FILED PURSUANT TO RULE 424(b)(3)
February 12, 1997
Dear Shareholder:
A special meeting of shareholders of The United Group, Inc.
("United") will be held on March 12, 1997 to approve the
Agreement and Plan of Reorganization dated as of November 1,
1996, as amended by an amendment thereto dated January 28, 1997
(the "Merger Agreement") between United and Norwest Corporation
("Norwest") pursuant to which United will become a wholly-owned
subsidiary of Norwest (the "Merger"). If the Merger Agreement is
approved and the Merger becomes effective, you will be entitled
to receive approximately $16.83 worth of Norwest common stock for
each share of United common stock owned by you immediately prior
to the Merger. The value of the Norwest common stock (and thus
the number of shares of Norwest common stock) you will be
entitled to receive will be based on the average of the closing
prices of a share of Norwest common stock as reported on the NYSE
during the period of 10 trading days ending on the day before the
special meeting..
United's board of directors has, by unanimous vote of all
directors present, approved the Merger Agreement as being
advisable and in your best interests as a shareholder of United
and recommends that you approve the Merger Agreement.
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 and discusses the
background of and reasons for the Merger. Please carefully
review and consider the information in the Proxy
Statement - Prospectus. The Merger Agreement is included in the
Proxy Statement - Prospectus as Appendix A. Additional
information concerning Norwest, including its most recent annual
report on Form 10-K and its quarterly reports on Form 10-Q for
the current year, may be obtained from Norwest as indicated in
the Proxy Statement - Prospectus under the section entitled
"Incorporation of Certain Documents by Reference."
Your vote is very important. The Merger will not occur
unless it is approved by the holders of the required number of
shares of United 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 Merger Agreement. If you attend the
meeting, you may vote in person if you wish, even though you have
previously returned your proxy.
Bill G. Beaver
President and Director
THE UNITED GROUP, INC.
5960 Fairview Road, Suite 203
Charlotte, North Carolina 28210
(704) 554-9280
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 12, 1997
A special meeting (the "Special Meeting") of shareholders of
The United Group, Inc., a North Carolina corporation ("United"),
will be held at the Ramada Limited Motel, Ramada Drive, Clemmons,
North Carolina, on March 12, 1997 at 10:00 a.m., eastern time,
for the following purposes:
1. To approve the Agreement and Plan of
Reorganization dated November 1, 1996, as amended by an
amendment thereto dated January 28, 1997 (the "Merger
Agreement") between United and Norwest Corporation
("Norwest") pursuant to which a wholly-owned subsidiary
of Norwest will merge with and into United and United
will become a wholly-owned subsidiary of Norwest, upon
the terms and subject to the conditions set forth in
the Merger Agreement, a copy of which is attached as an
appendix to the accompanying Proxy
Statement - Prospectus.
2. To transact such other business as may properly
come before the meeting or any adjournments or
postponements thereof.
Only shareholders of record on the books of United at the
close of business on December 31, 1996 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
Kenneth M. O'Connell
Secretary
February 12, 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 1>
THE UNITED GROUP, INC.
PROXY STATEMENT
For a Special Meeting of Shareholders
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 The United Group, Inc. ("United") for use at a
special meeting of United's shareholders to be held on March 12,
1997 (the "Special Meeting"). United's board of directors has
called the Special Meeting to approve the Agreement and Plan of
Reorganization dated November 1, 1996, as amended by an amendment
thereto dated January 28, 1997 (including all exhibits, the
"Merger Agreement") between United and Norwest Corporation
("Norwest") a copy of which is attached as an appendix to the
accompanying Proxy Statement - Prospectus.
The Merger Agreement provides for the merger of a wholly-owned
subsidiary of Norwest with and into United (the "Merger"), with
the net effect of the Merger being that United will become a
wholly-owned subsidiary of Norwest. If the Merger Agreement is
approved and the Merger becomes effective, you will be entitled
to receive approximately $16.83 worth of Norwest common stock,
par value of $1-2/3 per share ("Norwest Common Stock"), for each
share of United common stock, no par value ("United Common
Stock"), owned by you immediately prior to the Merger. The value
of the Norwest Common Stock (and thus the number of shares of
Norwest Common Stock) you will be entitled to receive will be
based on 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 10 trading days ending on the day before the
Special Meeting. This average is referred to as the "Norwest
Measurement Price." For example, if the Norwest Measurement
Price is $40, you will be entitled to receive approximately
0.4208 of a share of Norwest Common Stock for each share of
United Common Stock; if the Norwest Measurement Price of $45, you
will be entitled to receive approximately 0.3740 of a share 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.
A copy of the Merger Agreement has been included in this Proxy
Statement - Prospectus as Appendix A and is incorporated herein
by reference.
Norwest has filed a registration statement on Form S-4 (File
No. 333-20995) (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 United 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 New York Stock Exchange
("NYSE") and the Chicago Stock Exchange ("CHX") under the symbol
NOB. The closing price
of Norwest Common Stock as reported on the NYSE on February 7,
1997 was $48.75 per share. There is no established public market
for shares of United Common Stock.
Norwest, its banking subsidiaries and many of its nonbanking
subsidiaries are subject to significant regulation by a number of
federal and state agencies. This regulation may affect Norwest's
earnings and/or
<Page 2>
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 United contained in this Proxy
Statement - Prospectus has been provided by United.
This Proxy Statement - Prospectus is dated as of February 11,
1997 and, together with the accompanying form of proxy, is first
being mailed to shareholders of United on or about February 12,
1997.
<Page 3>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 5
DOCUMENTS ENCLOSED WITH THIS PROXY STATEMENT - PROSPECTUS 7
EXPLANATORY NOTE AND DEFINITIONS OF CERTAIN TERMS 7
SUMMARY 8
Parties to the Merger 8
Special Meeting and Vote Required 9
The Merger 9
Market Information 11
Comparison of Rights of Holders of United Common Stock and
Norwest Common Stock 11
Comparative Per Common Share Data 12
Selected Consolidated Financial Data 14
NORWEST PER COMMON SHARE PRICES AND COMPARATIVE DIVIDENDS 18
MEETING INFORMATION 19
General 19
Record Date; Voting Rights; Vote Required 19
Voting and Revocation of Proxies 19
Solicitation of Proxies 20
THE MERGER 21
General 21
Background of and Reasons for the Merger 21
Retention of United's Financial Advisor 23
Merger Consideration 23
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 Merger Agreement 30
Amendment of the Merger Agreement 30
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 34
Accounting Treatment 34
Expenses 34
COMPARISON OF RIGHTS OF HOLDERS OF UNITED COMMON
STOCK AND NORWEST COMMON STOCK 35
General 35
Directors 35
Amendment of Articles or Certificate of Incorporation and
Bylaws 36
Shareholder or Stockholder Approval of Mergers and Asset
Sales 36
Appraisal Rights 37
<Page 4>
Special Meetings 37
Action Without a Meeting 38
Limitation of Director Liability 38
Indemnification of Officers and Directors 38
Dividends 39
Proposal of Business; Nomination of Director 39
CERTAIN REGULATORY AND OTHER CONSIDERATIONS
PERTAINING TO NORWEST 41
Bank Regulatory Agencies 41
Bank Holding Company Activities; Interstate Banking 41
Dividend Restrictions 42
Holding Company Structure 43
Regulatory Capital Standards and Related Matters 44
FDIC Insurance 47
Fiscal and Monetary Policies 48
Competition 48
EXPERTS 49
LEGAL OPINIONS 49
MANAGEMENT OF NORWEST AND ADDITIONAL INFORMATION 49
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION AND
AMENDMENT THERETO
APPENDIX B NORTH CAROLINA BUSINESS CORPORATION ACT ARTICLE 13
<Page 5>
AVAILABLE INFORMATION
Norwest and United 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 Merger Agreement, you
should rely only on the information contained or incorporated by
reference in this Proxy Statement - Prospectus. Neither Norwest
nor United 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 11, 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 United since February
11, 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 11, 1997. The Commission
allows Norwest and United 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.
The following Norwest documents have been incorporated by
reference in this Proxy Statement - Prospectus. Each document
was filed with the Commission under file number of 1-2979.
(1) Norwest's annual report on Form 10-K for the year
ended December 31, 1995;
<Page 6>
(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 number (612) 667-8655
fax number (612) 667-4399
To ensure timely delivery of the documents, your request should
be received by Norwest by March 5, 1997.
DOCUMENTS ENCLOSED WITH THIS PROXY STATEMENT - PROSPECTUS
As permitted by the Commission, United 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) United's annual report on Form 10-KSB for the year
ended September 30, 1995;
(2) United's annual report to shareholders for the year
ended September 30, 1996; and
(3) United's annual report on Form 10-KSB for the year
ended September 30, 1996, as amended pursuant to Form 10-
KSB/A.
Additional copies of these documents are available upon
request in writing or by telephone as follows:
Corporate Secretary
The United Group, Inc.
5960 Fairview Road, Suite 203
Charlotte, North Carolina 28210
telephone (704) 554-9280
fax (704) 554-1702
To ensure timely delivery of any of these documents, your request
should be received by United by no later than March 5, 1997.
<Page 7>
EXPLANATORY NOTE AND DEFINITIONS OF CERTAIN TERMS
United is incorporated under the laws of the state of North
Carolina and is governed by the North Carolina Business
Corporation Act and United's articles of incorporation and bylaws
(as amended and in effect as of the date of this Proxy
Statement - Prospectus, the "NCBCA," "United Articles" and
"United Bylaws," respectively). Norwest is incorporated under
the laws of the state of Delaware and is governed by the Delaware
General Corporation Law and Norwest's restated certificate of
incorporation and bylaws (as amended and in effect as of the date
of this Proxy Statement - Prospectus, the "DGCL," "Norwest
Certificate" and "Norwest Bylaws," respectively). The NCBCA uses
the term "shareholder" to refer to a holder of capital stock of a
North Carolina corporation. The DGCL uses the term "stockholder"
to refer to a holder of capital stock of a Delaware corporation.
Accordingly, this Proxy Statement - Prospectus uses the term
"shareholder" to refer to a holder of United Common Stock and the
term "stockholder" to refer to a holder of Norwest Common Stock.
<Page 8>
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, in their entirety. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" for a list of the documents 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 September 30, 1996, Norwest had consolidated total assets
of $78.4 billion, total deposits of $48.0 billion and total
stockholders' equity of $5.9 billion. Based on total assets at
September 30, 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."
United. United is a company incorporated under the laws of
North Carolina in 1968. United owns all of the issued and
outstanding shares of capital stock of United Financial Services,
Inc. ("UFS"). Substantially all of United's revenues are derived
from UFS.
At September 30, 1996, United had consolidated total assets of
$41.5 million, total liabilities of $35.9 million and total
stockholders' equity of $5.6 million. Additional information
regarding United is included in the United documents delivered
herewith. See "DOCUMENTS ENCLOSED WITH THIS PROXY
STATEMENT - PROSPECTUS."
Special Meeting and Vote Required
Special Meeting. The Special Meeting will be held on March
12, 1997 at the Ramada Limited Motel, Ramada Drive, Clemmons,
North Carolina for the purpose of voting on a proposal to approve
the Merger Agreement. Only holders of record of United Common
Stock at the close of business on December 31, 1996 (the "Record
Date") will be entitled to receive notice of and to vote at the
Special Meeting. At the Record Date, there were 1,057,927.9447
shares of United 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 Merger Agreement requires the
affirmative vote of the holders a majority of the outstanding
shares of United Common Stock. Holders of United 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 United Common Stock do not vote in favor of approval
of the Merger Agreement, United will remain a separate entity.
See "MEETING INFORMATION--Record Date; Voting Rights; Vote
Required." Based on information furnished to United, on
September 30, 1996, Mr. Don G. Angell, a
<Page 9>
member of United's board of directors (the "United Board") and
all of United's directors and officers as group (including Mr.
Angell) beneficially owned 559,810.4 and 726,390.6828 shares,
respectively, of United Common Stock, or approximately 52.9% and
68.7% respectively, of the outstanding United Common Stock. Such
individuals intend to vote all shares of United Common Stock held
in their individual capacities in favor of approval of the Merger
Agreement.
The Merger
Effect of the Merger. If the Merger Agreement is approved and
the Merger becomes effective, a wholly-owned subsidiary of
Norwest will merge with and into United and United, as the
surviving corporation in the Merger, will become a wholly-owned
subsidiary of Norwest. In the Merger, each share of United
Common Stock outstanding immediately prior to the Effective Time
of the Merger (excluding any shares held by any subsidiary of
United) will be automatically converted into and exchanged for
the right to receive shares of Norwest Common Stock based on the
Exchange Ratio. See "THE MERGER - Merger Consideration."
Recommendation of the United Board. At a meeting of the
United Board held on October 21, 1996, after considering the
terms and conditions of the proposed transaction, the United
Board unanimously authorized United's officers to negotiate and
execute the Merger Agreement. At a meeting of the United Board
held on December 5, 1996, the United Board unanimously ratified
the execution and delivery of the Merger Agreement by United's
officers. The United Board believes that the Merger is advisable
and in the best interests of United and its shareholders and
recommends that shareholders of United approve the Merger
Agreement. For a discussion of the circumstances surrounding the
Merger and the factors considered by the United Board in making
its recommendation, see "THE MERGER - Background of and Reasons
for the Merger."
Conditions to the Merger; Termination of the Merger Agreement.
The obligations of Norwest and United to effect the Merger are
subject to the satisfaction or, if permissible under the Merger
Agreement, waiver of a number of conditions, in addition to
approval of the Merger Agreement by United's shareholders. The
Merger 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 Merger
Agreement."
Regulatory Approvals. Under the terms of the Merger Agreement
the Merger is subject to the approval of the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board"). In
addition, under the terms of the Merger Agreement the approval of
the Department of Insurance of the State of Arizona under the
Arizona Insurance Holding Company Systems laws is required.
Norwest has filed an application with the Federal Reserve Board
requesting approval of the Merger and Norwest has filed an
application for approval with the Arizona Department of Insurance
The Federal Reserve Board approved the Merger on January 31,
1997; however, there can be no assurance that the necessary
regulatory approval from the Arizona Department of Insurance 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 Merger
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 that articles of merger relating to the Merger (the
"Articles of Merger") are filed with the North Carolina Secretary
of State in accordance with the relevant provisions of the NCBCA
(the "Effective Time of the Merger"). The parties expect to file
the Articles of Merger with the North Carolina Secretary of State
as soon as practicable following approval of the Merger Agreement
at the Special Meeting. See "THE MERGER - Conditions to the
Merger" and "- Regulatory Approvals."
No Solicitation. Subject to certain exceptions, United and
its subsidiaries, and their respective directors, officers,
representatives and agents, are prohibited under the Merger
Agreement from directly or
<Page 10>
indirectly soliciting, authorizing the solicitation of or
entering into any discussions with any party other than Norwest
concerning certain transactions involving the acquisition of
United's capital stock or assets. See "THE MERGER - No
Solicitation."
Interests of Certain Persons in the Merger. In the Merger,
United's directors and executive officers will receive the same
consideration for their shares of United Common Stock as the
other shareholders of United will receive for their shares of
United Common Stock. Certain members of the United Board and
management, however, may be deemed to have interests in the
Merger that are in addition to and separate from the interests of
United's shareholders generally. These interests include, among
others, employment agreements. See "THE MERGER - Interests of
Certain Persons in the Merger."
Directors and Officers of United after the Merger. Following
the Effective Time of the Merger, Norwest will be the sole
shareholder of United and, for that reason, will be in a position
to elect or appoint all of the directors and officers of United.
Dissenters' Rights. Holders of United Common Stock will have
the right to dissent with respect to their shares of United
Common Stock. 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. The Merger is intended
to be a tax-free reorganization. Generally, no gain or loss will
be recognized by United's shareholders, except with respect to
cash received for any fractional shares. The Merger's
effectiveness is conditioned upon the receipt by United of a
written opinion 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 United shareholders or in
light of each United shareholder's personal investment
circumstances. For that reason, United shareholders 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.
Market Information
On October 31, 1996, the last business day preceding public
announcement of the Merger Agreement, and on February 7, 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 $43-7/8
and $48-3/4 respectively. There is no established public market
for shares of United Common Stock.
Comparison of Rights of Holders of United Common Stock and
Norwest Common Stock
As of the date of this Proxy Statement - Prospectus, the
rights of United's shareholders are governed by the NCBCA and the
United Articles and United Bylaws. At the Effective Time of the
Merger, United's shareholders 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 UNITED 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 United 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 for the
year ended December 31, 1995 are derived from the audited
consolidated financial statements of Norwest (including the
related notes thereto) for such year. The historical data for
<Page 11>
Norwest for the nine-month period ended September 30, 1996 are
derived from the unaudited consolidated financial statements of
Norwest (including the related notes thereto) for such nine-month
period. United's financial statements are based on a fiscal year
ending September 30. The United financial information has been
converted to a calendar year basis to conform to the presentation
of Norwest financial information. Accordingly, the historical
data presented in the following table for United for the year
ended December 31, 1995 and for the nine-month period ended
September 30, 1996, have been derived from the audited
consolidated financial statements of United (including the
related notes thereto) for the year ended September 30, 1996 and
from the unaudited consolidated financial statements of United
(including the related notes thereto) for the three-month period
ended December 31, 1995.
The data are based on the assumption that 395,667 shares of
Norwest Common Stock will be issued in the Merger. This number
is based on an assumed Norwest Measurement Price of $45 and the
resulting exchange ratio of .374 of a share of Norwest Common
Stock for each share of United Common Stock. The exchange ratio
of .374 of a share of Norwest Common Stock for each share of
United 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 day before the Special Meeting. See "THE
MERGER - Merger Consideration" for information on how the actual
Norwest Measurement Price will be determined.
All financial information derived from unaudited financial
statements reflects, in the respective opinions of Norwest and
United management, all adjustments (consisting only of normal
recurring adjustments) necessary for fair presentation of such
data. (See footnote (4) to the table below.) 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 audited and unaudited
consolidated financial statements of United are included in
United's annual report on Form 10-KSB for the year ended
September 30, 1996 and 1995 and United's quarterly report on Form
10-QSB for the quarters ended December 31, 1995. See "DOCUMENTS
ENCLOSED WITH THIS PROXY STATEMENT - PROSPECTUS." The above-
referenced audited and unaudited consolidated financial
statements of Norwest are incorporated by reference into this
Proxy Statement - Prospectus. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
<Page 12>
<TABLE>
<CAPTION>
COMPARATIVE PER COMMON SHARE DATA
Norwest Common United Common Stock
Stock
Pro Forma Pro Forma
Historica Combined Historica Equivalen
l l t
<S> <C> <C> <C> <C>
BOOK VALUE (1):
September 30, 1996 $15.53 $15.52 $5.64 $5.80
December 31, 1995 $14.20 14.20 4.71 5.31
DIVIDENDS DECLARED
(2)(4):
Nine Months Ended
September 30, 1996 0.78 0.78 0.10 0.29
Year Ended
December 31, 1995 0.90 0.90 0.10 0.34
NET INCOME (3)(4):
Nine Months Ended
September 30, 1996 2.26 2.26 1.04 0.85
Year Ended
December 31, 1995 2.73 2.73 1.35 1.02
</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 United divided by total
pro forma common shares of the combined entities. The pro
forma equivalent book value per share of United represents
the pro forma combined book value per share multiplied by the
assumed exchange ratio of .374.
(2)Assumes no changes in cash dividends per share by Norwest.
The pro forma equivalent dividends per share of United Common
Stock represent cash dividends declared per share of Norwest
Common Stock multiplied by the assumed exchange ratio of
.374. See note (1) above.
(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 United
divided by the average pro forma common and common equivalent
shares of the combined entities. The pro forma equivalent
net income per share of United Common Stock represents the
pro forma combined net income per share multiplied by the
assumed exchange ratio of .374. See note (1) above.
(4)United's net income per share for the nine months ended
September 30, 1996 was derived from its 1996 fiscal year end
net income of $1.46 per share less the per share income of
$0.42 reported in its unaudited financial statements for the
quarter ended December 31, 1995. United's net income per
share for the calendar year ended December 31, 1995 was
derived from its 1995 fiscal year end net income per share of
$1.25 less the per share income of $0.32 reported in its
unaudited financial statements for the quarter ended December
31, 1994 plus the per share income of $0.42 reported in its
unaudited financial statements for the quarter ended December
31, 1995.
Selected Consolidated Financial Data
The following table sets forth certain selected historical
consolidated financial information for Norwest and United. The
income statement and balance sheet data for Norwest included in
the selected consolidated financial data for each of the five
years in the period ended December 31, 1995 are derived from the
audited consolidated financial statements of Norwest (including
the related notes thereto) for such five-year period. The income
statement and balance sheet dated for United included in the
selected
<Page 13>
consolidated financial data for each of the five years in the
period ended September 30, 1996 are derived from the audited
consolidated financial statements of United (including the
related notes thereto) for such five-year period. The selected
financial data for Norwest for the nine-month periods ended
September 30, 1996 and 1995 are derived from the unaudited
consolidated financial statements of Norwest for such periods.
All financial data derived from unaudited financial statements
reflect, in the respective opinions of Norwest's management, all
adjustments (consisting of only normal recurring adjustments)
necessary for a fair presentation of such data. Results for the
nine-month period ended September 30, 1996 are not necessarily
indicative of the results that may be expected for any other
interim period or for the year as a whole. The data for Norwest
should be read in conjunction with Norwest's consolidated
financial statements (including the notes thereto) incorporated
herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE." The data for United should be read in conjunction
with United's consolidated financial statements (including the
related notes thereto) included in United's annual report on Form
10-KSB for the year ended September 30, 1996. See "DOCUMENTS
ENCLOSED WITH THIS PROXY STATEMENT - PROSPECTUS."
<Page 14>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
Norwest Corporation and Subsidiaries
Nine Months
Ended Years Ended December 31
September
30
1996 1995 1995 1994 1993( 1992( 1991
1) 2)
(In millions except per share
amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA
Interest income $ 4, 4,153 5,717 4,393 3,946 3,806 4,025
710.1 .3 .3 .7 .3 .4 .9
Interest expense 1, 1, 2, 1, 1, 1, 2,
955.1 771.6 448.0 590.1 442.9 610.6 150.3
Net interest 2,755 2,381 3,269 2,803 2,503 2,195 1,875
income .0 .7 .3 .6 .4 .8 ,6
Provision for 281.1 216.5 312.4 164.9 158.2 270.8 406.4
credit losses
Non-interest 1,826 1,325 1,848 1,638 1,585 1,273 1,064
income .5 .9 .2 .3 .0 .7 .0
Non-interest 2, 2, 3, 3, 3, 2, 2,
expenses 986.7 447.4 382.3 096.4 050.4 553.1 041.5
Income before 1,313 1,043 1,422 1,180 879.8 645.6 491.7
income taxes .7 .7 .8 .6
Income tax
expense 467. 347. 466. 380. 266. 175. 73
9 4 8 2 7 6 .4
Income before
cumulative effect
of a change in 845.8 696.3 956.0 800.4 613.1 470.0 418.3
accounting method
Cumulative effect
on years prior to
1992 of change in
accounting method (76.
-- -- -- -- -- 0) --
Net income $
845. 696 956 800 613 394 418
8 .3 .0 .4 .1 .0 .3
PER COMMON SHARE
DATA
Net income per
share:
Primary:
Before
cumulative effect
of a change in $ 2.04 2.76 2.45 1.89 1.44 1.33
accounting method 2.26
Cumulative
effect on years
prior to 1992 of
change in
accounting method (0.2
-- -- -- -- -- 5) --
Net income $
2.26 2. 2. 2. 1. 1.1 1.
04 76 45 89 9 33
Fully diluted:
Before
cumulative effect
of a change in $ 2.2 2.01 2.73 2.41 1.86 1.42 1.32
accounting method 6
Cumulative
effect on years
prior to 1992 of
change in
accounting method (0.2
-- -- -- -- -- 3) --
Net income $
2.2 2 2 2 1 1. 1
6 .01 .73 .41 .86 19 .32
Dividends
declared per common $ 0.660 0.900 0.765 0.640 0.540 0.470
share 0.78
0
BALANCE SHEET DATA
At period end:
Total assets $78,4 71,41 72,13 59,31 54,66 50,03 45,97
27.6 1.9 4.4 5.9 5.0 7.0 4.5
Long-term debt 13,25 12,68 13,67 9,186 6,850 4,553 3,686
0.1 6.3 6.8 .3 .9 .2 .6
Total 5,938 4,940 5,312 3,846 3,760 3,371 3,192
stockholders' .4 .1 .1 .4 .9 .8 .3
equity
</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.
<Page 15>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
The United Group, Inc. and Subsidiaries
Years Ended September 30
1996 1995 1994 1993 1992
(In thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income $9,618 $8,861 $7,711 $7,207 $7,091
.4 .0 .9 .5 .4
Interest expense 2,981. 3,130. 2,500. 2,268. 2,541.
9 5 7 3 6
Net interest 6,636. 5,730. 5,211. 4,939. 4,549.
income 5 5 2 2 8
Provision for loan 771.7 497.5 403.8 564.1 926.5
losses
Noninterest income 1,559. 1,611. 1,497. 1,372. 1,224.
5 3 9 3 0
Noninterest expense 5,186. 4,990. 4,807. 4,430. 4,103.
4 2 1 3 6
Income before income 2,237. 1,854. 1,498. 1,317. 743.7
taxes 9 1 2 1
Income tax expense 693.0 539.0 444.0 369.0 113.0
Net income $1,544 $1,315 $1,054 $948.1 $630.7
.9 .1 .2
PER COMMON SHARE DATA
Net income per share $1.46 $1.25 $0.98 $0.83 $0.63
Dividends declared 0.10 0.10 0.10 0.10 --
per share
BALANCE SHEET DATA
At period end:
Total assets $41,51 $40,05 $35,35 $32,96 $30,11
3.7 7.7 7.3 2.8 7.7
Long-term debt 508.9 524.3 837.8 3,120. 3,278.
2 4
Total shareholder 5,561. 4,126. 2,862. 2,502. 1,711.
equity 5 9 3 8 9
</TABLE>
<Page 16>
<TABLE>
<CAPTION>
NORWEST PER COMMON SHARE PRICES AND COMPARATIVE DIVIDENDS
The following table sets forth the high and low sales prices
per share of the Norwest Common Stock, and the cash dividends
paid on such Norwest Common Stock and United Common Stock, for
the below quarterly calendar periods. The prices for Norwest
Common Stock are as reported on the NYSE. United Common Stock is
traded in a limited over-the-counter market on a "best efforts"
basis. Therefore, firm quotations for shares of United Common
Stock are not available.
Norwest United
Common Common
Stock Stock
High Low Dividend Dividends
s
<S> <C> <C> <C> <C>
1993
First Quarter $26.00 20.625 0.145 0.10
0
Second Quarter 28.375 22.875 0.165 - -
Third Quarter 28.000 25.625 0.165 - -
Fourth Quarter 29.000 22.500 0.165 - -
1994
First Quarter 27.375 22.250 0.185 0.10
Second Quarter 28.250 23.125 0.185 - -
Third Quarter 27.500 24.750 0.185 - -
Fourth Quarter 25.000 21.000 0.210 - -
1995
First Quarter 26.250 22.625 0.210 0.10
Second Quarter 29.375 25.125 0.210 - -
Third Quarter 32.750 26.875 0.240 - -
Fourth Quarter 34.750 29.250 0.240 - -
1996
First Quarter 37.125 30.500 0.240 0.10
Second Quarter 37.500 33.000 0.270 - -
Third Quarter 41.000 32.000 0.270 - -
Fourth Quarter 46.750 42.000 0.270 - -
1997
First Quarter 48.875 42.875 - - - -
(through February
7, 1997)
</TABLE>
<Page 17>
MEETING INFORMATION
General
This Proxy Statement - Prospectus is being furnished to
holders of United Common Stock in connection with the
solicitation of proxies by the United Board for use at the
Special Meeting to be held on March 12, 1997 and at any
adjournments or postponements thereof. At the Special Meeting,
shareholders of United will consider and vote upon a proposal to
approve the Merger Agreement. The United 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 Merger 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.
Record Date; Voting Rights; Vote Required
The United Board has fixed the close of business on December
31, 1996 as the record date for the determination of shareholders
of United entitled to receive notice of and to vote at the
Special Meeting (the "Record Date"). On the Record Date, there
were 1,057,927.9447 shares of United Common Stock outstanding and
entitled to vote. Holders of United 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 United Common Stock
outstanding on the Record Date will constitute a quorum for the
transaction of business at the Special Meeting.
Under the NCBCA and the United Articles and United Bylaws,
approval of the Merger Agreement will require the affirmative
vote of the holders of a majority of the shares of United Common
Stock. Directors and officers of United as a group beneficially
owned as of the Record Date an aggregate of 726,390.6828, or
approximately 68.7%, of the outstanding shares of United Common
Stock. Directors and executive officers of United intend to vote
all shares of United Common Stock held in their individual
capacities in favor of approval of the Merger Agreement. If a
majority of the votes eligible to be cast by the holders of
United Common Stock do not vote in favor of approval of the
Merger Agreement, United will remain a separate entity. 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 Merger Agreement.
Voting and Revocation of Proxies
Shares of United 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 United Common Stock represented by such proxy will be voted
FOR approval of the Merger Agreement. Any proxy given pursuant
to this solicitation may be revoked by the person giving it at
any time before the proxy is voted by filing either an instrument
revoking it or a duly executed proxy bearing a later date with
the secretary of United 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 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 Merger Agreement must be approved by the
holders of a majority of the shares of United Common Stock
outstanding on the Record Date. Because the proposal to approve
the Merger Agreement requires the affirmative vote of a specified
percentage
<Page 18>
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 United may solicit proxies from the shareholders of
United, 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. United 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 SHAREHOLDERS OF UNITED. SHAREHOLDERS 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 UNITED IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE.
<Page 19>
THE MERGER
This section of the Proxy Statement - Prospectus describes
certain aspects of the Merger. The following description does
not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached as
Appendix A to this Proxy Statement - Prospectus and incorporated
herein by reference. Shareholders are urged to read the Merger
Agreement in its entirety. Parenthetical references are to
sections of the Merger Agreement.
General
At the Effective Time of the Merger, a wholly-owned subsidiary
of Norwest will be merged with and into United, with United being
the surviving corporation in the Merger. Following the Merger,
United will be a wholly-owned subsidiary of Norwest. Except with
respect to fractional shares and shares as to which dissenters'
rights have been exercised, if the Merger Agreement is approved
and the Merger becomes effective, each share of United Common
Stock outstanding, excluding any shares held by any subsidiary of
United, immediately prior to the Effective Time of the Merger
will be automatically converted into and exchanged for the right
to receive approximately $16.83 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, either directly or indirectly, own all of
the outstanding shares of United Common Stock. 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.
Background of and Reasons for the Merger
Norwest regularly explores opportunities for acquisitions of
financial services companies, including companies engaged in
consumer finance. After receiving materials prepared by Orr
Management Company ("Orr"), which was offering United for sale
through a bid process, Norwest approached United's management to
determine whether there would be an interest in a possible
business combination.
In August of 1996, representatives of Norwest met with a
representative of Orr and Bill G. Beaver and Kenneth M. O'Connell
of United. At this meeting, a complete history and background of
both Norwest and United was discussed. The Norwest
representatives also discussed their plans for United in the
event an agreement to combine the entities could be reached.
Based on this initial discussion, both Norwest and United agreed
to pursue further discussions.
Over the next several weeks, several additional meetings were
held to further discuss various issues regarding the possible
acquisition of United by Norwest and to negotiate the terms of
the Merger Agreement. The terms and conditions of the proposed
transaction were reviewed at the October 21, 1996 meeting of the
United Board, and the United Board unanimously authorized
United's officers to negotiate and execute the Merger Agreement.
The Merger Agreement was entered into by Norwest and United on
November 1, 1996. On December 5, 1996, the United Board ratified
the execution and delivery of the Merger Agreement by United's
officers.
The terms of the Merger Agreement, including the purchase
price, are the result of armslength negotiations between United
and Norwest and their respective representatives. The United
Board believes that the Merger is fair to and in the best
interests of United's shareholders. In reaching its decision to
recommend approval of the Merger, the United Board considered a
number of factors. The United Board did not assign any relative
or specific weights to the individual factors considered. Among
other things, the United Board considered:
The Prospects for Remaining Independent. In this regard, the
United Board considered the competitive and technological
challenges arising before United and the financial services
industry and the
<Page 20>
fundamental need for increasing financial resources to meet such
challenges. The United Board considered the current trends in
the financial services industry, including the likelihood of
continuing consolidation and increasing competition, the growing
importance of financial resources, market positions and economies
of scale to an institution's ability to compete successfully in
this changing environment and the increasing cost of technology.
After thorough analysis, the United Board concluded that there
would be substantial risk involved in attempting to attain the
necessary growth through internal means to meet such challenges
and that there was a limited number of attractive acquisition
targets for United. The United Board concluded that the range of
values on a sale basis generally exceeded the present value of
United's shares on a basis assuming the reasonable implementation
of business strategies by United. The United Board determined
that a business combination with Norwest would result in both
greater short-term and long-term value to United's shareholders
than other alternatives available, including remaining
independent.
Financial Terms of the Merger. The United Board considered
other alternative bids, including one bid which was for a price
in excess of the price offered by Norwest. This bid also
involved the exchange of stock in the acquiring company for
United Common Stock. The United Board, however, after
considering the price volatility of the stock to be exchanged
pursuant to this bid, contingencies and other pre-conditions with
respect to this bidder and other relevant factors, determined
Norwest to be the most attractive potential merger partner. The
United Board considered the Exchange Ratio in relation to the
book value, assets and earnings projections of United,
information concerning the financial condition, results of
operations and prospects of United, including the projected
return on assets and return on equity and the financial terms of
other recent business combinations in the industry. The United
Board believes that the holders of United Common Stock would
initially benefit from the Merger through the ability to obtain,
in a tax-free exchange, ownership of shares in a larger
enterprise with greater financial resources and broader and more
diversified classes of products, while allowing those
shareholders who wish to dispose of their interest for cash the
opportunity to do so in the open market provided by the New York
Stock Exchange. Certain holders of United's Common Stock would
be subject to transfer restrictions on the shares of Norwest
Common Stock received in the Merger. After considering a number
of potential bidders, the United Board determined Norwest to be
the most attractive potential merger partner. The United Board
also reviewed and considered a compilation of financial terms and
trends of other recent business combinations in the financial
services industry and determined that the financial terms of the
Merger were comparable to such other transactions.
Financial and Other Information Concerning Norwest. Such
information included, but was not limited to, to the financial
condition, assets quality, historical and projected earnings and
operations of Norwest and the market price and book value of
Norwest Common Stock. In addition, the United Board considered
the future growth prospects of Norwest following the Merger and
the potential synergies and economies of scale expected to be
realized from the Merger.
Investment Liquidity. The shares of Norwest Common Stock to
be received in the Merger by holders of United Common Stock will
be listed for trading on the New York Stock Exchange and should
provide United's shareholders with increased investment liquidity
due to the increased market capitalization of Norwest.
The United Board believes that United's business can be
substantially enhanced by the financial resources and diversified
operations of Norwest, that the Merger will produce a company
better able to meet the competitive and technological challenges
in the financial services industry and that combining United with
Norwest will result in economies of scale and increase the market
served by United in the States of North Carolina and South
Carolina.
<Page 21>
The United Board believes that the terms of the Merger are
fair to and in the best interest of United and United's
shareholders. The United Board has, by unanimous vote of all
directors present, approved the Merger Agreement and the
transactions contemplated thereby and recommends that United's
shareholders approve and adopt the Merger Agreement.
Retention of United's Financial Advisor
United retained Orr Management Company as its financial
advisor, who assisted United's representatives in the negotiation
of the proposed acquisition of United by Norwest. Orr Management
Company assisted United with a letter of intent which was entered
into by United and Norwest on September 16, 1996. Following the
execution of the letter of intent, the Merger Agreement, as a
definitive purchase agreement, was negotiated and entered into by
Norwest and United on November 1, 1996, following the
authorization thereof on October 21, 1996, by the United Board.
The United Board subsequently ratified the execution and delivery
of the Merger Agreement on December 5, 1996.
Merger Consideration
Shares of Norwest Common Stock. Except with respect to
fractional shares as described below, shares as to which
dissenters' rights have been exercised and shares owned by
United's subsidiaries, if the Merger Agreement is approved and
the Merger becomes effective, you will be entitled to receive
approximately $16.83 worth of Norwest Common Stock (the "exchange
value" for each share of United Common Stock owned by you
immediately prior to the Effective Time of the Merger. The
exchange value of the Norwest Common Stock you will be entitled
to receive will be based on 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 10 trading days ending on the day
before the Special Meeting. This average is referred to in the
Merger Agreement and in this document as the "Norwest Measurement
Price." (Section 1(a))
The fractional share of Norwest Common Stock you will be
entitled to receive in the Merger for each share of United Common
Stock (the "exchange ratio") will equal the exchange value of
$16.83 divided by the Norwest Measurement Price. For example, if
the Norwest Measurement Price is $40, you will be entitled to
receive approximately 0.4208 of a share of Norwest Common Stock
for each share of United Common Stock; if the Norwest Measurement
Price is $45, you will be entitled to receive approximately
0.3740 of a share 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 closing price of a share of Norwest
Common Stock on the effective date of the Merger. (Sections 1(a)
and 2(c))
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 United shareholder 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 on the NYSE's
composite tape for the ten trading days ending on the day
immediately preceding the Special Meeting. (Section 1(c))
Dissenters' Rights
The following is a summary of the rights of dissenting
shareholders pursuant to North Carolina law and does not purport
to be a complete statement thereof. The summary is qualified in
its entirety by reference to Article 13 of the NCBCA, a copy of
which is set forth in full in Appendix B to this Proxy
Statement - Prospectus.
Record holders of United Common Stock will have the right
under the NCBCA to dissent with respect to the Merger and,
subject to certain conditions, receive a cash payment equal to
the fair value of their shares. Any shareholder who wishes to
assert his or her dissenter's rights must cause
<Page 22>
United to receive, before the Special Meeting, a written
objection to the Merger stating that such shareholder's right to
dissent will be exercised if the Merger is effective and giving
the shareholder's address to which any notices should be sent,
and such shareholder must not vote any of his or her shares in
favor of the Merger Agreement. Voting against the Merger
Agreement is not sufficient, in and of itself, for a shareholder
to assert his or her dissenter's rights.
In the event United's shareholders approve the Merger
Agreement at the Special Meeting, United is required to deliver
or mail a written notice to all shareholders who are entitled to
demand payment for their shares no later than 10 days after the
Effective Time of the Merger. Any shareholder to whom a notice
is sent by United and who desires to exercise his or her
dissenter's rights must, within 30 days from the delivery or
mailing of United's notice, make written demand on United for the
payment of the fair value of his or her shares. Pursuant to the
NCBCA, the fair value of the shares is the value thereof
immediately preceding the effectuation of the Merger, excluding
any appreciation or depreciation in anticipation of the Merger.
The shareholder must demand payment and deposit his or her shares
in accordance with the terms of the notice. A shareholder who
does not demand payment or deposit his or her shares by the date
set forth in the notice is not entitled to assert his or her
dissenter's rights. Any shareholder who does not demand payment
for his or her shares within the 30 day period is not entitled to
assert dissenter's rights. Upon receiving a demand for payment
from a dissenting shareholder, United must make an appropriate
notation of the demand in its shareholder records. Within 20
days after making such demand, the dissenting shareholder must
submit his or her share certificates to United for notation
thereon that demand has been made for and deposit his or her
shares.
Upon United's receipt of a demand from a dissenting
shareholder, United will deliver or mail to the shareholder a
written offer to pay the amount estimated by United to be the
fair value of the shares, plus interest received to the date of
the payment. Within 60 days from demanding payment and depositing
shares, United shall pay this amount to each dissenting
shareholder who, pursuant to the instructions contained in the
dissenting shareholder notice, agrees in writing to accept it as
full satisfaction of his or her demand, such payment will occur
within 30 days after the dissenter accepts United's offer.
A dissenting shareholder may notify United in writing of his
or her own estimate of the fair value of the shares and amount of
interest due, and reject United's offer or demand payment of his
or her estimate if: (i) the dissenter believes the amount of
United's offer is inadequate, (ii) United fails to pay the
dissenting shareholder within 30 days after the dissenter accepts
United's offer, or (iii) the Merger is not consummated and United
fails to return to the shares deposited by the dissenter within
60 days of the date set for demanding payment. A dissenter must
notify United in writing within 30 days after the United offer
or, if rights are asserted under (ii) and (iii) of the preceding
sentence, 30 days after United's failure to perform timely.
If, however, within 60 days after the date of the dissenter's
demand, the dissenting shareholder and United do not agree upon
the value of the shares, then the dissenter may, within an
additional 60 days after the expiration of the first 60 day
period, file a petition in any court of competent jurisdiction,
asking the court to determine the fair value of the shareholder's
shares. If the petition is filed by the shareholder, United
must, upon service upon it of the petition filed with the court,
pay to the dissenter the amount offered by United. The court has
the discretion to make all dissenters whose demands remain
unsettled parties to the proceeding and all such parties must be
served a copy of the petition.
After the hearing of the petition, the court determines the
shareholders who have complied with the foregoing procedure and
become entitled to the valuation of and payment for their shares
and may appoint one or more appraisers to determine that value.
The appraisers have the power described in the order appointing
them. The court then determines the fair value of the shares of
all of the shareholders entitled to payment for their shares.
Upon payment of the judgment, the dissenting shareholders cease
to have any interest in those shares or United. The court allows
the appraisers a reasonable fee as court costs, and all court
costs are allotted between the parties in a manner as the court
determines to be fair and equitable.
<Page 23>
If the dissenting shareholder does not file the petition
within the 60 day period, he or she shall have 30 days to: (i)
accept United's offer or (ii) withdraw his or her demand and
resume status as a non-dissenting shareholder. A shareholder who
fails to take action within the 30 day period will be deemed to
withdraw his or her dissent and demand for payment.
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 United 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.
SHAREHOLDERS OF UNITED 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 United 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 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 shareholders of United entitled to receive certificates
for shares of Norwest Common Stock until such shareholders
surrender their certificates representing shares of United 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 United. The
obligations of both Norwest and United to effect the Merger are
subject to the satisfaction as of the Effective Time of the
Merger or, if permissible under the Merger Agreement, waiver of a
number of conditions including, among others, the following: (i)
the approval of the Merger Agreement by the requisite vote of
United's shareholders; (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 United. The obligation of
United to effect the Merger is subject to the satisfaction as of
the Effective Time of the Merger or, if permissible under the
Merger 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 Merger Agreement and the truthfulness in
<Page 24>
all material respects of the representations made by Norwest in
the Merger 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 United
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
Merger Agreement, waiver of certain additional conditions,
including, among others, the following: (i) the performance by
United in all material respects of the agreements made by United
in the Merger Agreement and the truthfulness in all material
respects of the representations made by United in the Merger
Agreement; (ii) the absence of any condition or requirement in
any approval, license or consent of a regulatory authority
relating to the Merger that, in the good faith judgment of
Norwest, is unreasonably burdensome to Norwest; (iii) all
material consents and waivers from third parties to loan
agreements, leases or other material contracts have been obtained
that are material to United's or the applicable United
subsidiary's business; and (iv) at any time since November 1,
1996 (the date of the Merger Agreement) the total number of
shares of United Common Stock outstanding and subject to issuance
upon exercise (assuming for this purpose that phantom shares and
other share equivalents constitute United Common Stock) of all
warrants, options, conversion rights (including equity securities
convertible into United Common Stock), phantom shares or other
share equivalents shall not have exceeded 1,057,927.9447.
See Sections 6 and 7 of the Merger Agreement for additional
conditions to the Merger becoming effective.
Regulatory Approvals
Under the terms of the Merger Agreement, the Merger is subject
to prior approval by the Federal Reserve Board under the Bank
Holding Company Act. Norwest has filed an application with the
Federal Reserve Board requesting approval of the Merger, and on
January 31, 1997, the Federal Reserve Board approved the Merger.
Under the terms of the Merger Agreement, the Merger is also
subject to the prior approval by the Department of Insurance of
the State of Arizona, under Arizona insurance holding company
system statutes, for the change in ultimate ownership of United's
insurance subsidiary that will result from the Merger. Norwest
has filed an application with the Arizona Department of
Insurance; however, there can be no assurance that such
department will approve the change in indirect ownership of
United's insurance subsidiary or the date of 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, shareholders.
Regulatory approvals do not constitute an endorsement or
recommendation of the proposed Merger.
Norwest and United 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 Merger Agreement."
Conduct of Business Pending the Merger
By United. United, and each of its subsidiaries, is required
to maintain its corporate existence in good standing, maintain
the general character of its businesses and conduct its
businesses in the ordinary and usual manner. In addition,
without the prior written consent of Norwest, neither United nor
any subsidiary of United may: (i) enter into any material
agreement, contract or commitment exceeding $25,000
<Page 25>
(other than lending transactions in the ordinary course of
business and in accordance with policies and procedures in effect
on November 1, 1996); (ii) make any investments except
investments in the ordinary course of business in accordance with
past practice; (iii) 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, except as requested by Norwest for full payment to
participants in the Deferred Compensation Plan as consideration
for release of any payment in shares due to them under such plan;
(iv) sell or otherwise dispose of any of its assets or properties
other than in the ordinary course of business; (v) declare, set
aside, make or pay any dividend or other distribution with
respect to its capital stock; (vi) redeem, purchase or otherwise
acquire, directly or indirectly, any of the capital stock of
United; (vii) increase the compensation of any director, officer
or executive employee of United, except pursuant to existing
compensation plans and practices (including bonus plans); or
(viii) sell or otherwise dispose of any shares of capital stock
of any United subsidiary. (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)
See Sections 4 and 5 of the Merger Agreement for additional
restrictions on the conduct of business by United and Norwest
pending the Merger.
No Solicitation
United and its subsidiaries, and their respective directors,
officers, representatives and agents, are prohibited under the
Merger Agreement from directly or indirectly soliciting,
authorizing the solicitation of or 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 United or any of its subsidiaries; (ii) make a tender
or exchange offer for any shares of common stock or other equity
security of United or any of its subsidiaries; (iii) purchase,
lease or otherwise acquire the assets of United or any of its
subsidiaries except in the ordinary course of business; or (iv)
merge, consolidate or otherwise combine with United or any of its
subsidiaries. If any third party makes an offer or inquiry to
United or any of its subsidiaries concerning any of the
foregoing, United or the subsidiary, as applicable, is required
to promptly disclose such offer or inquiry (including the terms
thereof) to Norwest. (Section 4(h))
Certain Additional Agreements
United. United has also agreed under the Merger Agreement to:
(i) if requested by Norwest, terminate or amend, effective as of
the Effective Time of the Merger, certain employee benefit plans
of United and its subsidiaries; (ii) establish such additional
accruals and reserves as may be necessary to conform United's
accounting and credit loss reserve practices and methods to those
of Norwest and Norwest's plans with respect to the conduct of
United'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 Merger Agreement; (iii) obtain
and deliver environmental assessment reports on certain
properties; (iv) terminate certain agreements; (v) use its best
efforts to obtain and deliver to Norwest at least 32 days prior
to the Effective Time of the Merger signed representations
substantially in the form attached as Exhibit B to the Merger
Agreement from each executive officer, director of shareholder of
United who may reasonably be deemed an "affiliate" of United
within the meaning of each term used in Rule 145 of the
Securities Act; (vi) cause Mr. Don G. Angell, a member of the
United Board and a principal shareholder of United, to enter into
an agreement with Norwest to pay in full any receivable owed to
United by Mr. Angell or by any organization owned in whole or in
part by him, with the obligations under such agreement being
fully secured by shares of Norwest Common Stock; and (vii)
terminate and satisfy employment agreements it has with Mr. Bill
G.
<Page 26>
Beaver, the president of United and a member of the United Board,
and Mr. Kenneth M. O'Connell, an executive officer of United.
See "Interests of Certain Persons in the Merger." (Section 4)
Under the terms of the Merger Agreement, United was required
to cause an agreement between Financial Insurance Management
Group and UFS to be terminated without any financial impact to
Norwest and without any reduction in the equity of United or any
subsidiary of United. The termination of such agreement entailed
the payment by United of $325,000 to another party, and as a
consequence thereof, the $18,000,000 purchase price referred to
in the Merger Agreement is reduced by $195,000 (the estimated
after-tax effect of the payment of such amount). See Section
4(u) of the Merger Agreement and the amendment to the Merger
Agreement dated January 28, 1997.
For information concerning additional agreements and covenants
of United and Norwest, see Sections 4 and 5 of the Merger
Agreement.
Termination of the Merger Agreement
Subject to the satisfaction of certain notice requirements,
either Norwest or United may terminate the Merger Agreement at
any time prior to the Effective Time of the Merger, whether
before or after approval of the Merger Agreement by United's
shareholders, pursuant to the mutual written consent of each
party or upon the occurrence or existence of any of the following
events or conditions: (i) the Merger has not become effective by
April 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 Merger
Agreement; or (ii) any court or governmental authority of
competent jurisdiction shall have issued a final order
restraining, enjoining or otherwise prohibiting the transactions
contemplated by the Merger Agreement.
See Section 9 of the Merger Agreement for more information
concerning the circumstances under which the Merger 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 Merger Agreement.
Amendment of Merger Agreement
The Merger 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 Merger
Agreement by United's shareholders, provided that, after the
Merger Agreement is approved by United's shareholders, no
amendment can be made to the Merger Agreement that changes in a
manner materially adverse to United's shareholders the
consideration to be received by United's shareholders in the
Merger. (Section 17)
Waiver of Performance of Obligations
Any of the parties to the Merger Agreement may, by a signed
writing, give any consent, take any action with respect to the
termination of the Merger Agreement or otherwise, or waive any of
the 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 Merger Agreement.
(Section 16)
Effect on Employee Benefit Plans
The Merger Agreement provides that, subject to any eligibility
requirements applicable to such plans, employees of United shall
be entitled to participate in those Norwest employee benefit and
welfare plans specified in the Merger Agreement. United's
employees will generally continue to participate in welfare and
retirement plans maintained by United until entering Norwest's
plans. If United's medical plan is not continued after the
Merger, United employees who are participating in United's
medical benefit plan and were entitled to receive benefits
thereunder as of the Effective Date of the Merger shall not be
denied
<Page 27>
benefits under the specified Norwest medical benefit plan due to
a pre-existing condition. Eligible United employees will receive
credit for past service for eligibility and vesting purposes, but
not for the purposes of computing the amount or scope of any such
benefit. (Section 8)
Interests of Certain Persons in the Merger
Shareholders should be aware that certain members of the
United Board and management of United have interests in the
Merger in addition to and separate from the interests of
shareholders of United generally. The United Board is aware of
these interests, and considered them among other matters in
approving the Merger Agreement and the transactions contemplated
thereby, including the Merger. Adoption and approval of the
Merger Agreement by the shareholders of United will also
constitute approval of the following benefits to be received by
the directors, executive officers and employees of United.
Executive Employment Agreements. In connection with the
Merger, United will terminate its employment agreements with Bill
G. Beaver and Kenneth M. O'Connell, who will each sign a
termination and release agreement containing provisions
prohibiting competition for not less than three (3) years and
covering a geographic scope of not less than North Carolina and
South Carolina and their respective contiguous states. In
consideration of their signing such termination and release
agreements, Messrs. Beaver and O'Connell will receive from United
the immediate payment of the respective amounts that would have
otherwise been paid to them over the remaining terms of their
respective employment agreements.
In addition, a subsidiary of Norwest has entered into an
employment agreement dated as of October 25, 1996 with Bill G.
Beaver. Under the terms of the Employment Agreement, Mr. Beaver
is to be employed for a three-year period (which is extendible by
Mr. Beaver at his option for two successive one-year periods).
United has employment agreements with three other employees of
United or its subsidiaries, including Mr. Stephen Lackey, a
director and executive officer of United.
U.S. Federal Income Tax Consequences
The following is a summary of the material federal income tax
consequences of the Merger that are generally applicable to
holders of shares of United Common Stock. The summary is based
on the Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed regulations thereunder, Internal Revenue
Service ("IRS") rulings and pronouncements, reports of
congressional committees, judicial decisions and current
administrative rulings and practice, all as in effect on the date
hereof, all of which are subject to change at any time, and any
such change may be applied retroactively in a manner that could
adversely affect a holder of shares of United Common Stock. The
discussion below does not address all of the federal income tax
consequences that may be relevant to shareholders entitled to
special treatment under the Code (for example, dealers in
securities, banks, insurance companies, tax-exempt entities,
foreign corporations, and individuals who are not citizens or
residents of the United States) or to holders who acquired their
shares of United Common Stock through the exercise of employee
stock options or otherwise as compensation. Moreover, the
discussion below does not address the applicable state, local or
foreign tax laws. This summary also assumes that the shares of
United Common Stock are held as a "capital assets" within the
meaning of section 1221 of the Code. The following discussion is
intended only as a summary of the material federal income tax
consequences of the Merger and does not purport to be a complete
analysis or listing of all of the potential tax effects relevant
to a decision on whether to vote in favor of approval of the
Merger Agreement.
<Page 28>
United or Norwest will not seek any rulings from the IRS with
respect to any of the federal income tax consequences of the
Merger. There can be no assurance that the IRS will not take a
different position concerning the tax consequences of the Merger
or that any such position would not be sustained.
United and Norwest will report the Merger as a reorganization
under Section 368(a) of the Code. As a result, except for cash
received in lieu of remaining fractional shares in Norwest Common
Stock, holders of shares of United Common Stock will recognize no
gain or loss on the receipt of Norwest Common Stock in exchange
therefor. The Merger's effectiveness is conditioned upon the
receipt by United of a written opinion of counsel to United,
substantially to the effect that, for U.S. federal income tax
purposes: (i) the Merger will constitute a reorganization within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the
Code; (ii) no gain or loss will be recognized by the holders of
United Common Stock upon receipt of Norwest Common Stock solely
in exchange for such United Common Stock pursuant to the Merger
(except to the extent cash received in lieu of fractional shares
or as a result of exercising dissenter's or appraisal rights);
(iii) the basis of the Norwest Common Stock received by the
holders of shares of United Common Stock will be the same as the
basis of the shares of United Common Stock exchanged therefor,
decreased by the tax basis allocated to any fractional share
interest exchanged for cash; and (iv) the holding period of the
shares of Norwest Common Stock received by the shareholders of
United will include the holding period of the United Common Stock
exchanged therefor, provided such shares were held as a capital
asset as of the Effective Time of the Merger.
The form of the opinion of counsel, the original of which will
be delivered at the closing of the Merger, is filed as an exhibit
to the Registration Statement. An opinion of counsel only
represents counsel's best legal judgment and has no binding
effect on the IRS or the courts and no assurance can be given
that contrary positions may not be taken by the IRS or a court
considering the issues.
THE FOREGOING IS A GENERAL SUMMARY OF THE MATERIAL U.S.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO UNITED
SHAREHOLDERS, WITHOUT REGARD TO THE PARTICULAR FACTS AND
CIRCUMSTANCES OF EACH SHAREHOLDER'S TAX SITUATION AND STATUS.
EACH UNITED SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR
REGARDING ANY SUCH SPECIFIC TAX SITUATION AND STATUS, INCLUDING
THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN
LAWS AND THE POSSIBLE EFFECT OF CHANGES IN FEDERAL AND OTHER TAX
LAWS.
Resale of Norwest Common Stock
The shares of Norwest Common Stock issuable to shareholders of
United upon the Merger becoming effective have been registered
under the Securities Act. Such shares may be traded freely and
without restriction by those shareholders not deemed to be
"affiliates" of United or Norwest as that term is defined in the
rules under the Securities Act. Norwest Common Stock received by
those shareholders of United who are deemed to be "affiliates" of
United 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 United generally include
individuals or entities that control, are controlled by or are
under common control with, United and may include the executive
officers and directors of United as well as certain principal
shareholders of United. In the Merger Agreement, United has
agreed to use its best efforts to obtain and deliver at least 32
days prior to the Effective Date of the Merger, from each
shareholder who, in the opinion of counsel to United, is an
affiliate of United, an agreement with Norwest providing that
such affiliate will not (i) offer to sell, transfer or otherwise
dispose of, during the 30 days immediately prior to the Effective
Time of the Merger, any shares of United Common Stock; (ii) 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 or (iii)
sell, transfer or otherwise dispose of the shares of Norwest
Common Stock to be received by such persons in the Merger or in
any way reduce such shareholder's risk relative to such shares
until such time as financial results covering at least 30 days of
post-Merger combined operations of United
<Page 29>
and Norwest have been published. (Section 4(n)) This Proxy
Statement - Prospectus does not cover any resales of Norwest
Common Stock received by affiliates of United.
Stock Exchange Listing
The Merger Agreement provides for the filing by Norwest of
listing applications with the NYSE and the CHX covering the
shares of Norwest Common Stock issuable upon 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 United 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 market 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 Merger Agreement, Norwest
and United will each pay their own expenses in connection with
the Merger, including fees and expenses of their respective
independent auditors and counsel.
<Page 30>
COMPARISON OF RIGHTS OF HOLDERS OF
UNITED COMMON STOCK AND NORWEST COMMON STOCK
General
United is incorporated under the laws of the state of North
Carolina. Norwest is incorporated under the laws of the state of
Delaware. The rights of United's shareholders are currently
governed by the NCBCA and the United Articles and United Bylaws.
If United's shareholders approve the Merger Agreement and the
Merger becomes effective, shareholders of United 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
United 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
United. The United Bylaws provide for a board of directors
consisting of not less than 8 nor more than 12 persons, each
serving for a term of one year or until his or her earlier death,
resignation or removal. The number of directors of United is
fixed by the shareholders at each annual meeting and is currently
fixed at 9. Directors of United may be removed with or without
cause by the affirmative vote of the holders of a majority of the
shares of United capital stock entitled to vote thereon.
However, unless the entire United Board is removed, an individual
director may not be removed if the number of shares voting
against the removal would be sufficient to elect a director if
such shares were voted cumulatively. Vacancies on the United
Board may be filled by an election at an annual or special
meeting of the shareholders called for such purpose or by a
majority of the remaining directors. Board vacancies created by
an increase in the authorized number of directors may be filled
only by election at an annual or special meeting of shareholders
called for that purpose. Directors of United are elected by
receiving the greatest number of votes of shares of United Common
Stock voted thereon in person or by proxy at the meeting at which
directors are elected. The United Articles 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 Articles or Certificate of Incorporation and Bylaws
United. Under the NCBCA, amendments to the articles of
incorporation must be recommended by the United Board and require
the affirmative vote of the holders of at least a majority of the
outstanding shares entitled to vote thereon. The United Bylaws
provide that the Bylaws may be amended by a majority of the
United Board, except that the United Board has no power to adopt
a Bylaw: (i) requiring greater than a majority of voting shares
to constitute a quorum at a meeting of shareholders or more than
a majority of votes cast to constitute action by the shareholders
(except where required by law), (ii) providing
<Page 31>
for management of United otherwise than by the United Board or
its Executive committee, or (iii) classifying and staggering the
election of directors.
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.
Shareholder or Stockholder Approval of Mergers and Asset Sales
In addition to being subject to the laws of North Carolina and
Delaware, respectively, as discussed below, Norwest, as a bank
holding company, is subject to various provisions of federal law
with respect to mergers, consolidations and certain other
corporate transactions. See "CERTAIN REGULATORY CONSIDERATIONS
PERTAINING TO NORWEST."
United. Generally, the NCBCA requires that statutory mergers
be approved by a majority of each voting group entitled to vote
thereon; provided that the articles of incorporation or bylaws
may require a greater vote of the shares outstanding or a vote by
different voting groups. The United Articles do not provide for
a different number of shares for approval of a merger or a vote
by different voting groups. However, the NCBCA requires certain
mergers to be approved by holders of at least 95% of the
outstanding shares entitled to vote thereon. The affirmative
vote of at least a majority of the United Common Stock is
required for a merger with Norwest.
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
United. Shareholders of North Carolina corporations are
entitled to exercise certain dissenters' rights in the event of a
sale, lease, exchange, or other disposition of all, or
substantially all, of the property and assets of the corporation
and in the event of a merger or consolidation. Thus, dissenters
rights will be available to United shareholders. 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,
<Page 32>
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
United. Under the NCBCA, a special meeting of shareholders of
a North Carolina corporation may be called by (a) the board of
directors, or such other person or persons as authorized by the
articles of incorporation or the bylaws, or (b) the holders of at
least ten percent (10%) of the shares entitled to be cast on any
issue proposed to be considered at the special meeting. The
United Bylaws allow the president or secretary to call a special
meeting at any time.
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
United. Under the NCBCA and the United Bylaws, shareholders
may act without a meeting if a consent in writing to such action
is signed by all shareholders entitled to vote thereon.
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
United. Neither the NCBCA nor the United Articles or Bylaws
make provision for setting limits on the extent of a director's
liability.
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
United. NCBCA provides that a corporation may under certain
circumstances indemnify an individual who was made a party to a
proceeding because he or she was a director, only if the
individual: (i) acted in good faith, (ii) in a manner he
reasonably believed, in the case of conduct in his official
capacity, was in the corporation's best interests and, in all
other cases, that his conduct was at least not opposed to the
corporation's interests, and (iii) in the case of any criminal
proceeding, had no reasonable cause to believe that his conduct
was unlawful. The NCBCA also provides that officers, employees
or agents who are not directors may be indemnified to the extent
permitted by the Articles, Bylaws or actions of the board,
consistent with public policy. The United Articles and Bylaws
make no provision for the indemnification of directors, officers
or employees. See "THE MERGER - Interests of Certain Persons in
the Merger."
<Page 33>
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.
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 North Carolina and
Delaware law, respectively, as discussed below, Norwest is
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."
United. Under the NCBCA, a North Carolina corporation may not
make distributions if after giving it effect, the (i) corporation
would not be able to pay its debts as they become due in the
ordinary course of business or (ii) the corporation's assets
would be less than its liabilities plus any amounts needed to
satisfy all preferential rights upon dissolution.
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
United. The United Bylaws provide that special meetings of
shareholders of United may be called by the President, the Board
of Directors, or holders of at least 10% of all shares entitled
to vote at the proposed special meeting.
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.
<Page 34>
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.
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).
<Page 35>
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 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
<Page 36>
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.
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
<Page 37>
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
<Page 45>
capital to its total consolidated quarterly average assets, less
goodwill and certain other intangible assets. The 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
<Page 38>
of at least 4% and a leverage ratio of at least 4% (3% in some
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.
<Page 39>
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.
Subject to certain exceptions, BIF and SAIF will be merged
into one insurance fund effective January 1, 1999.
Effective January 1, 1997, all FDIC insured depository
institutions are required to pay an assessment to provide funds
for payment of interest on Financing Corporation ("FICO") bonds.
Until December 31, 1999 or when the last savings and loan
association ceases to exist, whichever occurs first, institutions
will pay approximately 6.4 cents per $100 of SAIF-accessible
deposits and approximately 1.3 cents per $100 of BIF assessable
deposits.
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.
<Page 40>
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 consolidated financial statements of United and
subsidiaries as of September 30, 1996 and for the year then ended
incorporated by reference herein, have been incorporated herein
in reliance upon the report of Daniel Ratliff & Company,
independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts
in accounting and auditing. The consolidated financial
statements of United and subsidiaries as of September 30, 1995
and for the year then ended incorporated by reference herein,
have been incorporated herein in reliance upon the report of The
Daniel Professional Group, Inc., independent certified public
accountants, incorporated by reference herein, and 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
Merger Agreement, will be validly issued and fully paid and
nonassessable, has been rendered by Stanley S. Stroup, Executive
Vice President and General Counsel of Norwest Corporation. At
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 tax consequences of the Merger to United's
shareholders will be passed upon for United by Blanco Tackabery
Combs & Matamoros, P.A. At September 30, 1996, 2,050 shares of
United Common Stock were beneficially owned by the Profit Sharing
Plan maintained by Blanco Tackabery Combs & Matamoros, P.A. for
its employees or members. Blanco Tackabery Combs & Matamoros,
P.A. intends to cause its plan to abstain from voting on the
Merger Agreement.
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." Shareholders of United desiring copies of such
documents may contact Norwest or United, as appropriate, at the
addresses or phone numbers indicated under "AVAILABLE
INFORMATION."
<Page A>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
AND AMENDMENT THERETO
<Page A-1>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
entered into as of the 1st day of November, 1996, by and between
THE UNITED GROUP, INC. ("United"), a North Carolina 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 United (the "Merger") pursuant to an
agreement and plan of merger (the "Merger Agreement") in
substantially the form attached hereto as Exhibit A, which
provides, among other things, for the conversion and exchange of
the shares of Common Stock of United with no par per share
("United Common Stock") outstanding immediately prior to the
time the Merger becomes effective in accordance with the
provisions of the Merger Agreement into shares of voting Common
Stock of Norwest of the par value of $1-2/3 per share ("Norwest
Common Stock"),
NOW, THEREFORE, to effect such reorganization and in
consideration of the premises and the mutual covenants and
agreements contained herein, the parties hereto do hereby
represent, warrant, covenant and agree as follows:
1. Basic Plan of Reorganization
(a) Merger. Subject to the terms and conditions contained
herein, a wholly-owned subsidiary of Norwest (the "Merger Co.")
will be merged by statutory merger with and into United pursuant
to the Merger Agreement, with United as the surviving
corporation, in which merger each share of United Common Stock
assuming for this purpose that phantom stock, options, warrants,
any shares to be issued under United Financial Service's Deferred
Compensation Plan ("Deferred Compensation Plan") or the United
Group Inc. Stock Bonus Plan ("Stock Bonus Plan") and other common
stock equivalents constitute United Common Stock outstanding
immediately prior to the Effective Time of the Merger (as defined
below) (other than shares as to which statutory dissenters'
appraisal rights have been exercised, shares held in United's
treasury, and shares held by any United Subsidiary, as defined
below, Norwest or Merger Co. will 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
United Common Stock then outstanding (assuming for this purpose
that phantom stock, options, warrants, any shares to be issued
under the Deferred Compensation Plan or the Stock Bonus Plan,
and other common stock equivalents constitute Common Stock) . The
"Adjusted Norwest Shares" shall be a number equal to Eighteen
Million (18,000,000) divided by the Norwest Measurement Price
("Exchange Ratio"). 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 tapes of the New York Stock
Exchange during the period of (ten)10 trading days ending on the
day immediately preceding the meeting of the 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 United 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 United Common Stock
shall be converted will equal the number of shares of Norwest
Common Stock which holders of shares of United Common Stock
would have received pursuant to such Common Stock Adjustment had
the record date therefor been immediately following the Effective
Time of the Merger.
(c) Fractional Shares. No fractional shares of Norwest
Common Stock and no certificates or scrip certificates therefor
shall be issued to represent any such fractional interest, and
any holder thereof shall
<Page A-2>
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, as defined above.
(d) Mechanics of Closing Merger. Subject to the terms and
conditions set forth herein, the Merger Agreement shall be
executed and it or Articles of Merger or a Certificate of Merger
shall be filed with the Secretary of State of the State of North
Carolina 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. Eastern
Standard 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 United 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 United . United
represents and warrants to Norwest as follows:
(a) Organization and Authority. United is a corporation
duly organized, validly existing and in good standing under the
laws of the State of North Carolina, 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 United and the United
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. United has furnished
Norwest true and correct copies of its articles of incorporation
and by-laws, as amended.
(b) United 's Subsidiaries. Schedule 2(b) sets forth a
complete and correct list of all of United 's subsidiaries as of
the date hereof (individually a "United Subsidiary" and
collectively the " United 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 United.
No equity security of any United Subsidiary is or may be
required to be issued by reason of any option, warrant, scrip,
preemptive right, right to subscribe to, call or commitment of
any character whatsoever relating to, or security or right
convertible into, shares of any capital stock of such subsidiary,
and there are no contracts, commitments, understandings or
arrangements by which any United 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. 55 (1982) and the North Carolina
Business Corporation Act, all of such shares so owned by United
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 United Subsidiary is a
corporation 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), United 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
United consists only of 25,000,000 shares of common stock,
$1.00 par value, of which 1,055,367.4582 shares were outstanding
as of the date hereof. The number of shares of United Common
Stock outstanding includes 71,363.94 shares, 236,698.897 shares
held
<Page A-3>
by a trust on behalf of the participants in the Stock Bonus Plan,
and no shares held in treasury by United or any United
Subsidiary. The number of shares of United Common Stock that
will be outstanding as of the Effective Date of the Merger will
be 1,055,367.4582, including all shares newly issued by United to
participants in the Deferred Compensation Plan as consideration
for the release by the participants of payment in shares due to
them under the Deferred Compensation Plan. Deferred Compensation
Plan All of the outstanding shares of capital stock of United
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, preemptive rights or other
rights obligating United or any United Subsidiary to issue,
sell or otherwise dispose of, or to purchase, redeem or otherwise
acquire, any shares of capital stock of United or any United
Subsidiary. Since September 30, 1996, no shares of United
capital stock have been purchased, redeemed or otherwise
acquired, directly or indirectly, by United or any United
Subsidiary and no dividends or other distributions have been
declared, set aside, made or paid to the shareholders of United.
Each of the participants in the Deferred Compensation Plan is
identified at Schedule 2(c), together with the number of shares
due each of said participants under said plan.
(d) Authorization. United 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 United and the consummation of the
transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of United . Subject to
such approvals of shareholders and of government agencies and
other governing boards having regulatory authority over United
as may be required by statute or regulation, this Agreement and
the Merger Agreement are valid and binding obligations of United
enforceable against United in accordance with their respective
terms.
Except as set forth on Schedule 2(d), neither the execution,
delivery and performance by United of this Agreement or the
Merger Agreement, nor the consummation of the transactions
contemplated hereby and thereby, nor compliance by United 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 United or
any United Subsidiary under any of the terms, conditions or
provisions of (x) its articles of incorporation or by-laws or (y)
any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to
which United or any United Subsidiary is a party or by which
it may be bound, or to which United or any United Subsidiary
or any of the properties or assets of United or any United
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 United , violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation
applicable to United or any United 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 Hart-Scott-Rodino
Antitrust Improvements Act of 1976 ("HSR Act"), any approvals or
consents required by the North Carolina Banking Commission, the
South Carolina Board of Financial Institutions and the Arizona
Insurance Commissioner and any licensing or other law to which
United is subject, and filings required to effect the Merger
under North Carolina 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 United
of the transactions contemplated by this Agreement and the Merger
Agreement.
<Page A-4>
(e) United Financial Statements. The consolidated
balance sheets of United and United 's Subsidiaries as of
September 30, 1994 and 1995 and related consolidated statements
of income, shareholders' equity and cash flows for the two years
ended September 30 , 1995, together with the notes thereto,
certified by Daniel Professional Group, Inc. and included in
United 's Annual Report on Form 10-K SB for the fiscal year
ended September 30, 1995 (the " United 10-K") as filed with the
Securities and Exchange Commission (the "SEC"), and the unaudited
consolidated statements of financial condition of United and
United 's Subsidiaries as of June 30, 1996 and the related
unaudited consolidated statements of income, shareholders' equity
and cash flows for the nine months then ended included in
United 's Quarterly Report on Form 10-Q SB for the fiscal
quarter ended June 30, 1996 as filed with the SEC (collectively,
the " United 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 United and
United 's Subsidiaries at the dates and the consolidated results
of operations and cash flows of United and United 's
Subsidiaries for the periods stated therein.
(f) Reports. Since September 30 , 1990, United and each
United 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 SB, Forms 10-Q SB and proxy statements
and (ii) any applicable state securities or regulatory
authorities. All such reports and statements filed with any such
regulatory body or authority are collectively referred to herein
as the " United Reports". As of their respective dates, the
United Reports complied in all material respects with all the
rules and regulations promulgated by the SEC and applicable state
securities or other regulatory 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 United Reports have been made available to
Norwest by United .
(g) Properties and Leases. Except as may be reflected in
the United Financial Statements and except for any lien for
current taxes not yet delinquent, United and each United
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 United's
consolidated balance sheet as of June 30, 1996 included in
United's Quarterly Report on Form 10-Q SB 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 United or any United
Subsidiary pursuant to which United or such United
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 United or such
United Subsidiary or any event which, with notice or lapse of
time or both, would constitute such a material default.
Substantially all United 's and each United 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 United and the United 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 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 United and the United Subsidiaries for the
fiscal year ended September 30 , 1991 and for all fiscal years
prior thereto, are for the purposes of routine audit by the
Internal Revenue Service closed because of the statute of
limitations, and no claims for additional taxes for such fiscal
years are pending. Except only as set forth on Schedule 2(h),
(i) neither United nor any United Subsidiary is a party to
any pending action or proceeding, nor is any such action or
proceeding threatened by any governmental authority, for the
assessment or collection of taxes, interest, penalties,
assessments or deficiencies and (ii) no issue has been raised by
any
<Page A-5>
federal, state, local or foreign taxing authority in connection
with an audit or examination of the tax returns, business or
properties of United or any United Subsidiary which has not
been settled, resolved and fully satisfied. Each of United and
the United Subsidiaries has paid all taxes owed or which it is
required to withhold from amounts owing to employees, creditors
or other third parties. The consolidated balance sheet as of
June 30, 1996, 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 United and the United Subsidiaries with
respect to all periods through the date thereof.
(i) Absence of Certain Changes. Since September 30, 1995
there has been no change in the business, financial condition or
results of operations of United or any United 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 United and the United Subsidiaries taken as a
whole.
(j) Commitments and Contracts. Except as set forth on
Schedule 2(j), neither United nor any United 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
United or such United Subsidiary); or
(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; or
(iii) any labor contract or agreement with any labor
union; or
(iv) any contract containing covenants which limit the
ability of United or any United 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, United or any United Subsidiary may carry on its
business (other than as may be required by law or applicable
regulatory authorities); or
(v) any other contract or agreement which is a
"material contract" within the meaning of Item 601(b)(10) of
Regulation S-K, or which was not made in the ordinary course
of business; or
(vi) any lease with annual rental payments aggregating
$10,000 or more; or
(vii) 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. United has
furnished Norwest copies of all attorney responses to the
request of the independent auditors for United with respect to
loss contingencies as of September 30, 1995 in connection with
the United financial statements included in the United 10-K.
Except as set forth at Schedule 2(k), no legal or regulatory
proceedings or regulatory investigations have been filed or
commenced against United or any United Subsidiary. To the
best knowledge of United, neither United nor any United
Subsidiary is a party to any 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 United and the United Subsidiaries taken as a
whole.
(l) Insurance. United and each United Subsidiary is
presently insured, and during each of the past five calendar
years (or during such lesser period of time as United has owned
such United Subsidiary) has been 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.
<Page A-6>
(m) Compliance with Laws. United and each United
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 United or such United Subsidiary; all such
permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best knowledge
of United , no suspension or cancellation of any of them is
threatened; and all such filings, applications and registrations
are current. The conduct by United and each United
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 United nor any United Subsidiary is in default under
any order, license, regulation or demand of any federal, state,
municipal or other governmental agency or with respect to any
order, writ, injunction or decree of any court. Except for
statutory or regulatory restrictions of general application and
except as set forth on Schedule 2(m), no federal, state,
municipal or other governmental authority has placed any
restriction on the business or properties of United or any
United Subsidiary which reasonably could be expected to have a
material adverse effect on the business or properties of United
and the United Subsidiaries taken as a whole.
(n) Labor. No work stoppage involving United or any
United Subsidiary is pending or, to the best knowledge of
United , threatened. Neither United nor any United
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
United or such United Subsidiary. Employees of United and
the United 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 United no
officer or director of United or any United 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 United
or any United Subsidiary.
(p) United 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
United or any United 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 United or any United 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), United or the United subsidiaries have
received favorable determination letters from the Internal
Revenue Service under the provisions of the Tax Equity and
Fiscal Responsibility Act ("TEFRA"), the Deficit Reduction
Act ("DEFRA") and the Retirement Equity Act ("REA") for each
of the Plans to which the qualification requirements of
Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), apply. United 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 as of the end of the most recent
Plan year exceed the value of the assets of the Plan
allocable to such vested or accrued benefits.
<Page A-7>
(iv) Except as disclosed in Schedule 2(p), and to the
best knowledge of United , 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 United , 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 United and the
United 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 United or any United 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 United and the United Subsidiaries supplied or to
be supplied by United 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 United Common Stock pursuant to the
provisions of the Merger Agreement (the "Registration
Statement"), (ii) the proxy statement to be mailed to United 's
shareholders in connection with the meeting to be called to
consider the Merger (the "Proxy Statement") and (iii) any other
documents to be filed with the SEC or any regulatory authority in
connection with the transactions contemplated hereby or by the
Merger Agreement will, at the respective times such documents are
filed with the SEC or any regulatory authority and, in the case
of the Registration Statement, when it becomes effective and,
with respect to the Proxy Statement, when mailed, be false or
misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements
therein not misleading or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the
meeting of shareholders referred to in paragraph 4(c), be false
or misleading with respect to any material fact, or omit to state
any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any
proxy for such meeting. All documents which United and the
United 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 United nor any United 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 Orr Management
Company, neither United nor any United 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 United
or any United Subsidiary in connection with this Agreement and
the Merger Agreement or the transactions contemplated hereby and
thereby.
<Page A-8>
(t) Fiduciary Activities. Neither United nor any United
subsidiary has ever had any accounts for which it has acted as a
fiduciary including but not limited to accounts for which it has
served as trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor.
(u) No Defaults. Neither United nor any United
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
United and the United Subsidiaries, taken as a whole. To the
best of United 's knowledge, all parties with whom United or
any United Subsidiary has material leases, agreements or
contracts or who owe to United or any United Subsidiary
material obligations other than with respect to those arising in
the ordinary course of the business of the United 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 result in the imposition
of, on United or any United Subsidiary, any liability
relating to the release of hazardous substances as defined under
any local, state or federal environmental statute, regulation or
ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, pending or to the best of United 's knowledge,
threatened against United or any United Subsidiary the result
of which has had or could reasonably be expected to have a
material adverse effect upon United and United 's Subsidiaries
taken as a whole; to the best of United 's knowledge there is no
reasonable basis for any such proceeding, claim or action; and to
the best of United 's knowledge neither United nor any United
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. United has
provided Norwest with copies of all environmental assessments,
reports, studies and other related information in its possession
with respect to each non-residential OREO property.
3. Representations and Warranties of Norwest. Norwest
represents and warrants to United 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. 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.
<Page A-9>
(c) 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 June
30, 1996 , no shares of 10.24% Cumulative Preferred Stock at
$100 stated value, 980,000 shares of Cumulative Tracking
Preferred Stock at $200 stated value, 12,304 shares of ESOP
Cumulative Convertible Preferred Stock, at $1,000 stated value,
and 23,664 shares of 1995 ESOP Cumulative Convertible Preferred
Stock, at $1,000 stated value, and 37,939 shares of 1996 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 June
30, 1996 , 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 June 30, 1996, 370,189,434 shares were
outstanding and 4,744,191 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 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 North Carolina law, no notice to, filing
with, exemption or review by, or authorization, consent or
approval of, any public body or authority is necessary for the
consummation by Norwest of the transactions contemplated by this
Agreement and the Merger Agreement.
(e) Norwest Financial Statements. The consolidated balance
sheets of Norwest and Norwest's subsidiaries as of December 31,
1994 and 1995 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
<Page A-10>
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 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) 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.
(h) 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.
(i) 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.
<Page A-11>
(j) 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.
(k) 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.
(l) 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(l), Norwest or the Norwest Subsidiaries have
received favorable determination letters from the Internal
Revenue Service under the provisions of TEFRA, DEFRA and REA
for each of the Norwest Plans to which the qualification
requirements of Section 401(a) of the Code apply. Norwest
knows of no reason that any Norwest Plan which is subject to
the qualification provisions of Section 401(a) of the Code
is not "qualified" within the meaning of Section 401(a) of
the Code and that each related trust is not exempt from
taxation under Section 501(a) of the Code, except that any
such Norwest Plan may not have been amended to comply with
TRA and other recent legislation and regulations, although
each such Norwest Plan is within the remedial amendment
period during which retroactive amendment may be made.
(iii) The present value of all benefits vested and all
benefits accrued under each Norwest Plan which is subject to
Title IV of ERISA did not, in each case, as determined for
purposes of reporting on Schedule B to the Annual Report on
Form 5500 of each such Norwest Plan as of the end of the
most recent Plan year, exceed the value of the assets of the
Norwest Plans allocable to such vested or accrued benefits.
(iv) Except as set forth on Schedule 3(l), 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
<Page A-12>
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(l), 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.
(m) 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.
(n) 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.
4. Covenants of United. United 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, United, and each United 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; 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
<Page A-13>
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 United and each
United Subsidiary the non-compliance with which reasonably could
be expected to have a material adverse effect on United and the
United Subsidiaries taken as a whole; and permit Norwest and its
representatives (including KPMG Peat Marwick and Deloitte &
Touche) to examine its and its Subsidiaries books, records and
properties and to interview officers, employees and agents at all
reasonable times when it is open for business. No such
examination by Norwest or its representatives either before or
after the date of this Agreement shall in any way affect,
diminish or terminate any of the representations, warranties or
covenants of United herein expressed.
(b) Except as otherwise set forth in or required by this
Agreement, from the date hereof until the Effective Time of the
Merger, United and each United subsidiary will not (without
the prior written consent of Norwest): amend or otherwise change
its articles of incorporation or association or by-laws; issue,
sell or purchase shares held by a United Subsidiary, authorize
for issuance, sale, or purchase, 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, except
as requested by Norwest for full payment to the participants in
the Deferred Compensation Plan as consideration for release of
any payment in shares due to them under the Deferred Compensation
Plan; authorize or incur any long-term debt; mortgage, pledge or
subject to lien or other encumbrance any of its properties,
except in the ordinary course of business; enter into, or amend,
or extend, or renew any material agreement, contract or
commitment in excess of $25,000 except lending 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 in the ordinary course of business;
amend or terminate any Plan except as required by law or by this
Agreement; declare, set aside, make or pay any dividend or other
distribution with respect to its capital stock; redeem, purchase
or otherwise acquire, directly or indirectly, any of the capital
stock of United; increase the compensation of any officers,
directors or executive employees, except pursuant to existing
compensation plans and practices; sell or otherwise dispose of
any shares of the capital stock of any United 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 United will duly call, and
will cause to be held not later than thirty (30) 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 United will (i) cause proper notice of such
meeting to be given to its shareholders in compliance with the
North Carolina Business Corporation Act and other applicable law
and regulation, (ii) recommend by the affirmative vote of the
Board of Directors a vote in favor of approval of this Agreement
and the Merger Agreement, and (iii) use its best efforts to
solicit from its shareholders proxies in favor thereof.
(d) United will furnish or cause to be furnished to
Norwest all the information concerning United and its
subsidiaries required for inclusion, at the sole discretion of
Norwest, 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 Daniel Professional Group, Inc.to use
such opinion in such Registration Statement.
(e) United 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
United or any United Subsidiary to carry out the transactions
contemplated by this Agreement and will cooperate with Norwest to
obtain all such approvals and consents required of Norwest.
<Page A-14>
(f) United 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) United will hold in confidence all documents and
information concerning Norwest and its subsidiaries furnished to
United 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 United '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 United , in
the public domain, or later acquired by United 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 United , nor any United Subsidiary, nor any
director, officer, representative or agent thereof, will,
directly or indirectly, solicit, authorize the solicitation of or
enter into any discussions with any corporation, partnership,
person or other entity or group (other than Norwest) concerning
any offer or possible offer (i) to purchase any shares of common
stock, any option or warrant to purchase any shares of common
stock, any securities convertible into any shares of such common
stock, or any other equity security of United or any United
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 United or
any United Subsidiary except in the ordinary course of
business, or (iv) to merge, consolidate or otherwise combine with
United or any United Subsidiary. If any corporation,
partnership, person or other entity or group makes an offer or
inquiry to United or any United Subsidiary concerning any of
the foregoing, United or such United Subsidiary will promptly
disclose such offer or inquiry, including the terms thereof, to
Norwest.
(i) {intentionally left blank}
(j) United and each United Subsidiary will take all
action necessary or required to terminate and will terminate (i)
the Stock Bonus Plan and the Deferred Compensation Planeffective
as of immediately prior to the Effective Time of the Merger which
termination of the Deferred Compensation Plan shall be on the
terms and conditions described in paragraph 4(k) below(ii) its
Employee Savings Plan as of immediately prior to the Effective
Time of the Merger and distribute to each participant in said
plan the full amount owing to each of said participants under
said plan, with the termination to be effective prior to the
Effective Date of the Merger and the payment in full to be made
prior to the Effective Date of the Merger; and (iii) its Notes
Payable Program, with the termination to be effective prior to
the Effective Date of the Merger, and pay to each note holder
under said program, prior to the Effective Date of the Merger,
the full amount owing to each note holder, and obtain a release,
prior to the Effective Date of the Merger, from each such note
holder of any further liability under the note. United and each
United Subsidiary will (A) if requested by Norwest, terminate or
amend any or all other qualified pension and welfare benefit
plan and any or all other non-qualified benefit plan and
compensation arrangements of the Effective Date of the Merger,
(B) amend the Plans to comply with the provisions of the TRA and
regulations thereunder and other applicable law, and (Ci) submit
an 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. United shall pay in
full the senior subordinated note payable to its primary carrier
of credit life and disability insurance due June 30, 1999.
(k) United shall cause United Financial Services, Inc., a
United Subsidiary, to (i)) ratify its Deferred Compensation Plan
as adopted and effective as of September 1, 1990 and as set forth
at Schedule 4(k)(i), (ii) amend said Deferred Compensation Plan
to reflect the practices and procedures that became effective in
1994 and as set forth at Schedule 4(k)(ii), and (iii) amend its
Deferred Compensation Plan to (A) remove any requirement that all
benefits be paid in cash, and (B) provide for the issuance of
record
<Page A-15>
(but not distribution) of such shares of United Common Stock to
participants in such plan immediately prior to the Effective Time
of the Merger in exchange for such shares held for payment in
shares to such participant, (C) provide for the distribution
after the Effective Time of the Merger to Deferred Compensation
Plan participants who have deferred cash accounts in said plan of
all amounts held in such account in a lump sum payment, subject
to the payment by such participant of all amounts sufficient to
satisfy any minimum federal or state income tax withholding
requirements, (D) provide for the substitution as of the
Effective Time of the Merger for an amount of shares of Norwest
Common Stock in accordance with the Exchange Ratio for shares of
United Common Stock issued to such participant, and (E) the
distribution as soon as is practicable after the Effective Time
of the Merger to participants of shares of Norwest Common Stock,
subject to either the payment to Norwest of cash sufficient to
satisfy all minimum federal or state income tax withholding
requirements or the sale to Norwest of shares of Norwest Common
Stock in an amount necessary to satisfy such requirements.
(l) United shall cause United Financial Services, Inc., a
United Subsidiary, to use its best efforts to obtain from each
participant in its Deferred Compensation Plan within 45 days
after the date of this Agreement, (i) said participant's written
consent to termination and amendment of the Deferred
Compensation Plan on the terms described in paragraph 4(j)(i) and
4(k), and (ii) a release of United, each United Subsidiary,
Norwest, Merger Co., and their successors and assigns of all
claims arising directly or indirectly from the Deferred
Compensation Plan, except fulfillment of United's obligations
arising under said plan as ratified and amended pursuant to
paragraph 4(k).
(m) Neither United nor any United Subsidiary shall take
any action which with respect to United would disqualify the
Merger as a "pooling of interests" for accounting purposes.
(n) United shall use its best efforts to obtain and
deliver at least 32 days prior to the Effective Date of the
Merger signed representations substantially in the form attached
hereto as Exhibit B to Norwest by each executive officer,
director or shareholder of United who may reasonably be deemed
an "affiliate" of United within the meaning of such term as
used in Rule 145 under the Securities Act.
(o) United and each United Subsidiary shall make such
adjustments immediately before the Merger, to be effective as of
such dates as Norwest may request, as may be necessary to conform
United 's and each United Subsidiary's accounting and credit loss
reserve practices and methods to those of Norwest and consistent
with Norwest's plans with respect to the conduct of United 's
business following the Merger and to provide, to the extent
permitted by generally accepted accounting practices, for the
costs and expenses relating to the consummation by United of
the Merger and the other transactions contemplated by this
Agreement.
(p) Not later than the day immediately preceding the
Effective Date of Merger, all salaries, wages, bonuses,
commissions and any other amounts now or hereafter due present or
former employees, officers, directors and others relating to
services rendered to United or any United Subsidiary up to and
including the Effective Date of Merger will have been paid or
properly accrued on the books of United or the applicable United
Subsidiary, including, without limitation, any fee incurred by
United or any United Subsidiary in connection with termination of
the employment agreements that United Financial Services, Inc.
has with Bill G. Beaver and Kenneth M. O'Connell.
(q) United will take all action necessary or required to
operate the Plans so as to maintain compliance with the
provisions of ERISA and the Code, including the Tax Reform Act of
1986 and regulations thereunder and other applicable law.
(r) United shall obtain, at its sole expense, a Phase I
environmental assessment for each of its owned real properties
and each non-residential OREO property . Oral reports of such
environmental assessments shall be delivered to Norwest no later
than four (4) weeks and written reports shall be delivered to
Norwest no later than six (6) weeks from the date of this
Agreement. United shall obtain, at its sole expense, Phase II
environmental assessments for properties identified by Norwest on
the basis of the results of such
<Page A-16>
Phase I environmental assessments. United shall obtain a survey
and assessment of all potential asbestos containing material in
owned properties (other than OREO property) and a written report
of the results shall be delivered to Norwest within four weeks of
the date of this Agreement.
(s) Don G. Angell shall have entered into an agreement with
Norwest providing for payment in full, not later than two
business days after the Effective Date of the Merger, of any
receivable owed to United, prior to the Effective Date of the
Merger, by Don G. Angell or an organization owned in part or in
full by Don G. Angell; said agreement shall state the amount of
said receivable, and also provide that payment in full of said
receivable shall be secured by a pledge to Norwest of shares of
Norwest Common Stock with a value, in Norwest's reasonable
judgment, to secure payment in full of the receivable.
(t) United shall terminate and satisfy in full the
employment agreements that it has with Bill G. Beaver and Kenneth
M. O'Connell and each of said employees shall sign a termination
and release agreement satisfactory to Norwest, which termination
and release agreement with respect to Bill G. Beaver shall
contain a no-compete agreement of not less than three (3) years
in duration, and a geographical scope of not less than North
Carolina and South Carolina and their contiguous states, and
which shall prohibit said employee from engaging in the financial
services business except in connection with any employment
agreement that he may enter into with Norwest or any affiliate;
said termination agreements and releases shall have been
delivered to Norwest by United.
(u) The agreement made and entered into on November 12,
1993 by and between Financial Insurance Management Group, a
Florida company, and United Financial Services, Inc., which is
set forth on Schedule 4(u), shall be terminated at no financial
impact to Norwest and no reduction in the equity of United or any
United Subsidiary, and United shall obtain and deliver to Norwest
a release by Financial Insurance Management Group that is
satisfactory to Norwest.
(v) No United Subsidiary shall dispose of or distribute any
United shares (other than the newly issued shares as required by
paragraph 4(k).
5. Covenants of Norwest. Norwest covenants and agrees
with United 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 United all the information
concerning Norwest required for inclusion in a proxy statement or
statements to be sent to the shareholders of United , or in any
statement or application made by United to any governmental
body in connection with the transactions contemplated by this
Agreement.
(c) As promptly as practicable after the execution of this
Agreement, Norwest will file with the SEC a registration
statement on Form S-4 (the "Registration Statement") under the
Securities Act and any other applicable documents, relating to
the shares of Norwest Common Stock to be delivered to the
shareholders of United 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 United shareholders, at the time of
the United shareholders' meeting referred to in paragraph 4(c)
hereof and at the Effective Time of the Merger
<Page A-17>
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 United or
any United 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.
(e) The shares of Norwest Common Stock to be issued by
Norwest to the shareholders of United 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 United 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 United to obtain all such approvals and consents required
by United .
(h) Norwest will hold in confidence all documents and
information concerning United and United '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 United (except to the extent that such information can be
shown to be previously known to Norwest, in the public domain, or
later acquired by Norwest from other legitimate sources) and,
upon request, all such documents, copies thereof or extracts
therefrom shall immediately thereafter be returned to United
(i) Norwest will file any documents or agreements required
to be filed in connection with the Merger under the North
Carolina Business Corporation Act.
(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) {intentionally left blank}
6. Conditions Precedent to Obligation of United. The
obligation of United 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 United :
(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
<Page A-18>
hereof shall be true and correct in all respects material to
Norwest and its subsidiaries taken as a whole as if made at the
Time of Filing.
(b) Norwest shall have, or shall have caused to be,
performed and observed in all material respects all covenants,
agreements and conditions hereof to be performed or observed by
it and Merger Co. at or before the Time of Filing.
(c) United 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 United required for approval of a
plan of merger in accordance with the provisions of United 's
Articles of Incorporation and By-laws and the North Carolina
Business Corporation Act.
(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 United 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) United shall have received an opinion, dated the
Closing Date, of counsel to United, substantially to the effect
that, for federal income tax purposes: (i) the Merger will
constitute a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code; (ii) no gain or loss
will be recognized by the holders of United 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 United will be the same as the
basis of United Common Stock exchanged therefor; and (iv) the
holding period of the shares of Norwest Common Stock received by
the shareholders of United will include the holding period of
the United Common Stock, provided such shares of United
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.
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, any one or all of 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 material
respects as if made at the Time of Filing.
<Page A-19>
(b) United shall have, or shall have caused to be,
performed and observed in all material respects each covenant,
condition and agreement herein 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 (i) prior to November 1, 1996 by the Board of Directors
of United, and (ii) at the meeting described in paragraph 4(c)
hereof, by the affirmative vote of the holders of the percentage
of the outstanding shares of United required for approval of a
plan of merger in accordance with the provisions of United 's
Articles of Incorporation and By-laws and the North Carolina
Business Corporation Act.
(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 United , as to the matters set forth in subparagraphs (a)
through (c) of this paragraph 7.
(e) Norwest and United 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 United or any
United Subsidiary that, in the good faith judgment of Norwest,
is unreasonably burdensome to Norwest.
(f) United and each United Subsidiary shall have
obtained any and all material consents or waivers from other
parties to loan agreements, leases or other contracts material to
United 's or such subsidiary's business required for the
consummation of the Merger, including, without limitation, waiver
of any provision in any loan agreement that would make
consummation of the transactions contemplated by this Agreement
an event of default or impose any other penalty under the loan
agreement, and United and each United Subsidiary shall have
obtained any and all material permits, authorizations, consents,
waivers and approvals required for the lawful consummation by it
of the Merger.
(g) No court or governmental authority of competent
jurisdiction shall have issued an order restraining, enjoining or
otherwise prohibiting the consummation of the transactions
contemplated by this Agreement.
(h) The Merger shall qualify for accounting treatment as a
"pooling of interests" as determined by Norwest.
(i) At any time since the date hereof the total number of
shares of United Common Stock outstanding and subject to
issuance upon exercise (assuming for this purpose that phantom
shares and other share-equivalents constitute United Common
Stock) of all warrants, options, conversion rights, phantom
shares or other share-equivalents, other than any option held by
Norwest, shall be 1,055,367.4582.
(j) The Registration Statement (as amended or supplemented)
shall have become effective under the Securities Act and shall
not be subject to any stop order, and no action, suit, proceeding
or investigation by the SEC to suspend the effectiveness of the
Registration Statement shall have been initiated and be
continuing, or have been threatened or be unresolved. Norwest
shall have received all state securities law or blue sky
authorizations necessary to carry out the transactions
contemplated by this Agreement.
(k) Norwest shall have received from the President and Chief
Financial Officer of United 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
United 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 United
;
<Page A-20>
(ii) the amounts reported in the interim quarterly
financial statements of United agree with the general
ledger of United ;
(iii) the annual and quarterly financial statements of
United and the United 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 United and the
United 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
United and the United 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
United and the United 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 (a) 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; or (b) in each case for changes, increases or
decreases which result from events herein or resulting from
the transactions set forth herein.
(v) they have reviewed certain amounts, percentages,
numbers of shares and financial information which are
derived from the general accounting records of United and
the United 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 United and the United Subsidiaries
and have found them to be in agreement with financial
records and analyses prepared by United included in the
annual and quarterly financial statements, except as
disclosed in such letters.
(l) United and the United Subsidiaries considered as a
whole shall not have sustained since September 30,, 1995 any
material loss or interference with their business, including,
without limitation, any loss or interference from any civil
disturbance or any fire, explosion, flood or other calamity,
whether or not covered by insurance.
(m) There shall be no reasonable basis for any proceeding,
claim or action of any nature seeking to impose, or that could
result in the imposition on United or any United Subsidiary
of, any liability relating to the release of hazardous substances
as defined under any local, state or federal environmental
statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended, which has had or could
reasonably be expected to have a material adverse effect upon
United and its subsidiaries taken as a whole.
(n) Since June 30, 1996 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, business or prospects of
United and the United Subsidiaries taken as a whole (other
than changes in laws or regulations, or interpretations thereof,
that affect the consumer finance industry generally or changes in
the general level of interest rates).
(o) United shall have taken the actions required by
paragraphs 4(q), (v), (s), and (t) hereof.
(p) United shall have (A) terminated its Deferred
Compensation Plan, Stock Bonus Plan, Employee Savings Plan, and
Notes Payable Program as provided in paragraph 4(j), (B) taken
the actions required by paragraphs 4(k) and 4(l), and (C)
obtained the consent and release described in Paragraphs 4(l0(i)
and 4(l)(ii) of each participant in the Deferred Compensation
Plan.
<Page A-21>
8. Employee Benefit Plans. Each person who is an employee
of United or any United Subsidiary as of the Effective Date of
the Merger ("United Employee") shall be, subject to the next
sentence, eligible for participation in the benefit plans
available for Norwest Financial North Carolina, Inc. ("NFNCI")
that are in effect from time to time, subject to any eligibility
requirements applicable to such plans. Norwest, or any of its
affiliates, reserves the right to continue to maintain, following
the Merger, the medical benefit plan maintained by United prior
to the Merger, for one or more or all of the United Employees
and, during the period that such plan is being maintained,
United Employees who are eligible for coverage under such plan or
plans shall not be eligible to participate in the corresponding
NFNCI plan or plans. United Employees shall receive credit under
NFNCI's benefit plans for time in service as a United Employee
for eligibility and vesting purposes, but not for purposes of
computing the amount or scope of any such benefit; provided,
however, NFNCI shall assure , if United's medical plan is not
continued after the Merger, that United Employees who are
participating in United's medical benefit plan and were entitled
to receive benefits thereunder as of the Effective Date of the
Merger shall not be denied benefits as would be provided by
NFNCI's medical benefits plan because of a pre-existing
condition provision of NFNCI's medical benefit plan that would
have the effect of denying benefits under NFNCI's plan as of the
Effective Date of the Merger.
9. Termination of Agreement.
(a) This Agreement may be terminated at any time prior to
the Time of Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon written
notice to the other party if the Merger shall not have been
consummated by April 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 each of the covenants and agreements herein to be
performed or observed by such party;
(iii) by United or Norwest upon written notice to
the other party if any court or governmental authority of
competent jurisdiction shall have issued a final order
restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this
Agreement;
(iv) by Norwest or United if there has been a
misrepresentation or breach in any material respect on the
part of the other in the representations and warranties set
forth herein and such breach or misrepresentation, after due
notice, has not been corrected, or if, after due notice,
there has been a failure on the part of the other to comply
in any material respect with a covenant, agreement or
condition precedent herein;
(b) Termination of this Agreement under this paragraph 9
shall not release, or be construed as so releasing, either party
hereto from any liability or damage to the other party hereto
arising out of the breaching party's willful and material breach
of the warranties and representations made by it, or willful and
material failure in performance of any of its covenants,
agreements, duties or obligations arising hereunder, and the
obligations under paragraphs 4(g), 5(h) and 10 shall survive such
termination.
10. Expenses. All expenses in connection with this
Agreement and the transactions contemplated hereby, including
without limitation broker, financial advisor, legal and
accounting fees, incurred by United and United Subsidiaries
shall be borne by United , 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.
<Page 22>
13. Notices. Any notice or other communication provided
for herein or given hereunder to a party hereto shall be in
writing and shall be delivered in person or shall be mailed by
first class registered or certified mail, postage prepaid,
addressed as follows:
If to Norwest:
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Attention: Secretary
and to Norwest Financial, Inc.
206 8th Street
Des Moines, Iowa 50309
Attention: General Counsel
If to United:
The United Group, Inc.
Suite 203
5960 Fairview Road
Charlotte, North Carolina 28210
and to:
George E. Hollodick
Blanco Tackabery Combs & Matamoros, P.A.
P.O. Drawer 25008
Winston-Salem, North Carolina 27114
or to such other address with respect to a party as such party
shall notify the other in writing as above provided.
14. Complete Agreement. This Agreement and the Merger
Agreement contain the complete agreement between the parties
hereto with respect to the Merger and other transactions
contemplated hereby and supersede all prior agreements and
understandings between the parties hereto with respect thereto.
15. Captions. The captions contained in this Agreement are
for convenience of reference only and do not form a part of this
Agreement.
16. Waiver and Other Action. Either party hereto may, by a
signed writing, give any consent, take any action pursuant to
paragraph 9 hereof or otherwise, or waive any inaccuracies in the
representations and warranties by the other party and compliance
by the other party with any of the covenants and conditions
herein.
17. Amendment. At any time before the Time of Filing, the
parties hereto, by action taken by their respective Boards of
Directors or pursuant to authority delegated by their respective
Boards of Directors, may amend this Agreement; provided, however,
that no amendment after approval by the shareholders of United
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. Representations and Warranties. The representations
and warranties contained in this Agreement (i) apply only to
events occurring before the Merger or the termination of this
Agreement; and (ii) unless specifically waived in writing, shall
survive the Effective Date of Merger for a three year period
beginning on the Effective Date of the Merger. No representation
or warranty, except as set forth in paragraph 9(b), shall survive
the termination of this Agreement. Paragraph 10 shall survive
the Merger.
<Page 23>
20. Public Statements. Neither Norwest nor United will,
except as required by law or regulation (in which case, the
disclosing party will notify the other party at least 48 hours
prior to making such disclosure, unless in the reasonable
judgment of counsel for the disclosing party, immediate
disclosure or disclosure before the expiration of such 48 hour
period is required under applicable law), or with the prior
written consent of the other party, make any public disclosure or
permit any public disclosure to be made regarding this Agreement
or the Merger Agreement or the transactions contemplated hereby
or thereby. Provided, however that nothing herein shall prohibit
either party from making any disclosure which is a communication
directed to its employees or the employees of any of its
affiliates.
21. 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 THE UNITED GROUP, INC.
By: /s/ John E. Ganoe By: /s/ Bill G.
Beaver
Title: Executive Vice President Title:
President
<Page A-24>
Exhibit A
AGREEMENT AND PLAN OF MERGER
Between THE UNITED GROUP, INC.
a North Carolina corporation (the surviving corporation)
and
MERGER CO.
a North Carolina corporation (the merged corporation)
This Agreement and Plan of Merger dated as of October ____,
1996, between THE UNITED GROUP, INC., a North Carolina
corporation (hereinafter sometimes called "UNITED" and sometimes
called the "surviving corporation") and MERGER CO., a North
Carolina corporation ("Merger Co.")(said corporations being
hereinafter sometimes referred to as the "constituent
corporations"),
WHEREAS, Merger Co., a wholly-owned subsidiary of Norwest
Corporation, was incorporated by Articles of Incorporation filed
in the office of the Secretary of State of the State of North
Carolina____ on _______, 19__, and said corporation is now a
corporation subject to and governed by the provisions of the
North Carolina Business Corporation Act. 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, UNITED was incorporated by Articles of
Incorporation filed in the office of the Secretary of State of
the State of North Carolina on ________, 19__ and said
corporation is now a corporation subject to and governed by the
provisions of the North Carolina Business Corporation Act.
UNITED has authorized capital stock of 25,000,000 shares of
Common Stock, no par value per share ("UNITED Common Stock") of
which _____________ shares were outstanding and no shares were
held in the treasury as of ___________ , 19__; and
WHEREAS, Norwest Corporation and UNITED are parties to an
Agreement and Plan of Reorganization dated as of October ___ ,
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 UNITED, with UNITED continuing as the surviving
corporation, on the terms and conditions hereinafter set forth in
accordance
with the provisions of the North Carolina Business Corporation
Act, 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 UNITED pursuant to the laws of the State of North
Carolina, and do hereby agree upon, prescribe and set forth the
terms and conditions of the merger of Merger Co. with and into
UNITED, the mode of carrying said merger into effect, the manner
and basis of converting the shares of UNITED Common Stock (other
than shares of UNITED Common Stock held by United's wholly-owned
subsidiary, United Financial Services, Inc. ("UFS") 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:
<Page A-25>
FIRST: At the time of merger, Merger Co. shall be merged
with and into UNITED, 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 The United Group, Inc.
SECOND: The Articles of Incorporation of UNITED at the time
of merger shall be amended as set forth below and, as so amended,
shall be the Articles of Incorporation of the surviving
corporation until further amended according to law:
[Amend to change number of directors, etc.]
THIRD: The By-Laws of UNITED at the time of merger shall be
and remain the By-Laws of the surviving corporation until amended
according to the provisions of the Articles of Incorporation of
the surviving corporation or of said By-Laws.
FOURTH: The directors of Merger Co. at the time of merger
shall be and remain the directors of the surviving corporation
and shall hold office from the time of merger until their
respective successors are elected and qualify.
FIFTH: The officers of Merger Co. at the time of merger
shall be and remain the officers of the surviving corporation and
shall hold office from the time of merger until their respective
successors are elected or appointed and qualify.
SIXTH: The manner and basis of converting the shares of
UNITED Common Stock into cash or shares of Norwest Common Stock
shall be as follows:
1. A. Each of the shares of UNITED Common Stock
outstanding immediately prior to the time of merger (other
than shares owned by UFS and 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 UNITED Common Stock then
outstanding. The "Adjusted Norwest Shares" shall be a
number equal to $_______ divided by the Norwest Measurement
Price. The "Norwest Measurement Price" is defined as the
closing price of a share of Norwest Common Stock as reported
on the consolidated tape of the New York Stock Exchange on
the second day immediately preceding the Effective Date of
the Merger.
B. Each of the shares of UNITED Common Stock held by
UFS shall remain as issued and outstanding shares of UNITED
Common Stock following the merger and shall be unaffected by
the merger.
2. As soon as practicable after the merger becomes
effective, each holder, other than UFS, of a certificate for
shares of UNITED 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
(other than certificates held by UFS) which, immediately
prior to the time of merger, represented shares of UNITED
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 UNITED Common
Stock have been converted on the basis above set forth;
provided, however, until the holder of such certificate for
UNITED 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
<Page A-26>
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 UNITED 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 UNITED Common
Stock shall be converted will equal the number of shares of
Norwest Common Stock which the holders of shares of UNITED
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 ten (10) trading days immediately
preceding the meeting of shareholders held to vote on the
merger.
5. Each share of Merger Co. Common Stock issued and
outstanding at the time of merger shall be converted into
and exchanged for shares of the surviving corporation after
the time of merger.
SEVENTH: The merger provided for by this Agreement shall be
effective as follows:
1. The effective date of merger shall be the date on which
Articles of Merger (as described in subparagraph 1(b) of
this Article Seventh) shall be delivered to and filed by the
Secretary of State of the State of North Carolina; 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 UNITED in accordance with the
North Carolina Business Corporation Act; and
b. Articles of merger (with this Agreement attached
as part thereof) with respect to the merger, setting
forth the information required by the North Carolina
Business Corporation Act, shall be executed by the
President or a Vice President of Merger Co. and by the
Secretary or an Assistant Secretary of Merger Co., and
by the President or a Vice President of UNITED and by
the Secretary or an Assistant Secretary of UNITED, and
shall be filed in the office of the Secretary of State
of the State of North Carolina in accordance with the
North Carolina Business Corporation Act.
2. The merger shall become effective as of 11:59 p.m. (the
"time of merger") on the effective date of merger.
EIGHTH: At the time of merger:
1. The separate existence of Merger Co. shall cease, and
the corporate existence and identity of UNITED shall
continue as the surviving corporation.
2. The merger shall have the other effects prescribed by
Section 55-11-06 of the North Carolina Business Corporation
Act.
<Page A-27>
NINTH: The following provisions shall apply with respect to
the merger provided for by this Agreement:
1. The surviving corporation shall (i) file with the
Secretary of State of the State of North Carolina an
agreement that it may be served with process within or
without the State of North Carolina in the courts of the
State of North Carolina in any proceeding for the
enforcement of any obligation of Merger Co. and in any
proceeding for the enforcement of the rights of a dissenting
shareholder of Merger Co. against UNITED, and (ii) file with
said Secretary of State an agreement that it will promptly
pay to the dissenting shareholders of Merger Co. the amount,
if any, to which such dissenting shareholders will be
entitled under the provisions of the North Carolina Business
Corporation Act with respect to the rights of dissenting
shareholders.
2. The registered office of the surviving corporation in
the State of North Carolina shall be at _______________, and
the name of the registered agent of UNITED at such address
is ________________________.
3. If at any time the surviving corporation shall consider
or be advised that any further assignment or assurance in
law or other action is necessary or desirable to vest,
perfect or confirm in the surviving corporation the title to
any property or rights of Merger Co. acquired or to be
acquired as a result of the merger provided for herein, the
proper officers and directors of UNITED and Merger Co. may
execute and deliver such deeds, assignments and assurances
in law and take such other action as may be necessary or
proper to vest, perfect or confirm title to such property or
right in the surviving corporation and otherwise carry out
the purposes of this Agreement.
4. For the convenience of the parties and to facilitate
the filing of this Agreement, any number of counterparts
hereof may be executed and each such counterpart shall be
deemed to be an original instrument.
5. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in
accordance with the laws of the State of North Carolina.
6. This Agreement cannot be altered or amended except
pursuant to an instrument in writing signed by both of the
parties hereto.
7. At any time prior to the filing of Articles of Merger
with the Secretary of State of the State of North Carolina,
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.
<Page A-28>
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.
THE UNITED GROUP, INC.
By: _________________________________
Its: _________________________________
(Corporate Seal)
Attest:
__________________________
Secretary
MERGER CO.
By: ________________________________
Its: ________________________________
(Corporate Seal)
Attest:
___________________________
Secretary
<Page A-29>
AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This Amendment to Agreement and Plan of Reorganization
("Amendment") is entered into as of the 28th day of January, 1997
by and between The United Group Inc.("United") and Norwest
Corporation ("Norwest").
WHEREAS, United and Norwest entered into an Agreement and
Plan of Reorganization as of November 1, 1996 ("Agreement"); and
WHEREAS, United covenanted and agreed at paragraph 4(u) of
the Agreement that an agreement made and entered into on November
12, 1993 by and between Financial Insurance Management Group, a
Florida company, ("Financial Insurance") and United Financial
Services, Inc.("Insurance Services Contract") shall be terminated
at no financial impact to Norwest and no reduction in the equity
of United or any United Subsidiary; and
WHEREAS, United has informed Norwest that United and
Financial Insurance have agreed that the Insurance Services
Contract shall be terminated upon the payment by United to
Financial Insurance of $325,000 ("Termination Price");
WHEREAS, Norwest and United have agreed that, in
consideration for a reduction of the Adjusted Norwest Shares,
United shall pay the Termination Price to Financial Insurance
within five business days after the Effective Date of the Merger.
NOW, THEREFORE it is hereby agreed as follows:
1. The above recitals are incorporated herein by reference
and are a part of this Amendment.
2. The second sentence of paragraph 1(a) of the Agreement
is hereby deleted in its entirety and replaced with the following
sentence:
"The "Adjusted Norwest Shares" shall be a number equal
to Seventeen Million Eight Hundred and Five Thousand
(17,805,000) divided by the Norwest Measurement Price
("Exchange Ratio").
3. All capitalized terms in this Amendment that are used
in the Agreement have the same meanings as in the Agreement.
4. Except as amended hereby, the Agreement remains in full
force and effect.
Norwest Corporation The United Group,
Inc.
By: /s/ Stanley S. Stroup By: /s/ Bill G.
Beaver
Title: Executive Vice President Title: President
<Page B>
APPENDIX B
NORTH CAROLINA BUSINESS CORPORATION ACT
ARTICLE 13
<Page B-1>
APPENDIX B
Dessenters' Rights
Part 1. Right to Dissent and Obtain Payment for Shares
55-13-01 DEFINITIONS. - In this Article:
(1) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or
acquiring corporation by merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to
dissent from corporate action under G.S.55-13-02 and who
exercises that right when and in the manner required by G.S. 55-
13-20 through 55-13-28.
(3) "Fair value", with respect to a dissenter's shares,
means the value of the shares immediately before the effectuation
of the corporate action to which the dissenter objects excluding
any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of
the corporate action until the date of payment, at a rate that is
fair and equitable under all the circumstances, giving due
consideration to the rate currently paid by the corporation on
its principal bank loans, if any, but not less than the rate
provided by G.S. 24-1.
(5) "Record shareholder" means the person in whose name
shares are registered in the records of a corporation or the
beneficial owner of shares to the extent of the rights granted by
a nominee certificate on file with a corporation.
(6) "Beneficial shareholder" means the person who is a
beneficial owner of shares held in a voting trust or by a nominee
as the record shareholder.
(7) "Shareholder" means the record shareholder or the
beneficial shareholder.
55-13-02 RIGHT TO DISSENT. - (a) In addition to any rights
granted Article 9, a shareholder is entitled to dissent from, and
obtain payment of the fair value of his shares in the event of,
any of the following corporate actions:
(1) Consummation of a plan of merger to which the
corporation (other than a parent corporation in a merger under G.
S .55- 11 -04) is a party unless (i) approval by the shareholders
of that corporation is not required under G.S. 55-11-03(g) or
(ii) such shares are then redeemable by the corporation at a
price not greater than the cash to be received in exchange for
such shares;
(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired, unless such shares are then redeemable by the
corporation at a price not greater than the cash to be received
in exchange for such shares;
(3) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation other than
as permitted by G.S. 55-12-01, including a sale in dissolution,
but not including a sale pursuant to court order or a sale
pursuant to a plan by which all or substantially all of the net
proceeds of the sale will be distributed in cash to the
shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of a
dissenter's shares because it (i) alters or abolishes a
preferential right of the shares; (ii) creates, alters, or
abolishes a right in respect of redemption, including a provision
respecting a sinking fund for the redemption or repurchase, of
the shares; (iii) alters or abolishes a preemptive right of the
holder of the shares to acquire shares or other securities; (iv)
excludes or limits the right of the shares to vote on any matter,
or to cumulate votes; (v) reduces the number of shares owned by
the shareholder to a
<Page B-2>
fraction of a share if the fractional share so created is to be
acquired for cash under G.S.55-6-04; or (vi) changes the
corporation into a nonprofit corporation or cooperative
organization;
(5) Any corporate action taken pursuant to a shareholder
vote to the extent the articles of incorporation, bylaws, or a
resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment
for their shares.
(b) A shareholder entitled to dissent and obtain payment
for his shares under this Article may not challenge the corporate
action creating his entitlement, including without limitation a
merger solely or partly in exchange for cash or other property,
unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation. (Last amended by Ch. 645, L.
`91, eff. 10-1-91.)
55-13-03 DISSENT BY NOMINEES AND BENEFICIAL OWNERS. - (a) A
record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if he dissents with
respect to all shares beneficially owned by any one person and
notifies the corporation in writing of the name and address of
each person on whose behalf he asserts dissenters' rights. The
rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights
as to shares held on his behalf only if:
(1) He submits to the corporation the record shareholder's
written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is
the beneficial shareholder.
Part 2. Procedure for Exercise of Dissenters' Rights
55-13-20 NOTICE OF DISSENTERS' RIGHTS. - (a) If proposed
corporate action creating dissenters' rights under G.S. 55-13-02
is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to
assert dissenters' rights under this Article and be accompanied
by a copy of this Article.
(b) If corporate action creating dissenters' rights under
G.S. 55-13-02 is taken without a vote of shareholders, the
corporation shall no later than 10 days thereafter notify in
writing all shareholders entitled to assert dissenters' rights
that the action was taken and send them the dissenters' notice
described in G.S. 55-13-22.
(c) If a corporation fails to comply with the requirements
of this section, such failure shall not invalidate any corporate
action taken; but any shareholder may recover from the
corporation any damage which he suffered from such failure in a
civil action brought in his own name within three years after the
taking of the corporate action creating dissenters' rights under
G.S. 55-13-02 unless he voted for such corporate action.
55-13-21 NOTICE OF INTENT TO DEMAND PAYMENT. - (a) If
proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(1) Must give to the corporation, and the corporation must
actually receive, before the vote is taken written notice of his
intent to demand payment for his shares if the proposed action is
effectuated; and
(2) Must not vote his shares in favor of the proposed
action.
(b) A shareholder who does not satisfy the requirements of
subsection (a) is not entitled to payment for his shares under
this Article.
<Page B-3>
55-13-22 DISSENTERS' NOTICE. - (a) If proposed corporate
action creating dissenters' rights under G.S. 55-13-02 is
authorized at a shareholders' meeting, the corporation shall mail
by registered or certified mail, return receipt requested, a
written dissenters' notice to all shareholders who satisfied the
requirements of G.S. 55-13-21.
(b) The dissenters' notice must be sent no later than 10
days after the corporate action was taken, and must:
(1) State where the payment demand must be sent and where
and when certificates for certificated shares must be deposited-
(2) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment
demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than 30 nor more than
60 days after the date the subsection (a) notice is mailed- and
(5) Be accompanied by a copy of this Article.
55-13-23 DUTY TO DEMAND PAYMENT. - (a) A shareholder sent a
dissenters' notice described in G.S. 55-13-22 must demand payment
and deposit his share certificates in accordance with the terms
of the notice.
(b) The shareholder who demands payment and deposits his
share certificates under subsection (a) retains all other rights
of a shareholder until these rights are cancelled or modified by
the taking of the proposed corporate action.
(c) Shareholder who does not demand payment or deposit his
share certificates where required, each by the date set in the
dissenter's notice is not titled to payment for his shares under
this Article.
55-13-24 SHARE RESTRICTIONS. - (a) The corporation may
restrict the transfer of uncertificated shares from the date the
demand for their payment is received until the proposed corporate
action is taken or the restrictions released under G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as
to uncertificated shares retains all other rights of a
shareholder until these rights are cancelled or modified by the
taking of the proposed corporate action.
55-13-25 OFFER OF PAYMENT. - (a) As soon as the proposed
corporate action is taken, or upon receipt of a payment demand,
the corporation shall offer to pay each dissenter who complied
with G.S. 55-13-23 the amount the corporation estimates to be the
fair value of his shares, plus interest accrued to the date of
payment, and shall pay this amount to each dissenter who agrees
in writing to accept it in full satisfaction of his demand.
(b) The offer of payment must be accompanied by:
(1) The corporation's most recent available balance sheet
as of the end of a fiscal year ending not more than 16 months
before the date of offer of payment, an income statement for that
year, a statement of changes in shareholders' equity for that
year, and the latest available interim financial statements, if
any
(2) A statement of the corporation's estimate of the fair
value of the shares;
(3) An explanation of how the interest was calculated
(4) A statement of the dissenter's right to demand payment
under G.S. 55-13-28; and
(5) A copy of this Article.
<Page B-4>
55-13-26 FAILURE TO TAKE ACTION. - (a) If the corporation
does not take the proposed action within 60 days after the date
set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release
the transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing
transfer restrictions, the corporation takes the proposed action,
it must send a new dissenters' notice under G.S. 55-13-22 and
repeat the payment demand procedure.
55-13-27 [Reserved for future codification purposes.]
55-13-28 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH
CORPORATION'S OFFER OR FAILURE TO PERFORM. - (a) A dissenter may
notify the corporation in writing of his own estimate of the fair
value of his shares and amount of interest due, and demand
payment of his estimate or reject the corporation's offer under
G.S. 55-13-25 and demand payment of the fair value of his shares
and interest due, if:
(1) The dissenter believes that the amount offered under
G.S. 55-13-25 is less than the fair value of his shares or that
the interest due is incorrectly calculated:
(2) The corporation fails to make payment to a dissenter
who accepts the corporation's offer under G.S. 55-13-25 without
30 days after the dissenter's acceptance- or
(3) The corporation, having failed to take the proposed
action, does not return the deposited certificates or release the
transfer restrictions imposed on uncertified shares within 60
days after the date set for demanding payment.
(b) A dissenter waives his right to demand payment under
this section unless he notifies the corporation of his demand in
writing (i) under subdivision (a)(l) within 30 days after the
corporation offered payment for his shares or (ii) under
subdivisions (a)(2) and (a)(3) within 30 days after the
corporation has failed to perform timely. A dissenter who fails
to notify the corporation of his demand under subsection (a)
within such 30-day period shall be deemed to have withdrawn his
dissent and demand for payment.
Part 3. Judicial Appraisal of Shares
55-13-30 COURT ACTION. - (a) If a demand for payment under
G.S. 55-13-28 remains unsettled, the dissenter may commence a
proceeding within 60 days after the date of his payment demand
under G.S. 55-13-28 and petition the court to determine the fair
value of the shares and accrued interest. Upon service upon it
of the petition filed with the court, the corporation shall pay
to the dissenter the amount offered by the corporation under G.S.
55-13-25.
(al) If the dissenter does not commence the proceeding
within the 60-day period, the dissenter shall have an additional
30 days to either (i) accept in writing the amount offered by the
corporation under G.S. 55-13-25, upon which the corporation shall
pay such amount to the dissenter in full satisfaction of his
demand, or (ii) withdraw his demand for payment and resume the
status of a nondissenting shareholder. A dissenter who takes no
action within such 30-day period shall be deemed to have
withdrawn his dissent and demand for payment.
(b) [Reserved for future codification purposes.]
(c) The court shall have the discretion to make all
dissenters (whether or not residents of this State) whose demands
remain unsettled parties to the proceeding as in an action
against their shares and all parties must be served with a copy
of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
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(d) The jurisdiction of the court in which the proceeding
is commenced under subsection (b) is plenary and exclusive. The
court may appoint one or more persons as appraisers to receive
evidence and recommend decision on the question of fair value.
The appraisers have the powers described in the order appointing
them, or in any amendment to it. The parties are entitled to the
same discovery rights as parties in other civil proceedings.
However, in a proceeding by a dissenter in a public corporation,
there is not right to a trial by jury.
(e) Each dissenter made a party to the proceeding is
entitled to judgment for the amount, if any, by which the court
finds the fair value of this shares, plus interest, exceeds the
amount paid by the corporation.
55-13-31 COURT COSTS AND COUNSEL FEES. - (a) The court in an
appraisal proceeding commenced under G.S. 55-13-30 shall
determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court,
and shall assess the costs as it finds equitable.
(b) The court may also assess the fees and expenses of
counsel and experts for the respective parties, in amounts the
court finds equitable:
(1) Against the corporation and in favor of any or all
dissenters if the court finds the corporation did not
substantially comply with the requirements of G.S. 55-13-20
through 55-13-28- or
(2) Against either the corporation or a dissenter, in favor
of either or any other party, if the court finds that the party
against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this Article.
(c) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services should
not be assessed against the corporation, the court may award to
these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
