subject to any order, judgment or decree, except for matters which, in the
aggregate, will not have, or cannot reasonably be expected to have, a material
adverse effect on the business, financial condition or results of operations
of Bancorp and the Bancorp Subsidiaries taken as a whole.
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(l) Insurance. Bancorp and each Bancorp Subsidiary is presently insured, and
during each of the past five calendar years (or during such lesser period of
time as Bancorp has owned such Bancorp Subsidiary) has been insured, for
reasonable amounts with reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good
business practice, customarily be insured and has maintained all insurance
required by applicable law and regulation.
(m) Compliance with Laws. Bancorp and each Bancorp Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to
own or lease its properties and assets and to carry on its business as
presently conducted and that are material to the business of Bancorp or such
Bancorp Subsidiary; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the best knowledge
of Bancorp, no suspension or cancellation of any of them is threatened; and
all such filings, applications and registrations are current. The conduct by
Bancorp and each Bancorp Subsidiary of its business and the condition and use
of its properties does not violate or infringe, in any respect material to any
such business, any applicable domestic (federal, state or local) or foreign
law, statute, ordinance, license or regulation. Neither Bancorp nor any
Bancorp Subsidiary is in default under any order, license or demand of any
federal, state, municipal or other governmental agency or with respect to any
order, writ, injunction or decree of any court. Except for statutory or
regulatory restrictions of general application and except as set forth on
Schedule 2(m), no federal, state, municipal or other governmental authority
has placed any restriction on the business or properties of Bancorp or any
Bancorp Subsidiary which reasonably could be expected to have a material
adverse effect on the business or properties of Bancorp and the Bancorp
Subsidiaries taken as a whole.
(n) Labor. No work stoppage involving Bancorp or any Bancorp Subsidiary is
pending or, to the best knowledge of Bancorp, threatened. Neither Bancorp nor
any Bancorp Subsidiary is involved in, or threatened with or affected by, any
labor dispute, arbitration, lawsuit or administrative proceeding which could
materially and adversely affect the business of Bancorp or such Bancorp
Subsidiary. Employees of Bancorp and the Bancorp Subsidiaries are not
represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees.
(o) Material Interests of Certain Persons. Except as set forth on Schedule
2(o), to the best knowledge of Bancorp no officer or director of Bancorp or
any Bancorp Subsidiary, or any "associate" (as such term is defined in Rule
l4a-1 under the Exchange Act) of any such officer or director, has any
interest in any material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of Bancorp or any Bancorp
Subsidiary.
Schedule 2(o) sets forth a correct and complete list of any loan from
Bancorp or any Bancorp Subsidiary to any present officer, director, employee
or any associate or related interest of any such person which was required
under Regulation O of the Federal Reserve Board to be approved by or reported
to Bancorp's or such Bancorp Subsidiary's Board of Directors.
(p) Bancorp Benefit Plans.
(i) The only "employee benefit plans" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), for which Bancorp or any Bancorp Subsidiary acts as the plan
sponsor as defined in ERISA Section 3(16)(B), and with respect to which any
liability under ERISA or otherwise exists or may be incurred by Bancorp or
any Bancorp Subsidiary are those set forth on Schedule 2(p) (the "Plans").
No Plan is a "multi-employer plan" within the meaning of Section 3(37) of
ERISA.
(ii) Each Plan is and has been in all material respects operated and
administered in accordance with its provisions and applicable law. Except
as set forth on Schedule 2(p), Bancorp
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or the Bancorp subsidiaries have received favorable determination letters
from the Internal Revenue Service under the provisions of the Tax Reform
Act of 1986 for each of the Plans to which the qualification requirements
of Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), apply. Bancorp knows of no reason that any Plan which is subject
to the qualification provisions of Section 401(a) of the Code is not
"qualified" within the meaning of Section 401(a) of the Code and that each
related trust is not exempt from taxation under Section 501(a) of the Code.
(iii) The present value of all benefits vested and all benefits accrued
under each Plan which is subject to Title IV of ERISA did not, in each
case, as determined for purposes of reporting on Schedule B to the Annual
Report on Form 5500 of each such Plan for the plan year ending December 31,
1995, exceed the value of the assets of the Plan allocable to such vested
or accrued benefits.
(iv) Except as disclosed in Schedule 2(p), and to the best knowledge of
Bancorp, no Plan or any trust created thereunder, nor any trustee,
fiduciary or administrator thereof, has engaged in a "prohibited
transaction", as such term is defined in Section 4975 of the Code or
Section 406 of ERISA or violated any of the fiduciary standards under Part
4 of Title I of ERISA which could subject, to the best knowledge of
Bancorp, such Plan or trust, or any trustee, fiduciary or administrator
thereof, or any party dealing with any such Plan or trust, to the tax or
penalty on prohibited transactions imposed by said Section 4975 or would
result in material liability to Bancorp and the Bancorp Subsidiaries taken
as a whole.
(v) No Plan which is subject to Title IV of ERISA or any trust created
thereunder has been terminated, nor have there been any "reportable events"
as that term is defined in Section 4043 of ERISA, with respect to any Plan,
other than those events which may result from the transactions contemplated
by this Agreement and the Merger Agreement.
(vi) No Plan or any trust created thereunder has incurred any
"accumulated funding deficiency", as such term is defined in Section 412 of
the Code (whether or not waived), since the effective date of ERISA.
(vii) Except as disclosed in Schedule 2(p), neither the execution and
delivery of this Agreement and the Merger Agreement nor the consummation of
the transactions contemplated hereby and thereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director
or employee or former employee of Bancorp or any Bancorp Subsidiary under
any Plan or otherwise, (ii) materially increase any benefits otherwise
payable under any Plan or (iii) result in the acceleration of the time of
payment or vesting of any such benefits to any material extent.
(q) Proxy Statement, etc. None of the information regarding Bancorp and the
Bancorp Subsidiaries supplied or to be supplied by Bancorp 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 Bancorp Common Stock pursuant to the provisions of the
Merger Agreement (the "Registration Statement"), (ii) the proxy statement to
be mailed to Bancorp's shareholders in connection with the meeting to be
called to consider the Merger (the "Proxy Statement") and (iii) any other
documents to be filed with the SEC or any regulatory authority in connection
with the transactions contemplated hereby or by the Merger Agreement will, at
the respective times such documents are filed with the SEC or any regulatory
authority and, in the case of the Registration Statement, when it becomes
effective and, with respect to the Proxy Statement, when mailed, be false with
respect to any material fact, or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, 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 with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make any
statements in any earlier communication with respect to the solicitation
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of any proxy for such meeting, in light of the circumstances under which they
are made, not misleading. All documents which Bancorp and the Bancorp
Subsidiaries are responsible for filing with the SEC and any other regulatory
authority in connection with the Merger will comply as to form in all material
respects with the provisions of applicable law.
(r) Registration Obligations. Except as set forth on Schedule 2(r), neither
Bancorp nor any Bancorp Subsidiary is under any obligation, contingent or
otherwise, which will survive the Merger by reason of any agreement to
register any of its securities under the Securities Act.
(s) Brokers and Finders. Except for Howe Barnes Investments, Inc., neither
Bancorp nor any Bancorp 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
Bancorp or any Bancorp Subsidiary in connection with this Agreement and the
Merger Agreement or the transactions contemplated hereby and thereby.
(t) Administration of Trust Accounts. Bancorp and each Bancorp Subsidiary
has properly administered in all respects material and which could reasonably
be expected to be material to the financial condition of Bancorp and the
Bancorp Subsidiaries taken as a whole all accounts for which it acts as a
fiduciary, including but not limited to accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents
and applicable state and federal law and regulation and common law. Neither
Bancorp, any Bancorp Subsidiary, nor any director, officer or employee of
Bancorp or any Bancorp Subsidiary has committed any breach of trust with
respect to any such fiduciary account which is material to or could reasonably
be expected to be material to the financial condition of Bancorp and the
Bancorp Subsidiaries taken as a whole, and the accountings for each such
fiduciary account are true and correct in all material respects and accurately
reflect the assets of such fiduciary account.
(u) No Defaults. Neither Bancorp nor any Bancorp Subsidiary is in default,
nor has any event occurred which, with the passage of time or the giving of
notice, or both, would constitute a default, under any material agreement,
indenture, loan agreement or other instrument to which it is a party or by
which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
material adverse effect upon Bancorp and the Bancorp Subsidiaries, taken as a
whole. To the best of Bancorp's knowledge, all parties with whom Bancorp or
any Bancorp Subsidiary has material leases, agreements or contracts or who owe
to Bancorp or any Bancorp Subsidiary material obligations other than with
respect to those arising in the ordinary course of the banking business of the
Bancorp Subsidiaries are in compliance therewith in all material respects.
(v) Environmental Liability. There is no legal, administrative, or other
proceeding, claim, or action of any nature seeking to impose, or that could
reasonably be expected to result in the imposition of, on Bancorp or any
Bancorp Subsidiary, any liability arising from the release of hazardous
substances under any local, state or federal environmental statute, regulation
or ordinance including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
pending or to the best of Bancorp's knowledge, threatened against Bancorp or
any Bancorp Subsidiary the result of which has had or could reasonably be
expected to have a material adverse effect upon Bancorp and Bancorp's
Subsidiaries taken as a whole; except as set forth in Schedule 2(v), to the
best of Bancorp's knowledge there is no reasonable basis for any such
proceeding, claim or action; and to the best of Bancorp's knowledge neither
Bancorp nor any Bancorp Subsidiary is subject to any agreement, order,
judgment, or decree by or with any court, governmental authority or third
party imposing any such environmental liability.
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3. REPRESENTATIONS AND WARRANTIES OF NORWEST. Norwest represents and
warrants to Bancorp 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, 1995, 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. (S) 55 (1982), all of such
shares so owned by Norwest are fully paid and nonassessable and are owned by
it free and clear of any lien, claim, charge, option, encumbrance or agreement
with respect thereto. Each Norwest Subsidiary is a corporation or national
banking association duly organized, validly existing, duly qualified to do
business and in good standing under the laws of its jurisdiction of
incorporation, and has corporate power and authority to own or lease its
properties and assets and to carry on its business as it is now being
conducted.
(c) Norwest Capitalization. The authorized capital stock of Norwest consists
of (i) 5,000,000 shares of Preferred Stock, without par value, of which as of
the close of business on December 31, 1995, 1,127,125 shares of 10.24%
Cumulative Preferred Stock at $100 stated value, 980,000 shares of Cumulative
Tracking Preferred Stock, at $200 stated value, and 12,984 shares of ESOP
Cumulative Convertible Preferred Stock, at $1,000 stated value were
outstanding, and 24,572 shares of 1995 ESOP Cumulative Convertible Preferred
Stock, at $1,000 stated value, were outstanding; (ii) 4,000,000 shares of
Preference Stock, without par value, of which as of the close of business on
December 31, 1995, no shares were outstanding; and (iii) 500,000,000 shares of
Common Stock, $1 2/3 par value, of which as of the close of business on
December 31, 1995, 358,332,153 shares were issued and 5,571,696 shares were
held in the treasury. All of the outstanding shares of capital stock of
Norwest have been duly and validly authorized and issued and are fully paid
and nonassessable.
(d) Authorization. Norwest has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement by Norwest and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of Norwest. No approval or consent by the stockholders of Norwest is
necessary for the execution and delivery of this Agreement and the Merger
Agreement and the consummation of the transactions contemplated hereby and
thereby. Subject to such approvals of government agencies and other governing
boards having regulatory authority over Norwest as may be required by statute
or regulation, this Agreement is a valid and binding obligation of Norwest
enforceable against Norwest in accordance with its terms.
Neither the execution, delivery and performance by Norwest of this Agreement
or the Merger Agreement, nor the consummation of the transactions contemplated
hereby and thereby, nor compliance by Norwest with any of the provisions
hereof or thereof, will (i) violate, conflict with, or
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result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required
by, or result in a right of termination or acceleration of, or result in the
creation of, any lien, security interest, charge or encumbrance upon any of
the properties or assets of Norwest or any Norwest Subsidiary under any of the
terms, conditions or provisions of (x) its certificate of incorporation or by-
laws or (y) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Norwest
or any Norwest Subsidiary is a party or by which it may be bound, or to which
Norwest or any Norwest Subsidiary or any of the properties or assets of
Norwest or any Norwest Subsidiary may be subject, or (ii) subject to
compliance with the statutes and regulations referred to in the next
paragraph, to the best knowledge of Norwest, violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to
Norwest or any Norwest Subsidiary or any of their respective properties or
assets.
Other than in connection with or in compliance with the provisions of the
Securities Act, the Exchange Act, the securities or blue sky laws of the
various states or filings, consents, reviews, authorizations, approvals or
exemptions required under the BHC Act or the HSR Act, and filings required to
effect the Merger under Delaware law, no notice to, filing with, exemption or
review by, or authorization, consent or approval of, any public body or
authority is necessary for the consummation by Norwest of the transactions
contemplated by this Agreement and the Merger Agreement.
(e) Norwest Financial Statements. The consolidated balance sheets of Norwest
and Norwest's subsidiaries as of December 31, 1995 and 1994 and related
consolidated statements of income, stockholders' equity and cash flows for the
three years ended December 31, 1995, together with the notes thereto,
certified by KPMG Peat Marwick and included in Norwest's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 (the "Norwest 10-K") as filed
with the SEC, and the unaudited consolidated balance sheets of Norwest and its
subsidiaries as of June 30, 1996 and the related unaudited consolidated
statements of income and cash flows for the six (6) months then ended included
in Norwest's Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1996, as filed with the SEC (collectively, the "Norwest Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and present fairly
(subject, in the case of financial statements for interim periods, to normal
recurring adjustments) the consolidated financial position of Norwest and its
subsidiaries at the dates and the consolidated results of operations, changes
in financial position and cash flows of Norwest and its subsidiaries for the
periods stated therein.
(f) Reports. Since December 31, 1990, Norwest and each Norwest Subsidiary
has filed all reports, registrations and statements, together with any
required amendments thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and proxy statements,
(ii) the Federal Reserve Board, (iii) the FDIC, (iv) the Comptroller and (v)
any applicable state securities or banking authorities. All such reports and
statements filed with any such regulatory body or authority are collectively
referred to herein as the "Norwest Reports". As of their respective dates, the
Norwest Reports complied in all material respects with all the rules and
regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, the
Comptroller and any applicable state securities or banking authorities, as the
case may be, and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(g) Properties and Leases. Except as may be reflected in the Norwest
Financial Statements and except for any lien for current taxes not yet
delinquent, Norwest and each Norwest Subsidiary has good title free and clear
of any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Norwest's
consolidated balance sheet as of June 30, 1996 included in Norwest's Quarterly
Report on Form 10-Q for the period then ended, and all real and personal
property acquired since such date, except such real and personal property as
has
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been disposed of in the ordinary course of business. All leases of real
property and all other leases material to Norwest or any Norwest Subsidiary
pursuant to which Norwest or such Norwest Subsidiary, as lessee, leases real
or personal property, are valid and effective in accordance with their
respective terms, and there is not, under any such lease, any material
existing default by Norwest or such Norwest Subsidiary or any event which,
with notice or lapse of time or both, would constitute such a material
default. Substantially all Norwest's and each Norwest Subsidiary's buildings
and equipment in regular use have been well maintained and are in good and
serviceable condition, reasonable wear and tear excepted.
(h) Taxes. Each of Norwest and the Norwest Subsidiaries has filed all
material federal, state, county, local and foreign tax returns, including
information returns, required to be filed by it, and paid or made adequate
provision for the payment of all taxes owed by it, including those with
respect to income, withholding, social security, unemployment, workers
compensation, franchise, ad valorem, premium, excise and sales taxes, and no
taxes shown on such returns to be owed by it or assessments received by it are
delinquent. The federal income tax returns of Norwest and the Norwest
Subsidiaries for the fiscal year ended December 31, 1979, and for all fiscal
years prior thereto, are for the purposes of routine audit by the Internal
Revenue Service closed because of the statute of limitations, and no claims
for additional taxes for such fiscal years are pending. Except only as set
forth on Schedule 3(h), (i) neither Norwest nor any Norwest Subsidiary is a
party to any pending action or proceeding, nor to Norwest's knowledge is any
such action or proceeding threatened by any governmental authority, for the
assessment or collection of taxes, interest, penalties, assessments or
deficiencies which could reasonably be expected to have any material adverse
effect on Norwest and its subsidiaries taken as a whole, and (ii) no issue has
been raised by any federal, state, local or foreign taxing authority in
connection with an audit or examination of the tax returns, business or
properties of Norwest or any Norwest Subsidiary which has not been settled,
resolved and fully satisfied, or adequately reserved for. Each of Norwest and
the Norwest Subsidiaries has paid all taxes owed or which it is required to
withhold from amounts owing to employees, creditors or other third parties.
(i) Absence of Certain Changes. Since December 31, 1995, there has been no
change in the business, financial condition or results of operations of
Norwest or any Norwest Subsidiary which has had, or may reasonably be expected
to have, a material adverse effect on the business, financial condition or
results of operations of Norwest and its subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 3(j), as of
May 1, 1996 neither Norwest nor any Norwest Subsidiary is a party or subject
to any of the following (whether written or oral, express or implied):
(i) any labor contract or agreement with any labor union;
(ii) any contract not made in the ordinary course of business containing
covenants which materially limit the ability of Norwest or any Norwest
Subsidiary to compete in any line of business or with any person or which
involve any material restriction of the geographical area in which, or
method by which, Norwest or any Norwest Subsidiary may carry on its
business (other than as may be required by law or applicable regulatory
authorities);
(iii) any other contract or agreement which is a "material contract"
within the meaning of Item 601(b)(10) of Regulation S-K.
(k) Litigation and Other Proceedings. Neither Norwest nor any Norwest
Subsidiary is a party to any pending or, to the best knowledge of Norwest,
threatened, claim, action, suit, investigation or proceeding, or is subject to
any order, judgment or decree, except for matters which, in the aggregate,
will not have, or cannot reasonably be expected to have, a material adverse
effect on the business, financial condition or results of operations of
Norwest and its subsidiaries taken as a whole.
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(l) Insurance. Norwest and each Norwest Subsidiary is presently insured or
self insured, and during each of the past five calendar years (or during such
lesser period of time as Norwest has owned such Norwest Subsidiary) has been
insured or self-insured, for reasonable amounts with financially sound and
reputable insurance companies against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured and has maintained all insurance required by applicable law and
regulation.
(m) Compliance with Laws. Norwest and each Norwest Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to
own or lease its properties or assets and to carry on its business as
presently conducted and that are material to the business of Norwest or such
Subsidiary; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect, and to the best knowledge of Norwest,
no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current. The conduct by Norwest
and each Norwest Subsidiary of its business and the condition and use of its
properties does not violate or infringe, in any respect material to any such
business, any applicable domestic (federal, state or local) or foreign law,
statute, ordinance, license or regulation. Neither Norwest nor any Norwest
Subsidiary is in default under any order, license, regulation or demand of any
federal, state, municipal or other governmental agency or with respect to any
order, writ, injunction or decree of any court. Except for statutory or
regulatory restrictions of general application, no federal, state, municipal
or other governmental authority has placed any restrictions on the business or
properties of Norwest or any Norwest Subsidiary which reasonably could be
expected to have a material adverse effect on the business or properties of
Norwest and its subsidiaries taken as a whole.
(n) Labor. No work stoppage involving Norwest or any Norwest Subsidiary is
pending or, to the best knowledge of Norwest, threatened. Neither Norwest nor
any Norwest Subsidiary is involved in, or threatened with or affected by, any
labor dispute, arbitration, lawsuit or administrative proceeding which could
materially and adversely affect the business of Norwest or such Norwest
Subsidiary. Except as set forth on Schedule 3(j), employees of Norwest and the
Norwest Subsidiaries are not represented by any labor union nor are any
collective bargaining agreements otherwise in effect with respect to such
employees.
(o) Norwest Benefit Plans.
(i) As of May 1, 1996, the only "employee benefit plans" within the
meaning of Section 3(3) of ERISA for which Norwest or any Norwest
Subsidiary acts as plan sponsor as defined in ERISA Section 3(16)(B) with
respect to which any liability under ERISA or otherwise exists or may be
incurred by Norwest or any Norwest Subsidiary are those set forth on
Schedule 3(o) (the "Norwest Plans"). No Norwest Plan is a "multi-employer
plan" within the meaning of Section 3(37) of ERISA.
(ii) Each Norwest Plan is and has been in all material respects operated
and administered in accordance with its provisions and applicable law.
Except as set forth on Schedule 3(o), Norwest or the Norwest Subsidiaries
have received favorable determination letters from the Internal Revenue
Service under the provisions of the Tax Reform Act of 1986 for each of the
Norwest Plans to which the qualification requirements of Section 401(a) of
the Code apply. Norwest knows of no reason that any Norwest Plan which is
subject to the qualification provisions of Section 401(a) of the Code is
not "qualified" within the meaning of Section 401(a) of the Code and that
each related trust is not exempt from taxation under Section 501(a) of the
Code.
(iii) The present value of all benefits vested and all benefits accrued
under each Norwest Plan which is subject to Title IV of ERISA did not, in
each case, as determined for purposes of reporting on Schedule B to the
Annual Report on Form 5500 of each such Norwest Plan for the plan year
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ending December 31, 1995, exceed the value of the assets of the Norwest
Plans allocable to such vested or accrued benefits.
(iv) Except as set forth on Schedule 3(o), and to the best knowledge of
Norwest, no Norwest Plan or any trust created thereunder, nor any trustee,
fiduciary or administrator thereof, has engaged in a "prohibited
transaction", as such term is defined in Section 4975 of the Code or
Section 406 of ERISA or violated fiduciary standards under Part 4 of Title
I of ERISA, which could subject, to the best knowledge of Norwest, such
Norwest Plan or trust, or any trustee, fiduciary or administrator thereof,
or any party dealing with any such Norwest Plan or trust, to the tax or
penalty on prohibited transactions imposed by said Section 4975 or would
result in material liability to Norwest and its subsidiaries taken as a
whole.
(v) Except as set forth on Schedule 3(o), no Norwest Plan which is
subject to Title IV of ERISA or any trust created thereunder has been
terminated, nor have there been any "reportable events" as that term is
defined in Section 4043 of ERISA with respect to any Norwest Plan, other
than those events which may result from the transactions contemplated by
this Agreement and the Merger Agreement.
(vi) No Norwest Plan or any trust created thereunder has incurred any
"accumulated funding deficiency", as such term is defined in Section 412 of
the Code (whether or not waived), during the last five Norwest Plan years
which would result in a material liability.
(vii) Neither the execution and delivery of this Agreement and the Merger
Agreement nor the consummation of the transactions contemplated hereby and
thereby will (i) result in any material payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or employee or former employee of
Norwest under any Norwest Plan or otherwise, (ii) materially increase any
benefits otherwise payable under any Norwest Plan or (iii) result in the
acceleration of the time of payment or vesting of any such benefits to any
material extent.
(p) Registration Statement, etc. None of the information regarding Norwest
and its subsidiaries supplied or to be supplied by Norwest for inclusion in
(i) the Registration Statement, (ii) the Proxy Statement, or (iii) any other
documents to be filed with the SEC or any regulatory authority in connection
with the transactions contemplated hereby or by the Merger Agreement will, at
the respective times such documents are filed with the SEC or any regulatory
authority and, in the case of the Registration Statement, when it becomes
effective and, with respect to the Proxy Statement, when mailed, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading or, in
the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the meeting of shareholders referred to in paragraph
4(c), be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for such meeting.
All documents which Norwest and the Norwest Subsidiaries are responsible for
filing with the SEC and any other regulatory authority in connection with the
Merger will comply as to form in all material respects with the provisions of
applicable law.
(q) Brokers and Finders. Neither Norwest nor any Norwest Subsidiary nor any
of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for Norwest or any Norwest Subsidiary in connection with this
Agreement and the Merger Agreement or the transactions contemplated hereby and
thereby.
(r) No Defaults. Neither Norwest nor any Norwest Subsidiary is in default,
nor has any event occurred which, with the passage of time or the giving of
notice, or both, would constitute a default under any material agreement,
indenture, loan agreement or other instrument to which it is a party or by
which it or any of its assets is bound or to which any of its assets is
subject, the result of which has
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had or could reasonably be expected to have a material adverse effect upon
Norwest and its subsidiaries taken as a whole. To the best of Norwest's
knowledge, all parties with whom Norwest or any Norwest Subsidiary has
material leases, agreements or contracts or who owe to Norwest or any Norwest
Subsidiary material obligations other than with respect to those arising in
the ordinary course of the banking business of the Norwest Subsidiaries are in
compliance therewith in all material respects.
(s) Environmental Liability. There is no legal, administrative, or other
proceeding, claim, or action of any nature seeking to impose, or that could
reasonably be expected to result in the imposition, on Norwest or any Norwest
Subsidiary, of any liability arising from the release of hazardous substances
under any local, state or federal environmental statute, regulation or
ordinance including, without limitation, CERCLA, pending or to the best of
Norwest's knowledge, threatened against Norwest or any Norwest Subsidiary, the
result of which has had or could reasonably be expected to have a material
adverse effect upon Norwest and its subsidiaries taken as a whole; to the best
of Norwest's knowledge there is no reasonable basis for any such proceeding,
claim or action; and to the best of Norwest's knowledge neither Norwest nor
any Norwest Subsidiary is subject to any agreement, order, judgment, or decree
by or with any court, governmental authority or third party imposing any such
environmental liability.
(t) Merger Co. From the time of execution of the Merger Agreement until the
Effective Time of the Merger, Merger Co. will be a corporation duly organized,
validly existing, duly qualified to do business and in good standing under the
laws of its jurisdiction of incorporation, will have corporate power and
authority to own or lease its properties and assets and to carry on its
business, will have the corporate power and authority to enter into the Merger
Agreement and to carry out its obligations thereunder. Neither the execution,
delivery and performance by Merger Co. of the Merger Agreement will violate,
conflict with or constitute a breach of any provision of its certificate of
incorporation or bylaws or any material instrument or obligation to which
Merger Co. is then a party.
(u) Regulatory Approval. Norwest is aware of no circumstance, in existence
as of the date hereof, which would prevent the transactions contemplated by
this Agreement and the Merger Agreement from being approved by the Federal
Reserve Board.
4. COVENANTS OF BANCORP. Bancorp covenants and agrees with Norwest as
follows:
(a) Except as otherwise permitted or required by this Agreement, from the
date hereof until the Effective Time of the Merger, Bancorp, and each Bancorp
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; extend credit in accordance with existing lending policies,
except that it shall not, without the prior written consent of Norwest, make
any new loan or modify, restructure or renew any existing loan (except
pursuant to commitments made prior to the date of this Agreement) to any
borrower if the amount of the resulting loan, when aggregated with all other
loans or extensions of credit to such person, would be in excess of $300,000;
maintain proper business and accounting records in accordance with generally
accepted principles; maintain its properties in good repair and condition,
ordinary wear and tear excepted; maintain in all material respects presently
existing insurance coverage; use its best efforts to preserve its 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; use its best efforts to
obtain any approvals or consents required to maintain existing leases and
other contracts in effect following the Merger; comply in all material
respects with all laws, regulations, ordinances, codes, orders, licenses and
permits applicable to the properties and operations of Bancorp and each
Bancorp Subsidiary the non-compliance with which reasonably could be expected
to have a material adverse effect on Bancorp and the Bancorp Subsidiaries
taken as a whole; and permit Norwest and its representatives (including KPMG
Peat Marwick) upon prior notice to examine its and its subsidiaries books,
records
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and properties and to interview officers, employees and agents at all
reasonable times when it is open for business; provided, however, that such
examinations do not interfere with the business operations of Bancorp and the
Bancorp Subsidiaries. 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
Bancorp herein expressed.
(b) Except as otherwise contemplated or required by this Agreement, from the
date hereof until the Effective Time of the Merger, Bancorp and each Bancorp
subsidiary will not (without the prior written consent of Norwest): amend or
otherwise change its certificate of incorporation or articles of association
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
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 (other than deposit liabilities); mortgage, pledge or subject to lien or
other encumbrance any of its properties, except in the ordinary course of
business; enter into any material agreement, contract, commitment or capital
improvement in excess of $25,000 except banking transactions in the ordinary
course of business and in accordance with policies and procedures in effect on
the date hereof; make any investments except investments made by bank
subsidiaries in the ordinary course of business for terms of up to one year
and in amounts of $100,000 or less; amend or terminate any Plan except as
required by law; make any contributions to any Plan except as required by the
terms of such Plan in effect as of the date hereof; declare, set aside, make
or pay any dividend or other distribution with respect to its capital stock
except (i) between the date hereof and the Effective Date of the Merger
Bancorp may declare and pay dividends, in accordance with applicable law and
regulation, out of the net earnings of Bancorp between the date hereof and the
Effective Date of the Merger, determined in accordance with generally accepted
accounting principles, in an amount not to exceed (A) $1.25 per share of
Bancorp Common Stock, payable on January 1, 1997, plus (B) if the Effective
Date of the Merger is after the record date for the regular June 1, 1997 cash
dividend on Norwest Common Stock, $0.57 per share of Bancorp Common Stock,
payable immediately prior to any adjustments made pursuant to paragraph 4(l)
hereof, and (ii) any dividend declared by a subsidiary's Board of Directors in
accordance with applicable law and regulation; redeem, purchase or otherwise
acquire, directly or indirectly, any of the capital stock of Bancorp; increase
the compensation of any officers, directors or executive employees, except
pursuant to existing employment agreements, compensation plans and practices,
provided, however, that Bancorp may pay bonuses in 1996 in accordance with its
existing bonus plans and practices in an aggregate amount not to exceed
$200,000; sell or otherwise dispose of any shares of the capital stock of any
Bancorp Subsidiary; or sell or otherwise dispose of any of its assets or
properties other than in the ordinary course of business.
(c) The Board of Directors of Bancorp 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 and the Merger
Agreement be submitted to a vote at such meeting. The Board of Directors of
Bancorp will (i) cause proper notice of such meeting to be given to its
shareholders in compliance with the Delaware General Corporation Law and other
applicable law and regulation, and (ii) except to the extent that the Board of
Directors of Bancorp shall conclude in good faith, after taking into account
the advice of its outside counsel, that to do so would violate its fiduciary
obligations under applicable law, (A) recommend by the affirmative vote of the
Board of Directors a vote in favor of approval of this Agreement and the
Merger Agreement, and (B) use its best efforts to solicit from its
shareholders proxies in favor thereof.
(d) Bancorp will furnish or cause to be furnished to Norwest all the
information concerning Bancorp and its subsidiaries required for inclusion in
the Registration Statement referred to in paragraph 5(c) hereof, or any
statement or application made by Norwest to any governmental body in
connection with the transactions contemplated by this Agreement. Any financial
statement for any fiscal year provided under this paragraph must include the
audit opinion and the consent of Clifton, Gunderson and Co. or McGladrey &
Pullen, as applicable, to use such opinion in such Registration Statement.
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(e) Bancorp 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 Bancorp to carry out the transactions contemplated
by this Agreement and will cooperate with Norwest to obtain all such approvals
and consents required of Norwest.
(f) Bancorp 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) Bancorp will hold in confidence all documents and information concerning
Norwest and its subsidiaries furnished to Bancorp 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 Bancorp's outside professional advisers in connection
with this Agreement, with the same undertaking from such professional
advisers. If the transactions contemplated by this Agreement shall not be
consummated, such confidence shall be maintained and such information shall
not be used in competition with Norwest (except to the extent that such
information can be shown to be previously known to Bancorp, in the public
domain, or later acquired by Bancorp 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 Bancorp, nor any Bancorp Subsidiary, nor any director, officer,
representative or agent thereof, will, directly or indirectly, solicit,
authorize the solicitation of or except to the extent that the Board of
Directors of Bancorp shall conclude in good faith, after taking into account
the advice of its outside counsel, that to fail to do so could reasonably be
determined to violate its fiduciary obligations under applicable law, enter
into any discussions with any corporation, partnership, person or other entity
or group (other than Norwest) concerning any offer or possible offer (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 Bancorp or any Bancorp
Subsidiary, (ii) to make a tender or exchange offer for any shares of such
common stock or other equity security, (iii) to purchase, lease or otherwise
acquire the assets of Bancorp or any Bancorp Subsidiary except in the ordinary
course of business, or (iv) to merge, consolidate or otherwise combine with
Bancorp or any Bancorp Subsidiary. If any corporation, partnership, person or
other entity or group makes an offer or inquiry to Bancorp or any Bancorp
Subsidiary concerning any of the foregoing, Bancorp or such Bancorp Subsidiary
will promptly disclose such offer or inquiry, including the terms thereof, to
Norwest.
(i) Bancorp shall consult with Norwest as to the form and substance of (i)
any proposed press release or other proposed public disclosure of matters
related to this Agreement or any of the transactions contemplated hereby, and
(ii) any communication with shareholders or employees of Bancorp relating to
this Agreement or the transactions contemplated hereby.
(j) Bancorp and each Bancorp Subsidiary will take all action necessary or
required (i) to amend, if requested by Norwest, all qualified pension and
welfare benefit plans and all non-qualified benefit plans and compensation
arrangements as of the Effective Date of the Merger to facilitate the merger
of such plans with Norwest plans without gaps in coverage for participants in
the plans and without duplication of costs caused by the continuation of such
plans after coverage is available under Norwest plans, and (ii) to submit
application to the Internal Revenue Service for a favorable determination
letter for each of the Plans which is subject to the qualification
requirements of Section 401(a) of the Code prior to the Effective Date of the
Merger.
(k) Bancorp shall use its best efforts to obtain and deliver prior to the
Effective Date of the Merger signed representations substantially in the form
attached hereto as Exhibit B to Norwest by each executive officer, director or
shareholder of Bancorp who may reasonably be deemed an "affiliate" of Bancorp
within the meaning of such term as used in Rule 145 under the Securities Act.
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(l) Immediately prior to the Closing, Bancorp shall establish such
additional accruals and reserves as may be necessary to conform Bancorp's
accounting and credit loss reserve practices and methods to those of Norwest
and Norwest's plans with respect to the conduct of Bancorp's business
following the Merger and, to the extent permitted by generally accepted
accounting principles, to provide for the costs and expenses relating to the
consummation by Bancorp of the Merger and the other transactions contemplated
by this Agreement.
(m) Bancorp has obtained and delivered to Norwest environmental assessment
reports for each bank facility. Norwest acknowledges the receipt and
sufficiency of such reports.
(n) Bancorp shall obtain, at its sole expense, commitments for title
insurance , boundary surveys and appraisals for each bank facility. Such
commitments and surveys shall be delivered to Norwest no later than four (4)
weeks prior to Closing.
5. COVENANTS OF NORWEST. Norwest covenants and agrees with Bancorp as
follows:
(a) From the date hereof until the Effective Time of the Merger, Norwest
will maintain its corporate existence in good standing; conduct, and cause the
Norwest Subsidiaries to conduct, their respective businesses in compliance
with all material obligations and duties imposed on them by all laws,
governmental regulations, rules and ordinances, and judicial orders, judgments
and decrees applicable to Norwest or the Norwest Subsidiaries, their
businesses or their properties; maintain all books and records of it and the
Norwest Subsidiaries, including all financial statements, in accordance with
the accounting principles and practices consistent with those used for the
Norwest Financial Statements, except for changes in such principles and
practices required under generally accepted accounting principles.
(b) Norwest will furnish to Bancorp all the information concerning Norwest
required for inclusion in a proxy statement or statements to be sent to the
shareholders of Bancorp, or in any statement or application made by Bancorp to
any governmental body in connection with the transactions contemplated by this
Agreement. From the date hereof to the Closing Date, Norwest shall make
available to Bancorp, when reasonably available, Norwest's Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K and Annual Report on Form 10-K, as
filed with the SEC.
(c) As promptly as practicable after the execution of this Agreement,
Norwest will file with the SEC a registration statement on Form S-4 (the
"Registration Statement") under the Securities Act and any other applicable
documents, relating to the shares of Norwest Common Stock to be delivered to
the shareholders of Bancorp pursuant to the Merger Agreement, and will use its
best efforts to cause the Registration Statement to become effective. At the
time the Registration Statement becomes effective, the Registration Statement
will comply in all material respects with the provisions of the Securities Act
and the published rules and regulations thereunder, and will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not false or
misleading, and at the time of mailing thereof to the Bancorp shareholders, at
the time of the Bancorp shareholders' meeting referred to in paragraph 4(c)
hereof and at the Effective Time of the Merger the prospectus included as part
of the Registration Statement, as amended or supplemented by any amendment or
supplement filed by Norwest (hereinafter the "Prospectus"), will not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not false or misleading; provided,
however, that none of the provisions of this subparagraph shall apply to
statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information furnished by Bancorp
or any Bancorp subsidiary for use in the Registration Statement or the
Prospectus.
(d) Norwest will file all documents required to be filed to list the Norwest
Common Stock to be issued pursuant to the Merger Agreement on the New York
Stock Exchange and the Chicago Stock Exchange and use its best efforts to
effect said listings.
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(e) The shares of Norwest Common Stock to be issued by Norwest to the
shareholders of Bancorp pursuant to this Agreement and the Merger Agreement
will, upon such issuance and delivery to said shareholders pursuant to the
Merger Agreement, be duly authorized, validly issued, fully paid and
nonassessable. The shares of Norwest Common Stock to be delivered to the
shareholders of Bancorp pursuant to the Merger Agreement are and will be free
of any preemptive rights of the stockholders of Norwest.
(f) Norwest will file all documents required to obtain prior to the
Effective Time of the Merger all necessary Blue Sky permits and approvals, if
any, required to carry out the transactions contemplated by this Agreement,
will pay all expenses incident thereto and will use its best efforts to obtain
such permits and approvals.
(g) Norwest will take all necessary corporate and other action and file all
documents required to obtain and will use its best efforts to obtain all
approvals of regulatory authorities, consents and approvals required of it to
carry out the transactions contemplated by this Agreement and will cooperate
with Bancorp to obtain all such approvals and consents required by Bancorp.
(h) Norwest will hold in confidence all documents and information concerning
Bancorp and Bancorp's Subsidiaries furnished to it and its representatives in
connection with the transactions contemplated by this Agreement and will not
release or disclose such information to any other person, except as required
by law and except to its outside professional advisers in connection with this
Agreement, with the same undertaking from such professional advisers. If the
transactions contemplated by this Agreement shall not be consummated, such
confidence shall be maintained and such information shall not be used in
competition with Bancorp (except to the extent that such information can be
shown to be previously known to Norwest, in the public domain, or later
acquired by Norwest from other legitimate sources) and, upon request, all such
documents, any copies thereof or extracts therefrom shall immediately
thereafter be returned to Bancorp.
(i) Norwest, as sole shareholder of Merger Co., will cause the Merger
Agreement to be approved in accordance with the Delaware General Corporation
Law and will file any documents or agreements required to be filed in
connection with the Merger under the Delaware General Corporation Law.
(j) Norwest will use its best efforts to deliver to the Closing all
opinions, certificates and other documents required to be delivered by it at
the Closing.
(k) Norwest shall consult with Bancorp as to the form and substance of any
proposed press release or other proposed public disclosure of matters related
to this Agreement or any of the transactions contemplated hereby. Norwest
shall consult with Bancorp as to the form and substance of any proposed
communication with the employees of Bancorp or the Bancorp Subsidiaries.
(l) Norwest shall give Bancorp prompt written notice of receipt of the
regulatory approvals referred to in paragraph 7(e).
(m) For a period not exceeding fifteen days prior to the Closing Date,
Norwest will permit Bancorp and its representatives to examine its books,
records and properties and interview officers, employees and agents of Norwest
at all reasonable times when it is open for business. No such examination by
Bancorp or its representatives shall in any way affect, diminish or terminate
any of the representations, warranties or covenants of Norwest herein
expressed.
(n) With respect to the indemnification of directors and officers and with
respect to directors' and officers' insurance, Norwest agrees as follows:
(i) Norwest shall ensure that all rights to indemnification and all
limitations of liability existing in favor of any person who is now, or has
been at any time prior to the date hereof, or who becomes prior to the
Effective Time of the Merger, a director or officer of Bancorp or any
Bancorp
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Subsidiary, (an "Indemnified Party" and, collectively, the "Indemnified
Parties") in Bancorp's Certificate of Incorporation or By-laws or similar
governing documents of any Bancorp Subsidiary, as applicable in the
particular case and as in effect on the date hereof, shall, with respect to
claims arising from (A) facts or events that occurred before the Effective
Time of the Merger, or (B) this Agreement or any of the transactions
contemplated by this Agreement, whether in any case asserted or arising
before or after the Effective Time of the Merger, survive the Merger and
shall continue in full force and effect. Nothing contained in this
paragraph 5(n)(i) shall be deemed to preclude the liquidation,
consolidation or merger of Bancorp or any Bancorp Subsidiary, in which case
all of such rights to indemnification and limitations on liability shall be
deemed to survive and continue as contractual rights notwithstanding any
such liquidation or consolidation or merger; provided, however, that in the
event of liquidation or sale of substantially all of the assets of Bancorp,
Norwest shall guarantee, to the extent of the net asset value of Bancorp or
any Bancorp Subsidiary as of the Effective Date of the Merger, the
indemnification obligations of Bancorp or any Bancorp Subsidiary to the
extent of indemnification obligations of Bancorp and the Bancorp
Subsidiaries described above. Notwithstanding anything to the contrary
contained in this paragraph 5(n)(i), nothing contained herein shall require
Norwest to indemnify any person who was a director or officer of Bancorp or
any Bancorp Subsidiary to a greater extent than Bancorp or any Bancorp
Subsidiary is, as of the date of this Agreement, required to indemnify any
such person;
(ii) any Indemnified Party wishing to claim indemnification under
paragraph 5(n)(i), upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Norwest thereof, but the
failure to so notify shall not relieve Norwest of any liability it may have
to such Indemnified Party. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time of the Merger), (A) Norwest shall have the right to assume the defense
thereof and Norwest shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof, except
that if Norwest elects not to assume such defense or counsel for the
Indemnified Party advises that there are issues which raise conflicts of
interest between Norwest and the Indemnified Party, the Indemnified Party
may retain counsel satisfactory to them, and Norwest shall pay the
reasonable fees and expenses of such counsel for the Indemnified Party
promptly as statements therefor are received; provided, however, that
Norwest shall be obligated pursuant to this subparagraph (ii) to pay for
only one firm of counsel for all Indemnified Parties in any jurisdiction
unless the use of one counsel for such Indemnified Parties would present
such counsel with a conflict of interest and (B) such Indemnified Party
shall cooperate in the defense of any such matter;
(iii) for a period of three years after the Effective Time of the Merger,
Norwest shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by Bancorp
(provided that Norwest may substitute therefor policies of at least the
same coverage and amount containing terms and conditions which are
substantially no less advantageous) with respect to claims arising from
facts or events which occurred before the Effective Time of the Merger;
provided, however, that in no event shall Norwest be obligated to expend,
in order to maintain or provide insurance coverage pursuant to this
paragraph 5(n)(iii), any amount per annum in excess of 150% of the amount
of the annual premiums paid as of the date hereof by Bancorp for such
insurance (the "Maximum Amount") and provided further that, prior to the
Effective Time of the Merger, Bancorp shall notify the appropriate
directors' and officers' liability insurers of the Merger and of all
pending or threatened claims, actions, suits, proceedings or investigations
asserted or claimed against any Indemnified Party, or circumstances likely
to give rise thereto, in accordance with terms and conditions of the
applicable policies. If the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum Amount,
Norwest shall use reasonable efforts to maintain the most advantageous
policies of directors' and officers' insurance obtainable for an annual
premium equal to the Maximum Amount;
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(iv) if Norwest or any of its successors or assigns (A) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (B) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each
such case, proper provision shall be made so that the successors and
assigns of Norwest shall assume the obligations set forth in this paragraph
5(n); and
(v) the provisions of this paragraph 5(n) are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
6. CONDITIONS PRECEDENT TO OBLIGATION OF BANCORP. The obligation of Bancorp
to effect the Merger shall be subject to the satisfaction at or before the
Time of Filing of the following further conditions, which may be waived in
writing by Bancorp:
(a) Except as they may be affected by transactions contemplated hereby and
except to the extent such representations and warranties are by their express
provisions made as of a specified date and except for activities or
transactions after the date of this Agreement made in the ordinary course of
business and not expressly prohibited by this Agreement, the representations
and warranties contained in paragraph 3 hereof shall be true and correct in
all respects material to Norwest and its subsidiaries taken as a whole as if
made at the Time of Filing.
(b) Norwest shall have, or shall have caused to be, performed and observed
in all material respects all covenants, agreements and conditions hereof to be
performed or observed by it at or before the Time of Filing.
(c) Bancorp shall have received a favorable certificate, dated as of the
Effective Date of the Merger, signed by the Chairman, the President or any
Executive Vice President or Senior Vice President and by the Secretary or
Assistant Secretary of Norwest, as to the matters set forth in subparagraphs
(a) and (b) of this paragraph 6.
(d) This Agreement and the Merger Agreement shall have been approved by the
affirmative vote of the holders of the percentage of the outstanding shares of
Bancorp required for approval of a plan of merger in accordance with the
provisions of Bancorp's Certificate of Incorporation and the Delaware General
Corporation Law.
(e) Norwest shall have received approval by the Federal Reserve Board and by
such other governmental agencies as may be required by law of the transactions
contemplated by this Agreement and the Merger Agreement and all waiting and
appeal periods prescribed by applicable law or regulation shall have expired.
(f) No court or governmental authority of competent jurisdiction shall have
issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(g) The shares of Norwest Common Stock to be delivered to the stockholders
of Bancorp pursuant to this Agreement and the Merger Agreement shall have been
authorized for listing on the New York Stock Exchange and the Chicago Stock
Exchange.
(h) Bancorp shall have received an opinion, dated the Closing Date, of
counsel to Bancorp, substantially to the effect that, for federal income tax
purposes: (i) the Merger will constitute a reorganization within the meaning
of Sections 368(a)(1)(A) and (a)(2)(E) of the Code; (ii) no gain or loss will
be recognized by the holders of Bancorp Common Stock upon receipt of Norwest
Common Stock except for cash received in lieu of fractional shares; (iii) the
basis of the Norwest Common Stock received by the shareholders of Bancorp will
be the same as the basis of Bancorp Common Stock
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exchanged therefor; and (iv) the holding period of the shares of Norwest
Common Stock received by the shareholders of Bancorp will include the holding
period of the Bancorp Common Stock, provided such shares of Bancorp Common
Stock were held as a capital asset as of the Effective Time of the Merger.
(i) The Registration Statement (as amended or supplemented) shall have
become effective under the Securities Act and shall not be subject to any stop
order, and no action, suit, proceeding or investigation by the SEC to suspend
the effectiveness of the Registration Statement shall have been initiated and
be continuing, or have been threatened and be unresolved. Norwest shall have
received all state securities law or blue sky authorizations necessary to
carry out the transactions contemplated by this Agreement.
(j) Prior to the mailing of the Proxy Statement referred to in paragraph
4(c), Bancorp and the Board of Directors of Bancorp shall have received an
opinion of Howe Barnes Investments, Inc. addressed to Bancorp and the Board of
Directors of Bancorp, and for their exclusive benefit, for inclusion in said
Proxy Statement and dated effective as of the date of mailing of such Proxy
Statement, based on such matters as Howe Barnes Investments, Inc. deems
appropriate or necessary, to the effect that the consideration to be received
by stockholders of Bancorp pursuant to the Merger is fair from a financial
point of view. Bancorp shall promptly provide a copy of such opinion to
Norwest upon receipt.
7. CONDITIONS PRECEDENT TO OBLIGATION OF NORWEST. The obligation of Norwest
to effect the Merger shall be subject to the satisfaction at or before the
Time of Filing of the following conditions, which may be waived in writing by
Norwest:
(a) Except as they may be affected by transactions contemplated hereby and
except to the extent such representations and warranties are by their express
provisions made as of a specified date and except for activities or
transactions or events occurring after the date of this Agreement made in the
ordinary course of business and not expressly prohibited by this Agreement,
the representations and warranties contained in paragraph 2 hereof shall be
true and correct in all respects material to Bancorp and the Bancorp
Subsidiaries taken as a whole as if made at the Time of Filing.
(b) Bancorp shall have, or shall have caused to be, performed and observed
in all material respects all covenants, agreements and conditions hereof to be
performed or observed by it at or before the Time of Filing.
(c) This Agreement and the Merger Agreement shall have been approved by the
affirmative vote of the holders of the percentage of the outstanding shares of
Bancorp required for approval of a plan of merger in accordance with the
provisions of Bancorp's Certificate of Incorporation and the Delaware General
Corporation Law.
(d) Norwest shall have received a favorable certificate dated as of the
Effective Date of the Merger signed by the Chairman or President and by the
Secretary or Assistant Secretary of Bancorp, as to the matters set forth in
subparagraphs (a) through (c) of this paragraph 7.
(e) Norwest shall have received approval by all governmental agencies as may
be required by law of the transactions contemplated by this Agreement and the
Merger Agreement and all waiting and appeal periods prescribed by applicable
law or regulation shall have expired. No approvals, licenses or consents
granted by any regulatory authority shall contain any condition or requirement
relating to Bancorp or any Bancorp Subsidiary that, in the good faith judgment
of Norwest, is unreasonably burdensome to Norwest.
(f) Bancorp and each Bancorp Subsidiary shall have obtained any and all
material consents or waivers from other parties to loan agreements, leases or
other contracts material to Bancorp's or such subsidiary's business required
for the consummation of the Merger, and Bancorp and each Bancorp Subsidiary
shall have obtained any and all material permits, authorizations, consents,
waivers and approvals required for the lawful consummation by it of the
Merger.
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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 Bancorp
Common Stock outstanding and subject to issuance upon exercise (assuming for
this purpose that phantom shares and other share-equivalents constitute
Bancorp 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 306,316.
(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 Bancorp a letter, 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 interim quarterly financial statements of Bancorp 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 Bancorp;
(ii) the amounts reported in the interim quarterly financial statements
of Bancorp agree with the general ledger of Bancorp;
(iii) the annual and quarterly financial statements of Bancorp and the
Bancorp Subsidiaries included in, or incorporated by reference in, the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the published
rules and regulations thereunder;
(iv) from the date of the most recent unaudited consolidated financial
statements of Bancorp and the Bancorp Subsidiaries as may be included in
the Registration Statement to a date 5 days prior to the effective date of
the Registration Statement or 5 days prior to the Closing, there are no
increases in long-term debt, changes in the capital stock or decreases in
stockholders' equity of Bancorp and the Bancorp Subsidiaries, except in
each case for changes, increases or decreases which the Registration
Statement discloses have occurred or may occur or which are described in
such letters. For the same period, there have been no decreases in
consolidated net interest income, consolidated net interest income after
provision for credit losses, consolidated income before income taxes,
consolidated net income and net income per share amounts of Bancorp and the
Bancorp Subsidiaries, or in income before equity in undistributed income of
subsidiaries, in each case as compared with the comparable period of the
preceding year, except in each case for changes, increases or decreases
which the Registration Statement discloses have occurred or may occur or
which are described in such letters;
(v) they have reviewed certain amounts, percentages, numbers of shares
and financial information which are derived from the general accounting
records of Bancorp and the Bancorp Subsidiaries, which appear in the
Registration Statement under the certain captions to be specified by
Norwest, and have compared certain of such amounts, percentages, numbers
and financial information with the accounting records of Bancorp and the
Bancorp Subsidiaries and have found them to be in agreement with financial
records and analyses prepared by Bancorp included in the annual and
quarterly financial statements, except as disclosed in such letters.
(k) Bancorp and the Bancorp Subsidiaries considered as a whole shall not
have sustained since December 31, 1995 any material loss or interference with
their business from any civil disturbance or any fire, explosion, flood or
other calamity, whether or not covered by insurance.
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(l) Except as set forth in Schedule 2(v), 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 Bancorp or any
Bancorp Subsidiary of, any liability arising from the release of hazardous
substances under any local, state or federal environmental statute, regulation
or ordinance including, without limitation CERCLA, which has had or could
reasonably be expected to have a material adverse effect upon Bancorp and its
subsidiaries taken as a whole.
(m) No change shall have occurred and no circumstances shall exist which has
had or might reasonably be expected to have a material adverse effect on the
financial condition, results of operations, or business of Bancorp and the
Bancorp Subsidiaries taken as a whole (other than changes in banking laws or
regulations, or interpretations thereof, that affect the banking industry
generally or changes in the general level of interest rates). No action taken
by Bancorp solely in order to comply with the requirements of paragraph 4(l)
hereof shall be deemed to have a material adverse effect for purposes of this
paragraph 7(m).
8. EMPLOYEE BENEFIT PLANS. Each person who is an employee of Bancorp or any
Bancorp Subsidiary as of the Effective Date of the Merger ("Bancorp
Employees") shall be eligible for participation in the employee welfare and
pension plans of Norwest, as in effect from time to time, as follows:
(a) Employee Welfare Benefit Plans. Each Bancorp employee shall be eligible
for participation in the employee welfare benefit plans of Norwest listed
below subject to any eligibility requirements applicable to such plans (with
full credit for years of past service to Bancorp and the Bancorp Subsidiaries
for the purpose of satisfying any eligibility and vesting periods applicable
to the Short Term Disability Plan, the Severance Pay Plan and the Vacation
Program, and not subject to pre-existing condition exclusions, except with
respect to the Norwest Long Term Care Plan) and shall enter each plan not
later than the first day of the calendar quarter which begins at least 32 days
after the Effective Date of the Merger (provided, however, that it is
Norwest's intent that the transition from the Bancorp plans to the Norwest
plans be facilitated without gaps in coverage to the participants and without
duplication in costs to Norwest):
Medical Plan
Dental Plan
Vision Plan
Short Term Disability Plan
Long Term Disability Plan
Long Term Care Plan
Flexible Benefits Plan
Basic Group Life Insurance Plan
Group Universal Life Insurance Plan
Dependent Group Life Insurance Plan
Business Travel Accident Insurance Plan
Accidental Death and Dismemberment Plan
Severance Pay Plan
Vacation Program
For the purpose of determining each Bancorp Employee's benefit for the year
in which the Merger occurs under the Norwest vacation program, vacation taken
by an employee of Bancorp in the year in which the Merger occurs will be
deducted from the total amount of vacation time available for such year under
the Norwest benefit. Any expenses incurred by a Bancorp Employee under the
indemnity medical plan of Bancorp or the Bancorp Subsidiaries shall be counted
toward satisfaction of deductibles for the year 1997 under the Norwest
indemnity medical plan.
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<PAGE>
(b) Employee Pension Benefit Plans.
Each Bancorp Employee shall be eligible for participation in the Norwest
Savings-Investment Plan (the "SIP"), subject to any eligibility requirements
applicable to the SIP (with full credit for years of past service to Bancorp
and the Bancorp Subsidiaries for the purpose of satisfying any eligibility and
vesting periods applicable to the SIP), and shall enter the SIP not later than
the first day of the calendar quarter which begins at least 32 days after the
Effective Date of the Merger.
Each Bancorp Employee shall be eligible for participation, as a new
employee, in the Norwest Pension Plan under the terms thereof.
9. TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated at any time prior to the Time of
Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon written notice to the other
party if the Merger shall not have been consummated by June 30, 1997 unless
such failure of consummation shall be due to the failure of the party
seeking to terminate to perform or observe in all material respects the
covenants and agreements hereof to be performed or observed by such party;
or
(iii) by Bancorp 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 Bancorp upon written notice to Norwest if the Board of Directors
of Bancorp shall in good faith determine that a Takeover Proposal
constitutes a Superior Proposal; provided, however, that Bancorp shall not
be permitted to terminate this Agreement pursuant to this paragraph (a)(iv)
unless (i) it has not breached any covenant contained in paragraph 4(h) and
(ii) it delivers to Norwest simultaneously with such notice of termination
the fee referred to in paragraph 9(c) below. As used in this Agreement; (i)
"Takeover Proposal" means a bona fide proposal or offer by a person to make
a tender or exchange offer, or to engage in a merger, consolidation or
other business combination involving Bancorp or to acquire in any manner a
substantial equity interest in, or all or substantially all of the assets
of, Bancorp, and (ii) "Superior Proposal" means a bona fide proposal or
offer made by a person to acquire Bancorp pursuant to a tender or exchange
offer, a merger, consolidation or other business combination or an
acquisition of all or substantially all of the assets of Bancorp and the
Bancorp Subsidiaries on terms which the Board of Directors of Bancorp shall
determine in good faith to be more favorable to Bancorp and its
shareholders than the transactions contemplated hereby.
(v) by Norwest upon written notice to Bancorp if (A) the Board of
Directors of Bancorp fails to recommend, withdraws, or modifies in a manner
materially adverse to Norwest, its approval or recommendation of this
Agreement, or the transactions contemplated hereby, (B) after an agreement
to engage in or the occurrence of an Acquisition Event (as defined below)
or after a third party shall have made a proposal to Bancorp or Bancorp's
shareholders to engage in an Acquisition Event, the transactions
contemplated hereby are not approved at the meeting of Bancorp shareholders
contemplated by paragraph 4(c), or (C) the meeting of Bancorp shareholders
contemplated by paragraph 4(c) is not held prior to June 30, 1997 and
Bancorp has failed to comply with its obligations under paragraph 4(c).
"Acquisition Event" means any of the following: (i) a merger, consolidation
or similar transaction involving Bancorp, its bank subsidiary (the "Bank")
or any successor to Bancorp or the Bank, (ii) a purchase, lease or other
acquisition in one or a series of related transactions of assets of Bancorp
or any of the Bancorp Subsidiaries representing 25% or more of the
consolidated assets of Bancorp and the Bancorp Subsidiaries, or (iii) a
purchase or other acquisition (including by way of merger, consolidation,
share exchange or any similar transaction) in one or a series of related
transactions of beneficial ownership of securities representing 25% or more
of the voting power of Bancorp or any Bancorp Subsidiary in each case with
or by a person or entity other than Norwest or an affiliate of Norwest.
A-24
<PAGE>
(b) Termination of this Agreement under this paragraph 9 shall not release,
or be construed as so releasing, either party hereto from any liability or
damage to the other party hereto arising out of the breaching party's willful
and material breach of the warranties and representations made by it, or
willful and material failure in performance of any of its covenants,
agreements, duties or obligations arising hereunder, and the obligations under
paragraphs 4(g), 5(h) and 10 shall survive such termination.
(c) If this Agreement is terminated pursuant to paragraph 9(a)(v) and prior
thereto or within 6 months after such termination:
(i) Bancorp or the Bank or any successor to Bancorp or the Bank shall
have entered into an agreement to engage in an Acquisition Event (as
defined above) or an Acquisition Event shall have occurred; or
(ii) the Board of Directors of Bancorp shall have authorized or approved
an Acquisition Event or shall have publicly announced an intention to
authorize or approve or shall have recommended that the shareholders of
Bancorp approve or accept any Acquisition Event,
then Bancorp shall promptly, but in no event later than five business days
after the first of such events shall have occurred, pay Norwest a fee equal to
$1,500,000.
10. EXPENSES. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by Bancorp and Bancorp Subsidiaries shall be borne
by Bancorp, and all such expenses incurred by Norwest shall be borne by
Norwest.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assignable by either party hereto without the prior
written consent of the other party hereto.
12. THIRD PARTY BENEFICIARIES. Each party hereto intends that this Agreement
shall not benefit or create any right or cause of action in or on behalf of
any person other than the parties hereto.
13. NOTICES. Any notice or other communication provided for herein or given
hereunder to a party hereto shall be in writing and shall be delivered in
person or shall be deemed to be given when mailed by first class registered or
certified mail, postage prepaid, addressed as follows:
If to Norwest:
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Attention: Secretary
If to Bancorp:
Farmers National Bancorp, Inc.
121 West First Street
Geneseo, IL 61254
Attention: Gaylon E. Martin, President
With a copy to:
Schiff Hardin & Waite
300 Hamilton Boulevard, Suite 100
Peoria, IL 61602
Attention: Theodore L. Eissfeldt
or to such other address with respect to a party as such party shall notify
the other in writing as above provided.
A-25
<PAGE>
14. COMPLETE AGREEMENT. This Agreement and the Merger Agreement contain the
complete agreement between the parties hereto with respect to the Merger and
other transactions contemplated hereby and supersede all prior agreements and
understandings between the parties hereto with respect thereto.
15. CAPTIONS. The captions contained in this Agreement are for convenience
of reference only and do not form a part of this Agreement.
16. WAIVER AND OTHER ACTION. Either party hereto may, by a signed writing,
give any consent, take any action pursuant to paragraph 9 hereof or otherwise,
or waive any inaccuracies in the representations and warranties by the other
party and compliance by the other party with any of the covenants and
conditions herein.
17. AMENDMENT. At any time before the Time of Filing, the parties hereto, by
action taken by their respective Boards of Directors or pursuant to authority
delegated by their respective Boards of Directors, may amend this Agreement;
provided, however, that no amendment after approval by the shareholders of
Bancorp shall be made which changes in a manner adverse to such shareholders
the consideration to be provided to said shareholders pursuant to this
Agreement and the Merger Agreement.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
19. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty contained in the Agreement or the Merger Agreement shall survive the
Merger or except as set forth in paragraph 9(b), the termination of this
Agreement.
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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Norwest Corporation Farmers National Bancorp, Inc.
/s/ John E. Ganoe /s/ Gaylon E. Martin
By: _________________________________ By: _________________________________
Executive Vice President President
Its: ________________________________ Its: ________________________________
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<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BETWEEN
FARMERS NATIONAL BANCORP, INC.
A DELAWARE CORPORATION
(THE SURVIVING CORPORATION)
AND
[MERGER CO.]
A DELAWARE CORPORATION
(THE MERGED CORPORATION)
This Agreement and Plan of Merger dated as of , 19 , between
FARMERS NATIONAL BANCORP, INC., a Delaware corporation (hereinafter sometimes
called "Bancorp" and sometimes called the "surviving corporation") and [MERGER
CO.], a Delaware corporation ("Merger Co.")(said corporations being
hereinafter sometimes referred to as the "constituent corporations"),
WHEREAS, Merger Co., a wholly-owned subsidiary of Norwest Corporation, was
incorporated by a Certificate of Incorporation filed in the office of the
Secretary of State of the State of Delaware on , 19 , and said
corporation is now a corporation subject to and governed by the provisions of
the Delaware General Corporation Law. Merger Co. has authorized capital stock
of shares of common stock having a par value of $ per share
("Merger Co. Common Stock"), of which shares were outstanding as of
the date hereof; and
WHEREAS, Bancorp was incorporated by a Certificate of Incorporation filed in
the office of the Secretary of State of the State of Delaware on ,
19 and said corporation is now a corporation subject to and governed by the
provisions of the Delaware General Corporation Law. Bancorp has authorized
capital stock of shares of Common Stock, par value $ per share
("Bancorp Common Stock") of which shares were outstanding and
shares were held in the treasury as of , 19 ; and
WHEREAS, Norwest Corporation and Bancorp are parties to an Agreement and
Plan of Reorganization dated as of , 19 (the "Reorganization
Agreement"), setting forth certain representations, warranties and covenants
in connection with the merger provided for herein; and
WHEREAS, the directors, or a majority of them, of each of the constituent
corporations respectively deem it advisable for the welfare and advantage of
said corporations and for the best interests of the respective shareholders of
said corporations that said corporations merge and that Merger Co. be merged
with and into Bancorp, with Bancorp continuing as the surviving corporation,
on the terms and conditions hereinafter set forth in accordance with the
provisions of the Delaware General Corporation Law, which statute permits such
merger; and
WHEREAS, it is the intent of the parties to effect a merger which qualifies
as a tax-free reorganization pursuant to Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code;
NOW, THEREFORE, the parties hereto, subject to the approval of the
shareholders of Merger Co., in consideration of the premises and of the mutual
covenants and agreements contained herein and of the benefits to accrue to the
parties hereto, have agreed and do hereby agree that Merger Co. shall be
merged with and into Bancorp pursuant to the laws of the State of Delaware,
and do hereby agree upon, prescribe and set forth the terms and conditions of
the merger of Merger Co. with and into Bancorp, the mode of carrying said
merger into effect, the manner and basis of converting the shares of Bancorp
Common Stock into shares of common stock of Norwest of the par value of $1 2/3
per share ("Norwest Common Stock"), and such other provisions with respect to
said merger as are deemed necessary or desirable, as follows:
A-27
<PAGE>
FIRST: At the time of merger Merger Co. shall be merged with and into
Bancorp, one of the constituent corporations, which shall be the surviving
corporation, and the separate existence of Merger Co. shall cease and the name
of the surviving corporation shall be .
SECOND: The Certificate of Incorporation of Bancorp at the time of merger
shall be amended as set forth below and, as so amended, shall be the
Certificate of Incorporation of the surviving corporation until further
amended according to law:
[Amend to change name, number of directors, etc.]
THIRD: The By-Laws of Bancorp at the time of merger shall be and remain the
By-Laws of the surviving corporation until amended according to the provisions
of the Certificate of Incorporation of the surviving corporation or of said
By-Laws.
FOURTH: The directors of Merger Co. at the time of merger shall become the
directors of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected and qualify.
FIFTH: The officers of Merger Co. at the time of merger shall become the
officers of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected or appointed and qualify.
SIXTH: The manner and basis of converting the shares of Bancorp Common Stock
into cash or shares of shares of Norwest Common Stock shall be as follows:
1. Each share of Bancorp Common Stock outstanding immediately prior to
the time of merger (other than shares as to which statutory dissenters'
rights have been exercised) shall at the time of merger, by virtue of the
merger and without any action on the part of the holder or holders thereof,
be converted into and exchanged for the number of shares of Norwest Common
Stock determined by dividing the Adjusted Norwest Shares by the number of
shares of Bancorp Common Stock then outstanding. The "Adjusted Norwest
Shares" shall be a number equal to $30,631,600 divided by the Norwest
Measurement Price. The "Norwest Measurement Price" is defined as the
average of the closing prices of a share of Norwest Common Stock as
reported on the consolidated tape of the New York Stock Exchange during the
period of 20 trading days ending on the day immediately preceding the
meeting of shareholders required by paragraph 4(c) of the Reorganization
Agreement.
2. As soon as practicable after the merger becomes effective, each holder
of a certificate for shares of Bancorp Common Stock outstanding immediately
prior to the time of merger shall be entitled, upon surrender of such
certificate for cancellation to the surviving corporation or to Norwest
Bank Minnesota, National Association, as the designated agent of the
surviving corporation (the "Agent"), to receive a new certificate for the
number of whole shares of Norwest Common Stock to which such holder shall
be entitled on the basis set forth in paragraph 1 above. Until so
surrendered each certificate which, immediately prior to the time of
merger, represented shares of Bancorp Common Stock shall not be
transferable on the books of the surviving corporation but shall be deemed
to evidence the right to receive (except for the payment of dividends as
provided below) ownership of the number of whole shares of Norwest Common
Stock into which such shares of Bancorp Common Stock have been converted on
the basis above set forth; provided, however, until the holder of such
certificate for Bancorp Common Stock shall have surrendered the same for
exchange as above set forth, no dividend payable to holders of record of
Norwest Common Stock as of any date subsequent to the effective date of
merger shall be paid to such holder with respect to the Norwest Common
Stock, if any, represented by such certificate, but, upon surrender and
exchange thereof as herein provided, there shall be paid by the surviving
corporation or the Agent to the record holder of such certificate for
Norwest Common
A-28
<PAGE>
Stock issued in exchange therefor an amount with respect to such shares of
Norwest Common Stock equal to all dividends that shall have been paid or
become payable to holders of record of Norwest Common Stock between the
effective date of merger and the date of such exchange.
3. If between the date of the Reorganization Agreement and the time of
merger, shares of Norwest Common Stock shall be changed into a different
number of shares or a different class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or if a stock dividend thereon shall be declared
with a record date within such period, then the number of shares of Norwest
Common Stock, if any, into which a share of Bancorp Common Stock shall be
converted on the basis above set forth, will be appropriately and
proportionately adjusted so that the number of such shares of Norwest
Common Stock into which a share of Bancorp Common Stock shall be converted
will equal the number of shares of Norwest Common Stock which the holders
of shares of Bancorp Common Stock would have received pursuant to such
reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or stock dividend had the record date therefor been
immediately following the time of merger.
4. No fractional shares of Norwest Common Stock and no certificates or
scrip certificates therefor shall be issued to represent any such
fractional interest, and any holder of a fractional interest shall be paid
an amount of cash equal to the product obtained by multiplying the
fractional share interest to which such holder is entitled by the average
of the closing prices of a share of Norwest Common Stock as reported by the
consolidated tape of the New York Stock Exchange for each of the twenty
(20) trading days immediately preceding the meeting of shareholders
required by paragraph 4(c) of the Reorganization Agreement.
5. Each share of Merger Co. Common Stock issued and outstanding at the
time of merger shall be converted into and exchanged for one (1) share of
the surviving corporation after the time of merger.
SEVENTH: The merger provided for by this Agreement shall be effective as
follows:
1. The effective date of merger shall be the date on which a Certificate
of Merger (as described in subparagraph 1(b) of this Article Seventh) shall
be delivered to and filed by the Secretary of State of the State of
Delaware; provided, however, that all of the following actions shall have
been taken in the following order:
a. This Agreement shall be approved and adopted on behalf of Merger
Co. and Bancorp in accordance with the Delaware General Corporation
Law; and
b. A Certificate of Merger with respect to the merger, setting forth
the information required by the Delaware General Corporation Law, shall
be executed by the President or a Vice President of Bancorp and by the
Secretary or an Assistant Secretary of Bancorp, (and, if required, by
the President or a Vice President of Merger Co. and by the Secretary or
an Assistant Secretary of Merger Co.), and shall be filed in the office
of the Secretary of State of the State of Delaware in accordance with
the Delaware General Corporation Law.
2. The merger shall become effective as of 11:59 p.m. Minneapolis,
Minnesota (the "time of merger") on the effective date of merger.
EIGHTH: At the time of merger:
1. The separate existence of Merger Co. shall cease, and the corporate
existence and identity of Bancorp shall continue as the surviving
corporation.
2. The merger shall have the other effects prescribed by Section
of the Delaware General Corporation Law.
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<PAGE>
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
1. The registered office of the surviving corporation in the State of
Delaware shall be , and the name of the registered agent of
Bancorp at such address is The Corporation Trust Company.
2. If at any time the surviving corporation shall consider or be advised
that any further assignment or assurance in law or other action is
necessary or desirable to vest, perfect or confirm in the surviving
corporation the title to any property or rights of Merger Co. acquired or
to be acquired as a result of the merger provided for herein, the proper
officers and directors of Bancorp and Merger Co. may execute and deliver
such deeds, assignments and assurances in law and take such other action as
may be necessary or proper to vest, perfect or confirm title to such
property or right in the surviving corporation and otherwise carry out the
purposes of this Agreement.
3. For the convenience of the parties and to facilitate the filing of
this Agreement, any number of counterparts hereof may be executed and each
such counterpart shall be deemed to be an original instrument.
4. This Agreement and the legal relations among the parties hereto shall
be governed by and construed in accordance with the laws of the State of
.
5. This Agreement cannot be altered or amended except pursuant to an
instrument in writing signed by both of the parties hereto.
6. At any time prior to the filing of Certificate of Merger with the
Secretary of State of the State of Delaware, subject to the provisions of
the Reorganization Agreement this Agreement may be terminated upon approval
by the Boards of Directors of either of the constituent corporations
notwithstanding the approval of the shareholders of either constituent
corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be signed in their respective corporate names by the undersigned
officers and their respective corporate seals to be affixed hereto, pursuant
to authority duly given by their respective Boards of Directors, all as of the
day and year first above written.
Farmers National Bancorp, Inc.
By: _________________________________
Its: ________________________________
(Corporate Seal)
Attest:
- -------------------------------------
Secretary
[MERGER CO.]
By: _________________________________
Its: ________________________________
(Corporate Seal)
Attest:
- -------------------------------------
Secretary
A-30
<PAGE>
EXHIBIT B
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
Attn: Secretary
Gentlemen:
I have been advised that I might be considered to be an "affiliate," as that
term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule
145") promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act") of Farmers
National Bancorp, Inc., a Delaware corporation ("Bancorp").
Pursuant to an Agreement and Plan of Reorganization, dated as of ,
19 , (the "Reorganization Agreement"), between Bancorp and Norwest
Corporation, a Delaware corporation ("Norwest") it is contemplated that a
wholly-owned subsidiary of Norwest will merge with and into Bancorp (the
"Merger") and as a result, I will receive in exchange for each share of Common
Stock, par value $5.00 per share, of Bancorp ("Bancorp Common Stock") owned by
me immediately prior to the Effective Time of the Merger (as defined in the
Reorganization Agreement), a number of shares of Common Stock, par value $1
2/3 per share, of Norwest ("Norwest Common Stock"), as more specifically set
forth in the Reorganization Agreement.
I hereby agree as follows:
I will not offer to sell, transfer or otherwise dispose of any of the shares
of Norwest Common Stock issued to me pursuant to the Merger (the "Stock")
except (a) in compliance with the applicable provisions of Rule 145, (b) in a
transaction that is otherwise exempt from the registration requirements of the
Securities Act, or (c) in an offering registered under the Securities Act.
I consent to the endorsement of the Stock issued to me pursuant to the
Merger with a restrictive legend which will read substantially as follows:
"The shares represented by this certificate were issued in a transaction
to which Rule 145 promulgated under the Securities Act of 1933, as amended
(the "Act"), applies, and may be sold or otherwise transferred only in
compliance with the limitations of such Rule 145, or upon receipt by
Norwest Corporation of an opinion of counsel reasonably satisfactory to it
that some other exemption from registration under the Act is available, or
pursuant to a registration statement under the Act."
Norwest's transfer agent shall be given an appropriate stop transfer order
and shall not be required to register any attempted transfer of the shares of
the Stock, unless the transfer has been effected in compliance with the terms
of this letter agreement.
It is understood and agreed that this letter agreement shall terminate and
be of no further force and effect and the restrictive legend set forth above
shall be removed by delivery of substitute certificates without such legend,
and the related stop transfer restrictions shall be lifted forthwith, if (i)
any such shares of Stock shall have been registered under the Securities Act
for sale, transfer or other disposition by me or on my behalf and are sold,
transferred or otherwise disposed of, or (ii) any such shares of Stock are
sold in accordance with the provisions of paragraphs (c), (e), (f) and (g) of
Rule 144 promulgated under the Securities Act, or (iii) I am not at the time
of such disposition an affiliate of Norwest and have been the beneficial owner
of the Stock for at least two years (or such other period as may be prescribed
by the Securities Act, and the rules and regulations promulgated thereunder)
A-31
<PAGE>
and Norwest has filed with the Commission all of the reports it is required to
file under the Securities Exchange Act of 1934, as amended, during the
preceding twelve months, or (iv) I am not and have not been for at least three
months an affiliate of Norwest and have been the beneficial owner of the Stock
for at least three years (or such other period as may be prescribed by the
Securities Act, and the rules and regulations promulgated thereunder), or (v)
Norwest shall have received an opinion of counsel acceptable to Norwest to the
effect that the stock transfer restrictions and the legend are not required.
I have carefully read this letter agreement and the Reorganization Agreement
and have discussed their requirements and other applicable limitations upon my
ability to offer to sell, transfer or otherwise dispose of shares of Bancorp
Common Stock, Norwest Common Stock or the Stock, to the extent I felt
necessary, with my counsel or counsel for Bancorp.
Sincerely,
-------------------------------------
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<PAGE>
APPENDIX B
AGREEMENT AND PLAN OF MERGER
<PAGE>
AGREEMENT AND PLAN OF MERGER
BETWEEN
FARMERS NATIONAL BANCORP, INC.
A DELAWARE CORPORATION
(THE SURVIVING CORPORATION)
AND
FNB MERGER CO.
A DELAWARE CORPORATION
(THE MERGED CORPORATION)
This Agreement and Plan of Merger dated as of January 31, 1997, between
FARMERS NATIONAL BANCORP, INC., a Delaware corporation (hereinafter sometimes
called "Bancorp" and sometimes called the "surviving corporation") and FNB
MERGER CO., a Delaware corporation ("Merger Co.")(said corporations being
hereinafter sometimes referred to as the "constituent corporations"),
WHEREAS, Merger Co., a wholly-owned subsidiary of Norwest Corporation, was
incorporated by a Certificate of Incorporation filed in the office of the
Secretary of State of the State of Delaware on January 22, 1997, and said
corporation is now a corporation subject to and governed by the provisions of
the Delaware General Corporation Law. Merger Co. has authorized capital stock
of 10,000 shares of common stock having a par value of $5.00 per share
("Merger Co. Common Stock"), of which 200 shares were outstanding as of the
date hereof; and
WHEREAS, Bancorp was incorporated by a Certificate of Incorporation filed in
the office of the Secretary of State of the State of Delaware on October 7,
1981 and said corporation is now a corporation subject to and governed by the
provisions of the Delaware General Corporation Law. Bancorp has authorized
capital stock of 600,00 shares of Common Stock, par value $5.00 per share
("Bancorp Common Stock") of which 306,316 shares were outstanding and 68,684
shares were held in the treasury as of January 31, 1997; and
WHEREAS, Norwest Corporation and Bancorp are parties to an Agreement and
Plan of Reorganization dated as of November 22, 1996 (the "Reorganization
Agreement"), setting forth certain representations, warranties and covenants
in connection with the merger provided for herein; and
WHEREAS, the directors, or a majority of them, of each of the constituent
corporations respectively deem it advisable for the welfare and advantage of
said corporations and for the best interests of the respective shareholders of
said corporations that said corporations merge and that Merger Co. be merged
with and into Bancorp, with Bancorp continuing as the surviving corporation,
on the terms and conditions hereinafter set forth in accordance with the
provisions of the Delaware General Corporation Law, which statute permits such
merger; and
WHEREAS, it is the intent of the parties to effect a merger which qualifies
as a tax-free reorganization pursuant to Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code;
NOW, THEREFORE, the parties hereto, subject to the approval of the
shareholders of Merger Co., in consideration of the premises and of the mutual
covenants and agreements contained herein and of the benefits to accrue to the
parties hereto, have agreed and do hereby agree that Merger Co. shall be
merged with and into Bancorp pursuant to the laws of the State of Delaware,
and do hereby agree upon, prescribe and set forth the terms and conditions of
the merger of Merger Co. with and into Bancorp, the mode of carrying said
merger into effect, the manner and basis of converting the shares of Bancorp
Common Stock into shares of common stock of Norwest of the par value of $1 2/3
per share ("Norwest Common Stock"), and such other provisions with respect to
said merger as are deemed necessary or desirable, as follows:
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FIRST: At the time of merger Merger Co. shall be merged with and into
Bancorp, one of the constituent corporations, which shall be the surviving
corporation, and the separate existence of Merger Co. shall cease and the name
of the surviving corporation shall be Farmers National Bancorp, Inc.
SECOND: The Certificate of Incorporation of Bancorp at the time of merger
shall be amended as set forth below and, as so amended, shall be the
Certificate of Incorporation of the surviving corporation until further
amended according to law:
Article X and Article XIII of said Certificate of Incorporation are
deleted in their entirety and Article XI is renumbered Article X and
Article XII is renumbered Article XI.
THIRD: The By-Laws of Bancorp at the time of merger shall be amended as set
forth below and, as so amended, shall be and remain the By-Laws of the
surviving corporation until amended according to the provisions of the
Certificate of Incorporation of the surviving corporation or of said By-Laws:
Article II is amended to add the following section:
Section 12. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any meeting of
stockholders of the corporation, or any action which may be taken at any
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at with all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
Article III, Section 1 is amended in its entirety to read as follows:
Section 1. The business and affairs of the corporation shall be managed
by or under the direction of a board of one or more directors. The
stockholders at their annual meeting shall determine the number of
directors to constitute the board for the next year, provided that
thereafter the authorized number of directors may be increased by the
stockholders or the board and decreased by the stockholders. The directors
shall be elected at the annual meeting of the stockholders, except as
provided in Section 3 of this Article, and each director elected shall hold
office until his or her successor is elected and qualified or until his or
her earlier resignation or removal. Directors need not be stockholders.
FOURTH: The directors of Merger Co. at the time of merger shall become the
directors of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected and qualify.
FIFTH: The officers of Merger Co. at the time of merger shall become the
officers of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected or appointed and qualify.
SIXTH: The manner and basis of converting the shares of Bancorp Common Stock
into cash or shares of shares of Norwest Common Stock shall be as follows:
1. Each share of Bancorp Common Stock outstanding immediately prior to
the time of merger (other than shares as to which statutory dissenters'
rights have been exercised) shall at the time of merger, by virtue of the
merger and without any action on the part of the holder or holders thereof,
be converted into and exchanged for the number of shares of Norwest Common
Stock determined by dividing the Adjusted Norwest Shares by the number of
shares of Bancorp Common Stock then outstanding. The "Adjusted Norwest
Shares" shall be a number equal to $30,631,600 divided by the Norwest
Measurement Price. The "Norwest Measurement Price" is
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defined as the average of the closing prices of a share of Norwest Common
Stock as reported on the consolidated tape of the New York Stock Exchange
during the period of 20 trading days ending on the day immediately
preceding the meeting of shareholders required by paragraph 4(c) of the
Reorganization Agreement.
2. As soon as practicable after the merger becomes effective, each holder
of a certificate for shares of Bancorp Common Stock outstanding immediately
prior to the time of merger shall be entitled, upon surrender of such
certificate for cancellation to the surviving corporation or to Norwest
Bank Minnesota, National Association, as the designated agent of the
surviving corporation (the "Agent"), to receive a new certificate for the
number of whole shares of Norwest Common Stock to which such holder shall
be entitled on the basis set forth in paragraph 1 above. Until so
surrendered each certificate which, immediately prior to the time of
merger, represented shares of Bancorp Common Stock shall not be
transferable on the books of the surviving corporation but shall be deemed
to evidence the right to receive (except for the payment of dividends as
provided below) ownership of the number of whole shares of Norwest Common
Stock into which such shares of Bancorp Common Stock have been converted on
the basis above set forth; provided, however, until the holder of such
certificate for Bancorp Common Stock shall have surrendered the same for
exchange as above set forth, no dividend payable to holders of record of
Norwest Common Stock as of any date subsequent to the effective date of
merger shall be paid to such holder with respect to the Norwest Common
Stock, if any, represented by such certificate, but, upon surrender and
exchange thereof as herein provided, there shall be paid by the surviving
corporation or the Agent to the record holder of such certificate for
Norwest Common Stock issued in exchange therefor an amount with respect to
such shares of Norwest Common Stock equal to all dividends that shall have
been paid or become payable to holders of record of Norwest Common Stock
between the effective date of merger and the date of such exchange.
3. If between the date of the Reorganization Agreement and the time of
merger, shares of Norwest Common Stock shall be changed into a different
number of shares or a different class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or if a stock dividend thereon shall be declared
with a record date within such period, then the number of shares of Norwest
Common Stock, if any, into which a share of Bancorp Common Stock shall be
converted on the basis above set forth, will be appropriately and
proportionately adjusted so that the number of such shares of Norwest
Common Stock into which a share of Bancorp Common Stock shall be converted
will equal the number of shares of Norwest Common Stock which the holders
of shares of Bancorp Common Stock would have received pursuant to such
reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or stock dividend had the record date therefor been
immediately following the time of merger.
4. No fractional shares of Norwest Common Stock and no certificates or
scrip certificates therefor shall be issued to represent any such
fractional interest, and any holder of a fractional interest shall be paid
an amount of cash equal to the product obtained by multiplying the
fractional share interest to which such holder is entitled by the average
of the closing prices of a share of Norwest Common Stock as reported by the
consolidated tape of the New York Stock Exchange for each of the twenty
(20) trading days immediately preceding the meeting of shareholders
required by paragraph 4(c) of the Reorganization Agreement.
5. Each share of Farmers Common Stock held in the treasury at the time of
merger shall be cancelled.
6. Each share of Merger Co. Common Stock issued and outstanding at the
time of merger shall be converted into and exchanged for one (1) share of
the surviving corporation after the time of merger.
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SEVENTH: The merger provided for by this Agreement shall be effective as
follows:
1. The effective date of merger shall be the date on which a Certificate
of Merger (as described in subparagraph 1(b) of this Article Seventh) shall
be delivered to and filed by the Secretary of State of the State of
Delaware; provided, however, that all of the following actions shall have
been taken in the following order:
a. This Agreement shall be approved and adopted on behalf of Merger
Co. and Bancorp in accordance with the Delaware General Corporation
Law; and
b. A Certificate of Merger with respect to the merger, setting forth
the information required by the Delaware General Corporation Law, shall
be executed by the President or a Vice President of Bancorp and by the
Secretary or an Assistant Secretary of Bancorp, (and, if required, by
the President or a Vice President of Merger Co. and by the Secretary or
an Assistant Secretary of Merger Co.), and shall be filed in the office
of the Secretary of State of the State of Delaware in accordance with
the Delaware General Corporation Law.
2. The merger shall become effective as of 11:59 p.m. Minneapolis,
Minnesota (the "time of merger") on the effective date of merger.
EIGHTH: At the time of merger:
1. The separate existence of Merger Co. shall cease, and the corporate
existence and identity of Bancorp shall continue as the surviving
corporation.
2. The merger shall have the other effects prescribed by Section 259 of
the Delaware General Corporation Law.
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
1. The registered office of the surviving corporation in the State of
Delaware shall be The Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware, 19801, and the name of the registered agent of
Bancorp at such address is The Corporation Trust Company.
2. If at any time the surviving corporation shall consider or be advised
that any further assignment or assurance in law or other action is
necessary or desirable to vest, perfect or confirm in the surviving
corporation the title to any property or rights of Merger Co. acquired or
to be acquired as a result of the merger provided for herein, the proper
officers and directors of Bancorp and Merger Co. may execute and deliver
such deeds, assignments and assurances in law and take such other action as
may be necessary or proper to vest, perfect or confirm title to such
property or right in the surviving corporation and otherwise carry out the
purposes of this Agreement.
3. For the convenience of the parties and to facilitate the filing of
this Agreement, any number of counterparts hereof may be executed and each
such counterpart shall be deemed to be an original instrument.
4. This Agreement and the legal relations among the parties hereto shall
be governed by and construed in accordance with the laws of the State of
Delaware.
5. This Agreement cannot be altered or amended except pursuant to an
instrument in writing signed by both of the parties hereto.
6. At any time prior to the filing of Certificate of Merger with the
Secretary of State of the State of Delaware, subject to the provisions of
the Reorganization Agreement this Agreement may be terminated upon approval
by the Boards of Directors of either of the constituent corporations
notwithstanding the approval of the shareholders of either constituent
corporation.
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IN WITNESS WHEREOF, the parties hereto have cause this Agreement and Plan of
Merger to be signed in their respective corporate names by the undersigned
officers and their respective corporate seals to be affixed hereto, pursuant
to authority duly given by their respective Boards of Directors, all as of the
day and year first above written.
Farmers National Bancorp, Inc.
/s/ Gaylon E. Martin
By: ____________________________
President
Its: ___________________________
(Corporate Seal)
The undersigned is the Secretary of Farmers National Bancorp, Inc. and
hereby certifies, in accordance with Section 251(c) of the Delaware General
Corporation Law, that a majority of the outstanding stock of Farmers National
Bancorp, Inc. entitled to vote on the foregoing Agreement and Plan of Merger
has been voted for adoption of such agreement.
By: ____________________________
Name: __________________________
FNB Merger Co.
/s/ Stanley S. Stroup
By: ____________________________
Vice President
Its: ___________________________
(Corporate Seal)
The undersigned is the Assistant Secretary of FNB Merger Co. and hereby
certifies, in accordance with Section 251(c) of the Delaware General
Corporation Law, that a majority of the outstanding stock of FNB Merger Co.
entitled to vote on the foregoing Agreement and Plan of Merger has been voted
for adoption of such agreement.
By: ____________________________
Name: __________________________
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APPENDIX C
OPINION OF HOWE BARNES INVESTMENTS, INC.
<PAGE>
February 18, 1997
Board of Directors
Farmers National Bancorp, Inc.
121 West First Street
Geneseo, Illinois 61254
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the outstanding shares of common stock of Farmers
National Bancorp, Inc. ("FNB") of the consideration (the "Consideration") to
be paid for the exchange of common shares in the merger (the "Merger") of FNB
with Norwest Corporation ("Norwest"), pursuant to the Agreement and Plan of
Reorganization, dated November 22, 1996, between FNB and Norwest (the "Merger
Agreement").
Pursuant to the Merger Agreement, a wholly-owned subsidiary of Norwest will
be merged by statutory merger with and into FNB pursuant to the Merger
Agreement, with FNB as the surviving corporation, in which Merger each share
of FNB common stock outstanding immediately prior to the Effective Time of the
Merger (other than shares as to which statutory dissenters' appraisal rights
have been exercised) will be converted into and exchanged for a number of
shares of Norwest common stock determined by dividing the Adjusted Norwest
Shares by the number of shares of FNB common stock then outstanding. The
"Adjusted Norwest Shares" shall be a number equal to $30,631,600 divided by
the Norwest Measurement Price. The "Norwest Measurement Price" is defined as
the average of the closing prices of a share of Norwest common stock as
reported on the consolidated tape of the New York Stock Exchange during the
period of 20 trading days ending on the day immediately preceding the meeting
of shareholders of FNB. The terms of the Merger are more fully set forth in
the Merger Agreement.
For purposes of this opinion and in connection with our review of the
proposed transaction, we have, among other things:
1. Participated in discussions with representatives of FNB concerning the
financial condition, businesses, assets, earnings, prospects, and such
senior management's views as to the future financial performance;
2. Reviewed the terms of the Merger Agreement;
3. Reviewed the proxy statement-prospectus relating to the Merger to be
sent to the holders of FNB common stock;
4. Reviewed certain publicly available financial statements, both audited
(where available) and unaudited, and related financial information of FNB
and Norwest, including those included in their respective Annual Reports on
Form 10-K for the three years ended December 31, 1995 and the respective
Quarterly Reports on Form 10-Q for the periods ended March 31, 1996, June
30, 1996 and September 30, 1996, as well as other internally generated
reports;
5. Reviewed certain financial forecasts and projections of FNB prepared
by its management and reviewed publicly available information, earnings
estimates, and research reports available for Norwest as to the expected
future financial performance of Norwest;
6. Discussed and reviewed certain aspects of the past and current
business operations, financial condition, and future prospects of FNB with
certain members of management;
7. Reviewed reported market prices and historical trading activity of FNB
common stock and Norwest common stock;
8. Reviewed certain aspects of the financial performance of FNB and
Norwest and compared such financial performance of FNB and Norwest,
together with stock market data relating to FNB
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Board of Directors
February 18, 1997
Page 2
common stock and Norwest common stock, with similar data available for
certain other financial institutions and certain of their publicly traded
securities; and
9. Reviewed certain of the financial terms, to the extent publicly
available, of certain recent business combinations involving other
financial institutions.
We have assumed and relied, without independent verification, upon the
accuracy and completeness of all of the financial and other information that
has been provided to us by FNB, Norwest, their respective representatives, and
of the publicly available information that was reviewed by us. We are not
experts in the evaluation of allowances for loan losses and have not
independently verified such allowances, and have relied on and assumed that
the aggregate allowances for loan losses set forth in the balance sheets of
each of FNB and Norwest at September 30, 1996 are adequate to cover such
losses and complied fully with applicable law, regulatory policy and sound
banking practice as of the date of such financial statements. We were not
retained to and we did not conduct a physical inspection of any of the
properties or facilities of FNB or Norwest, did not make any independent
evaluation or appraisal of the assets, liabilities or prospects of FNB or
Norwest, were not furnished with any such evaluation or appraisal, and did not
review any individual credit files. Our opinion is necessarily based on
economic, market, and other conditions as in effect on, and the information
made available to us as of, the date hereof.
Howe Barnes Investments, Inc. ("HBI"), as part of its investment banking
business, is regularly engaged in the valuation of banks and bank holding
companies, thrifts and thrift holding companies, and various other financial
services companies, in connection with mergers and acquisitions, initial and
secondary offerings of securities, and valuations for other purposes. In the
ordinary course of our business HBI acts as a market maker, buying or selling
the common stock of FNB for our own account and for the accounts of our
customers. In rendering this fairness opinion we have acted on behalf of the
Board of Directors of FNB and will receive a fee for our services.
We are not expressing any opinion herein as to the prices at which shares of
Norwest common stock issued in the Merger may trade if and when they are
issued or at any future time. Our opinion as expressed herein is limited to
the fairness, from a financial point of view, of the Consideration to the
holders of FNB common stock and does not address FNB's underlying business
decision to proceed with the Merger. We have been retained on behalf of the
Board of Directors of FNB, and our opinion does not constitute a
recommendation to any holder of FNB common stock as to how such holder should
vote with respect to the Merger Agreement at any meeting of holders of FNB
common stock.
Subject to the foregoing and based on our experience as investment bankers,
our activities as described above, and other factors we have deemed relevant,
we are of the opinion as of the date hereof that the Consideration is fair,
from a financial point of view, to the holders of FNB common stock.
Sincerely,
Howe Barnes Investments, Inc.
/s/ Daniel E. Coughlin
By __________________________________
Daniel E. Coughlin
First Vice President
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APPENDIX D
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
<PAGE>
262 APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to (S)228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of a member of
a nonstock corporation; and the words "depository receipt" mean a receipt or
other instrument issued by a depository representing an interest in one or
more shares, or fractions thereof, solely of stock of a corporation, which
stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to (S)251 (other than a merger effected pursuant to
(S)251(g) of this title), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of (S)251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
(S)(S)251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on
a national securities exchange or 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 more than
2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment
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to its certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or substantially
all of the assets of the corporation. If the certificate of incorporation
contains such a provision, the procedures of this section, including those set
forth in subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation,
a written demand for appraisal of his shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to (S)228 or
(S)253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given; provided that,
if the notice is given on or after the effective date of the
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merger or consolidation, the record date shall be such effective date. If
no record date is fixed and the notice is given prior to the effective
date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw his demand
for appraisal and to accept the terms offered upon the merger or
consolidation. Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which
demands for appraisal have been received and the aggregate number of holders
of such shares. Such written statement shall be mailed to the stockholder
within 10 days after his written request for such a statement is received by
the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection
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(f) of this section and who has submitted his certificates of stock to the
Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that he is not entitled to
appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of his demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon
such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation. (Last amended by Ch. 349, L.
'96, eff. 7-1-96.)
D-4
<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
<TABLE>
<CAPTION>
EXHIBITS:
---------
<C> <S>
Parenthetical references to exhibits in the description of
Exhibits 3.1, 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.2, 4.1 and 4.2
below are incorporated by reference from such exhibits to the
indicated reports of Norwest filed with the Securities and
Exchange Commission under File No. 1-2979.
2.1 --Agreement and Plan of Reorganization dated November 22, 1996
between Farmers National Bancorp, Inc. and Norwest Corporation
(included in Proxy Statement-Prospectus as Appendix A).
3.1 --Restated Certificate of Incorporation, as amended
(incorporated by reference to Exhibit 3(b) to Norwest's Current
Report on Form 8-K dated June 28, 1993 and Exhibit 3 to
Norwest's Current Report on Form 8-K dated July 3, 1995).
3.1.1 --Certificate of Designations of Powers, Preferences, and Rights
of Norwest ESOP Cumulative Convertible Preferred Stock
(incorporated by reference to Exhibit 4 to Norwest's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994).
3.1.2 --Certificate of Designations of Powers, Preferences, and Rights
of Norwest Cumulative Tracking Preferred Stock (incorporated by
reference to Exhibit 3 to Norwest's Current Report on Form 8-K
dated January 9, 1995).
3.1.3 --Certificate of Designations of Powers, Preferences, and Rights
of Norwest 1995 ESOP Cumulative Convertible Preferred Stock
(incorporated by reference to Exhibit 4 to Norwest's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1995).
3.1.4 --Certificate of Designations with respect to the 1996 ESOP
Cumulative Convertible Preferred Stock (incorporated by
reference to Exhibit 3 to Norwest's Current Report on Form 8-K
dated February 26, 1996).
3.2 --By-Laws, as amended (incorporated by reference to Exhibit 4(c)
to Norwest's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1991).
4 --Rights Agreement, dated as of November 22, 1988, between
Norwest Corporation and Citibank, N.A. (incorporated by
reference to Exhibit 1 to Norwest's Form 8-A dated December 6,
1988).
4.1 --Certificate of Adjustment, dated July 21, 1989, to Rights
Agreement (incorporated by reference to Exhibit 3 to Norwest's
Form 8 dated July 21, 1989).
4.2 --Certificate of Adjustment, dated June 28, 1993, to Rights
Agreement (incorporated by reference to Exhibit 4 to Norwest's
Form 8-A/A dated June 29, 1993).
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
5 --Opinion of Stanley S. Stroup, counsel to Norwest.*
8 --Opinion of Schiff Hardin & Waite.
23.1 --Consent of Stanley S. Stroup (included as part of Exhibit 5
filed herewith).
23.2 --Consent of KPMG Peat Marwick LLP.
23.3 --Consent of Clifton Gunderson L.L.C.
23.4 --Consent of McGladrey & Pullen, LLP.
23.5 --Consent of Schiff Hardin & Waite (included as part of Exhibit
8).
24 --Powers of Attorney.*
99 --Form of proxy for Special Meeting of Shareholders of Farmers
National Bancorp, Inc.
</TABLE>
- --------
* Previously filed.
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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) ((S) 230.424(b) of this
chapter) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(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 reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration
II-2
<PAGE>
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 reofferings 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
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.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THE AMENDMENT NO. 1 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 FEBRUARY 10, 1997.
Norwest Corporation
/s/ Richard M. Kovacevich
By: _________________________________
Richard M. Kovacevich
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED ON FEBRUARY 10, 1997 BY
THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<S> <C>
/s/ Richard M. Kovacevich President and Chief Executive Officer
___________________________________________ (Principal Executive Officer)
Richard M. Kovacevich
/s/ John T. Thornton Executive Vice President and Chief
___________________________________________ Financial Officer
John T. Thornton (Principal Financial Officer)
/s/ Michael A. Graf Senior Vice President and Controller
___________________________________________ (Principal Accounting Officer)
Michael A. Graf
</TABLE>
<TABLE>
<S> <C>
DAVID A. CHRISTENSEN
GERALD J. FORD
PIERSON M. GRIEVE
CHARLES M. HARPER
WILLIAM A. HODDER
LLOYD P. JOHNSON A majority of the
RICHARD M. KOVACEVICH Board of Directors*
RICHARD S. LEVITT
RICHARD D. McCORMICK
CYNTHIA H. MILLIGAN
IAN M. ROLLAND
MICHAEL W. WRIGHT
</TABLE>
- --------
* Richard M. Kovacevich, by signing his name hereto, does hereby sign this
document on behalf of each of the directors named above pursuant to powers
of attorney duly executed by such persons.
/s/ Richard M. Kovacevich
_____________________________________
Richard M. Kovacevich
Attorney-in-Fact
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT FORM OF
NUMBER DESCRIPTION* FILING
------- ------------ ------------
<C> <S> <C>
2.1 Agreement and Plan of Reorganization dated November
22, 1996 between Farmers National Bancorp, Inc. and
Norwest Corporation (included in Proxy Statement-
Prospectus as Appendix A).
3.1 Restated Certificate of Incorporation, as amended
(incorporated by reference to Exhibit 3(b) to
Norwest's Current Report on Form 8-K dated June 28,
1993 and Exhibit 3 to Norwest's Current Report on
Form 8-K dated July 3, 1995).
3.1.1 Certificate of Designations of Powers, Preferences,
and Rights of Norwest ESOP Cumulative Convertible
Preferred Stock (incorporated by reference to Exhibit
4 to Norwest's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994).
3.1.2 Certificate of Designations of Powers, Preferences,
and Rights of Norwest Cumulative Tracking Preferred
Stock (incorporated by reference to Exhibit 3 to
Norwest's Current Report on Form 8-K dated January 9,
1995).
3.1.3 Certificate of Designations of Powers, Preferences,
and Rights of Norwest 1995 ESOP Cumulative
Convertible Preferred Stock (incorporated by
reference to Exhibit 4 to Norwest's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1995).
3.1.4 Certificate of Designations with respect to the 1996
ESOP Cumulative Convertible Preferred Stock
(incorporated by reference to Exhibit 3 to Norwest's
Current Report on Form 8-K dated February 26, 1996).
3.2 By-Laws, as amended (incorporated by reference to
Exhibit 4(c) to Norwest's Quarterly Report on Form
10-Q for the quarter ended March 31, 1991).
4 Rights Agreement, dated as of November 22, 1988,
between Norwest Corporation and Citibank, N.A.
(incorporated by reference to Exhibit 1 to Norwest's
Form 8-A dated December 6, 1988).
4.1 Certificate of Adjustment, dated July 21, 1989, to
Rights Agreement (incorporated by reference to
Exhibit 3 to Norwest's Form 8 dated July 21, 1989).
4.2 Certificate of Adjustment, dated June 28, 1993, to
Rights Agreement (incorporated by reference to
Exhibit 4 to Norwest's Form 8-A/A dated June 29,
1993).
5 Opinion of Stanley S. Stroup, counsel to Norwest.** Electronic
Transmission
8 Opinion of Schiff Hardin & Waite. Electronic
Transmission
23.1 Consent of Stanley S. Stroup (included as part of
Exhibit 5 filed herewith).
23.2 Consent of KPMG Peat Marwick LLP. Electronic
Transmission
23.3 Consent of Clifton Gunderson L.L.C. Electronic
Transmission
23.4 Consent of McGladrey & Pullen, LLP Electronic
Transmission
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT FORM OF
NUMBER DESCRIPTION* FILING
------- ------------ ------------
<C> <S> <C>
23.5 Consent of Schiff Hardin & Waite (included as part of
Exhibit 8).
24 Powers of Attorney.** Electronic
Transmission
99 Form of proxy for Special Meeting of Shareholders of Electronic
Farmers National Bancorp, Inc. Transmission
</TABLE>
- --------
* Parenthetical references to exhibits in the description of Exhibits 3.1,
3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.2, 4.1 and 4.2 are incorporated by reference
from such exhibits to the indicated reports of Norwest filed with the SEC
under File No. 1-2979.
** Previously filed.
<PAGE>
[LETTERHEAD OF SCHIFF HARDIN & WAITE]
February 10, 1997
Farmers National Bancorp, Inc.
121 West First Street
Geneseo, Illinois 61254
Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the proposed merger (the "Merger") of FNB Merger Co., a Delaware
corporation ("Acquisition"), with and into Farmers National Bancorp, Inc. a
Delaware corporation ("Bancorp"). Acquisition is a wholly owned subsidiary of
Norwest Corporation, a Delaware corporation ("Norwest").
In formulating our opinion, we examined such documents as we deemed
appropriate, including the Plan of Merger between Bancorp and Norwest dated
November 22, 1996 (the "Merger Agreement") and the Joint Proxy Statement
included in the Registration Statement on Form S-4, as filed by Bancorp with the
Securities and Exchange Commission on February 11, 1997 (the "Registration
Statement"). In addition, we have obtained such additional information as we
have deemed relevant and necessary through consultation with various officers
and representatives of Bancorp and Norwest.
Our opinion set forth below assumes (1) the accuracy of the statements and
facts concerning the Merger set forth in the Merger Agreement and the
Registration Statement, (2) the consummation of the Merger in the manner
contemplated by, and in accordance with the terms set forth in, the Merger
Agreement and the Registration Statement and (3) the accuracy of (i) the
representations made by Bancorp, as set forth in the Officers' Certificate
delivered to us by Bancorp as of this date and to be updated as of the Effective
Time of the Merger and (ii) the representations made by Norwest, as set forth in
the Officers' Certificate delivered to us by Norwest as of this date and to be
updated as of the Effective Time of the Merger.
In connection with the Merger, the stockholders of Bancorp will exchange,
in the aggregate, all of the shares of Bancorp common stock $5.00 par value per
share (the "Common Stock") for the right to receive, in the aggregate, except
for cash paid in lieu of fractional shares or cash paid to dissenting
stockholders, solely shares of Norwest common stock $1 2/3 par value ("Norwest
Common Stock").
Based upon the facts and statements set forth above, our examination and
review of the documents referred to above and subject to the assumptions set
forth above, we are of the opinion that for federal income tax purposes:
<PAGE>
SCHIFF HARDIN & WAITE
Farmers National Bancorp, Inc.
February 10, 1997
Page 2
1. The Merger will constitute a reorganization within the meaning of
Section 368(a)(1)(A) and Section 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. No gain or loss will be recognized by Bancorp, Norwest or
Acquisition, as the case may be, as a result of the Merger.
3. No gain or loss will be recognized by the stockholders of Bancorp
upon the receipt of Norwest Common Stock solely in exchange for
their Common Stock.
4. The basis of the Norwest Common Stock received by a Bancorp
stockholder will be the same as the basis of Common Stock that was
exchanged therefor.
5. The holding period of the Norwest Common Stock received by a
Bancorp stockholder will include the period during which the
Common Stock surrendered in exchange therefor was held by a
Bancorp stockholder provided that the Common Stock surrendered was
a capital asset in the hands of the Bancorp stockholder on the
date of the exchange.
6. Where a dissenting Bancorp stockholder receives solely cash in
exchange for his/her Common Stock, such cash will be treated as
having been received by that Bancorp stockholder as a distribution
in redemption of his/her Common Stock subject to the provisions
and limitations of Section 302 of the Code.
7. Any cash received by a holder of Common Stock in lieu of a
fractional share will be treated as received in exchange for such
fractional share, and any gain or loss recognized as a result of
the receipt of such cash will be capital gain or loss equal to the
difference between the cash received and the portion of the
Bancorp stockholder's basis in Common Stock allocable to such
fractional share interest.
We express no opinion concerning any tax consequences of the Merger other than
those specifically set forth herein.
Our opinion is based on present law and existing interpretations
thereof by the courts and the Internal Revenue Service. Any change in the facts,
currently or in the future, or any change in the law or existing interpretations
thereof, may adversely affect our opinion. Further, our opinion
<PAGE>
Farmers National Bancorp, Inc.
February 10, 1997
Page 3
is not binding on the Internal Revenue Service and the tax effects discussed
above are not subject to absolute resolution prior to the running of the statute
of limitations or the rendering of a final determination by a court of law or by
closing agreement with the Internal Revenue Service. Finally, it should be
noted that we have expressed no opinion except as specifically set forth herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement filed with the Securities and Exchange Commission
relating to the offering of Norwest Common Stock pursuant to the proposed Merger
and to the reference to us under the caption "Legal Opinions" in such
Registration Statement.
SCHIFF HARDIN & WAITE
By: /s/ Lawrence H. Jacobson
--------------------------------
Lawrence H. Jacobson
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF KPMG PEAT MARWICK LLP]
Independent Auditors' Consent
-----------------------------
The Board of Directors
Norwest Corporation:
We consent to the use of our report dated January 17, 1996 incorporated herein
by reference and to the reference to our firm under the heading "EXPERTS" in the
prospectus. Our report refers to Norwest Corporation's adoption in 1995 of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 122, "Accounting for Mortgage Servicing Rights, an amendment of
FASB Statement No. 65."
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 10, 1997
<PAGE>
EXHIBIT 23.3
[LETTERHEAD OF CLIFTON GUNDERSON L.L.C.]
Independent Auditor's Consent
-----------------------------
The Board of Directors
Farmers National Bancorp, Inc.
We consent to the use of our report dated January 12, 1996 incorporated herein
by reference and to the reference to our firm under the heading "EXPERTS" in the
prospectus.
/s/ Clifton Gunderson L.L.C.
Peoria, Illinois
February 10, 1997
<PAGE>
EXHIBIT 23.4
[LETTERHEAD OF MCGLADREY & PULLEN, LLP]
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-4 pertaining to the Farmers National Bancorp, Inc./Norwest
Corporation merger transaction filed with the Securities and Exchange Commission
on January 23, 1997 of our report dated January 13, 1995 relating to the
financial statements of Farmers National Bancorp, Inc. for the periods ended
December 31, 1994 and 1993, and to the reference to our Firm under the caption
"Experts" contained therein.
/s/ McGladrey & Pullen, LLP
Davenport, Iowa
February 10, 1997
<PAGE>
EXHIBIT 99
FARMERS NATIONAL BANCORP, INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Barbara S. Kuhns, Emil Klingler, Jr., and
Richard D. Ford, or any of them, as proxies to vote all shares of Common Stock
the undersigned is entitled to vote at the Special Meeting of Stockholders of
Farmers National Bancorp, Inc. ("FNB") to be held at the offices of FNB at 121
West First Street, Geneseo, Illinois on March 20, 1997, or at any adjournment
thereof, as follows, hereby revoking any proxy previously given:
1. To approve the Agreement and Plan of Reorganization dated November 22,
1996 (the "Reorganization Agreement") between FNB and Norwest Corporation
("Norwest") and the related Agreement and Plan of Merger dated January 31, 1997
(the "Plan of Merger") pursuant to which a wholly-owned subsidiary of Norwest
will merge with FNB and FNB will become a wholly-owned subsidiary of Norwest
(the "Merger"), all upon the terms and subject to the conditions set forth in
the Reorganization Agreement and the Plan of Merger, copies of which are
included as Appendix A and Appendix B, respectively, in the accompanying Proxy
Statement-Prospectus; and to authorize such further action by the board of
directors and officers of FNB as may be necessary or appropriate to carry out
the intent and purposes of the Merger.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. In the discretion of the persons appointed proxies hereby on such other
matters as may properly come before the Special Meeting.
Shares represented by this proxy will be voted as directed by the
stockholder. The Board of Directors recommends a vote "FOR" proposal 1. If no
direction is supplied, the proxy will be voted "FOR" proposal 1.
Dated: __________________________, 199__.
_____________________________________________
(Please sign exactly as name appears at left.)
_____________________________________________
(If stock is owned by more than one person, all
owners should sign. Persons signing as executors,
administrators, trustees, or in similar capacities
should so indicate.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF FARMERS NATIONAL BANCORP, INC.
