<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 1998
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
NORWEST CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6712 41-0449260
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
NORWEST CENTER
SIXTH AND MARQUETTE
MINNEAPOLIS, MINNESOTA 55479
(612) 667-1234
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------------
STANLEY S. STROUP
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
NORWEST CENTER
SIXTH AND MARQUETTE
MINNEAPOLIS, MINNESOTA 55479-1026
(612) 667-8858
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
EDWARD D. HERLIHY H. RODGIN COHEN GUY ROUNSAVILLE, JR.
WACHTELL, LIPTON, ROSEN & KATZ SULLIVAN & CROMWELL WELLS FARGO & COMPANY
51 WEST 52ND STREET 125 BROAD STREET 420 MONTGOMERY STREET
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10004 SAN FRANCISCO, CALIFORNIA 94163
(212) 403-1000 (212) 558-4000 (800) 411-4932
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BE REGISTERED REGISTERED (1) PER SHARE(2) PRICE REGISTRATION FEE(3)
<S> <C> <C> <C> <C>
Common Stock, $1- 2/3 par value (and
associated Preferred Stock Purchase
Rights)............................. 910,000,000 $29.63 $26,963,330,000 $7,954,174
</TABLE>
(1) Based upon an estimate of the maximum number of shares of common stock,
$5.00 par value (the "Wells Fargo Common Stock"), of Wells Fargo & Company
("Wells Fargo") which will each be exchanged for 10 shares of common stock,
$1- 2/3 par value (the "Norwest Common Stock"), of Norwest Corporation
("Norwest") pursuant to the Merger described herein.
(2) Calculated in accordance with Rule 457(f)(l) under the Securities Act based
on the aggregate market value on September 10, 1998 of the shares of Wells
Fargo Common Stock expected to be canceled in connection with the Merger and
computed by dividing (i) the product of (A) the average of the high and low
prices of Wells Fargo Common Stock as reported on the NYSE on September 10,
1998 ($296.25) and (B) 91,000,000, representing the maximum number of shares
of Wells Fargo Common Stock expected to be cancelled in connection with the
Merger, by (ii) 910,000,000, representing the maximum number of shares of
Norwest Common Stock to be issued in connection with the Merger.
(3) The registration fee of $7,954,174 was calculated pursuant to Rule 457(f)
under the Securities Act, as follows: .000295 multiplied by the proposed
maximum aggregate offering price.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
[LOGO]
[LOGO]
MERGER OF EQUALS PROPOSED--YOUR VOTE IS VERY IMPORTANT
The Boards of Directors of Norwest Corporation and Wells Fargo & Company have
agreed to combine Norwest and Wells Fargo. This proposed merger of equals will
create one of the strongest and most diversified financial institutions in the
nation. We believe the combined company will be a formidable competitor, with
great strengths in retail, commercial, real estate and mortgage banking, asset
management and consumer finance. We will have one of the nation's largest retail
financial services networks, spanning virtually the entire Midwest and Western
United States, and offering solutions for all the financial needs of more
customers than ever before. The new company our stockholders will own as a
result of this merger of equals will have assets of $186 billion, deposits of
$127 billion and stockholders' equity of $20 billion. Our operations will be in
9 of the 10 fastest growing states (ranked by population growth) in the nation.
We strongly believe that this merger will position our companies to flourish as
the financial services business evolves and consolidates.
In the merger, Wells Fargo will merge with and into a subsidiary of Norwest. We
will take advantage of one of the most venerable names in banking: as part of
the merger, Norwest will be renamed "Wells Fargo & Company." Each share of Wells
Fargo common stock that you hold will be converted in the merger into 10 shares
of common stock of the new Wells Fargo. Each share of Norwest common stock that
you hold will remain outstanding as a share of common stock of the new Wells
Fargo.
We can't complete the merger unless we obtain the necessary government approvals
and unless the stockholders of both our companies approve it. Each of us will
hold a special meeting of our stockholders to vote on this merger proposal. YOUR
VOTE IS VERY IMPORTANT. Whether or not you plan to attend your stockholder
meeting, please take the time to vote by completing and mailing the enclosed
proxy card to us. If you date and mail your proxy card without indicating how
you want to vote, your proxy will be counted as a vote FOR the merger. If you
don't return your card, or if you don't instruct your broker how to vote any
shares held for you in your broker's name, the effect will be a vote against
this merger.
The dates, times and places of the meetings are as follows:
<TABLE>
<CAPTION>
FOR NORWEST STOCKHOLDERS: FOR WELLS FARGO STOCKHOLDERS:
<S> <C>
Minneapolis Hilton & Towers 420 Montgomery Street
1001 Marquette Avenue San Francisco, California 94163
Minneapolis, Minnesota 55403
October 20, 1998, 10:00 a.m., local time October 20, 1998, 2:00 p.m., local time
</TABLE>
This Joint Proxy Statement-Prospectus gives you detailed information about the
merger we're proposing, and it includes our merger agreement as an appendix. You
can also obtain information about our companies from publicly available
documents we've filed with the Securities and Exchange Commission. We encourage
you to read this entire document carefully.
We enthusiastically support this compelling combination of two of the premier
franchises in financial services and join with the other members of our Boards
of Directors in recommending that you vote in favor of the merger.
<TABLE>
<S> <C>
[SIG] [SIG]
Richard M. Kovacevich Paul Hazen
Chairman and Chief Executive Officer Chairman and Chief Executive Officer
Norwest Corporation Wells Fargo & Company
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED UNDER
THIS JOINT PROXY STATEMENT-PROSPECTUS OR DETERMINED IF THIS JOINT PROXY
STATEMENT-PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES WE ARE OFFERING THROUGH THIS
DOCUMENT ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK
OR NON-BANK SUBSIDIARY OF EITHER OF OUR COMPANIES, AND THEY ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY
OTHER GOVERNMENTAL AGENCY.
JOINT PROXY STATEMENT-PROSPECTUS DATED SEPTEMBER 11, 1998
AND FIRST MAILED TO STOCKHOLDERS ON SEPTEMBER 14, 1998
<PAGE>
[LOGO]
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NORWEST CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 20, 1998
------------------------
TO THE STOCKHOLDERS
OF NORWEST CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Norwest
Corporation, a Delaware corporation ("Norwest"), will be held on Tuesday,
October 20, 1998, at 10:00 a.m. local time, at the Minneapolis Hilton Towers,
1001 Marquette Avenue, Minneapolis, Minnesota, for the following purposes:
1. To consider and vote upon a proposal to issue (the "Issuance") shares of
common stock, par value $1 2/3 per share, of Norwest ("Norwest Common
Stock"), pursuant to an Agreement and Plan of Merger, dated as of June 7,
1998, and amended and restated as of September 10, 1998 (the "Agreement"),
by and among Wells Fargo & Company, a Delaware corporation ("Wells Fargo"),
Norwest, and WFC Holdings Corporation, a Delaware corporation and a
wholly-owned subsidiary of Norwest ("Merger Sub"), pursuant to which, among
other things, Wells Fargo will merge with and into Merger Sub (the "Merger")
upon the terms and subject to the conditions set forth in the Agreement, as
more fully described in the enclosed Joint Proxy Statement-Prospectus.
2. To consider and vote upon a proposal to adopt amendments (the "Amendments")
to the Restated Certificate of Incorporation of Norwest, to become effective
in connection with the Merger, to (a) increase the number of authorized
shares of Norwest Common Stock from 2,000,000,000 to 4,000,000,000, (b)
increase the number of authorized shares of Norwest preferred stock, no par
value, from 5,000,000 to 20,000,000 and (c) change the name of Norwest to
"Wells Fargo & Company", each as more fully described in the enclosed Joint
Proxy Statement-Prospectus. Norwest does not intend to effect the Amendments
if the Merger is not consummated.
3. To transact such other business as may properly be brought before the
Special Meeting or any adjournments or postponements of the Special Meeting.
The close of business on September 9, 1998 has been fixed as the record date
(the "Record Date") for determining those stockholders entitled to vote at the
Special Meeting and any adjournments or postponements of the Special Meeting.
Accordingly, only stockholders of record on such date are entitled to notice of,
and to vote at, the Special Meeting and any adjournments or postponements of the
Special Meeting.
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<S> <C>
BY ORDER OF THE BOARD OF DIRECTORS
[SIG]
LAUREL A. HOLSCHUH
SECRETARY
</TABLE>
September 11, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY CARD.
THE BOARD OF DIRECTORS OF NORWEST UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR APPROVAL OF THE ISSUANCE AND THE ADOPTION OF THE AMENDMENTS.
<PAGE>
WELLS FARGO & COMPANY
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 20, 1998
TO THE STOCKHOLDERS OF
WELLS FARGO & COMPANY:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Wells Fargo &
Company, a Delaware corporation ("Wells Fargo"), will be held on Tuesday,
October 20, 1998, at 2:00 p.m., local time, at 420 Montgomery Street, San
Francisco, California, for the following purposes:
1. To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger, dated as of June 7, 1998, and amended and restated as of September
10, 1998 (the "Agreement"), by and among Wells Fargo, Norwest Corporation, a
Delaware corporation ("Norwest"), and WFC Holdings Corporation, a Delaware
corporation and a wholly-owned subsidiary of Norwest ("Merger Sub"),
pursuant to which, among other things, Wells Fargo will merge with and into
Merger Sub upon the terms and subject to the conditions set forth in the
Agreement, as more fully described in the enclosed Joint Proxy
Statement-Prospectus.
2. To transact such other business as may properly be brought before the
Special Meeting or any adjournments or postponements of the Special Meeting.
The close of business on September 9, 1998 has been fixed as the record date
(the "Record Date") for determining those stockholders entitled to vote at the
special meeting of Wells Fargo Stockholders and any adjournments or
postponements of the Special Meeting. Accordingly, only stockholders of record
on such date are entitled to notice of, and to vote at, the Special Meeting and
any adjournments or postponements of the Special Meeting. The holders of record
of Wells Fargo preferred stock on the Record Date are entitled to notice of, but
will not be entitled to vote at, the Special Meeting.
<TABLE>
<S> <C>
BY ORDER OF THE BOARD OF DIRECTORS
[SIG]
GUY ROUNSAVILLE, JR.
SECRETARY
</TABLE>
September 11, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY CARD.
THE BOARD OF DIRECTORS OF WELLS FARGO UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR ADOPTION OF THE AGREEMENT.
[LOGO]
<PAGE>
TO FIND ANY ONE OF THE PRINCIPAL SECTIONS IDENTIFIED BELOW, SIMPLY BEND THE
DOCUMENT SLIGHTLY TO EXPOSE THE BLACK TABS AND OPEN THE DOCUMENT TO THE TAB
WHICH CORRESPONDS TO THE TITLE OF THE SECTION YOU WISH TO READ. FOR YOUR
CONVENIENCE, WE HAVE INCLUDED AN INDEX OF FREQUENTLY USED CAPITALIZED TERMS IN
THIS JOINT PROXY STATEMENT-PROSPECTUS IN AN INDEX OF DEFINED TERMS, WHICH IS
PRINTED ON GOLD PAPER TOWARDS THE BACK OF THIS JOINT PROXY STATEMENT-PROSPECTUS.
TABLE OF CONTENTS
SUMMARY
SPECIAL MEETINGS
THE MERGER
BUSINESS AND MANAGEMENT
REGULATION AND SUPERVISION
CAPITAL STOCK
CERTAIN OTHER MATTERS
FINANCIAL INFORMATION
APPENDICES
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
SUMMARY............................................................................. 1
NORWEST SPECIAL MEETING............................................................. 14
General......................................................................... 14
Matters to be Considered........................................................ 14
Proxies......................................................................... 14
Solicitation of Proxies......................................................... 15
Record Date and Voting Rights................................................... 15
Recommendation of Norwest Board................................................. 17
WELLS FARGO SPECIAL MEETING......................................................... 18
General......................................................................... 18
Matters to be Considered........................................................ 18
Proxies......................................................................... 18
Solicitation of Proxies......................................................... 18
Record Date and Voting Rights................................................... 19
Recommendation of Wells Fargo Board............................................. 20
THE MERGER.......................................................................... 21
General......................................................................... 21
Background of the Merger........................................................ 21
Recommendation of the Norwest Board and Norwest's Reasons for the Merger........ 24
Recommendation of the Wells Fargo Board and Wells Fargo's Reasons for the
Merger.......................................................................... 26
Opinion of Norwest's Financial Advisor.......................................... 29
Opinions of Wells Fargo's Financial Advisors.................................... 34
The Merger...................................................................... 45
Conversion of Stock; Treatment of Options....................................... 45
Exchange of Certificates; Fractional Shares..................................... 46
Effective Time.................................................................. 47
Representations and Warranties.................................................. 47
Conduct of Business Pending the Merger and Other Agreements..................... 48
Conditions to Consummation of the Merger........................................ 51
Regulatory Approvals Required for the Merger.................................... 52
Material Federal Income Tax Consequences........................................ 54
Accounting Treatment............................................................ 55
Termination of the Merger Agreement............................................. 56
Extension, Waiver and Amendment of the Agreement................................ 56
Employee Benefits and Plans..................................................... 57
Stock Exchange Listing.......................................................... 57
Expenses........................................................................ 57
Dividends....................................................................... 57
Interests of Certain Persons in the Merger...................................... 58
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Norwest and Wells Fargo Option Agreements....................................... 60
Restrictions on Resales by Affiliates........................................... 65
Norwest and Wells Fargo Dividend Reinvestment Plans............................. 65
MANAGEMENT AND OPERATIONS AFTER THE MERGER.......................................... 66
PRICE RANGE OF COMMON STOCK AND DIVIDENDS........................................... 68
INFORMATION ABOUT NORWEST........................................................... 70
General......................................................................... 70
Recent Developments............................................................. 70
Management and Additional Information........................................... 70
INFORMATION ABOUT WELLS FARGO....................................................... 71
General......................................................................... 71
Recent Developments............................................................. 71
Management and Additional Information........................................... 71
REGULATION AND SUPERVISION.......................................................... 72
General......................................................................... 72
Capital Requirements............................................................ 72
Dividend Restrictions........................................................... 73
NORWEST CAPITAL STOCK AND COMPARISON OF STOCKHOLDER RIGHTS.......................... 75
Description of Norwest Capital Stock............................................ 75
Comparison of Rights of Norwest Stockholders and Wells Fargo Stockholders....... 85
AMENDMENTS TO THE NORWEST RESTATED CERTIFICATE OF
INCORPORATION................................................................... 87
DISSENTERS' APPRAISAL RIGHTS........................................................ 88
LEGAL MATTERS....................................................................... 88
EXPERTS............................................................................. 88
STOCKHOLDER PROPOSALS............................................................... 88
OTHER MATTERS....................................................................... 89
INDEPENDENT PUBLIC ACCOUNTANTS...................................................... 89
WHERE YOU CAN FIND MORE INFORMATION................................................. 90
FORWARD-LOOKING STATEMENTS.......................................................... 93
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION..................................................................... 94
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Appendix A Agreement and Plan of Merger............................................ A-1
Appendix B Norwest Stock Option.................................................... B-1
Appendix C Wells Fargo Stock Option................................................ C-1
Appendix D Opinion of Goldman, Sachs & Co. to the
Norwest Board of Directors.............................................. D-1
Appendix E Opinion of Goldman, Sachs & Co. to the
Wells Fargo Board of Directors.......................................... E-1
Appendix F Opinion of Credit Suisse First Boston Corporation to the
Wells Fargo Board of Directors.......................................... F-1
</TABLE>
<PAGE>
SUMMARY
THIS BRIEF SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THE JOINT PROXY
STATEMENT-PROSPECTUS. IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. WE URGE YOU TO CAREFULLY READ THE ENTIRE JOINT PROXY
STATEMENT-PROSPECTUS AND THE OTHER DOCUMENTS TO WHICH THIS DOCUMENT REFERS TO
FULLY UNDERSTAND THE MERGER. SEE "WHERE YOU CAN FIND MORE INFORMATION."
THE MERGER (PAGE 21)
WE'VE ATTACHED THE MERGER AGREEMENT TO THIS DOCUMENT AS APPENDIX A. PLEASE READ
THE MERGER AGREEMENT. IT IS THE LEGAL DOCUMENT THAT GOVERNS THE MERGER.
GENERAL
We propose a combination in which Wells Fargo will merge into a subsidiary of
Norwest. The name of Norwest will be changed from "Norwest Corporation" to
"Wells Fargo & Company." As part of these transactions, the combined company
will retain the Certificate of Incorporation and By-Laws of Norwest with several
changes that we will make in connection with the merger as discussed on page 2.
The combined company will continue to be incorporated in Delaware, and its
corporate headquarters will be in San Francisco, California. We expect to
complete the merger in the fourth quarter of 1998.
EXCHANGE OF SHARES (PAGE 46)
WELLS FARGO STOCKHOLDERS. Each of your shares of Wells Fargo common stock will
automatically become the right to receive from Norwest 10 shares of Norwest
common stock. The total number of shares you will have the right to receive will
therefore be equal to the number of shares of Wells Fargo common stock you own
multiplied by 10.
You will have to surrender your Wells Fargo common stock certificates to receive
new certificates representing common stock of the combined company. This will
not be necessary until you receive written instructions after we have completed
the merger.
In addition, each share of Wells Fargo preferred stock that is outstanding at
completion of the merger will become one share of preferred stock of Norwest
having the same terms.
NORWEST STOCKHOLDERS. Each of your shares of Norwest common stock will remain
outstanding as one share of common stock of the combined company. You don't need
to surrender your shares or exchange them for new ones.
WELLS FARGO STOCK OPTIONS (PAGE 45)
In the merger, each stock option to buy Wells Fargo common stock granted under
Wells Fargo's stock option plans that is outstanding immediately before
completing the merger will become an option to buy Norwest common stock. The
option will continue to be governed by the terms of the Wells Fargo stock option
plan under which it was granted. The number of shares of Norwest common stock
subject to each new stock option, as well as the exercise price of that stock
option, will be adjusted to reflect the exchange ratio in the merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Shares of Norwest and Wells Fargo common stock are listed on the New York Stock
Exchange. On June 5, 1998, the last trading day before we announced the merger,
Norwest common stock closed at $39.6875 per share and Wells Fargo common stock
closed at $362.0625 per share. On September 10, 1998, Norwest common stock
closed at $30.88 per share and Wells Fargo common stock closed at $300.50 per
share.
Based on the 10-for-one exchange ratio, the market value of the consideration
that Wells Fargo stockholders will receive in the merger for each share of Wells
Fargo common stock would be $396.88 based on Norwest's closing stock price on
June 5, 1998, and $308.80
1
<PAGE>
based on Norwest's closing stock price on September 10, 1998. Of course, the
market price of Norwest common stock will fluctuate prior to the merger, while
the exchange ratio is fixed. You should obtain current stock price quotations
for Norwest common stock and Wells Fargo common stock.
THE COMPANIES (PAGES 70 AND 71)
NORWEST CORPORATION
NORWEST CENTER
SIXTH AND MARQUETTE
MINNEAPOLIS, MINNESOTA 55479
(612) 667-1234
Norwest is a diversified financial solutions company organized under the laws of
Delaware in 1929 and registered under the Bank Holding Company Act. 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 June 30, 1998, our assets were $93.15 billion, our deposits were $56.8
billion and our stockholders' equity was $7.3 billion. Based on assets at June
30, 1998, Norwest was the 12th largest bank holding company in the United
States.
WELLS FARGO & COMPANY
420 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94163
(800) 411-4932
Wells Fargo is a bank holding company registered under the Bank Holding Company
Act of 1956, as amended, and incorporated in Delaware.
We provide a broad range of financial products and services through electronic
and traditional channels, and a full range of banking and financial services to
commercial, corporate, real estate and small business customers across the
nation including consumer finance, trade financing, letters of credit,
collection and various banking-related services.
At June 30, 1998, our assets were $93.20
billion, our deposits were $70.5 billion and our stockholders' equity was $13.0
billion. Based on assets as of June 30, 1998, we were the 11th largest bank
holding company in the United States.
THE STOCKHOLDERS' MEETINGS (PAGES 14 AND 18)
NORWEST STOCKHOLDERS. The Norwest meeting will be held on October 20, 1998 at
10:00 a.m., local time, at the Minneapolis Hilton & Towers, 1001 Marquette
Avenue, Minneapolis, Minnesota. At the Norwest meeting, you will be asked:
1. to approve the issuance of Norwest common stock under a merger agreement
that provides for the merger of Wells Fargo into a subsidiary of Norwest;
2. to adopt amendments to our company's Certificate of Incorporation to (a)
increase the authorized shares of Norwest common stock from 2,000,000,000 to
4,000,000,000, (b) increase the authorized shares of Norwest preferred stock
from 5,000,000 to 20,000,000 and (c) change the name of Norwest to "Wells
Fargo & Company"; and
3. to act on other matters that may be submitted to a vote at the meeting.
WELLS FARGO STOCKHOLDERS. The Wells Fargo meeting will be held on October 20,
1998 at 2:00 p.m., local time, at 420 Montgomery Street, San Francisco,
California. At the Wells Fargo meeting, you will be asked:
1. to adopt a merger agreement that provides for the merger of our company with
and into a subsidiary of Norwest; and
2. to act on other matters that may be submitted to a vote at the meeting.
2
<PAGE>
RECORD DATE; VOTE REQUIRED
(PAGES 15 AND 19)
NORWEST STOCKHOLDERS. You can vote at the meeting of Norwest stockholders if
you owned Norwest common stock at the close of business on September 9, 1998.
You can cast one vote for each share of Norwest common stock that you owned at
that time. To approve the issuance of Norwest common stock, the holders of a
majority of those shares voting at the meeting must vote in favor of doing so.
To adopt the amendments to our Certificate of Incorporation, the holders of a
majority of shares of Norwest common stock allowed to vote at the meeting must
vote in favor of doing so.
We will not effect the amendments unless the merger is completed.
You may vote your shares in person by attending the meeting or by mailing us
your proxy if you are unable or do not wish to attend. You can revoke your proxy
at any time before we take a vote at the meeting by sending a written notice
revoking the proxy or a later-dated proxy to the secretary of Norwest, or by
attending the meeting and voting in person.
WELLS FARGO STOCKHOLDERS. You can vote at the meeting of Wells Fargo
stockholders if you owned Wells Fargo common stock at the close of business on
September 9, 1998. You can cast one vote for each share of Wells Fargo common
stock you owned at that time. To adopt the merger agreement, the holders of a
majority of shares of Wells Fargo common stock allowed to vote at the meeting
must vote in favor of doing so.
You may vote your shares in person by attending the meeting or by mailing us
your proxy if you are unable or do not wish to attend. You can revoke your proxy
at any time before we take a vote at the meeting by sending a written notice
revoking the proxy or a later-dated proxy to the secretary of Wells Fargo, or by
attending the meeting and voting in person.
OUR REASONS FOR THE MERGER (PAGES 24 AND 26)
Our companies are proposing to merge because we believe that by combining them
we can create a stronger and more diversified company that will provide
significant benefits to our stockholders and customers alike. For instance, the
combination of our businesses should help us to reduce duplicate costs by about
$650 million annually, before taxes, within three years. Based on these expected
cost savings and on our estimates of our individual companies' earnings, we
believe that the merger will not affect Norwest's estimated 1999 earnings per
share and will increase its estimated 2000 earnings per share by 3.2% and its
estimated 2001 earnings per share by 7.4%. The foregoing estimates of the impact
of the merger on our earnings per share assume that our revenues will be
unaffected by the proposed merger. We anticipate, however, that the merger of
our companies will create certain revenue enhancement opportunities. For
example, we believe that up to $850 million of additional revenues could
potentially be realized from cross-selling opportunities. We also estimate that
an additional improvement in pre-tax earnings of about $400 million could
potentially result if Norwest's efficiency ratio were improved to the pre-merger
efficiency ratio of Wells Fargo. However, due to the contingent nature and
timing of these potential revenue enhancements and efficiency improvements, we
have not taken them into account in arriving at our estimates of the merger's
impact on future earnings per share.
We expect the merger to strengthen our position as a competitor in the financial
services business, which is rapidly changing and growing more competitive. Over
80% of our total deposits will be located in the 12 states where we expect to
rank 1, 2 or 3 in terms of total deposits. We expect to rank first among U.S.
banks in terms of total stores, including being the number one retail mortgage
network. We expect to rank first among U.S. banks in commercial real estate
3
<PAGE>
lending, insurance agency, agricultural lending, Internet banking and
supermarket branch banking.
We also expect to incur a merger and integration charge of $950 million, before
tax, as a result of combining our companies.
The discussion of our reasons for the merger includes forward-looking statements
about possible or assumed future results of our operations and the performance
of the combined company after the merger. For a discussion of factors that could
affect these future results, see "Forward-Looking Statements" on page 93.
MANAGEMENT AND OPERATIONS AFTER THE MERGER (PAGE 66)
The present managements of our companies will share the responsibility of
managing the combined company. The board of directors of the combined company
will initially be comprised of an equal number of Norwest and Wells Fargo
directors. The total number of directors of the combined company will not exceed
28 directors upon completion of the merger. The directors will include Paul
Hazen, Chairman and Chief Executive Officer of Wells Fargo, Rodney L. Jacobs,
President of Wells Fargo, Richard M. Kovacevich, Chairman and Chief Executive
Officer of Norwest, and Leslie S. Biller, President of Norwest.
Following the merger, Mr. Hazen will be Chairman and Mr. Kovacevich will be
President and Chief Executive Officer of our combined company. In addition, Mr.
Biller will serve as a senior executive officer of the combined company, Mr.
Jacobs will serve as Chief Financial Officer of the combined company, and
Messrs. Biller and Jacobs will together head a transition team in charge of
determining the organization and operations of the combined company following
the merger.
OUR RECOMMENDATIONS TO STOCKHOLDERS (PAGES 24 AND 26)
NORWEST STOCKHOLDERS. The Board of Directors of Norwest believes that the
merger is fair to you and in your best interests, and unanimously recommends
that you vote "FOR" the proposals to approve the issuance of Norwest common
stock in the merger and to adopt the amendments to the Norwest Certificate of
Incorporation.
WELLS FARGO STOCKHOLDERS. The Board of Directors of Wells Fargo believes that
the merger is fair to you and in your best interests, and unanimously recommends
that you vote "FOR" the proposal to adopt the merger agreement.
OPINIONS OF FINANCIAL ADVISORS (PAGES 29 AND 34)
NORWEST STOCKHOLDERS. Goldman, Sachs & Co. has delivered a written opinion to
the Norwest Board of Directors that, as of the date of this Joint Proxy
Statement-Prospectus, the exchange ratio is fair to the holders of Norwest
common stock from a financial point of view. We have attached this opinion to
this document as Appendix D. You should read it completely to understand the
assumptions made, matters considered and limitations of the review undertaken by
Goldman Sachs in providing this opinion.
WELLS FARGO STOCKHOLDERS. Each of Goldman Sachs and Credit Suisse First Boston
Corporation has delivered its written opinion to the Wells Fargo Board of
Directors that, as of the date of this Joint Proxy Statement-Prospectus, the
exchange ratio is fair to the holders of Wells Fargo common stock from a
financial point of view. We have attached these opinions to this document as
Appendices E and F, respectively. You should read them completely to understand
the assumptions made, matters considered and limitations of the review
undertaken by Goldman Sachs and Credit Suisse First Boston in providing their
opinions.
Goldman Sachs agreed to act as financial advisor to each of us, including
rendering
4
<PAGE>
fairness opinions, with the consent of each of us and each of our boards of
directors. Our mutual decisions that Goldman Sachs act as financial advisor to
us in the merger were based on its reputation, its extensive knowledge of our
respective businesses and its long-standing relationships with our companies. In
addition, the merger agreement was negotiated on a mutually consensual basis
and, while Goldman Sachs provided financial advice to each of us, Goldman Sachs
did not participate in the negotiation of the specific exchange ratio in the
merger, which was conducted directly by our managements. Accordingly, each of us
was satisfied, after consulting with legal counsel, that there were no ethical
or legal reasons why Goldman Sachs could not advise both companies in the
proposed transaction. If we complete the merger, Norwest will pay to Goldman
Sachs a total fee of $15 million and Wells Fargo will pay to Goldman Sachs a fee
that will depend, in part, on the value of the transaction as measured by the
prevailing price per share of Norwest common stock. Assuming a price per share
of Norwest common stock of $30.05, the total fee payable to Goldman Sachs by
Wells Fargo on completion of the merger would be $26,730,000. Additionally, if
we complete the merger, Wells Fargo will pay to Credit Suisse First Boston a
total fee of $10 million.
CONDITIONS TO COMPLETION OF THE MERGER (PAGE 51)
The completion of the merger depends on a number of conditions being met. These
include:
1. approval of the merger agreement by the Wells Fargo stockholders, and the
approval of the issuance of Norwest common stock in the merger and the
amendments to the Norwest Certificate of Incorporation by Norwest
stockholders;
2. approval of the merger by certain federal and state regulatory authorities;
3. receipt by each of us of legal opinions that, for United States federal
income tax purposes, Norwest, the merger subsidiary, Wells Fargo and the
stockholders of Wells Fargo who exchange their shares for shares of Norwest
common stock, will not recognize any gain or loss as a result of the merger,
except in connection with the payment of cash instead of fractional shares.
These opinions will be subject to various limitations and we recommend that
you read the fuller description of tax consequences provided in this
document beginning on page 54;
4. receipt by each of us of a letter from our respective independent
accountants that the merger will qualify for "pooling of interests"
accounting treatment;
5. approval by the New York Stock Exchange of the listing of the shares of
Norwest common stock and one of the classes of Norwest preferred stock to be
issued in the merger; and
6. the absence of any injunction or legal restraint blocking the merger, or of
any proceedings by a government body trying to block the merger.
A party to the merger agreement could choose to complete the merger even though
a condition has not been satisfied, as long as the law allows it to do so. We
can't be certain when, or if, the conditions to the merger will be satisfied or
waived, or that the merger will be completed.
TERMINATION OF THE AGREEMENT; EXPENSES (PAGES 56 AND 57)
We can agree at any time to terminate the merger agreement without completing
the merger. Also, either of us can decide, without the consent of the other, to
terminate the merger agreement if:
1. any government agency denies an approval we need to complete the merger, and
that denial has become final and nonappealable, or if any governmental
entity issues a final, non-appealable order blocking the merger;
2. the merger has not been completed by June 7, 1999, unless the failure to
complete the merger by that time is due
5
<PAGE>
to a violation of the merger agreement by the party that wants to terminate
the agreement; or
3. the other company breaches our agreement in a way that would entitle the
party seeking to terminate the agreement to not consummate the merger, and
the breaching party doesn't correct the breach promptly, as long as the
party seeking to terminate has not itself materially breached the agreement.
Whether or not the merger is completed, we will each pay our own fees and
expenses, except that we will evenly divide the costs and expenses that we've
incurred in printing and mailing this document and the fees that we've paid to
the Securities and Exchange Commission in connection with the merger.
WAIVER AND AMENDMENT (PAGE 56)
We may jointly amend the merger agreement, and each of us may waive our right to
require the other party to adhere to the terms and conditions of the merger
agreement. However, we may not do so after our stockholders approve the merger,
if the amendment or waiver reduces or changes the consideration that will be
received by Wells Fargo stockholders, unless they approve the amendment or
waiver.
ACCOUNTING TREATMENT (PAGE 55)
We expect the merger to qualify as a "pooling of interests." This means that,
for accounting and financial reporting purposes, we will treat our companies as
if they had always been one.
REGULATORY APPROVALS (PAGE 52)
We can't complete the merger unless it is approved by the Board of Governors of
the Federal Reserve System. Once the Federal Reserve Board approves the merger,
we have to wait anywhere from 15 to 30 days before we can complete the merger,
during which time the Department of Justice can challenge the merger. We expect
that we will need to sell a modest level of deposits and loans to get regulatory
approvals, but we do not believe that this will have any material negative
effect on the combined company.
In addition, the merger is subject to the approval of, or notice to, state and
other regulatory authorities.
We have filed all of the required applications or notices with the Federal
Reserve Board and these other regulatory authorities.
As of the date of this document, we haven't received all of the required
approvals. While we don't know of any reason that we would not be able to obtain
the necessary approvals in a timely manner, we can't be certain when or if we
will get them.
NORWEST AND WELLS FARGO STOCK
OPTION AGREEMENTS (PAGE 60 AND APPENDICES B AND C)
Each of Norwest and Wells Fargo, as an inducement to the other company to enter
into the merger agreement, entered into a stock option agreement granting the
other company an option to purchase shares of the granting company's common
stock under certain circumstances. We granted options to each other in order to
increase the likelihood that we would complete the merger. The options could
discourage other companies from trying or proposing to combine with either of us
before we complete the merger. The most shares that can be purchased if either
of the options is exercised is 19.9% of the outstanding shares of the granting
company's common stock. The purchase price under the option granted by Norwest
is $39.6875 per share and the purchase price under the option granted by Wells
Fargo is $362.0625 per share, which were the closing prices on June 5, 1998, the
last trading day before we signed the merger agreement. In addition to the
option to purchase common stock, under certain circumstances the company holding
the option, or the company holding shares purchased under the option, may
require the company that granted the option to repurchase the option (and/or any
shares purchased under the option). Either of us could instead choose to give up
our option
6
<PAGE>
to the granting company and receive a cash payment of $1.2 billion.
Neither of us can exercise our option unless certain events occur. These events
generally are business combinations or acquisition transactions relating to our
companies and certain related events, other than the merger we are proposing in
this document, such as a merger or the sale of a substantial amount of assets or
stock. We don't know of any event that has occurred as of the date of this
document that would allow either of us to exercise our option.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER THAT DIFFER FROM YOUR
INTERESTS (PAGE 58)
Some of our directors and officers have interests in the merger that differ
from, or are in addition to, their interests as stockholders in our companies.
These interests exist because of employment agreements that certain officers of
Wells Fargo have entered into with Norwest, and rights that the officers have
under some of the benefit plans maintained by Wells Fargo. These employment
agreements and plans will provide the officers with severance benefits if their
employment with the combined company is terminated after the merger. If
severance benefits were to be paid at the time of the merger, the amount payable
to the chief executive officer and the other four most highly compensated
executive officers of Wells Fargo would be approximately $27.3 million. Also, we
have agreed to work together to establish a retention and severance bonus
program that will treat employees of our companies in a similar fashion and will
help us retain key personnel for the benefit of the combined company.
Additional interests of some of our directors and executive officers are
described under "Management and Operations After the Merger."
The members of our Boards of Directors knew about these additional interests,
and considered them, when they approved the merger agreement and the merger.
APPRAISAL RIGHTS (PAGE 88)
Delaware law does not provide you with dissenters' appraisal rights in the
merger.
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES (PAGE 54)
WELLS FARGO STOCKHOLDERS. We expect that for United States federal income tax
purposes, your exchange of shares of Wells Fargo common stock for shares of
Norwest common stock generally will not cause you to recognize any gain or loss.
You will, however, have to recognize income or gain in connection with any cash
you receive instead of fractional shares.
THIS TAX TREATMENT MAY NOT APPLY TO EVERY WELLS FARGO STOCKHOLDER. DETERMINING
THE ACTUAL TAX CONSEQUENCES OF THE MERGER TO YOU MAY BE COMPLICATED. THEY WILL
DEPEND ON YOUR SPECIFIC SITUATION AND ON VARIABLES NOT WITHIN OUR CONTROL. YOU
SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX
CONSEQUENCES.
NORWEST STOCKHOLDERS. As your shares of Norwest common stock remain unchanged,
the merger will not cause you to recognize any gain or loss for purposes of the
United States federal income tax.
MATERIAL DIFFERENCES IN THE RIGHTS OF STOCKHOLDERS (PAGE 85)
The rights of Norwest stockholders are governed by Delaware law and Norwest's
Certificate of Incorporation and By-Laws. The rights of Wells Fargo stockholders
are currently governed by Delaware law and Wells Fargo's Certificate of
Incorporation and By-Laws. Upon our completing the merger, you will become
stockholders of the combined company, and your rights will be governed by
Delaware law and by the combined company's Certificate of Incorporation and
By-Laws. The combined company's Certificate of Incorporation and By-Laws will be
identical to Norwest's, except that we intend
to change Norwest's name to "Wells Fargo & Company," increase the number of
7
<PAGE>
shares that the combined company may issue and increase the maximum number of
directors that may serve on the combined company's board.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE (PAGE 93)
We have each made forward-looking statements in this document (and in documents
to which we refer you in this document) that are subject to risks and
uncertainties. These forward-looking statements include information about
possible or assumed future results of our operations or the performance of the
new company after the merger is completed. When we use any of the words
"believes," "expects," "anticipates," "estimates" or similar expressions, we are
making forward-looking statements. Many possible events or factors could affect
the future financial results and performance of each of our companies and the
new company after the merger and could cause those results or performance to
differ materially from those expressed in our forward-looking statements. These
possible events or factors include the following:
1. our actual cost savings resulting from the merger are less than we expected,
we are unable to realize those cost savings as soon as we expected or we
incur additional or unexpected costs;
2. our revenues after the merger are lower than expected;
3. competition among financial services companies increases;
4. we have more trouble integrating our businesses or our other acquired
businesses than we expected;
5. changes in the interest rate environment reduce our interest margins;
6. general economic conditions change or are worse than we expected;
7. legislative or regulatory changes adversely affect our business;
8. personal or commercial customers' bankruptcies increase;
9. technology-related changes, including "Year 2000" data systems compliance,
are harder to make or more expensive than we expected; and
10. changes occur in the securities markets.
8
<PAGE>
UNAUDITED COMPARATIVE PER COMMON SHARE DATA
The following table shows information about our income per common share,
dividends per share and book value per share, and similar information reflecting
the merger (which we refer to as "pro forma" information). In presenting the
comparative pro forma information for certain time periods, we assumed that we
had been merged throughout those periods.
We also assumed that we will treat our companies as if they had always been
combined for accounting and financial reporting purposes (a method known as
"pooling of interests" accounting). The information listed as "equivalent pro
forma" was obtained by multiplying the pro forma amounts by the exchange ratio
of 10. We present this information to reflect the fact that Wells Fargo
stockholders will receive ten shares of the combined company's common stock for
each share of Wells Fargo common stock exchanged in the merger. We expect that
we will incur merger and integration charges as a result of combining our
companies. We also anticipate that the merger will provide the new company with
financial benefits that include reduced operating expenses and opportunity to
earn more revenue. The pro forma information, while helpful in illustrating the
financial characteristics of the new company under one set of assumptions, does
not reflect these expenses or benefits and, accordingly, doesn't attempt to
predict or suggest future results. It also doesn't necessarily reflect what the
historical results of the combined company would have been had our companies
been combined.
The information in the following table is based on, and should be read together
with, the historical financial information that we've presented in our prior
Securities and Exchange Commission filings. We have incorporated this material
into this document by reference. See "Where You Can Find More Information" on
page 90.
9
<PAGE>
UNAUDITED COMPARATIVE PER COMMON SHARE DATA
OF NORWEST AND WELLS FARGO
<TABLE>
<CAPTION>
AS OF OR FOR THE YEARS ENDED
AS OF OR FOR THE DECEMBER 31,
SIX MONTHS ENDED -------------------------------
JUNE 30, 1998 1997 1996 1995
--------------------- --------- --------- ---------
<S> <C> <C> <C> <C>
NORWEST(1)
Income from continuing operations per common share
(basic):
Historical........................................... $ 0.98 $ 1.78 $ 1.55 $ 1.39
Pro forma............................................ 0.86 1.51 1.38 1.67
Income from continuing operations per common share
(diluted):
Historical........................................... $ 0.96 $ 1.75 $ 1.54 $ 1.36
Pro forma............................................ 0.85 1.49 1.36 1.63
Cash dividends declared per common share:
Historical........................................... $ 0.330 $ 0.615 $ 0.525 $ 0.450
Pro forma............................................ 0.330 0.615 0.525 0.450
Book value per common share:
Historical........................................... $ 9.42 $ 9.01
Pro forma(2)......................................... 11.83 11.92
WELLS FARGO(3)
Income from continuing operations per common share
(basic):
Historical........................................... $ 7.52 $ 12.77 $ 12.21 $ 20.37
Equivalent pro forma................................. 8.60 15.10 13.80 16.70
Income from continuing operations per common share
(diluted):
Historical........................................... $ 7.45 $ 12.64 $ 12.05 $ 20.06
Equivalent pro forma................................. 8.50 14.90 13.60 16.30
Cash dividends declared per common share:
Historical........................................... $ 2.60 $ 5.20 $ 5.20 $ 4.60
Equivalent pro forma................................. 3.30 6.15 5.25 4.50
Book value per common share:
Historical........................................... $ 148.96 $ 146.41
Equivalent pro forma(2).............................. 118.30 119.20
</TABLE>
- ------------------------
(1) Gives effect to all stock splits of Norwest common stock, including the
two-for-one split effected on October 10, 1997.
(2) Pro forma book values per common share at June 30, 1998 and December 31,
1997 are based on pro forma common equity of $19,068 million and $19,308
million, respectively, and pro forma common shares outstanding of 1,611.2
million and 1,620.1 million, respectively. Pro forma and equivalent pro
forma book values per common share at June 30, 1998 include the effect of an
estimated non-recurring Merger charge of $950 million ($625 million net of
income taxes).
(3) The equivalent pro forma amounts are computed by multiplying the related pro
forma amounts for Norwest by a factor of 10 to reflect the exchange ratio in
the merger.
10
<PAGE>
SELECTED FINANCIAL DATA
The following tables show summarized historical financial data for each of us
and also show similar pro forma information reflecting the merger. The pro forma
information reflects the "pooling of interests" method of accounting.
We expect that we will incur merger and integration charges as a result of
combining our companies. We also anticipate that the merger will provide the
combined company with financial benefits that include reduced operating expenses
and opportunity to earn more revenue. The pro forma information, while helpful
in illustrating the financial characteristics of the new company under one set
of assumptions, doesn't reflect these expenses or benefits and, accordingly,
doesn't attempt to predict or suggest future results. It also doesn't
necessarily reflect what the historical results of the new company would have
been had our companies been combined.
The information in the following tables is based on historical financial
information that we've presented in our prior SEC filings. You should read all
of the summary financial information we provide in the following tables in
connection with this historical financial information and with the more detailed
financial information we provide in this document, which you can find beginning
on page 94. This historical financial information has also been incorporated
into this document by reference. See "Where You Can Find More Information" on
page 90. Both Norwest's and Wells Fargo's audited historical financial
statements were audited by KPMG Peat Marwick LLP, independent certified public
accountants.
11
<PAGE>
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF NORWEST AND WELLS FARGO
NORWEST CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30 YEARS ENDED DECEMBER 31
-------------------- -----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993(1)
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA
Interest income................................ $ 3,569.1 3,268.9 6,697.4 6,318.3 5,717.3 4,393.7 3,946.3
Interest expense............................... 1,421.4 1,310.8 2,664.0 2,617.0 2,448.0 1,590.1 1,442.9
--------- --------- --------- --------- --------- --------- ---------
Net interest income............................ 2,147.7 1,958.1 4,033.4 3,701.3 3,269.3 2,803.6 2,503.4
Provision for credit losses.................... 263.9 231.8 524.7 394.7 312.4 164.9 158.2
Non-interest income............................ 1,760.5 1,441.0 2,962.3 2,564.6 1,848.2 1,638.3 1,585.0
Non-interest expenses.......................... 2,534.5 2,161.2 4,421.3 4,089.7 3,382.3 3,096.4 3,050.4
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes..................... 1,109.8 1,006.1 2,049.7 1,781.5 1,422.8 1,180.6 879.8
Income tax expense............................. 360.0 352.8 698.7 627.6 466.8 380.2 266.7
--------- --------- --------- --------- --------- --------- ---------
Net income..................................... $ 749.8 653.3 1,351.0 1,153.9 956.0 800.4 613.1
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
PER COMMON SHARE DATA
Net income:
Basic.......................................... $ 0.98 0.86 1.78 1.55 1.39 1.23 0.95
Diluted........................................ 0.96 0.85 1.75 1.54 1.36 1.20 0.93
Dividends declared............................. 0.330 0.300 0.6150 0.5250 0.4500 0.3825 0.3200
BALANCE SHEET DATA
At period end:
Total assets................................. $93,153.3 83,856.3 88,540.2 80,175.4 72,134.4 59,315.9 54,665.0
Long-term debt............................... 12,315.6 12,043.7 12,766.7 13,082.2 13,676.8 9,186.3 6,850.9
Total stockholders' equity................... 7,346.1 6,507.1 7,022.2 6,064.2 5,312.1 3,846.4 3,760.9
</TABLE>
- ------------------------------
(1) On January 14, 1994, Norwest acquired First United Bank Group, Inc., a $3.9
billion bank holding company headquartered in Albuquerque, New Mexico, 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.
WELLS FARGO & COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30 YEARS ENDED DECEMBER 31
-------------------- -----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA
Interest income................................ $ 3,361 3,490 6,904 6,523 4,085 3,765 3,761
Interest expense............................... 1,082 1,131 2,290 2,002 1,431 1,155 1,104
--------- --------- --------- --------- --------- --------- ---------
Net interest income............................ 2,279 2,359 4,614 4,521 2,654 2,610 2,657
Provision for credit losses.................... 350 245 615 105 -- 200 550
Non-interest income............................ 1,460 1,319 2,704 2,200 1,324 1,200 1,093
Non-interest expenses.......................... 2,189 2,363 4,549 4,637 2,201 2,156 2,162
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes..................... 1,200 1,070 2,154 1,979 1,777 1,454 1,038
Income tax expense............................. 548 502 999 908 745 613 426
--------- --------- --------- --------- --------- --------- ---------
Net income..................................... $ 652 568 1,155 1,071 1,032 841 612
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
PER COMMON SHARE DATA
Net income:
Basic.......................................... $ 7.52 6.12 12.77 12.21 20.37 14.78 10.10
Diluted........................................ 7.45 6.06 12.64 12.05 20.06 14.54 9.96
Dividends declared............................. 2.60 2.60 5.20 5.20 4.60 4.00 2.25
BALANCE SHEET DATA
At period end:
Total assets................................. $ 93,200 100,180 97,456 108,888 50,316 53,374 52,513
Long-term debt............................... 4,415 4,420 4,568 5,060 3,049 2,853 4,221
Guaranteed preferred beneficial interests in
subordinated debentures.................... 1,299 1,299 1,299 1,150 -- -- --
Total stockholders' equity................... 12,950 13,106 12,889 14,112 4,055 3,911 4,315
</TABLE>
12
<PAGE>
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA OF NORWEST AND WELLS FARGO
The following unaudited selected pro forma financial data combine Norwest's
historical results with Wells Fargo's historical results, in each case, as of or
for the six months ended June 30, 1998 and 1997 and as of or for the fiscal
years ended December 31, 1997, 1996 and 1995, giving effect to the merger as if
it had occurred on January 1, 1995.
See "Where You Can Find More Information" and "Unaudited Pro Forma Condensed
Combined Financial Information."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30 YEARS ENDED DECEMBER 31
------------------------ -------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA
Interest income............................... $ 6,930 6,759 13,601 12,841 9,802
Interest expense.............................. 2,503 2,442 4,954 4,618 3,879
----------- ----------- ----------- ----------- -----------
Net interest income........................... 4,427 4,317 8,647 8,223 5,923
Provision for credit losses................... 614 477 1,140 500 312
Non-interest income........................... 3,197 2,730 5,611 4,722 3,147
Non-interest expenses......................... 4,701 4,495 8,916 8,686 5,560
----------- ----------- ----------- ----------- -----------
Income before income taxes.................... 2,309 2,075 4,202 3,759 3,198
Income tax expense............................ 908 855 1,697 1,535 1,211
----------- ----------- ----------- ----------- -----------
Net income.................................... $ 1,401 1,220 2,505 2,224 1,987
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
PER COMMON SHARE DATA
Net income:
Basic......................................... $ 0.86 0.73 1.51 1.38 1.67
Diluted....................................... 0.85 0.72 1.49 1.36 1.63
Dividends declared (a)........................ 0.330 0.300 0.615 0.525 0.450
BALANCE SHEET DATA
At period end:
Total assets.................................. $ 186,246 183,939 185,894 188,971 122,368
Long-term debt................................ 16,731 16,464 17,335 18,142 16,726
Guaranteed preferred beneficial interests in
subordinated debentures..................... 1,299 1,299 1,299 1,150 --
Total stockholders' equity(b)................. 19,529 18,848 19,771 20,037 9,230
</TABLE>
- ------------------------
(a) Assumes no changes in cash dividends per share by Norwest.
(b) Pro forma stockholders' equity at June 30, 1998 includes the effect of an
estimated non-recurring merger charge of $950 million ($625 million net of
income taxes).
13
<PAGE>
NORWEST SPECIAL MEETING
GENERAL
This Joint Proxy Statement-Prospectus is first being mailed to the holders
("NORWEST STOCKHOLDERS") of the common stock, par value $1 2/3 per share
("NORWEST COMMON STOCK"), of Norwest Corporation, a Delaware corporation
("NORWEST"), on or about September 14, 1998, and is accompanied by the notice of
the Special Meeting of Norwest Stockholders (the "NORWEST SPECIAL MEETING") and
a form of proxy that is solicited by the Board of Directors of Norwest (the
"NORWEST BOARD") for use at the Norwest Special Meeting to be held on Tuesday,
October 20, 1998, at 10:00 a.m., local time, at the Minneapolis Hilton & Towers,
1001 Marquette Avenue, Minneapolis, Minnesota, and at any adjournments or
postponements thereof.
MATTERS TO BE CONSIDERED
The purpose of the Norwest Special Meeting is (i) to approve the issuance
(the "ISSUANCE") of shares of Norwest Common Stock upon the terms and subject to
the conditions of the Agreement (as defined below), and the transactions
contemplated thereby, including the merger (the "MERGER") of Wells Fargo &
Company, a Delaware corporation ("WELLS FARGO"), with and into WFC Holdings
Corporation, a Delaware corporation and a wholly-owned subsidiary of Norwest
("MERGER SUB"), and (ii) to adopt amendments (the "AMENDMENTS") of the Norwest
Restated Certificate of Incorporation, as amended (the "NORWEST CERTIFICATE"),
to (a) increase the authorized shares of Norwest Common Stock from 2,000,000,000
to 4,000,000,000, (b) increase the authorized shares of preferred stock, without
par value, of Norwest (the "NORWEST PREFERRED STOCK") from 5,000,000 to
20,000,000 and (c) change the name of Norwest to "Wells Fargo & Company," and
(iii) take action on such other matters as may properly be submitted to a vote
at the Norwest Special Meeting. Norwest Stockholders may also be asked to vote
upon a proposal to adjourn or postpone the Norwest Special Meeting, which
adjournment or postponement could be used for the purpose, among others, of
allowing additional time for the soliciting of additional votes to approve the
Agreement. The Agreement and Plan of Merger was first entered into by Norwest
and Wells Fargo as of June 7, 1998 and was amended and restated as of September
10, 1998 to structure the transaction so that Wells Fargo will merge with and
into Merger Sub. Unless the context otherwise requires, the "AGREEMENT" refers
to the Agreement and Plan of Merger, as amended and restated as of September 10,
1998.
PROXIES
The accompanying form of proxy is for use at the Norwest Special Meeting if
a Norwest Stockholder is unable or does not wish to attend in person. The proxy
may be revoked by a Norwest Stockholder at any time before it is exercised, by
submitting to the Secretary of Norwest written notice of revocation or a
properly executed proxy of a later date, or by attending the Norwest Special
Meeting and electing to vote in person. Written notices of revocation and other
communications with respect to the revocation of Norwest proxies should be
addressed to Norwest Corporation, Norwest Center, Sixth and Marquette,
Minneapolis, Minnesota 55479-1026, Attention: Corporate Secretary. All shares
represented by valid proxies received pursuant to this solicitation, and not
revoked before they are exercised, will be voted in the manner specified
therein. If no specification is made, the proxies will be voted in favor of the
matters to be voted upon at the Norwest Special Meeting, including approval of
the Issuance and adoption of the Amendments. The Norwest Board is unaware of any
other matters that may be presented for action at the Norwest Special Meeting.
If other matters do properly come before the Norwest Special Meeting, however,
it is intended that shares represented by proxies in the accompanying form will
be voted, or not voted, by the persons named in the proxies in their discretion,
provided that no proxy that is voted against approval of the Issuance or
adoption of the Amendments will be voted in favor of any adjournment or
postponement of the Norwest Special Meeting for the purpose of soliciting
additional proxies.
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VOTING BY PARTICIPANTS IN THE NORWEST CORPORATION SAVINGS INVESTMENT
PLAN. Participants in the Norwest Corporation Savings Investment Plan ("SIP")
may submit a voting instructions card to give voting instructions to Norwest
Bank Minnesota, N.A., as Trustee of SIP. Unallocated shares and shares for which
no voting instructions are received that are held under SIP will be voted by
Wilmington Trust Company, Wilmington, Delaware, in its discretion as the named
fiduciary for SIP. Participants in SIP who have questions about instructions to
vote shares under SIP should contact the SIP trustee as follows: Norwest Bank
Minnesota, N.A., 510 Marquette, 5th and Marquette, Minneapolis, Minnesota
55479-0035.
CONFIDENTIAL VOTING POLICY. It is Norwest's policy that all Norwest
Stockholder meeting proxies, ballots and voting records that identify the
particular vote of a Norwest Stockholder are confidential. The vote of any
Norwest Stockholder will not be disclosed to any third party before the final
vote count at the Norwest Special Meeting except (i) to meet legal requirements;
(ii) to assert claims for or defend claims against Norwest; (iii) to allow the
inspectors of election to certify the results of the Norwest Stockholder vote;
(iv) if a proxy solicitation in opposition to Norwest or the Norwest Board takes
place; or (v) to respond to Norwest Stockholders who have written comments on
proxy cards or if a Norwest Stockholder has requested disclosure. Inspectors of
election and those who count Norwest Stockholder votes may not be employees of
Norwest. Such inspectors may be employees of an affiliated Norwest bank if they
have been instructed to comply with this policy.
SOLICITATION OF PROXIES
The entire cost of soliciting proxies from the Norwest Stockholders will be
borne by Norwest, except that Wells Fargo and Norwest have each agreed to pay
one-half of the printing costs and filing fees relating to this Joint Proxy
Statement-Prospectus and related materials. In addition to the solicitation of
proxies by mail, Norwest will request banks, brokers and other record holders to
send proxies and proxy material to the beneficial owners of Norwest Common Stock
and secure their voting instructions, if necessary. Norwest will reimburse such
record holders for their reasonable expenses in so doing. Norwest has also made
arrangements with Georgeson & Company Inc. to assist it in soliciting proxies
from banks, brokers and nominees, and has agreed to pay $15,000 plus expenses
for such services. If necessary, Norwest may also use several of its regular
employees, who will not be specially compensated, to solicit proxies from
stockholders, either personally or by telephone, telegram, facsimile, letter or
special delivery letter.
RECORD DATE AND VOTING RIGHTS
In accordance with the provisions of the Delaware General Corporation Law
(the "DELAWARE LAW"), the By-Laws, as amended, of Norwest (the "NORWEST
BY-LAWS") and the rules of the New York Stock Exchange, Inc. (the "NYSE"),
September 9, 1998 has been fixed as the record date for determination of Norwest
Stockholders entitled to notice of and to vote at the Norwest Special Meeting
(the "NORWEST RECORD DATE"). Accordingly, only holders of shares of Norwest
Common Stock of record at the close of business on the Norwest Record Date will
be entitled to notice of and to vote at the Norwest Special Meeting. At the
close of business on the Norwest Record Date, there were 768,497,329 shares of
Norwest Common Stock held by approximately 51,250 holders of record. The
presence, in person or by proxy, of shares of Norwest Common Stock representing
a majority of such shares outstanding and entitled to vote on the Norwest Record
Date is necessary to constitute a quorum at the Norwest Special Meeting. Each
share of Norwest Common Stock outstanding on the Norwest Record Date entitles
its holder to one vote.
Shares of Norwest Common Stock present in person at the Norwest Special
Meeting but not voting, and shares of Norwest Common Stock for which Norwest has
received proxies but with respect to which holders of such shares have
abstained, will be counted as present at the Norwest Special Meeting for
purposes of determining the presence or absence of a quorum for the transaction
of business. Brokers who hold shares of Norwest Common Stock in nominee or
"street" name for customers who are the beneficial owners of such shares are
prohibited from giving a proxy to vote
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shares held for such customers with respect to the matters to be considered and
voted upon at the Norwest Special Meeting without specific instructions from
such customers. However, shares represented by proxies returned by a broker
holding such shares in "street" name will be counted for purposes of determining
whether a quorum exists, even if such shares are not voted in matters where
discretionary voting by the broker is not allowed ("BROKER NON-VOTES").
Under the rules of the NYSE and the Norwest Certificate, approval of the
Issuance requires the affirmative vote of a majority of the votes cast at the
Norwest Special Meeting, provided that at least 50% of the shares entitled to
vote on the Issuance are represented at the Norwest Special Meeting in person or
by proxy. The adoption of the Amendments requires the affirmative vote of the
holders of a majority of the outstanding shares of Norwest Common Stock entitled
to vote at the Norwest Special Meeting. Norwest does not intend to effect the
Amendments if the Merger is not consummated and the Amendments are contingent
upon such consummation.
BECAUSE ADOPTION OF THE AMENDMENTS REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF NORWEST COMMON STOCK ENTITLED
TO VOTE AT THE NORWEST SPECIAL MEETING, ABSTENTIONS AND BROKER NON-VOTES WILL
HAVE THE SAME EFFECT AS VOTES AGAINST SUCH ADOPTION. ACCORDINGLY, THE NORWEST
BOARD URGES NORWEST STOCKHOLDERS TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
As of the Norwest Record Date, directors and executive officers of Norwest
beneficially owned approximately 14,368,705 shares of Norwest Common Stock,
entitling them to exercise approximately 1.85% of the voting power of the
Norwest Common Stock entitled to vote at the Norwest Special Meeting. It is
currently expected that each such director and/or executive officer of Norwest
will vote the shares of Norwest Common Stock beneficially owned by him or her
for approval of the Issuance and for the adoption of the Amendments. Also, as of
the Norwest Record Date, directors and executive officers of Wells Fargo
beneficially owned 2,275 shares of Norwest Common Stock, or less than 1% of the
voting power of the Norwest Common Stock entitled to vote at the Norwest Special
Meeting. As of the Norwest Record Date, the banking, trust and investment
management subsidiaries of Norwest, as fiduciaries, custodians or agents, held a
total of 22,213,425 shares of Norwest Common Stock, representing approximately
2.9% of the shares entitled to vote at the Norwest Special Meeting. These
entities maintained sole or shared voting power with respect to 21,912,450 of
such shares of Norwest Common Stock, including shares of Norwest Common Stock
that are held under SIP and the Norwest Corporation Pension Plan (the "NORWEST
PENSION PLAN"). SIP participants are entitled to vote their allocated SIP shares
at the Norwest Special Meeting. Unallocated SIP shares and SIP shares for which
no voting instructions are received will be voted by Wilmington Trust Company in
its discretion as the named fiduciary for SIP. Wilmington Trust Company will
also vote all shares of Norwest Common Stock held under the Norwest Pension Plan
in its capacity as the named fiduciary for the Norwest Pension Plan. As of the
Norwest Record Date, the banking, trust and investment management subsidiaries
of Wells Fargo, as fiduciaries, custodians or agents, held a total of 4,881,166
shares of Norwest Common Stock, representing less than 1% of the shares entitled
to vote at the Norwest Special Meeting. These entities maintained sole or shared
voting power with respect to 1,252,071 of such shares of Norwest Common Stock.
Additional information with respect to beneficial ownership of Norwest
Common Stock by persons and entities owning more than 5% of such stock and more
detailed information with respect to beneficial ownership of Norwest Common
Stock by directors and executive officers of Norwest is incorporated by
reference to Norwest's Annual Report on Form 10-K for the year ended December
31, 1997. See "Where You Can Find More Information."
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RECOMMENDATION OF NORWEST BOARD
The Norwest Board has unanimously approved the Agreement and the
transactions contemplated thereby, including the Issuance and the Amendments.
The Norwest Board believes that the Agreement and the transactions contemplated
thereby, including the Issuance and the Amendments, are advisable and are in the
best interests of Norwest and Norwest Stockholders and recommends that the
Norwest Stockholders vote "FOR" the approval of the Issuance and the adoption of
the Amendments. See "The Merger--Recommendation of the Norwest Board and
Norwest's Reasons for the Merger."
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WELLS FARGO SPECIAL MEETING
GENERAL
This Joint Proxy Statement-Prospectus is first being mailed to the holders
("WELLS FARGO STOCKHOLDERS") of common stock, $5.00 par value per share, of
Wells Fargo (the "WELLS FARGO COMMON STOCK") on or about September 14, 1998, and
is accompanied by the notice of the Special Meeting of Wells Fargo Stockholders
and a form of proxy that is solicited by the Board of Directors of Wells Fargo
(the "WELLS FARGO BOARD") for use at the special meeting of Wells Fargo
Stockholders (the "WELLS FARGO SPECIAL MEETING" and, with the Norwest Special
Meeting, the "MEETINGS"), to be held on Tuesday, October 20, 1998, at 2:00 p.m.,
local time, at 420 Montgomery Street, San Francisco, California, and at any
adjournments or postponements thereof.
MATTERS TO BE CONSIDERED
The purpose of the Wells Fargo Special Meeting is to take action with
respect to the adoption of the Agreement and on such other matters as may be
properly submitted to a vote at the Wells Fargo Special Meeting. Wells Fargo
Stockholders may also be asked to vote upon a proposal to adjourn or postpone
the Wells Fargo Special Meeting, which adjournment or postponement could be used
for the purpose, among others, of allowing additional time for the soliciting of
additional votes to approve the Agreement.
PROXIES
The accompanying form of proxy is for use at the Wells Fargo Special Meeting
if a Wells Fargo Stockholder will be unable to attend in person. The proxy may
be revoked by the Wells Fargo Stockholder at any time before it is exercised by
submitting to the Secretary of Wells Fargo written notice of revocation, a
properly executed proxy of a later date or by attending the Wells Fargo Special
Meeting and electing to vote in person. Written notices of revocation and other
communications with respect to the revocation of Wells Fargo proxies should be
addressed to Wells Fargo & Company, 420 Montgomery Street, San Francisco,
California 94163, Attention: Corporate Secretary. All shares represented by
valid proxies received pursuant to this solicitation, and not revoked before
they are exercised, will be voted in the manner specified therein. If no
specification is made, the proxies will be voted in favor of adoption of the
Agreement. The Wells Fargo Board is unaware of any other matters that may be
presented for action at the Wells Fargo Special Meeting. If other matters do
properly come before the Wells Fargo Special Meeting, however, it is intended
that shares represented by proxies in the accompanying form will be voted, or
not voted, by the persons named in the proxies in their discretion, provided
that no proxy that is voted against adoption of the Agreement will be voted in
favor of any adjournment or postponement of the Wells Fargo Special Meeting for
the purpose of soliciting additional proxies.
SOLICITATION OF PROXIES
The entire cost of soliciting the proxies from the Wells Fargo Stockholders
will be borne by Wells Fargo; provided, however, that Norwest and Wells Fargo
have each agreed to pay one-half of the printing costs and filing fees relating
to this Joint Proxy Statement-Prospectus and related materials. In addition to
the solicitation of the proxies by mail, Wells Fargo will request banks, brokers
and other record holders to send proxies and proxy material to the beneficial
owners of the stock and secure their voting instructions, if necessary. Wells
Fargo will reimburse such record holders for their reasonable expenses in so
doing. Wells Fargo has also made arrangements with D.F. King & Co., Inc. to
assist it in soliciting proxies from banks, brokers and nominees and has agreed
to pay approximately $15,000 plus expenses for such services. If necessary,
Wells Fargo may also use several of its regular employees,
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who will not be specially compensated, to solicit proxies from Wells Fargo
Stockholders, either personally or by telephone, telegram, facsimile, letter or
special delivery letter.
RECORD DATE AND VOTING RIGHTS
In accordance with the provisions of the Delaware Law, the By-Laws, as
amended, of Wells Fargo (the "WELLS FARGO BY-LAWS") and the rules of the NYSE,
September 9, 1998 has been fixed as the record date for determination of Wells
Fargo Stockholders entitled to notice of and to vote at the Wells Fargo Special
Meeting (the "WELLS FARGO RECORD DATE"). Accordingly, only Wells Fargo
Stockholders of record at the close of business on the Wells Fargo Record Date
will be entitled to notice of and to vote at the Wells Fargo Special Meeting. At
the close of business on the Wells Fargo Record Date, there were 85,228,029
shares of Wells Fargo Common Stock outstanding held by approximately 43,671
holders of record. The presence, in person or by proxy, of shares of Wells Fargo
Common Stock representing a majority of such shares outstanding and entitled to
vote on the Wells Fargo Record Date is necessary to constitute a quorum at the
Wells Fargo Special Meeting. Each share of Wells Fargo Common Stock outstanding
on the Wells Fargo Record Date entitles its holder to one vote.
Shares of Wells Fargo Common Stock present in person at the Wells Fargo
Special Meeting but not voting, and shares of Wells Fargo Common Stock for which
Wells Fargo has received proxies but with respect to which holders of such
shares have abstained, will be counted as present at the Wells Fargo Special
Meeting for purposes of determining the presence or absence of a quorum for the
transaction of business. Brokers who hold shares of Wells Fargo Common Stock in
nominee or "street" name for customers who are the beneficial owners of such
shares are prohibited from giving a proxy to vote shares held for such customers
with respect to the matters to be considered and voted upon at the Wells Fargo
Special Meeting without specific instructions from such customers. However,
broker non-votes will be counted for purposes of determining whether a quorum
exists.
Under the Delaware Law and the Wells Fargo Restated Certificate of
Incorporation, as amended (the "WELLS FARGO CERTIFICATE"), adoption of the
Agreement requires the affirmative vote of the holders of a majority of the
outstanding shares of Wells Fargo Common Stock entitled to vote at the Wells
Fargo Special Meeting.
BECAUSE ADOPTION OF THE AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF WELLS FARGO COMMON STOCK
ENTITLED TO VOTE AT THE WELLS FARGO SPECIAL MEETING, ABSTENTIONS AND BROKER
NON-VOTES WILL HAVE THE SAME EFFECT AS VOTES AGAINST SUCH ADOPTION. ACCORDINGLY,
THE WELLS FARGO BOARD URGES WELLS FARGO STOCKHOLDERS TO COMPLETE, DATE AND SIGN
THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE.
As of the Wells Fargo Record Date, directors and executive officers of Wells
Fargo beneficially owned approximately 396,479 shares of Wells Fargo Common
Stock, entitling them to exercise less than 1% of the voting power of the Wells
Fargo Common Stock entitled to vote at the Wells Fargo Special Meeting. It is
currently expected that each such director and/or executive officer of Wells
Fargo will vote the shares of Wells Fargo Common Stock beneficially owned by him
or her for approval of the Agreement and the transactions contemplated thereby.
Also, as of the Wells Fargo Record Date, directors and executive officers of
Norwest beneficially owned approximately 200 shares of Wells Fargo Common Stock,
or less than 1% of the voting power of the Wells Fargo Common Stock entitled to
vote at the Wells Fargo Special Meeting. As of the Wells Fargo Record Date, the
banking, trust and investment management subsidiaries of Wells Fargo, as
fiduciaries, custodians or agents, held a total of 3,331,503 shares of Wells
Fargo Common Stock, representing approximately 4% of the shares entitled to vote
at the Wells Fargo Special Meeting. These entities maintained sole or shared
voting power with respect to none of such shares of Wells Fargo Common Stock. As
of the Wells Fargo Record Date, the banking, trust and investment management
subsidiaries of Norwest, as fiduciaries,
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custodians or agents, held a total of 48,760 shares of Wells Fargo Common Stock,
representing less than 1% of the shares entitled to vote at the Wells Fargo
Special Meeting. These entities maintained sole or shared voting power with
respect to all of such shares of Wells Fargo Common Stock.
Additional information with respect to beneficial ownership of Wells Fargo
Common Stock by persons and entities owning more than 5% of such stock and more
detailed information with respect to beneficial ownership of Wells Fargo Common
Stock by directors and executive officers of Wells Fargo is incorporated by
reference to Wells Fargo's Annual Report on Form 10-K for the year ended
December 31, 1997. See "Where You Can Find More Information."
RECOMMENDATION OF WELLS FARGO BOARD
The Wells Fargo Board has unanimously approved the Agreement and the
transactions contemplated thereby. The Wells Fargo Board believes that the
Agreement is in the best interests of Wells Fargo and Wells Fargo Stockholders
and recommends that the Wells Fargo Stockholders vote "FOR" the adoption of the
Agreement. See "The Merger--Recommendation of the Wells Fargo Board and Wells
Fargo's Reasons for the Merger."
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THE MERGER
THE FOLLOWING SUMMARY OF THE MATERIAL TERMS AND PROVISIONS OF THE AGREEMENT
AND THE OPTION AGREEMENTS (AS DEFINED HEREIN) IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE AGREEMENT AND THE OPTION AGREEMENTS. THE AGREEMENT IS ATTACHED
AS APPENDIX A AND THE OPTION AGREEMENTS ARE ATTACHED AS APPENDICES B AND C TO
THIS JOINT PROXY STATEMENT-PROSPECTUS, EACH OF WHICH IS INCORPORATED HEREIN BY
REFERENCE.
GENERAL
The Norwest Board and the Wells Fargo Board have each unanimously approved
the Agreement, which provides for combining Norwest and Wells Fargo through the
merger of Wells Fargo with and into Merger Sub at the effective time of the
Merger (the "EFFECTIVE TIME"), with Merger Sub as the surviving corporation in
the Merger (the "SURVIVING CORPORATION"). Pursuant to the Agreement and the
Amendments, promptly following the Effective Time, Norwest will change its name
to "Wells Fargo & Company." With certain limited exceptions described below,
each share of Norwest Common Stock issued and outstanding at the Effective Time
will remain issued and outstanding, each share of the common stock, par value
$1.00 per share, of Merger Sub (the "MERGER SUB COMMON STOCK") issued and
outstanding at the Effective Time will remain issued and outstanding as one
share of common stock of the Surviving Corporation, and each share of Wells
Fargo Common Stock issued and outstanding at the Effective Time will be
converted into the right to receive 10 (the "EXCHANGE RATIO") shares of Norwest
Common Stock, each together with a Series A Junior Participating Preferred Share
Purchase Right (the "NORWEST STOCKHOLDER RIGHTS") issued to the Norwest
Stockholders pursuant to the Rights Agreement (the "NORWEST RIGHTS AGREEMENT"),
as amended, dated as of November 22, 1988, between Norwest and Citibank, N.A.
(the "NORWEST RIGHTS AGENT"), unless the Norwest Rights Agreement expires and is
not renewed or replaced prior to the Effective Time. Each outstanding share of
Wells Fargo Adjustable Rate Cumulative Preferred Stock, Series B, par value
$5.00 per share ("WELLS FARGO SERIES B PREFERRED STOCK"), outstanding at the
Effective Time will be converted, automatically and without the requirement of
any exchange of any certificate representing such stock, into one share of
Norwest Adjustable Rate Cumulative Preferred Stock, Series B, without par value
("NORWEST SERIES B PREFERRED STOCK"), and each share of Wells Fargo
Fixed/Adjustable Rate Non-Cumulative Preferred Stock, Series H, par value $5.00
per share ("WELLS FARGO SERIES H PREFERRED STOCK" and, together with Wells Fargo
Series B Preferred Stock, "WELLS FARGO PREFERRED STOCK," and Wells Fargo
Preferred Stock and Wells Fargo Common Stock being referred to herein as the
"WELLS FARGO CAPITAL STOCK"), outstanding at the Effective Time will be
converted, automatically and without the requirement of any exchange of any
certificate representing such stock, into one share of Norwest Fixed/Adjustable
Rate Non-Cumulative Preferred Stock, Series H, without par value ("NORWEST
SERIES H PREFERRED STOCK" and, together with the Norwest Series B Preferred
Stock, the "NORWEST NEW PREFERRED STOCK"). While the common stock and preferred
stock to be issued to Wells Fargo Stockholders in the Merger and the common
stock and preferred stock to remain outstanding with Norwest Stockholders
following the Merger are referred to herein as Norwest Common Stock and Norwest
Preferred Stock, the combined company will be named "Wells Fargo & Company" and
Norwest Common Stock and Norwest Series B Preferred Stock are expected to trade
after the Effective Time under the Wells Fargo & Company name under the symbols
"WFC" and "WFCpb," respectively.
This section of the Joint Proxy Statement-Prospectus describes the material
aspects of the Merger, including the principal provisions of the Agreement and
the Option Agreements. Certain capitalized terms used herein without definition
shall have the meanings ascribed to them in the Agreement or the Option
Agreements.
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BACKGROUND OF THE MERGER
The senior management of Wells Fargo has regularly reviewed with the Wells
Fargo Board the possible benefits of strategic business combinations with other
financial institutions, including other large regional bank holding companies,
as part of its ongoing evaluation of available strategies to increase
stockholder value and strengthen Wells Fargo's franchise. Following the April
1998 announcements of merger agreements between NationsBank Corporation and
BankAmerica Corporation, and between BANC ONE CORPORATION and First Chicago NBD
Corporation, such a review was conducted at the regularly scheduled meeting of
the Wells Fargo Board on April 16, 1998.
In addition, in light of the trend toward consolidation in the financial
services industry, the senior management of Wells Fargo has from time to time
had informal discussions with the senior managements of other financial
institutions regarding potential business combination transactions. In this
regard, following the April 1998 announcements of merger agreements between
NationsBank Corporation and BankAmerica Corporation, and between BANC ONE
CORPORATION and First Chicago NBD Corporation, Paul Hazen, Wells Fargo's
Chairman and Chief Executive Officer, was contacted separately by the Chief
Executive Officers of several large regional bank holding companies, including
Norwest, regarding the possibility of a business combination transaction between
Wells Fargo and each of those companies. On April 22, 1998, Wells Fargo
requested Goldman, Sachs & Co. ("GOLDMAN SACHS") to advise it with respect to a
possible business combination. At a Wells Fargo Board meeting on April 29, 1998,
Wells Fargo's senior management discussed these contacts and proposals with the
Wells Fargo Board and provided an extensive review of Wells Fargo's strategic
options. Presentations were also made by Wells Fargo's legal advisors and
Goldman Sachs. After the Wells Fargo Board asked numerous questions of
management and the advisors, the Wells Fargo Board instructed management to
continue discussions, but emphasized that any transaction must adequately
address execution risk, particularly in the areas of systems integration and
Year 2000 compliance, and must not threaten revenue growth or risk significant
customer or employee loss. Accordingly, Wells Fargo's senior management
continued discussions with the senior managements of other bank holding
companies regarding the key provisions of a potential business combination,
including financial terms, transaction structure, management structure,
execution risk, systems compatibility, antitrust issues, and other potential
integration and transition issues. In addition, Wells Fargo management conducted
due diligence and analysis of the possible business combinations. KPMG Peat
Marwick LLP provided assistance to Wells Fargo management limited to the areas
of business combination accounting and certain systems compatibility issues.
On May 18 and 19, 1998, senior management of Wells Fargo again met with the
Wells Fargo Board and reviewed in detail the various strategic alternatives
potentially available to Wells Fargo, the benefits and risks of each, and the
status of discussions and the results of due diligence with various bank holding
companies that had approached Wells Fargo regarding a potential business
combination. Extensive presentations were also made by Wells Fargo's legal
advisors regarding the relevant legal considerations in considering the Wells
Fargo Board's strategic options and by Goldman Sachs. At this meeting, it was
the sense of the Wells Fargo Board that substantial questions existed with
respect to certain possible combinations, particularly with respect to
successfully integrating operations and systems and other execution risks and
the achievability of proposed synergies and other business projections. The
Wells Fargo Board also reviewed Wells Fargo's own prospects for continued growth
as a strong, independent company with an attractive western regional banking
franchise. After considering these matters, the Wells Fargo Board nonetheless
determined that senior management of Wells Fargo should continue discussions and
due diligence analysis in order to explore possible strategic opportunities,
including business combinations, that might be available to Wells Fargo.
Following consultation with senior management of Wells Fargo, Norwest requested
Goldman Sachs to advise it with respect to a possible business combination with
Wells Fargo on May 27, 1998.
In subsequent discussions between senior managements of Wells Fargo and
Norwest, Wells Fargo's management concluded that a transaction along the lines
being discussed between Wells
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Fargo and Norwest could be consistent with Wells Fargo's strategic business plan
and limit the integration and other risks that concerned the Wells Fargo Board.
Specifically, it was determined by the senior managements of Wells Fargo and
Norwest, among other things, that the terms of a merger between the two
companies could include an exchange ratio of 10 shares of Norwest Common Stock
for each share of Wells Fargo Common Stock, that the Board of Directors of the
combined company would be composed of equal numbers of Norwest and Wells Fargo
directors, that Mr. Hazen would be Chairman of the Board of Directors, and
Richard M. Kovacevich, Chairman of the Board of Directors and Chief Executive
Officer of Norwest, would be President and Chief Executive Officer of the
combined company, that the combined company would adopt the "Wells Fargo &
Company" name, and that the corporate headquarters of the combined company would
be in San Francisco. There was also agreement as to the method and pace of the
integration process. Norwest also indicated to Wells Fargo, and Wells Fargo
indicated to Norwest, that, in view of the importance of having reasonable
assurances of the completion of any proposed business combination between the
two companies, each company would require the grant of a 19.9% stock option as a
condition to entering into a definitive merger agreement. In view of these terms
and the conclusion of senior management of both organizations that the proposed
transaction would meet the strategic objectives of both organizations while
providing significant benefits to stockholders and other key constituencies with
low execution and integration risks, counsel for Norwest and Wells Fargo were
instructed to commence the preparation of documentation with respect to a
transaction, including an agreement and plan of merger and stock option
agreements. After discussions over a number of months, on June 4, 1998, Wells
Fargo requested Credit Suisse First Boston Corporation ("CSFB") to advise it
with respect to the proposed merger with Norwest.
On June 6, 1998, the Norwest Board held a special meeting at which senior
management of Norwest reviewed its discussions and negotiations with Wells Fargo
as well as the business, strategic and financial issues regarding a business
combination, and the results of its due diligence investigation of Wells Fargo.
Goldman Sachs presented certain financial information with respect to Wells
Fargo and the potential transaction to the Norwest Board, and rendered its oral
opinion (which was subsequently confirmed in writing) that, as of such date, the
Exchange Ratio pursuant to the Agreement was fair to Norwest Stockholders from a
financial point of view. Mr. Hazen was also invited to address the Norwest Board
and the members of the Norwest Board directed questions to Mr. Hazen regarding
Wells Fargo and the proposed combination. Also at this meeting, counsel reviewed
the terms of the agreement and plan of merger and of the stock option agreements
and informed the Norwest Board of the legal standards applicable to its decision
to approve such agreements and the transactions contemplated thereby. Counsel
also explained that, as a result of the anticipated number of outstanding shares
the combined company would have on a pro forma basis, and the proposed
composition of the Board of Directors of the combined company, the agreement and
plan of merger contemplated amendments to the Norwest Certificate and the
Norwest By-Laws to increase the number of authorized shares and the maximum size
of the Norwest Board, respectively. After further questions by and discussions
among the members of the Norwest Board, and consideration of the factors
described under "--Recommendation of the Norwest Board and Norwest's Reasons for
the Merger," the Norwest Board voted unanimously (with two directors not
present) to approve the Agreement and the transactions contemplated thereby, as
well as the Option Agreements and the Employment Agreements (as defined herein).
On June 7, 1998, the Wells Fargo Board held a special meeting at which
senior management of Wells Fargo, together with Wells Fargo's legal and
financial advisors, reviewed the terms of the Norwest proposal, the status of
the discussions with Norwest, the results of the company's due diligence
investigation of Norwest, and the consistency of a merger with Norwest and Wells
Fargo's business strategy. Senior management and Wells Fargo's legal and
financial advisors also reviewed with the Board the status of discussions with
other bank holding companies, including the results of the further due diligence
investigations with respect thereto, the nature of the proposals that they had
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submitted (each such proposal contemplating a tax-free stock-for-stock merger at
a fixed exchange ratio) and other relevant factors. Each of Goldman Sachs and
CSFB presented certain financial information with respect to the potential
transaction to, and answered questions of, the Wells Fargo Board, and rendered
its oral opinion (which, in each case, was subsequently confirmed in writing)
that, as of June 7, 1998, the Exchange Ratio pursuant to the Agreement was fair
to Wells Fargo Stockholders from a financial point of view. Also at this
meeting, counsel reviewed the terms of the agreement and plan of merger and of
the stock option agreements, informed the Wells Fargo Board of the legal
standards applicable to its decision to approve the agreement and plan of merger
and the stock option agreements and the transactions contemplated thereby, and
discussed the likelihood that the transaction would receive the requisite
regulatory approvals in a timely manner. Mr. Kovacevich was also invited to
address the Wells Fargo Board, and the members of the Wells Fargo Board directed
questions to Mr. Kovacevich regarding Norwest and the proposed combination.
After further questions by and discussions among the members of the Wells Fargo
Board, and consideration of the factors described under "--Recommendation of the
Wells Fargo Board and Wells Fargo's Reasons for the Merger," the Wells Fargo
Board concluded that, based on a variety of factors (including, among other
things, the strong strategic fit between Wells Fargo and Norwest, lower
execution risk when compared to the other combination proposals, the benefits of
a transaction accounted for as a pooling, and the fact that the Norwest proposal
represented superior value per share to the other proposals based on the
financial terms and current stock market valuations), a business combination
with Norwest represented a superior strategy compared to the other proposals or
to Wells Fargo not engaging in a strategic business combination at that time.
Accordingly, the Wells Fargo Board concluded that a business combination with
Norwest was in the best interests of Wells Fargo and its stockholders and voted
unanimously (with one director not present) to approve the Agreement and the
Option Agreements and the transactions contemplated thereby.
The Agreement and the Option Agreements were entered into by Norwest and
Wells Fargo on June 7, 1998.
RECOMMENDATION OF THE NORWEST BOARD AND NORWEST'S REASONS FOR THE MERGER
THE NORWEST BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, NORWEST AND THE NORWEST STOCKHOLDERS. ACCORDINGLY, THE NORWEST
BOARD HAS UNANIMOUSLY APPROVED THE AGREEMENT AND THE AMENDMENTS AND UNANIMOUSLY
RECOMMENDS THAT THE NORWEST STOCKHOLDERS VOTE FOR THE APPROVAL OF THE ISSUANCE
AND THE ADOPTION OF THE AMENDMENTS.
The Norwest Board believes that the consummation of the Merger presents a
unique opportunity to combine two of the nation's strongest franchises to create
a premier banking and financial services company with the capability to offer a
full range of financial products and services in many of the nation's most
attractive markets through a powerful distribution network.
In reaching its decision to approve the Agreement and the Option Agreements,
the Norwest Board consulted with Norwest management, as well as with its
financial and legal advisors, and considered a variety of factors, including the
following:
(i) The Norwest Board's familiarity with and review of Norwest's
business, operations, financial condition, earnings and prospects.
(ii) The consistency of the Merger with Norwest's long-term business
strategy.
(iii) The anticipated effectiveness of the Merger in allowing Norwest to
enhance stockholder returns by achieving efficiencies and pre-tax cost
savings of approximately $650 million annually within three years, and by
allowing Norwest to leverage its broad range of consumer, corporate and
commercial financial services in attractive, high-growth markets and through
a significantly enhanced physical and electronic distribution network.
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(iv) The business, operations, financial condition, earnings and
prospects of Wells Fargo. In making its determination, the Norwest Board
took into account the results of Norwest's due diligence review of Wells
Fargo's business.
(v) The scale, scope, strength and diversity of operations, product
lines and delivery systems that could be achieved by combining Norwest and
Wells Fargo, as illustrated by the fact that (based on information available
as of June 6, 1998) the combined company would be the seventh largest bank
holding company in the United States (by total assets) with 80% of its
deposits in 12 states where it is expected to be the number 1, 2 or 3 retail
bank (ranked by deposits), have the nation's leading financial services
distribution network with approximately 5,777 financial services stores
(including approximately 2,800 banking, 741 retail mortgage and 1,425
consumer finance stores serving approximately 9.1 million households, 2.1
million customers and 3.2 million customers, respectively) and approximately
6,500 ATMs, rank first nationally in mortgage origination and servicing and
in Internet banking, first nationally among banks in commercial real estate
lending, agricultural lending and insurance sales, second nationally in
small business lending (serving approximately 1.0 million customers) and
fourth nationally among banks in mutual fund assets (with approximately $46
billion under management), and would also be a significant competitor in
credit cards and merchant processing.
(vi) The complementary nature of the businesses of Norwest and Wells
Fargo and the anticipated improved stability of the combined company's
businesses and earnings in varying economic and market climates relative to
Norwest on a stand-alone basis made possible by the Merger, as a result of
greater geographic, asset and line-of-business diversification.
(vii) The anticipated financial impact of the proposed transaction on
the combined company's future financial performance, including, without
limitation, the expectation that the proposed transaction would, giving
effect to the pre-tax cost savings expected to be realized in the merger, be
accretive to Norwest's estimated earnings per share by 7.6% in 1999, 9.4% in
2000 and 12.8% in 2001 (on a cash basis) and neutral to Norwest's estimated
earnings per share in 1999 and accretive by 3.2% in 2000 and 7.4% in 2001
(on a United States Generally Accepted Accounting Principles ("GAAP")
basis). The foregoing is based on management earnings estimates for both
Norwest and Wells Fargo and excludes the expected non-recurring merger and
integration charge of $950 million before tax. The combined company's
ability to achieve such results depends on various factors, a number of
which will be beyond its control, including the regulatory environment,
economic conditions, unanticipated changes in business conditions and
inflation, and there can be no assurance in this regard. See
"Forward-Looking Statements."
(viii) The expectation that the Merger would result in synergies for the
combined company's operations, including an advantageous cost structure
relative to competitors and to Norwest on a stand-alone basis and the
potential for revenue enhancements. The Norwest Board noted that, although
no assurances could be given that any particular level of cost synergies
will be achieved, the managements of Norwest and Wells Fargo had identified
potential pre-tax cost savings of approximately $650 million annually which
could be fully achieved in the first three years following consummation of
the Merger. They also noted that, although no assurances could be given and
such possibilities were not taken into account in arriving at the estimates
of the Merger's impact on future earnings per share, up to $850 million of
additional revenues could potentially be realized from cross-selling
opportunities and that an additional improvement in pre-tax earnings of
about $400 million could potentially result if Norwest's efficiency ratio
could be improved to the pre-Merger efficiency ratio of Wells Fargo. For
further information and assumptions with respect to potential synergies in
the Merger, please see "Management and Operations After the Merger."
(ix) The belief of Norwest's senior management and the Norwest Board
that Norwest and Wells Fargo share a common vision with respect to
delivering financial performance and
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stockholder value and that their managements and employees possess
complementary skills and expertise, including the sales and service culture
and revenue generation orientation of Norwest and alternative banking
service delivery capability and expense efficiency of Wells Fargo.
(x) The Norwest Board's belief that, while no assurances could be given,
the business and financial advantages contemplated in connection with the
Merger were likely to be achieved within a reasonable timeframe. In
particular, the Norwest Board took into account management's view that the
similarity of systems architecture would facilitate systems integration.
(xi) The structure of the Merger and the terms of the Agreement and the
Option Agreements, which were reciprocal in nature, including the fact that
the fixed Exchange Ratio provides certainty as to the number of shares of
Norwest Common Stock to be issued in the Merger and that the Merger is
intended to qualify as a reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "CODE") and for "pooling of interests"
accounting treatment.
(xii) The proposed arrangements with members of management of Norwest
and Wells Fargo, including the fact that Mr. Hazen would serve as Chairman
of the Board of Directors of the combined company and Mr. Kovacevich would
serve as President and Chief Executive Officer of the combined company after
the Merger, and that the Board of Directors of the combined company would
include equal numbers of Norwest directors and Wells Fargo directors,
including Messrs. Hazen, Kovacevich, Biller and Jacobs, and that, in
connection with the Merger, Mr. Hazen and Mr. Jacobs would enter into the
Employment Agreements. See "--Interests of Certain Persons in the Merger"
and "Management and Operations After the Merger."
(xiii) The opinion of Goldman Sachs that, as of June 6, 1998, the
Exchange Ratio pursuant to the Agreement was fair from a financial point of
view to Norwest Stockholders. See "--Opinion of Norwest's Financial
Advisor."
(xiv) The likelihood that the Merger will be approved by the appropriate
regulatory authorities. See "--Regulatory Approvals Required for the
Merger." In this connection, the Norwest Board considered that a modest
amount of divestitures of certain assets and deposit liabilities could be
required by regulatory authorities in connection with the Merger.
The foregoing discussion of the information and factors considered by the
Norwest Board is not intended to be exhaustive but includes all material factors
considered by the Norwest Board. In reaching its determination to approve and
recommend the Merger, the Norwest Board did not assign any relative or specific
weights to the foregoing factors, and individual directors may have given
differing weights to different factors. The Norwest Board is unanimous in its
recommendation that Norwest Stockholders vote for approval and adoption of the
Agreement.
RECOMMENDATION OF THE WELLS FARGO BOARD AND WELLS FARGO'S REASONS FOR THE MERGER
THE WELLS FARGO BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, WELLS FARGO AND WELLS FARGO STOCKHOLDERS. ACCORDINGLY, THE WELLS
FARGO BOARD HAS UNANIMOUSLY (WITH ONE DIRECTOR NOT PRESENT) APPROVED THE
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT WELLS FARGO STOCKHOLDERS VOTE FOR THE
ADOPTION OF THE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE MERGER.
The Wells Fargo Board believes that the consummation of the Merger presents
a unique opportunity to combine two of the nation's strongest franchises to
create a premier banking and financial services company with the capability to
offer a full range of financial products and services in many of the nation's
most attractive markets through a powerful distribution network.
In reaching its decision to approve the Agreement and the Option Agreements,
the Wells Fargo Board consulted with Wells Fargo management, as well as with its
financial and legal advisors, and considered a number of factors, including the
following:
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(i) The Wells Fargo Board's familiarity with and review of Wells Fargo's
business, operations, financial condition, earnings and prospects.
(ii) The consistency of the Merger with Wells Fargo's long-term business
strategy.
(iii) The anticipated effectiveness of the Merger in allowing Wells
Fargo to enhance stockholder returns by achieving efficiencies and pre-tax
cost savings of approximately $650 million annually within three years and
by allowing Wells Fargo to leverage its strong banking franchise and brand,
its presence in attractive, high-growth markets and its success in achieving
efficiencies (through, among other things, innovative delivery and
distribution systems) through access to a broader range of customers and an
enhanced range of products, financial services and business lines.
(iv) The business, operations, financial condition, earnings and
prospects of Norwest. In making its determination, the Wells Fargo Board
took into account the results of Wells Fargo's due diligence review of
Norwest's business.
(v) The scale, scope, strength and diversity of operations, product
lines and delivery systems that could be achieved by combining Norwest and
Wells Fargo, as illustrated by the fact that (based on information available
as of June 7, 1998) the combined company would be the seventh largest bank
holding company in the United States (by total assets) with 80% of its
deposits in 12 states where it is expected to be the number 1, 2 or 3 retail
bank (ranked by deposits), have the nation's leading financial services
distribution network with approximately 5,777 financial services stores
(including approximately 2,800 banking, 741 retail mortgage and 1,425
consumer finance stores serving approximately 9.1 million households, 2.1
million customers and 3.2 million customers, respectively) and approximately
6,500 ATMs, rank first nationally in mortgage origination and servicing and
in Internet banking, first nationally among banks in commercial real estate
lending, agricultural lending and insurance sales, second nationally in
small business lending (serving approximately 1.0 million customers) and
fourth nationally among banks in mutual fund assets (with approximately $46
billion under management), and would also be a significant competitor in
credit cards and merchant processing;
(vi) The complementary nature of the businesses of Norwest and Wells
Fargo and the anticipated improved stability of the combined company's
businesses and earnings in varying economic and market climates relative to
Wells Fargo on a stand-alone basis made possible by the Merger, as a result
of greater geographic, asset and line-of-business diversification.
(vii) The anticipated financial impact of the proposed transaction on
the combined company's future financial performance, including, without
limitation, the accretive impact on Wells Fargo's earnings per share
beginning in 1999 (on a cash and GAAP basis) and, based on Norwest's recent
dividend rate, on dividends to Wells Fargo Stockholders. See "--Opinions of
Wells Fargo's Financial Advisors." The foregoing information with respect to
earnings per share is based both on management earnings estimates for both
Norwest and Wells Fargo and on consensus "street" earnings estimates
published by Institutional Brokers Estimate System ("IBES") for Wells Fargo.
(IBES is a data service that monitors and publishes compilations of earnings
estimates produced by selected research analysts regarding companies of
interest to institutional stockholders.) The combined company's ability to
achieve such results depends on various factors, a number of which will be
beyond its control, including the regulatory environment, economic
conditions, unanticipated changes in business conditions and inflation, and
there can be no assurance in this regard. See "Forward-Looking Statements."
(viii) The expectation that the Merger would result in synergies for the
combined company's operations, including expense savings and the potential
for revenue enhancements for the combined company's operations. The Wells
Fargo Board noted that, although no assurances could be given that any
particular level of cost synergies will be achieved, the managements of
Norwest and Wells Fargo had identified potential pre-tax cost savings of
approximately $650 million
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annually that could be fully achieved in the first three years following
consummation of the Merger. They also noted that, although no assurances
could be given and such possibilities were not taken into account in
arriving at the estimates of the Merger's impact on future earnings per
share, up to $850 million of additional revenues could potentially be
realized from cross-selling opportunities and that an additional improvement
in pre-tax earnings of about $400 million could potentially result if
Norwest's efficiency ratio could be improved to the pre-Merger efficiency
ratio of Wells Fargo. For further information and assumptions with respect
to potential synergies in the Merger, please see "Management and Operations
After the Merger."
(ix) The belief of Wells Fargo's senior management and the Wells Fargo
Board that Norwest and Wells Fargo share a common vision with respect to
delivering financial performance and stockholder value and that their
managements and employees possess complementary skills and expertise,
including the sales and service culture and revenue generation orientation
of Norwest and alternative banking service delivery capability and expense
efficiency of Wells Fargo.
(x) The Wells Fargo Board's belief that, while no assurances could be
given, the level of execution risk in connection with the Merger was
moderate and that the business and financial advantages contemplated in
connection with the Merger were likely to be achieved within a reasonable
timeframe. In particular, the Wells Fargo Board took into account
management's view that similarity of systems architecture would facilitate
systems integration.
(xi) The structure of the Merger and the terms of the Agreement and the
Option Agreements, which were reciprocal in nature, including the fact that,
based on the market prices of Norwest Common Stock and Wells Fargo Common
Stock on the trading date preceding execution of the Agreement, the fixed
Exchange Ratio provides Wells Fargo Stockholders with a premium to the
market price of Wells Fargo Common Stock and that the Merger is intended to
qualify as a reorganization under Section 368(a) of the Code and for
"pooling of interests" accounting treatment.
(xii) The proposed arrangements with members of management of Norwest
and Wells Fargo, including the fact that Mr. Hazen would serve as Chairman
of the Board of Directors of the combined company and Mr. Kovacevich would
serve as President and Chief Executive Officer of the combined company after
the Merger, that the Board of Directors of the combined company would
include equal numbers of Norwest directors and Wells Fargo directors,
including Messrs. Hazen, Kovacevich, Biller and Jacobs, and that, in
connection with the Merger, Mr. Hazen and Mr. Jacobs would enter into the
Employment Agreements. The Wells Fargo Board also considered the fact that
certain members of the Wells Fargo Board and the management of Wells Fargo
could be expected to receive certain benefits as a result of the Merger
pursuant to the Employment Agreements (in the case of Messrs. Hazen and
Jacobs) and under existing employment and compensation arrangements of Wells
Fargo. See "--Interests of Certain Persons in the Merger" and "Management
and Operations after the Merger."
(xiii) The fact that since the Merger would be accounted for as a
pooling of interests, the risk is eliminated that purchase accounting could
limit dividends from bank subsidiaries.
(xiv) The business combination proposals made by other bank holding
companies.
(xv) The opinions of Goldman Sachs and CSFB that, as of June 7, 1998,
the Exchange Ratio pursuant to the Agreement was fair from a financial point
of view to Wells Fargo Stockholders. See "--Opinions of Wells Fargo's
Financial Advisors."
(xvi) The likelihood that the Merger will be approved by the appropriate
regulatory authorities. See "--Regulatory Approvals Required for the
Merger." In this connection, the Wells Fargo Board considered that a modest
amount of divestitures of certain assets and deposit liabilities could be
required by regulatory authorities in connection with the Merger.
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The foregoing discussion of the information and factors considered by the
Wells Fargo Board is not intended to be exhaustive but includes all material
factors considered by the Wells Fargo Board. In reaching its determination to
approve and recommend the Merger, the Wells Fargo Board did not assign any
relative or specific weights to the foregoing factors, and individual directors
may have given differing weights to different factors. The Wells Fargo Board is
unanimous in its recommendation that Wells Fargo Stockholders vote for approval
and adoption of the Agreement. For a discussion of the interests of the
executive officers and directors of Wells Fargo in the Merger, see "--Interests
of Certain Persons in the Merger."
OPINION OF NORWEST'S FINANCIAL ADVISOR
Goldman Sachs delivered its oral opinion on June 6, 1998, to the Norwest
Board, confirmed by a written opinion dated as of June 7, 1998, that, as of the
date thereof, the Exchange Ratio pursuant to the Agreement was fair from a
financial point of view to the Norwest Stockholders. Goldman Sachs reconfirmed
its opinion dated as of June 7, 1998 by delivering a written opinion to the
Norwest Board dated the date hereof (the "NORWEST OPINION").
THE FULL TEXT OF THE NORWEST OPINION, WHICH SETS FORTH THE ASSUMPTIONS MADE,
PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS
ATTACHED AS APPENDIX D TO THIS JOINT PROXY STATEMENT-PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. GOLDMAN SACHS HAS CONSENTED TO THE REFERENCES
TO THE NORWEST OPINION IN THIS JOINT PROXY STATEMENT-PROSPECTUS AND TO THE
INCLUSION OF THE NORWEST OPINION AS APPENDIX D HERETO. IN GIVING SUCH CONSENT,
GOLDMAN SACHS DOES NOT THEREBY ADMIT THAT IT COMES WITHIN THE CATEGORY OF
PERSONS WHOSE CONSENT IS REQUIRED UNDER SECTION 7 OF THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") AND THE RULES AND REGULATIONS OF THE
SECURITIES EXCHANGE COMMISSION (THE "COMMISSION") THEREUNDER. THE NORWEST
OPINION WAS PROVIDED TO THE NORWEST BOARD FOR ITS INFORMATION, IS DIRECTED ONLY
TO THE FAIRNESS OF THE EXCHANGE RATIO FROM A FINANCIAL POINT OF VIEW TO THE
NORWEST STOCKHOLDERS AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY NORWEST
STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE NORWEST SPECIAL
MEETING WITH RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED THERETO. THE
DESCRIPTION OF THE NORWEST OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO APPENDIX D. NORWEST STOCKHOLDERS ARE URGED TO READ THE NORWEST
OPINION IN ITS ENTIRETY.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs provides
a full range of financial advisory and securities services and, in the course of
its normal trading activities, may from time to time effect transactions and
hold securities, including derivative securities, of Norwest or Wells Fargo for
its own account and for the accounts of customers. Goldman Sachs is familiar
with Norwest, having acted as its financial advisor in connection with, and
having participated in certain of the negotiations leading to, the Agreement.
Goldman Sachs has also provided certain investment banking services to Wells
Fargo, including having acted as financial advisor to Wells Fargo in the sale of
its stake in Wells Fargo Nikko Investment Advisors in August 1995 and as a joint
lead manager of its public offering of $200 million Subordinated Bank Notes due
2008 on April 15, 1998. Since June 1996, excluding any fees in connection with
the Merger, Wells Fargo and Norwest have paid approximately $419,000 and
$4,690,000, respectively, to Goldman Sachs for investment banking services.
In addition, Goldman Sachs has acted, with Norwest's consent, as Wells
Fargo's financial advisor and has and will receive fees therefor in connection
with the Merger and the Agreement, including rendering an opinion to Wells
Fargo's Board with respect to the fairness of the Exchange Ratio from a
financial point of view to Wells Fargo Stockholders.
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In connection with the Norwest Opinion, Goldman Sachs reviewed, among other
things, the Agreement; the Registration Statement on Form S-4, including this
Joint Proxy Statement-Prospectus relating to the Norwest and Wells Fargo Special
Meetings to be held in connection with the Merger; Annual Reports to
Stockholders and Annual Reports on Form 10-K of Norwest and Wells Fargo for the
five years ended December 31, 1997; the Registration Statement on Form S-4 dated
November 27, 1995, as amended, relating to the acquisition of First Interstate
Bancorp by Wells Fargo; certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of Norwest and Wells Fargo; certain other communications
from Norwest and Wells Fargo to their respective stockholders; and certain
internal financial analyses and forecasts of Norwest and Wells Fargo prepared by
their respective managements, including forecasts of certain cost savings and
revenue opportunities (the "SYNERGIES") expected to be achieved as a result of
the Merger. Goldman Sachs also held discussions with members of the senior
management of Norwest and Wells Fargo regarding the strategic rationale for, and
the potential benefits of, the Merger and the past and current business
operations, regulatory relationships, financial condition and future prospects
of their respective companies. In addition, Goldman Sachs reviewed the reported
price and trading activity for the Norwest Common Stock and the Wells Fargo
Common Stock, compared certain financial and stock market information for
Norwest and Wells Fargo with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the commercial banking industry specifically and
in other industries generally and performed such other studies and analyses as
it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and assumed such accuracy and
completeness for purposes of rendering the Norwest Opinion. In that regard,
Goldman Sachs assumed, with the Norwest Board's consent, that the financial
forecasts, including, without limitation, the Synergies and projections
regarding under-performing and non-performing assets and net charge-offs had
been reasonably prepared on a basis reflecting the best currently available
judgments and estimates of Norwest and Wells Fargo and that such forecasts will
be realized in the amounts and at the times contemplated thereby. Goldman Sachs
is not an expert in the evaluation of loan and lease portfolios for purposes of
assessing the adequacy of the allowances for losses with respect thereto and
assumed, with the Norwest Board's consent, that such allowances for each of
Norwest and Wells Fargo are in the aggregate adequate to cover all such losses.
In addition, Goldman Sachs did not review individual credit files nor did it
make an independent evaluation or appraisal of the assets and liabilities of
Norwest or Wells Fargo or any of their subsidiaries, and it had not been
furnished with any such evaluation or appraisal. Goldman Sachs also assumed,
with the Norwest Board's consent, that the Merger will be accounted for as a
pooling of interests under GAAP and that obtaining any necessary regulatory
approvals and third party consents for the Merger or otherwise will not have a
material adverse effect on Norwest or Wells Fargo or the combined company
pursuant to the Merger. In addition, the Norwest Opinion does not address the
relative merits of the Merger as compared to any alternative business
transaction that might be available to Norwest.
The advisory services and the Norwest Opinion have been provided for the
information and assistance of the Norwest Board in connection with its
consideration of the Merger contemplated by the Agreement and the Norwest
Opinion does not constitute a recommendation as to how any Norwest Stockholder
should vote with respect to the Merger.
The following is a brief summary of the material financial analyses
presented to the Norwest Board on June 6, 1998 by Goldman Sachs in connection
with rendering its opinion to the Norwest Board dated as of June 6, 1998.
EXCHANGE RATIO HISTORY. Goldman Sachs calculated the ratio of the average
market price per share of Wells Fargo Common Stock to the average price per
share of Norwest Common Stock over selected periods ending on June 5, 1998 (the
"BASE DATE") and dating back five years. The calculations showed that the
average ratio of stock prices was 9.15x on the Base Date; 9.40x for the ten
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days prior to the Base Date; 8.72x for the three months prior to the Base Date;
8.27x for the six months prior to the Base Date; 8.80x for the one year prior to
the Base Date; 11.47x for the three years prior to the Base Date; and 11.32x for
the five years prior to the Base Date.
PUBLIC MARKET COMPARISON. Goldman Sachs presented a public market
comparison of Wells Fargo and Norwest and a selected group of other publicly
traded banking organizations consisting of BankAmerica Corporation (pro forma
for the announced merger of NationsBank Corporation and BankAmerica
Corporation), Banc One Corporation (pro forma for the announced merger of Banc
One Corporation and First Chicago NBD Corporation), The Chase Manhattan
Corporation, First Union Corporation (pro forma for the acquisition of
CoreStates Financial Corp.), U.S. Bancorp, Fleet Financial Group, Inc., National
City Corp. and The Bank of New York Company, Inc. (the "SELECTED COMPANIES" ),
on the basis of various financial ratios and other indicators, including among
other things, market price to earnings per share ("EPS") based on GAAP ("GAAP
EPS") ratios, market price to cash EPS (GAAP EPS excluding amortization of
goodwill and certain other intangibles)("CASH EPS") ratios, historical price to
stated book value and tangible book value ratios and IBES projected 5-year EPS
growth rates. The Selected Companies were selected for comparison purposes
through a review of publicly traded banking institutions with similar operating
characteristics. In general, financial data presented was as of or annualized
based on the quarter ended March 31, 1998 and market data was as of June 5,
1998.
Goldman Sachs compared estimated ratios of price to GAAP EPS and price to
Cash EPS for Wells Fargo (based on both IBES estimates ("WELLS FARGO-IBES") and
management projections provided by Wells Fargo ( "WELLS FARGO-MANAGEMENT
PROJECTIONS")) and Norwest (based on management projections provided by Norwest
("NORWEST-MANAGEMENT PROJECTIONS") which were substantially similar to IBES
estimates) with the median ratios for the Selected Companies for 1998 and 1999.
The price to estimated GAAP EPS ratios for 1998 for Wells Fargo-IBES, Wells
Fargo-Management Projections and Norwest were 24.2x, 22.7x and 19.9x,
respectively. The median price to GAAP EPS ratio for the Selected Companies for
the same period was 16.2x. The price to estimated GAAP EPS ratios for 1999 for
Wells Fargo-IBES, Wells Fargo-Management Projections and Norwest were 21.1x,
18.3x and 17.6x, respectively. The median price to GAAP EPS ratio for the
Selected Companies for the same period was 14.6x. The price to estimated Cash
EPS ratios for 1998 for Wells Fargo-IBES, Wells Fargo-Management Projections and
Norwest were 17.7x, 17.1x and 17.9x, respectively. The median price to Cash EPS
ratio for the Selected Companies was 15.0x. The price to estimated Cash EPS
ratios for 1999 for Wells Fargo-IBES, Wells Fargo-Management Projections and
Norwest were 15.9x, 14.4x and 16.0x, respectively. The median price to Cash EPS
ratio for the Selected Companies for the same period was 13.2x. The price to
stated book value ratios for Wells Fargo and Norwest were 2.5x and 4.3x,
respectively. The median price to stated book value ratio for the Selected
Companies was 3.3x. The projected 5-year EPS growth estimate was 13.5% for Wells
Fargo based on IBES projections; 17.4% for Wells Fargo based on Wells
Fargo-Management Projections; and 13.0% for Norwest. The median projected 5-year
EPS growth estimate was 12.0% for the Selected Companies based on IBES
projections.
Additionally, Goldman Sachs presented a public market comparison of Wells
Fargo, Norwest and the Selected Companies, on the basis of, among other things,
return on average common equity ("ROACE") based on GAAP ("GAAP ROACE") and cash
ROACE (GAAP ROACE excluding goodwill and certain other intangibles)("CASH
ROACE"), net interest margin, efficiency ratios (excluding goodwill and other
intangibles) and non-interest income to revenues ratios.
The GAAP ROACE for Wells Fargo and Norwest was 10.1% and 21.2%,
respectively. The median GAAP ROACE for the Selected Companies was 17.8%. The
Cash ROACE for Wells Fargo and Norwest was 37.5% and 28.2%, respectively. The
median Cash ROACE for the Selected Companies was 23.2%. The net interest margin
for Wells Fargo and Norwest was 6.0% and 5.6%, respectively. The median net
interest margin for the Selected Companies was 4.0%. The efficiency ratios for
Wells Fargo and Norwest were 52% and 62%, respectively. The median efficiency
ratio for the Selected Companies was
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56%. The non-interest income to revenue ratios for Wells Fargo and Norwest were
39% and 43%, respectively. The median non-interest income to revenue ratio for
the Selected Companies was 42%.
DISCOUNTED CASH FLOW ANALYSIS--WELLS FARGO. Goldman Sachs performed a
discounted cash flow analysis for Wells Fargo using two sets of projections: (i)
IBES estimates and (ii) Wells Fargo-Management Projections. In performing its
analysis, Goldman Sachs used forward EPS terminal multiples ("TERMINAL VALUES")
ranging from 15x to 18x and a discount rate of 12%. Based on this methodology,
Goldman Sachs calculated implied share values for Wells Fargo Common Stock
ranging from $326 to $376 under the IBES scenario and from $392 to $451 under
the Wells Fargo-Management Projections scenario.
Goldman Sachs also performed a sensitivity analysis based on Wells
Fargo-Management Projections for cash earnings for the years 1997 through 2002
using a 12% discount rate, a Terminal Value of 16x and a variation of the annual
growth rate assumption of plus and minus 2.0%. Based on this analysis, the
implied share values ranged from $374 to $452.
DISCOUNTED CASH FLOW ANALYSIS--NORWEST. Goldman Sachs performed a
discounted cash flow analysis for Norwest using Terminal Values ranging from 15x
to 18x and a discount rate of 12%. Based on this methodology, Goldman Sachs
calculated implied share values for Norwest Common Stock ranging from $38 to
$44.
Goldman Sachs also performed a sensitivity analysis based on
Norwest-Management Projections for cash earnings for the years 1997 through 2002
using a 12% discount rate, a Terminal Value of 16x and a variation of the annual
growth rate assumption of plus and minus 2.0%. Based on this analysis, the
implied share values ranged from $36 to $44.
CONTRIBUTION ANALYSIS. Goldman Sachs analyzed certain historical and
estimated financial information for Wells Fargo and Norwest and the pro forma
combined entity resulting from the Merger. This analysis indicated that Holders
of Wells Fargo Common Stock and Norwest Common Stock would receive 53% and 47%,
respectively, of the outstanding common equity of the combined company. The
analysis further indicated that Wells Fargo and Norwest would contribute: 51%
and 49%, respectively, to the pro forma combined market capitalization (as of
June 5, 1998); 64% and 36%, respectively, to the pro forma combined stated
common equity; 46% and 54%, respectively, to the pro forma combined 1997 GAAP
Net Income ; 46% and 54%, respectively, to the pro forma combined 1998 IBES
estimated GAAP Net Income; 46% and 54%, respectively, to the pro forma combined
1999 IBES estimated GAAP Net Income; 47% and 53%, respectively, to the pro forma
combined Wells Fargo/ Norwest-Management Projected 1998 GAAP Net Income; 47% and
53%, respectively, to the pro forma combined Wells Fargo/Norwest-Management
Projected 1999 GAAP Net Income; 53% and 47%, respectively, to the pro forma
combined 1997 Cash Net Income; 52% and 48%, respectively, to the pro forma
combined 1998 IBES estimated Cash Net Income; 51% and 49%, respectively, to the
pro forma combined 1999 IBES estimated Cash Net Income; 52% and 48%,
respectively, to the pro forma combined Wells Fargo/Norwest-Management Projected
1998 Cash Net Income; and 52% and 48%, respectively, to the pro forma combined
Wells Fargo/Norwest-Management Projected 1999 Cash Net Income.
PRO FORMA COMBINED FINANCIAL ANALYSIS. Goldman Sachs presented pro forma
combined GAAP EPS and pro forma combined Cash EPS to analyze the pro forma
combined impact of the Merger. For Wells Fargo, the 1999 standalone and pro
forma combined GAAP EPS were $19.86 and $22.29, respectively, representing 12.2%
accretion; the 2000 standalone and pro forma combined GAAP EPS were $24.07 and
$25.90, respectively, representing 7.6% accretion; the 2001 standalone and pro
forma combined GAAP EPS were $27.75 and $30.29, respectively, representing 9.2%
accretion; the 1999 standalone and pro forma combined Cash EPS were $25.16 and
$25.62, respectively, representing 1.8% accretion; the 2000 standalone and pro
forma combined Cash EPS were $29.43 and $29.17, representing 0.9% dilution; and
the 2001 standalone and pro forma combined Cash EPS were $33.18 and $33.51,
respectively, representing 1.0% accretion.
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For Norwest, the 1999 standalone and pro forma combined GAAP EPS were each
$2.23, representing 0.0% accretion; the 2000 standalone and pro forma combined
GAAP EPS were $2.51 and $2.59, respectively, representing 3.2% accretion; the
2001 standalone and pro forma combined GAAP EPS were $2.82 and $3.03,
respectively, representing 7.4% accretion; the 1999 standalone and pro forma
combined Cash EPS were $2.38 and $2.56, respectively, representing 7.5%
accretion; the 2000 standalone and pro forma combined Cash EPS were $2.66 and
$2.92, representing 9.5% accretion; and the 2001 standalone and pro forma
combined Cash EPS were $2.97 and $3.35, respectively, representing 12.7%
accretion.
PRO FORMA DISCOUNTED CASH FLOW ANALYSIS. Goldman Sachs performed a pro
forma combined discounted cash flow analysis for Wells Fargo using Terminal
Values ranging from 15x to 18x and a discount rate of 12%. Based on this
methodology, Goldman Sachs calculated theoretical share values for Wells Fargo
Common Stock ranging from $420 to $494.
Goldman Sachs performed a pro forma combined discounted cash flow analysis
for Norwest using Terminal Values ranging from 15x to 18x and a discount rate of
12%. Based on this methodology, Goldman Sachs calculated theoretical share
values for Norwest Common Stock ranging from $46 to $54.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. Goldman
Sachs believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering the analyses taken as a
whole, would create an incomplete view of the process underlying the analyses
set forth in the Norwest Opinion. In addition, Goldman Sachs considered the
results of all such analyses and did not assign relative weights to any of the
analyses, so the ranges of valuations resulting from any particular analysis
described above should not be taken to be Goldman Sachs' view of the actual
value of Norwest or a combination of Norwest and Wells Fargo.
In performing its analyses, Goldman Sachs made numerous assumptions with
respect to industry performance, general business, economic and regulatory
conditions and other matters, many of which are beyond the control of Norwest or
Wells Fargo. The analyses performed by Goldman Sachs are not necessarily
indicative of actual values, trading values or actual future results which might
be achieved, all of which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of
Goldman Sachs' analysis of the fairness of the Exchange Ratio pursuant to the
Agreement to Norwest Stockholders from a financial point of view and were
provided to the Norwest Board. The analyses do not purport to be appraisals or
to reflect the prices at which a company might be sold. In addition, as
described above, the Norwest Opinion was one of many factors taken into
consideration by the Norwest Board in making its determination to approve the
Merger. Consequently, the analyses described above should not be viewed as
determinative of the Norwest Board's or Norwest management's opinion with
respect to the value of Norwest or a combination of Norwest and Wells Fargo, or
of whether the Norwest Board or Norwest management would have been willing to
agree to a different exchange ratio. Norwest placed no limits on the scope of
the analysis performed, or opinion expressed, by Goldman Sachs.
Norwest agreed to pay Goldman Sachs a fee of $2,500,000 in cash, which was
paid upon the delivery of the opinion dated June 6, 1998, and an additional fee
of $12,500,000 in cash upon consummation of the Merger. In addition, Norwest has
agreed to reimburse Goldman Sachs for its reasonable out-of-pocket expenses
incurred in connection with the services provided by it and to indemnify and
hold harmless Goldman Sachs and certain related parties, to the full extent
lawful, from and against certain liabilities and expenses, including certain
liabilities under the federal securities laws, incurred in connection with its
engagement.
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Norwest engaged Goldman Sachs to assist Norwest as financial advisor in
connection with investigating the expansion of Norwest's business through a
merger of Norwest and Wells Fargo. The engagement letter further stated that
Norwest had been informed that Goldman Sachs was acting as financial advisor to
Wells Fargo with respect to, among other things, the Merger (including
negotiating the financial terms and rendering a fairness opinion), and Norwest
consented to Goldman Sachs doing so. Norwest also waived any claim of a conflict
of interest with respect to the Wells Fargo engagement or any activities
undertaken by Goldman Sachs in connection therewith. Norwest also agreed that
Goldman Sachs would be under no obligation or duty to disclose to Norwest or any
other person any documents or other information received by Goldman Sachs from
or in respect of Wells Fargo. In that regard, Norwest agreed that neither
Goldman Sachs' representation of Wells Fargo nor any fees that Goldman Sachs may
be entitled to receive in connection therewith shall in any way affect Norwest's
obligations to Goldman Sachs under the engagement letter entered into by Norwest
and Goldman Sachs or create any liability to Norwest on the part of Goldman
Sachs of any kind whatsoever under the engagement letter entered into by Norwest
and Goldman Sachs or otherwise.
OPINIONS OF WELLS FARGO'S FINANCIAL ADVISORS
GOLDMAN SACHS
Goldman Sachs delivered its written opinion, dated as of June 7, 1998 to the
Wells Fargo Board that, as of the date thereof, the Exchange Ratio pursuant to
the Agreement was fair from a financial point of view to Wells Fargo
Stockholders. Goldman Sachs reconfirmed its opinion dated as of June 7, 1998 by
delivering a written opinion to the Wells Fargo Board dated the date hereof (the
"WELLS FARGO OPINION").
THE FULL TEXT OF THE WELLS FARGO OPINION WHICH SETS FORTH THE ASSUMPTIONS
MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW
UNDERTAKEN, IS ATTACHED AS APPENDIX E TO THIS JOINT PROXY STATEMENT-PROSPECTUS
AND IS INCORPORATED HEREIN BY REFERENCE. GOLDMAN SACHS HAS CONSENTED TO THE
REFERENCES TO THE WELLS FARGO OPINION IN THIS JOINT PROXY STATEMENT-PROSPECTUS
AND TO THE INCLUSION OF THE WELLS FARGO OPINION AS APPENDIX E HERETO. IN GIVING
SUCH CONSENT, GOLDMAN SACHS DOES NOT THEREBY ADMIT THAT IT COMES WITHIN THE
CATEGORY OF PERSONS WHOSE CONSENT IS REQUIRED UNDER SECTION 7 OF THE SECURITIES
ACT AND THE RULES AND REGULATIONS OF THE COMMISSION THEREUNDER. THE WELLS FARGO
OPINION WAS PROVIDED TO THE WELLS FARGO BOARD FOR ITS INFORMATION, IS DIRECTED
ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO FROM A FINANCIAL POINT OF VIEW TO
WELLS FARGO STOCKHOLDERS AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY WELLS
FARGO STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE WELLS FARGO
SPECIAL MEETING WITH RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED THERETO.
THE DESCRIPTION OF THE WELLS FARGO OPINION SET FORTH HEREIN IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO APPENDIX E. WELLS FARGO STOCKHOLDERS ARE URGED TO READ
THE WELLS FARGO OPINION IN ITS ENTIRETY.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs provides
a full range of financial advisory and securities services and, in the course of
its normal trading activities, may from time to time effect transactions and
hold securities, including derivative securities, of Norwest or Wells Fargo for
its own account and for the accounts of customers. Goldman Sachs is familiar
with Wells Fargo having provided certain investment banking services to Wells
Fargo, from time to time, including having acted as financial advisor to Wells
Fargo in the sale of its stake in Wells Fargo Nikko Investment Advisors in
August 1995, as joint lead manager of its public offering of $200
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million of Subordinated Bank Notes due 2008 on April 15, 1998 and as its
financial advisor in connection with, and having participated in certain of the
negotiations leading to, the Agreement. Goldman Sachs has provided, and may in
the future provide, certain investment banking services to Norwest. Since June,
1996, excluding any fees in connection with the Merger, Wells Fargo and Norwest
have paid approximately $419,000 and $4,690,000, respectively, to Goldman Sachs
for investment banking services.
In addition, Goldman Sachs has acted, with Wells Fargo's consent, as
Norwest's financial advisor and has and will receive fees therefor in connection
with the Merger and the Agreement, including rendering an opinion to Norwest's
Board with respect to the fairness of the Exchange Ratio from a financial point
of view to Norwest Stockholders.
In connection with the Wells Fargo Opinion, Goldman Sachs reviewed, among
other things, the Agreement; the Registration Statement on Form S-4, including
this Joint Proxy Statement-Prospectus relating to the Norwest and Wells Fargo
Special Meetings to be held in connection with the Merger; Annual Reports to
Stockholders and Annual Reports on Form 10-K of Norwest and Wells Fargo for the
five years ended December 31, 1997; the Registration Statement on Form S-4 dated
November 27, 1995, as amended, relating to the acquisition of First Interstate
Bancorp by Wells Fargo; certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of Norwest and Wells Fargo; certain other communications
from Norwest and Wells Fargo to their respective stockholders; and certain
internal financial analyses and forecasts of Norwest and Wells Fargo prepared by
their respective managements including forecasts of the Synergies expected to be
achieved as a result of the Merger. Goldman Sachs also held discussions with
members of the senior management of Norwest and Wells Fargo regarding the
strategic rationale for, and the potential benefits of, the Merger and the past
and current business operations, regulatory relationships, financial condition
and future prospects of their respective companies. In addition, Goldman Sachs
reviewed the reported price and trading activity for the Norwest Common Stock
and the Wells Fargo Common Stock, compared certain financial and stock market
information for Norwest and Wells Fargo with similar information for certain
other companies the securities of which are publicly traded, reviewed the
financial terms of certain recent business combinations in the commercial
banking industry specifically and in other industries generally and performed
such other studies and analyses as it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and assumed such accuracy and
completeness for purposes of rendering the Wells Fargo Opinion. In that regard,
Goldman Sachs assumed, with the Wells Fargo Board's consent, that the financial
forecasts, including, without limitation, the Synergies and projections
regarding under-performing and non-performing assets and net charge-offs had
been reasonably prepared on a basis reflecting the best currently available
judgments and estimates of Norwest and Wells Fargo and that such forecasts will
be realized in the amounts and at the times contemplated thereby. Goldman Sachs
is not an expert in the evaluation of loan and lease portfolios for purposes of
assessing the adequacy of the allowances for losses with respect thereto and
assumed, with the Wells Fargo Board's consent, that such allowances for each of
Norwest and Wells Fargo are in the aggregate adequate to cover all such losses.
In addition, Goldman Sachs did not review individual credit files nor did it
make an independent evaluation or appraisal of the assets and liabilities of
Norwest or Wells Fargo or any of their subsidiaries, and it had not been
furnished with any such evaluation or appraisal. Goldman Sachs also assumed,
with the Wells Fargo Board's consent, that the Merger will be accounted for as a
pooling of interests under GAAP and that obtaining any necessary regulatory
approvals and third party consents for the Merger or otherwise will not have a
material adverse effect on Norwest or Wells Fargo or the combined company
pursuant to the Merger. In addition, the Wells Fargo Opinion
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does not address the relative merits of the Merger as compared to any
alternative business transaction that might be available to Wells Fargo.
The advisory services and Wells Fargo Opinion have been provided for the
information and assistance of the Wells Fargo Board in connection with its
consideration of the Merger contemplated by the Agreement and the Wells Fargo
Opinion does not constitute a recommendation as to how any Wells Fargo
Stockholder should vote with respect to the Merger.
The following is a brief summary of the material financial analyses
presented to the Wells Fargo Board on June 7, 1998 by Goldman Sachs in
connection with rendering its opinion to Wells Fargo dated as of June 7, 1998.
EXCHANGE RATIO HISTORY. Goldman Sachs calculated the ratio of the average
market price per share of Wells Fargo Common Stock to the average price per
share of Norwest Common Stock over selected periods ending on the Base Date. The
calculations showed that the average ratio of stock prices was 9.15x on the Base
Date; 9.40x for the ten days prior to the Base Date; 8.72x for the three months
prior to the Base Date; 8.27x for the six months prior to the Base Date; and
8.80x for the one year prior to the Base Date.
PUBLIC MARKET COMPARISON. Goldman Sachs presented a public market
comparison of Wells Fargo and Norwest and a selected group of other publicly
traded banking organizations consisting of BankAmerica Corporation (pro forma
for the announced merger of NationsBank Corporation and BankAmerica
Corporation), Banc One Corporation (pro forma for the announced merger of Banc
One Corporation and First Chicago NBD Corporation), The Chase Manhattan
Corporation, First Union Corporation (pro forma for the acquisition of
CoreStates Financial Corp.), Fleet Financial Group, Inc., National City Corp.
and The Bank of New York Company, Inc. (the "WELLS FARGO SELECTED COMPANIES"),
on the basis of various financial ratios and other indicators, including among
other things, market price to EPS based on GAAP EPS ratios, market price to Cash
EPS ratios and historical price to stated book value. The Wells Fargo Selected
Companies were selected for comparison purposes through a review of publicly
traded banking institutions with similar operating characteristics. In general,
financial data presented was as of or annualized based on the quarter ended
March 31, 1998 and market data was as of June 5, 1998.
Goldman Sachs compared estimated ratios of price to GAAP EPS and price to
Cash EPS for Wells Fargo (based on both Wells Fargo-IBES and Wells
Fargo-Management Projections) and Norwest (based on Norwest-Management
Projections which were substantially similar to IBES estimates) with the median
ratios for the Wells Fargo Selected Companies for 1998 and 1999. The price to
estimated GAAP EPS ratios for 1998 for Wells Fargo-IBES, Wells Fargo-Management
Projections and Norwest were 24.2x, 22.7x and 19.9x, respectively. The median
price to GAAP EPS ratio for the Wells Fargo Selected Companies for the same
period was 16.2x. The price to estimated GAAP EPS ratios for 1999 for Wells
Fargo-IBES, Wells Fargo-Management Projections and Norwest were 21.1x, 18.3x and
17.6x, respectively. The median price to GAAP EPS ratio for the Wells Fargo
Selected Companies for the same period was 14.6x. The price to estimated Cash
EPS ratios for 1998 for Wells Fargo-IBES, Wells Fargo-Management Projections and
Norwest were 17.7x, 17.1x and 17.9x, respectively. The median price to Cash EPS
ratio for the Wells Fargo Selected Companies was 15.0x. The price to estimated
Cash EPS ratios for 1999 for Wells Fargo-IBES, Wells Fargo-Management
Projections and Norwest were 15.9x, 14.4x and 16.0x, respectively. The median
price to Cash EPS ratio for the Wells Fargo Selected Companies for the same
period was 13.2x. The price to stated book value ratios for Wells Fargo and
Norwest were 2.5x and 4.3x, respectively. The median price to stated book value
ratio for the Wells Fargo Selected Companies was 3.3x. The projected 5-year EPS
growth estimate was 13.5% for Wells Fargo based on IBES projections; 17.4% for
Wells Fargo based on Management Projections;
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and 13.0% for Norwest. The median projected 5-year EPS growth estimate was 12.0%
for the Wells Fargo Selected Companies based on IBES projections.
Additionally, Goldman Sachs presented a public market comparison of Wells
Fargo, Norwest and the Wells Fargo Selected Companies, on the basis of, among
other things, ROACE based on GAAP ROACE and Cash ROACE, net interest margin,
efficiency ratios (excluding goodwill and other intangibles) and non-interest
income to revenues ratios.
The GAAP ROACE for Wells Fargo and Norwest was 10.1% and 21.2%,
respectively. The median GAAP ROACE for the Wells Fargo Selected Companies was
17.8%. The Cash ROACE for Wells Fargo and Norwest was 37.5% and 27.2%,
respectively. The median Cash ROACE for the Selected Companies was 23.2%. The
net interest margin for Wells Fargo and Norwest was 6.0% and 5.6%, respectively.
The median net interest margin for the Wells Fargo Selected Companies was 4.0%.
The efficiency ratios for Wells Fargo and Norwest were 52% and 62%,
respectively. The median efficiency ratio for the Wells Fargo Selected Companies
was 56%. The non-interest income to revenue ratios for Wells Fargo and Norwest
were 39% and 43%, respectively. The median non-interest income to revenue ratio
for the Wells Fargo Selected Companies was 42%.
DISCOUNTED CASH FLOW ANALYSIS--WELLS FARGO. Goldman Sachs performed a
discounted cash flow analysis for Wells Fargo using two sets of projections: (i)
IBES estimates and (ii) Wells Fargo-Management Projections. In performing its
analysis, Goldman Sachs used Terminal Values ranging from 15x to 18x and a
discount rate of 12%. Based on this methodology, Goldman Sachs calculated
implied share values for Wells Fargo Common Stock ranging from $322 to $371
under the IBES scenario and from $392 to $451 under the Wells Fargo-Management
Projections scenario.
Goldman Sachs also performed a sensitivity analysis based on Wells
Fargo-Management Projections for cash earnings for the years 1997 through 2002
using a 12% discount rate, a Terminal Value of 16x and a variation of the annual
growth rate assumption of plus and minus 2.0%. Based on this analysis, the
implied share values ranged from $374 to $452.
DISCOUNTED CASH FLOW ANALYSIS--NORWEST. Goldman Sachs performed a
discounted cash flow analysis for Norwest using Terminal Values ranging from 15x
to 18x and a discount rate of 12%. Based on this methodology, Goldman Sachs
calculated implied share values for Norwest Common Stock ranging from $38 to
$44.
Goldman Sachs also performed a sensitivity analysis based on
Norwest-Management Projections for cash earnings for the years 1997 through 2002
using a 12% discount rate, a Terminal Value of 16x and a variation of the annual
growth rate assumption of plus 4.0% and minus 2.0%. Based on this analysis, the
implied share values ranged from $36 to $48.
CONTRIBUTION ANALYSIS. Goldman Sachs analyzed certain historical and
estimated financial information for Wells Fargo and Norwest and the pro forma
combined entity resulting from the Merger. This analysis indicated that Holders
of Wells Fargo Common Stock and Norwest Common Stock would receive 53% and 47%,
respectively, of the outstanding common equity of the combined company. The
analysis further indicated that Wells Fargo and Norwest would contribute: 51%
and 49%, respectively, to the pro forma combined market capitalization (as of
June 5, 1998); 64% and 36%, respectively, to the pro forma combined stated
common equity; 46% and 54%, respectively, to the pro forma combined 1997 GAAP
Net Income ; 46% and 54%, respectively, to the pro forma combined 1998 IBES
estimated GAAP Net Income; 46% and 54%, respectively, to the pro forma combined
1999 IBES estimated GAAP Net Income; 47% and 53%, respectively, to the pro forma
combined Wells Fargo/ Norwest-Management Projected 1998 GAAP Net Income; 48% and
52%, respectively, to the pro forma
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combined Wells Fargo/Norwest-Management Projected 1999 GAAP Net Income; 53% and
47%, respectively, to the pro forma combined 1997 Cash Net Income; 52% and 48%,
respectively, to the pro forma combined 1998 IBES estimated Cash Net Income; 51%
and 49%, respectively, to the pro forma combined 1999 IBES estimated Cash Net
Income; 52% and 48%, respectively, to the pro forma combined Wells
Fargo/Norwest-Management Projected 1998 Cash Net Income; and 53% and 47%,
respectively, to the pro forma combined Wells Fargo/Norwest-Management Projected
1999 Cash Net Income.
PRO FORMA COMBINED FINANCIAL ANALYSIS-CAPITAL BUILD UP. Using both Wells
Fargo-Management Projections and IBES estimates, Goldman Sachs presented pro
forma combined GAAP EPS and pro forma combined Cash EPS for each of Wells Fargo
and Norwest to analyze the pro forma combined impact of the Merger. Based on
Wells Fargo-Management Projections, the 1999 standalone and pro forma combined
GAAP EPS for Wells Fargo were $19.86 and $22.31, respectively, representing
12.3% accretion; the 2000 standalone and pro forma combined GAAP EPS for Wells
Fargo were $24.07 and $25.89, respectively, representing 7.6% accretion; the
2001 standalone and pro forma combined GAAP EPS for Wells Fargo were $27.75 and
$30.28, respectively, representing 9.1% accretion; the 1999 standalone and pro
forma combined Cash EPS for Wells Fargo were $25.16 and $25.63, respectively,
representing 1.9% accretion; the 2000 standalone and pro forma combined Cash EPS
for Wells Fargo were $29.43 and $29.16, representing 0.9% dilution; and the 2001
standalone and pro forma combined Cash EPS for Wells Fargo were $33.18 and
$33.49, respectively, representing 0.9% accretion.
Based on IBES estimates for Wells Fargo, the 1999 standalone and pro forma
combined GAAP EPS for Wells Fargo were $17.25 and $21.05, respectively,
representing 22.0% accretion; the 2000 standalone and pro forma combined GAAP
EPS for Wells Fargo were $19.75 and $23.85, respectively, representing 20.8%
accretion; the 2001 standalone and pro forma combined GAAP EPS for Wells Fargo
were $22.42 and $27.74, respectively, representing 23.7% accretion; the 1999
standalone and pro forma combined Cash EPS for Wells Fargo were $22.52 and
$24.38, respectively, representing 8.2% accretion; the 2000 standalone and pro
forma combined Cash EPS for Wells Fargo were $25.07 and $27.12, representing
8.2% accretion; and the 2001 standalone and pro forma combined Cash EPS for
Wells Fargo were $27.79 and $30.95, respectively, representing 11.4% accretion.
Based on Wells Fargo-Management Projections, the 1999 standalone and pro
forma combined GAAP EPS for Norwest were each $2.23, representing 0.0%
accretion; the 2000 standalone and pro forma combined GAAP EPS for Norwest were
$2.51 and $2.59, respectively, representing 3.2% accretion; the 2001 standalone
and pro forma combined GAAP EPS for Norwest were $2.82 and $3.03, respectively,
representing 7.4% accretion; the 1999 standalone and pro forma combined Cash EPS
for Norwest were $2.38 and $2.56, respectively, representing 7.6% accretion; the
2000 standalone and pro forma combined Cash EPS for Norwest were $2.66 and
$2.92, representing 9.5% accretion; and the 2001 standalone and pro forma
combined Cash EPS for Norwest were $2.97 and $3.35, respectively, representing
12.6% accretion.
Based on IBES estimates for Wells Fargo, the 1999 standalone and pro forma
combined GAAP EPS for Norwest were $2.23 and $2.11, respectively, representing
5.6% dilution; the 2000 standalone and pro forma combined GAAP EPS for Norwest
were $2.51 and $2.39, respectively, representing 5.0% dilution; the 2001
standalone and pro forma combined GAAP EPS for Norwest were $2.82 and $2.77,
respectively, representing 1.6% dilution; the 1999 standalone and pro forma
combined Cash EPS for Norwest were $2.38 and $2.44, respectively, representing
2.3% accretion; the 2000 standalone and pro forma combined Cash EPS for Norwest
were $2.66 and $2.71, representing 1.8% accretion; and the 2001 standalone and
pro forma combined Cash EPS for Norwest were $2.97 and $3.10, respectively,
representing 4.1% accretion.
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PRO FORMA COMBINED FINANCIAL ANALYSIS-NORMALIZED CAPITAL BASE. Goldman
Sachs performed a sensitivity analysis for the pro forma combined company in
which Goldman Sachs assumed that the tangible common equity to tangible assets
ratio was held constant and the excess capital was reinvested. Goldman Sachs
performed this analysis by using both Wells Fargo-Management Projections and
IBES estimates and presented pro forma combined GAAP EPS and pro forma combined
Cash EPS for each of Wells Fargo and Norwest to analyze the pro forma combined
impact of the Merger. Based on Wells Fargo-Management Projections, the 1999
standalone and pro forma combined GAAP EPS for Wells Fargo were $19.86 and
$22.52, respectively, representing 13.4% accretion; the 2000 standalone and pro
forma combined GAAP EPS for Wells Fargo were $24.07 and $27.61, respectively,
representing 14.7% accretion; the 2001 standalone and pro forma combined GAAP
EPS for Wells Fargo were $27.75 and $31.42, respectively, representing 13.2%
accretion; the 1999 standalone and pro forma combined Cash EPS for Wells Fargo
were $25.16 and $25.84, respectively, representing 2.7% accretion; the 2000
standalone and pro forma combined Cash EPS for Wells Fargo were $29.43 and
$30.88, representing 4.9% accretion; and the 2001 standalone and pro forma
combined Cash EPS for Wells Fargo were $33.18 and $34.64, respectively,
representing 4.4% accretion.
Based on IBES estimates for Wells Fargo, the 1999 standalone and pro forma
combined GAAP EPS for Wells Fargo were $17.25 and $21.26, respectively,
representing 23.2% accretion; the 2000 standalone and pro forma combined GAAP
EPS for Wells Fargo were $19.75 and $25.56, respectively, representing 29.4%
accretion; the 2001 standalone and pro forma combined GAAP EPS for Wells Fargo
were $22.42 and $28.87, respectively, representing 28.8% accretion; the 1999
standalone and pro forma combined Cash EPS for Wells Fargo were $22.52 and
$24.58, respectively, representing 9.1% accretion; the 2000 standalone and pro
forma combined Cash EPS for Wells Fargo were $25.07 and $28.82, representing
15.0% accretion; and the 2001 standalone and pro forma combined Cash EPS for
Wells Fargo were $27.79 and $32.08, respectively, representing 15.4% accretion.
Based on Wells Fargo-Management Projections, the 1999 standalone and pro
forma combined GAAP EPS for Norwest were $2.23 and $2.25, respectively,
representing 1.0% accretion; the 2000 standalone and pro forma combined GAAP EPS
for Norwest were $2.51 and $2.76, respectively, representing 10.0% accretion;
the 2001 standalone and pro forma combined GAAP EPS for Norwest were $2.82 and
$3.14, respectively, representing 11.4% accretion; the 1999 standalone and pro
forma combined Cash EPS for Norwest were $2.38 and $2.58, respectively,
representing 8.4% accretion; the 2000 standalone and pro forma combined Cash EPS
for Norwest were $2.66 and $3.09, representing 15.9% accretion; and the 2001
standalone and pro forma combined Cash EPS for Norwest were $2.97 and $3.46,
respectively, representing 16.5% accretion.
Based on IBES estimates for Wells Fargo, the 1999 standalone and pro forma
combined GAAP EPS for Norwest were $2.23 and $2.13, respectively, representing
4.7% dilution; the 2000 standalone and pro forma combined GAAP EPS for Norwest
were $2.51 and $2.56, respectively, representing 1.8% accretion; the 2001
standalone and pro forma combined GAAP EPS for Norwest were $2.82 and $2.89,
respectively, representing 2.4% accretion; the 1999 standalone and pro forma
combined Cash EPS for Norwest were $2.38 and $2.46, respectively, representing
3.2% accretion; the 2000 standalone and pro forma combined Cash EPS for Norwest
were $2.66 and $2.88, representing 8.2% accretion; and the 2001 standalone and
pro forma combined Cash EPS for Norwest were $2.97 and $3.21, respectively,
representing 7.9% accretion.
PRO FORMA DISCOUNTED CASH FLOW ANALYSIS. Goldman Sachs performed a pro
forma combined discounted cash flow analysis for Wells Fargo using Terminal
Values ranging from 15x to 18x and a discount rate of 12%. Based on this
methodology, Goldman Sachs calculated theoretical share values
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for Wells Fargo Common Stock ranging from $421 to $496 based on Wells
Fargo-Management Projections and from $386 to $454 based on IBES estimates.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. Goldman
Sachs believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering the analyses taken as a
whole, would create an incomplete view of the process underlying the analyses
set forth in the Wells Fargo Opinion. In addition, Goldman Sachs considered the
results of all such analyses and did not assign relative weights to any of the
analyses, so the ranges of valuations resulting from any particular analysis
described above should not be taken to be Goldman Sachs' view of the actual
value of Wells Fargo or a combination of Wells Fargo and Norwest.
In performing its analyses, Goldman Sachs made numerous assumptions with
respect to industry performance, general business, economic and regulatory
conditions and other matters, many of which are beyond the control of Wells
Fargo or Norwest. The analyses performed by Goldman Sachs are not necessarily
indicative of actual values, trading values or actual future results which might
be achieved, all of which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of
Goldman Sachs' analysis of the fairness of the Exchange Ratio pursuant to the
Agreement to Wells Fargo Stockholders from a financial point of view and were
provided to the Wells Fargo Board. The analyses do not purport to be appraisals
or to reflect the prices at which a company might be sold. In addition, as
described above, the Wells Fargo Opinion was one of many factors taken into
consideration by the Wells Fargo Board in making its determination to approve
the Merger. Consequently, the analyses described above should not be viewed as
determinative of the Wells Fargo Board's or Wells Fargo management's opinion
with respect to the value of Wells Fargo or a combination of Wells Fargo and
Norwest, or of whether the Wells Fargo Board or Wells Fargo management would
have been willing to agree to a different exchange ratio. Wells Fargo placed no
limits on the scope of the analysis performed, or opinion expressed, by Goldman
Sachs.
Wells Fargo paid Goldman Sachs a fee of $5,000,000 upon execution by Wells
Fargo of the engagement letter with Goldman Sachs on April 23, 1998. Such fee is
to be credited towards any future fees payable by Wells Fargo to Goldman Sachs
pursuant to the engagement letter. Wells Fargo agreed that if at least 50% of
the outstanding Wells Fargo Common Stock is acquired or if all or substantially
all of the assets of Wells Fargo are transferred in one or a series of
transactions, Wells Fargo will pay Goldman Sachs an additional fee such that the
aggregate fee paid will equal 0.10% of the aggregate value of all such
transactions. Based on the average of the last sales prices of Norwest Common
Stock on the five trading days ending September 10, 1998 of $30.05, the
additional fee would be approximately $21,730,000. Up to the date hereof, Wells
Fargo has paid a total fee of approximately $16,860,000 to Goldman Sachs. If the
0.10% fee does not become payable to Goldman Sachs, Wells Fargo will pay Goldman
Sachs a fee to be mutually agreed upon by Goldman Sachs and Wells Fargo prior to
the consummation of the transaction. In addition, Wells Fargo has agreed to
reimburse Goldman Sachs for its reasonable out-of-pocket expenses incurred in
connection with the services provided by it and to indemnify and hold harmless
Goldman Sachs and certain related parties, to the full extent lawful, from and
against certain liabilities and expenses, including certain liabilities under
the federal securities laws, incurred in connection with its engagement. Goldman
Sachs also anticipates acting as lead underwriter in connection with an offering
by Wells Fargo of Wells Fargo Common Stock, which offering is anticipated to
occur prior to the consummation of the Merger.
In a separate letter, dated June 5, 1998, entered into by Wells Fargo and
Goldman Sachs, each of Wells Fargo and Goldman Sachs confirmed their mutual
agreement with respect to Goldman Sachs acting as financial advisor to Norwest
with respect to its negotiations with Well Fargo concerning a possible Merger or
comparable business combination of the two companies. Wells Fargo and Goldman
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Sachs agreed that Goldman Sachs would continue to act as financial advisor to
Wells Fargo pursuant to the engagement letter dated April 23, 1998 and Wells
Fargo consented to Goldman Sachs undertaking the role of financial advisor on
behalf of Norwest. Wells Fargo waived any claim of a conflict of interest with
respect to the Norwest engagement or any activities undertaken by Goldman Sachs
in connection therewith. Wells Fargo also agreed that Goldman Sachs would be
under no obligation or duty to disclose to Norwest or any other person any
documents or other information received by Goldman Sachs from or in respect of
Wells Fargo. In that regard, Wells Fargo agreed that neither Goldman Sachs'
representation of Norwest nor any fees that Goldman Sachs may be entitled to
receive in connection therewith shall in any way affect Wells Fargo's
obligations to Goldman Sachs under the engagement letter entered into by Wells
Fargo and Goldman Sachs or create any liability to Wells Fargo on the part of
Goldman Sachs of any kind whatsoever under the engagement letter entered into by
Wells Fargo and Goldman Sachs or otherwise.
CREDIT SUISSE FIRST BOSTON
CSFB has also acted as financial advisor to Wells Fargo in connection with
the Merger. CSFB was selected by Wells Fargo based on CSFB's experience,
expertise and familiarity with Wells Fargo and its business. CSFB is an
internationally recognized investment banking firm and is regularly engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, leveraged buyouts, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Since June, 1996, excluding any
fees in connection with the Merger, Wells Fargo has paid approximately $1
million to CSFB for investment banking services.
In connection with CSFB's engagement, Wells Fargo requested that CSFB
evaluate the fairness of the consideration proposed to be received by Wells
Fargo Stockholders pursuant to the terms of the Agreement. At a meeting of the
Wells Fargo Board of Directors to evaluate the Merger, CSFB rendered to the
Wells Fargo Board of Directors an oral opinion (which opinion was subsequently
confirmed by delivery of a written opinion dated June 7, 1998) that, as of such
date and based upon and subject to certain matters stated in such opinion, the
Exchange Ratio pursuant to the Agreement was fair to Wells Fargo Stockholders
from a financial point of view. CSFB has confirmed its June 7, 1998 opinion by
delivery of a written opinion dated the date of this Joint Proxy
Statement-Prospectus (the "CSFB OPINION"). In connection with the CSFB Opinion,
CSFB updated certain of its analyses performed in connection with its opinion
dated June 7, 1998 and reviewed the assumptions on which such analyses were
based and the factors considered in connection therewith.
THE FULL TEXT OF THE CSFB OPINION, WHICH SETS FORTH THE PROCEDURES FOLLOWED,
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN
CONNECTION WITH THE CSFB OPINION, IS ATTACHED AS APPENDIX F TO THIS JOINT PROXY
STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. STOCKHOLDERS OF
WELLS FARGO ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY. CSFB
HAS CONSENTED TO THE INCLUSION OF THE CSFB OPINION AS APPENDIX F HERETO. IN
GIVING SUCH CONSENT, CSFB DOES NOT ADMIT THAT IT COMES WITHIN THE CATEGORY OF
PERSONS WHOSE CONSENT IS REQUIRED UNDER SECTION 7 OF THE SECURITIES ACT OR THE
RULES AND REGULATIONS OF THE COMMISSION THEREUNDER NOR DOES IT THEREBY ADMIT
THAT IT IS AN EXPERT WITH RESPECT TO ANY PART OF THE REGISTRATION STATEMENT OF
WHICH THIS JOINT PROXY STATEMENT-PROSPECTUS IS A PART WITHIN THE MEANING OF THE
TERM "EXPERTS" AS USED IN THE SECURITIES ACT OR THE RULES AND REGULATIONS OF THE
COMMISSION THEREUNDER. THE CSFB OPINION IS DIRECTED TO THE WELLS FARGO BOARD OF
DIRECTORS AND RELATES ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO TO WELLS FARGO
STOCKHOLDERS FROM A FINANCIAL POINT OF VIEW, DOES NOT ADDRESS ANY OTHER ASPECT
OF THE MERGER OR ANY RELATED TRANSACTION AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY WELLS
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FARGO STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE WELLS FARGO
SPECIAL MEETING. THE SUMMARY OF THE CSFB OPINION SET FORTH IN THIS JOINT PROXY
STATEMENT-PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION.
In arriving at the CSFB Opinion, CSFB reviewed the Agreement and certain
publicly available business and financial information relating to Wells Fargo
and Norwest. CSFB also reviewed certain other information relating to Wells
Fargo and Norwest, including financial forecasts, provided to CSFB by Wells
Fargo and Norwest, and met with Wells Fargo's and Norwest's managements to
discuss the business and prospects of Wells Fargo and Norwest. CSFB also
considered certain financial and stock market data of Wells Fargo and Norwest
and compared those data with similar data for other publicly held companies in
businesses similar to Wells Fargo and Norwest and considered the financial terms
of certain other business combinations and other transactions which have
recently been effected. CSFB also considered such other information, financial
studies, analyses and investigations and financial, economic and market criteria
which CSFB deemed relevant.
In connection with its review, CSFB did not assume any responsibility for
independent verification of any of the information provided to or otherwise
reviewed by CSFB and relied on such information being complete and accurate in
all material respects. With respect to the financial forecasts (including the
estimates of future cost savings, operating synergies and revenue enhancements
expected to be achieved as a result of the Merger), CSFB assumed that such
forecasts were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the managements of Wells Fargo and Norwest.
In addition, CSFB was not requested to make, and did not make, an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of Wells Fargo or Norwest, nor was CSFB furnished with any such evaluations or
proposals. The CSFB Opinion is necessarily based upon financial, economic,
market and other conditions as they existed and could be evaluated on the date
of such opinion. CSFB did not express any opinion as to the actual value of the
Norwest Common Stock when issued to Wells Fargo Stockholders pursuant to the
Merger or the prices at which the Norwest Common Stock will trade subsequent to
the Merger.
In preparing the CSFB opinions, CSFB performed a variety of financial and
comparative analyses, including those described below. The summary of CSFB's
analyses set forth below does not purport to be a complete description of the
analyses underlying the CSFB opinions. The preparation of a fairness opinion is
a complex analytic process involving various determinations as to the most
appropriate and relevant methods of financial analyses and the application of
those methods to the particular circumstances and, therefore, such opinion is
not readily susceptible to summary description. In arriving at its opinion, CSFB
made qualitative judgments as to the significance and relevance of each analysis
and factor considered by it. Accordingly, CSFB believes that its analyses must
be considered as a whole and that selecting portions of its analyses and
factors, without considering all analyses and factors, could create a misleading
or incomplete view of the processes underlying such analyses and the CSFB
opinions. In its analyses, CSFB made numerous assumptions with respect to Wells
Fargo, Norwest, industry performance, regulatory, general business, economic,
market and financial conditions and other matters, many of which are beyond the
control of Wells Fargo and Norwest. No company, transaction or business used in
such analyses as a comparison is identical to Wells Fargo, Norwest or the
Merger, nor is an evaluation of the results of such analyses entirely
mathematical; rather, such analyses involve complex considerations and judgments
concerning financial and operating characteristics and other factors that could
affect the transaction, public trading or other values of the companies,
business segments or transactions being analyzed. The estimates contained in
such analyses and the ranges resulting from any particular analysis are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by such analyses. In addition, analyses
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relating to the value of businesses or securities do not purport to be
appraisals or to reflect the prices at which businesses or securities actually
may be sold. Accordingly, such analyses and estimates are inherently subject to
substantial uncertainty. The CSFB opinion dated June 7, 1998 and financial
analyses were among many factors considered by the Wells Fargo Board in its
evaluation of the Merger and should not be viewed as determinative of the views
of the Wells Fargo Board or management of Wells Fargo with respect to the
Exchange Ratio or the Merger.
The following is a summary of the material financial analyses performed by
CSFB in connection with its opinion dated June 7, 1998:
COMPARABLE COMPANIES ANALYSIS. CSFB compared certain financial, operating
and stock market data of Wells Fargo to corresponding data of selected publicly
traded companies in the banking industry. Such companies included: U.S. Bancorp,
Wachovia Corporation, SunTrust Banks and Mellon Bank Corporation (collectively,
the "COMPARABLE COMPANIES"). EPS estimates for the Comparable Companies were
based on estimates of selected investment banking firms as compiled by IBES and
EPS estimates for Wells Fargo were based on internal estimates of the management
of Wells Fargo. All multiples were based on closing stock prices on June 5,
1998. With respect to the Comparable Companies, CSFB considered market
capitalization, which ranged from $14.2 billion to $29.7 billion compared to
$31.5 billion for Wells Fargo. CSFB also considered the ratio of market price to
estimated calendar years 1998 and 1999 EPS, which ranged from 18.0x to 20.9x
with an average of 19.5x for estimated calendar year 1998 and 15.9x to 18.8x
with an average of 17.2x for estimated calendar year 1999 compared to 22.7x and
18.3x, respectively, for Wells Fargo; the ratio of market price to book value as
of March 31, 1998 which ranged from 2.46x to 4.85x with an average of 3.72x for
the Comparable Companies compared to 2.46x for Wells Fargo; tangible book value
as of March 31, 1998, which ranged from 2.66x to 8.22x with an average of 5.41x
for the Comparable Companies compared to 6.78x for Wells Fargo; and projected
long-term EPS growth rate, which ranged from 11.0% to 13.0% with an average of
11.8% compared to 13.0% for Wells Fargo.
DISCOUNTED CASH FLOW VALUATION. CSFB performed a discounted cash flow
analysis under the following two scenarios: (a) using Wells Fargo's management
estimates (the "MANAGEMENT CASE") and (b) using consensus analysts' estimates
compiled by IBES (the "STREET CASE"). The range of estimated terminal values was
calculated by applying multiples ranging from 16x to 18x to the projected cash
EPS for calendar year 2003. The free cash flow streams and estimated terminal
values were then discounted to present values using discount rates ranging from
12% to 14%. This analysis indicated implied per share valuation ranges of $364
to $433 in the Management Case and $323 to $385 in the Street Case.
CONTRIBUTION ANALYSIS. CSFB reviewed certain historical and estimated
future operating and financial information (including, among other things,
market capitalization, tangible common equity, net income and cash net income)
for Wells Fargo, Norwest and the pro forma combined entity resulting from the
Merger. The analysis indicated that based on the Exchange Ratio the Wells Fargo
Stockholders would receive 52.7% of the outstanding common shares of the
combined company after the Merger. The analysis also indicated that in calendar
year 1997 Wells Fargo would have contributed 45.5% to the net income of the
combined company on a pro forma basis and that, based on estimates provided to
CSFB by Wells Fargo and Norwest managements, Wells Fargo's estimated
contributions in calendar years 1998 and 1999 to the combined company's reported
net income would be 46.9% and 48.5%, respectively, and its contributions to the
combined company's cash net income would be 52.1% and 52.7%, respectively. In
addition, the analysis indicated that as of June 5, 1998 Wells Fargo would have
contributed 50.5% to the pro forma market capitalization of the combined company
and, based upon tangible common equity as of March 31, 1998, would have
contributed 44.3% of the pro forma tangible common equity of the combined
company.
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COMPARABLE TRANSACTION ANALYSIS. Using publicly available information, CSFB
compared certain terms of the Merger to the terms of the following selected
merger-of-equals transactions in the banking industry (the "COMPARABLE
TRANSACTIONS"): NationsBank Corporation/BankAmerica Corporation, Banc One
Corporation/First Chicago NBD Corporation, Citicorp/Travelers Group, Inc. and
Chemical Banking Corporation/The Chase Manhattan Corporation. Such analysis
indicated, among other things, that for the Comparable Transactions the premium
represented by the exchange ratio in such transactions to market prices (based
on the 30-day average closing share price prior to announcement) ranged from
2.8% to 15.3% as compared to 7.4% represented by the Exchange Ratio in the
Merger. In addition, CSFB also noted that the allocation of common stock
ownership between the merging companies in the Comparable Transactions ranged
from 50%/50% to 60/40% as compared to 54%/46% in the Merger, and that the
proposed arrangements with respect to the composition of the board of directors
and senior management of the combined company and certain other non-financial
issues in the Merger were comparable to those of the Comparable Transactions.
MERGER CONSEQUENCES ANALYSIS. CSFB analyzed the potential pro forma effect
of the Merger during the calendar years 1999 through 2001 on net income,
reported EPS and cash EPS under the following two scenarios: (1) an analysis
which did not reflect earnings generated by excess capital expected to be built
up in the combined company as a result of the synergies generated by the Merger
(the "NO EXCESS CAPITAL CASE"), and (2) an analysis which reflected earnings on
excess capital expected to be built up in the combined company as a result of
the synergies generated by the Merger (the "EXCESS CAPITAL CASE"). In both
scenarios, the analysis was conducted using consensus analysts' EPS estimates
compiled by IBES for Norwest and Wells Fargo's management estimates for Wells
Fargo.
Based upon the No Excess Capital Case, CSFB noted that the analysis
suggested that the Merger would be accretive to Wells Fargo's reported EPS in
the years 1999, 2000 and 2001 by 11.2%, 7.7% and 9.7%, respectively, and
(dilutive)/accretive to Wells Fargo's cash EPS in those years by 0.9%, (0.8)%
and 0.5%, respectively.
Based upon the Excess Capital Case, CSFB noted that the analysis suggested
the Merger would be accretive to Wells Fargo's reported EPS in the years 1999,
2000 and 2001 by 13.2%, 14.2% and 12.5%, respectively, and accretive to Wells
Fargo's cash EPS in those years by 2.5%, 4.5% and 3.7%, respectively.
In addition, based on the dividends paid on the Wells Fargo Common Stock and
the Norwest Common Stock, as of June 7, 1998, the Merger would be accretive to
dividends per share of Wells Fargo Common Stock by 27%.
Pursuant to the terms of CSFB's engagement, Wells Fargo has agreed to pay
CSFB a total fee of $10 million, $5 million of which was payable upon the public
announcement of the Merger and the balance of which was payable upon the mailing
of this Joint Proxy Statement-Prospectus to Wells Fargo Stockholders. Wells
Fargo has also agreed to indemnify CSFB and certain related persons and entities
against certain liabilities, including liabilities under the federal securities
laws, arising out of CSFB's engagement, and to reimburse CSFB for its reasonable
out-of-pocket expenses, including the reasonable fees and expenses of its legal
counsel, incurred by CSFB in connection with its engagement. In the ordinary
course of its business, CSFB and its affiliates may actively trade the debt and
equity securities of both Wells Fargo and Norwest for their own accounts and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
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THE MERGER
Subject to the terms and conditions of the Agreement and in accordance with
the Delaware Law, at the Effective Time, Wells Fargo will merge with and into
Merger Sub. Merger Sub will be the surviving corporation and will continue its
corporate existence under the laws of the State of Delaware. In connection with
the Merger and pursuant to the Amendments, Norwest will change its name to
"Wells Fargo & Company" as soon as practicable following the Effective Time. At
the Effective Time, the separate corporate existence of Wells Fargo will
terminate. The Certificate of Incorporation of Merger Sub will be the
Certificate of Incorporation of the Surviving Corporation, and the By-Laws of
Merger Sub will be the By-Laws of the Surviving Corporation.
Norwest and Wells Fargo may at any time change the method of effecting the
combination of Wells Fargo and Norwest if and to the extent they deem such
change to be desirable, including without limitation, to provide for a merger of
Wells Fargo with Norwest or another wholly-owned subsidiary of Norwest;
PROVIDED, HOWEVER, that no such change will (i) alter or change the amount of
consideration to be provided to holders of Wells Fargo Capital Stock as provided
for in the Agreement (the "MERGER CONSIDERATION"), (ii) adversely affect the tax
treatment of stockholders as a result of receiving the Merger Consideration or
(iii) materially impede or delay consummation of the transactions contemplated
by the Agreement.
CONVERSION OF STOCK; TREATMENT OF OPTIONS
At the Effective Time, each share of Wells Fargo Common Stock outstanding,
other than shares held by Norwest, Merger Sub or Wells Fargo or any subsidiary
thereof (except, in each case, for shares held, directly or indirectly, in trust
accounts, managed accounts and the like, or otherwise held in a fiduciary
capacity that are beneficially owned by third parties ("TRUST ACCOUNT SHARES")
or in respect of a debt previously contracted ("DPC SHARES")), will be converted
into the right to receive a number of shares of Norwest Common Stock equal to
the Exchange Ratio (10) subject to customary antidilution adjustments as
provided in the Agreement and described below. Because the Exchange Ratio is
fixed and because the market price of Norwest Common Stock prior to the
Effective Time is subject to fluctuation, the value of the shares of Norwest
Common Stock that Wells Fargo Stockholders will receive in the Merger may
increase or decrease, both before and after the Merger.
Each outstanding share of Wells Fargo Common Stock owned by Norwest, Merger
Sub or their subsidiaries or by Wells Fargo or its subsidiaries (other than
Trust Account Shares or DPC Shares) will be canceled at the Effective Time and
will cease to exist, and no Norwest Common Stock or other consideration will be
delivered in exchange therefor.
Each share of Norwest Common Stock issued and outstanding immediately prior
to the Effective Time will remain issued and outstanding immediately after
consummation of the Merger and each share of Merger Sub Common Stock issued and
outstanding immediately prior to the Effective Time will remain issued and
outstanding as one share of common stock of the Surviving Corporation
immediately after consummation of the Merger.
Each share of Wells Fargo Series B Preferred issued and outstanding
immediately prior to the Effective Time will be converted, automatically and
without the requirement of any exchange of any certificate representing such
stock, into one share of Norwest Series B Preferred. The terms of Norwest Series
B Preferred will be substantially the same as the terms of Wells Fargo Series B
Preferred. Each share of Wells Fargo Series H Preferred issued and outstanding
immediately prior to the Effective Time will be converted, automatically and
without the requirement of any exchange of any certificate representing such
stock, into one share of Norwest Series H Preferred. The terms of
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Norwest Series H Preferred will be substantially the same as the terms of Wells
Fargo Series H Preferred. See "Norwest Capital Stock and Comparison of
Stockholder Rights--Description of Norwest Capital Stock."
Each stock option to acquire Wells Fargo Common Stock granted under Wells
Fargo's stock option and incentive plans (collectively, the "WELLS FARGO STOCK
PLANS") outstanding and unexercised immediately prior to the Effective Time will
be converted automatically at the Effective Time into, and will become, a stock
option to purchase Norwest Common Stock and will continue to be governed by the
terms of the Wells Fargo Stock Plans. The Wells Fargo Stock Plans will be
assumed by the Surviving Corporation. In each case, the number of shares of
Norwest Common Stock subject to the new Norwest option will be equal to the
product of the number of shares of Wells Fargo Common Stock subject to the Wells
Fargo option and the Exchange Ratio, rounded to the nearest whole share, and the
exercise price per share of Norwest Common Stock subject to the new Norwest
option will be equal to the exercise price per share of Wells Fargo Common Stock
under the Wells Fargo option divided by the Exchange Ratio, rounded to the
nearest whole cent. The duration and other terms of each such new Norwest option
will be substantially the same as the prior Wells Fargo option. In any event,
options that are incentive stock options under the Code shall be adjusted in the
manner prescribed thereby.
If, prior to the Effective Time, the outstanding shares of Wells Fargo
Common Stock or Norwest Common Stock are increased, decreased, changed into or
exchanged for a different number or kind of shares or securities as a result of
a reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, or other similar change in capitalization, an
appropriate and proportionate adjustment will be made to the Exchange Ratio.
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
At or prior to the Effective Time, Norwest will deposit, or cause to be
deposited, with Norwest Bank Minnesota, N.A., or another bank or trust company
reasonably acceptable to each of Norwest and Wells Fargo (the "EXCHANGE AGENT"),
for the benefit of the holders of certificates of Wells Fargo Common Stock,
certificates representing the shares of Norwest Common Stock and cash in lieu of
any fractional shares (such certificates and cash, together with any dividends
or distributions with respect thereto, being referred to herein as the "EXCHANGE
FUND") to be issued pursuant to the Agreement in exchange for outstanding shares
of Wells Fargo Common Stock.
As soon as is practicable after the Effective Time, a form of transmittal
letter will be mailed by the Exchange Agent to Wells Fargo Stockholders. The
form of transmittal letter will contain instructions with respect to the
surrender of certificates representing Wells Fargo Common Stock.
WELLS FARGO COMMON STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE
ENCLOSED PROXY AND SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNLESS AND
UNTIL THE WELLS FARGO STOCKHOLDER RECEIVES A LETTER OF TRANSMITTAL FOLLOWING THE
EFFECTIVE TIME.
Until the certificates representing Wells Fargo Common Stock are surrendered
for exchange after the Effective Time, holders of such certificates or receipts
will accrue but will not be paid dividends or other distributions declared after
the Effective Time with respect to Norwest Common Stock into which their shares
have been converted. When such certificates or receipts are surrendered, any
unpaid dividends or other distributions will be paid, without interest. After
the Effective Time, there will be no transfers on the stock transfer books of
Wells Fargo of shares of Wells Fargo Common Stock issued and outstanding
immediately prior to the Effective Time. If certificates representing shares of
Wells Fargo Common Stock are presented after the Effective Time, they will be
canceled and exchanged for the relevant certificate representing the applicable
shares of Norwest Common Stock.
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No fractional shares of Norwest Common Stock will be issued to any Wells
Fargo Stockholder upon consummation of the Merger. For each fractional share
that would otherwise be issued, Norwest will pay cash in an amount equal to such
fraction multiplied by the average of the closing sale prices of Norwest Common
Stock on the NYSE as reported by THE WALL STREET JOURNAL for the five trading
days immediately preceding the date of the Effective Time. No interest will be
paid or accrued on the cash in lieu of fractional shares payable to holders of
such certificates.
None of Norwest, Wells Fargo or any other person, will be liable to any
former Wells Fargo Stockholder for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
If a certificate for Wells Fargo Common Stock has been lost, stolen or
destroyed, the Exchange Agent will issue the consideration properly payable
under the Agreement on receipt of appropriate evidence as to such loss, theft or
destruction and appropriate evidence as to the ownership of such certificate by
the claimant. The Exchange Agent will also require the claimant to post bond in
such amount as Norwest may determine is necessary as indemnity against any claim
that may be made against Norwest with respect to such certificate.
Norwest Stockholders will not be required to exchange certificates
representing such shares of Norwest Common Stock or otherwise take any action as
a result of the consummation of the Merger. THERE IS NO NEED FOR NORWEST
STOCKHOLDERS TO SUBMIT THEIR SHARE CERTIFICATES TO NORWEST, WELLS FARGO, THE
EXCHANGE AGENT OR TO ANY OTHER PERSON IN CONNECTION WITH THE MERGER.
For a description of the Norwest Common Stock and a description of the
differences between the rights of Wells Fargo Stockholders, on the one hand, and
Norwest Stockholders, on the other, see "Norwest Capital Stock and Comparison of
Stockholder Rights."
EFFECTIVE TIME
The Effective Time will be as set forth in the certificate of merger that
will be filed with the Secretary of State of the State of Delaware on the
closing date of the Merger (the "CLOSING DATE"). The Closing Date will occur on
a date to be specified by the parties, which date will be no later than five
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions precedent to the Merger set forth in
Article VIII of the Agreement. Norwest and Wells Fargo each anticipate that the
Merger will be consummated during the fiscal quarter ending December 31, 1998.
However, the consummation of the Merger could be delayed if there is a delay in
obtaining the Requisite Regulatory Approvals (as defined herein). There can be
no assurances as to if or when such approvals will be obtained or that the
Merger will be consummated. If the Merger is not effected on or before June 7,
1999, the Agreement may be terminated by either Norwest or Wells Fargo, unless
the failure to effect the Merger by such date is due to the failure of the party
seeking to terminate the Agreement to perform or observe the covenants and
agreements of such party set forth therein. See "--Conditions to Consummation of
the Merger" and "--Regulatory Approvals Required for the Merger."
REPRESENTATIONS AND WARRANTIES
The Agreement contains representations and warranties of Norwest, on the one
hand, and Wells Fargo, on the other, as to, among other things, (i) the
corporate organization and existence of each party and its subsidiaries; (ii)
the capitalization of each party and its subsidiaries; (iii) the corporate power
and authority of each party; (iv) the compliance of the Agreement with (a) the
certificate of incorporation and by-laws of each party, (b) applicable law, and
(c) certain material agreements; (v) governmental and third-party approvals;
(vi) the timely filing of required regulatory reports; (vii) each party's
financial statements and filings with the Commission; (viii) each party's
broker's fees; (ix) the absence of certain changes in each party's business
since December 31, 1997; (x) the absence of
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material legal proceedings and injunctions; (xi) the filing and accuracy of each
party's tax returns; (xii) each party's employee benefit plans and related
matters; (xiii) the availability and accuracy of each party's reports and
filings with the Commission; (xiv) each party's compliance with applicable law,
including the proper administration of all accounts for which each party is a
fiduciary; (xv) the validity of, and the absence of material defaults under,
certain contracts; (xvi) agreements between each party and regulatory agencies;
(xvii) the use of interest rate risk management instruments such as swaps and
options; (xviii) the absence of undisclosed liabilities; (xix) insurance; (xx)
the absence of environmental liabilities; (xxi) the inapplicability to the
Merger of the Delaware takeover law and, in the case of Norwest, the Norwest
Stockholder Rights not becoming separated from the shares of Norwest Common
Stock or not becoming triggered or exercisable as a result of the consummation
of the transactions contemplated by the Agreement; (xxiii) each party's "Year
2000" risk management plan; and (xxiv) the qualification of the Merger as a
reorganization under 368(a) of the Code and for "pooling of interests"
accounting treatment.
CONDUCT OF BUSINESS PENDING THE MERGER AND OTHER AGREEMENTS
Pursuant to the Agreement, prior to the Effective Time each of Norwest and
Wells Fargo has agreed to, and to cause its subsidiaries to, (i) conduct its
business in the ordinary course, (ii) use reasonable best efforts to maintain
and preserve intact its business organization, employees and advantageous
business relationships and retain the services of its key officers and key
employees and (iii) take no action which would adversely affect or delay the
ability of either Norwest or Wells Fargo to obtain any Requisite Regulatory
Approvals or to perform its covenants and agreements under the Agreement or the
Option Agreements.
Norwest and Wells Fargo have also agreed to cooperate with each other and to
use their reasonable best efforts to promptly prepare and file all necessary
documentation to effect all applications, notices, petitions and filings, and to
obtain and to cooperate in obtaining permits, consents, approvals and
authorizations of all third parties and governmental entities necessary or
advisable to consummate the transactions contemplated by the Agreement and to
comply with the terms and conditions of all such permits, consents, approvals
and authorizations. Norwest and Wells Fargo have each agreed, upon request, to
furnish to the other party all information concerning themselves and their
subsidiaries, directors, officers and stockholders and such other matters as may
be necessary or advisable in connection with the Merger. Norwest and Wells Fargo
have further agreed, subject to the terms and conditions of the Agreement, to
use their reasonable best efforts to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
which may be imposed on such party or its subsidiaries and to consummate the
Merger. Norwest also agreed to cause the shares of Norwest Common Stock and
Norwest Series B Preferred Stock to be issued in the Merger to be approved for
listing on the NYSE, subject to official notice of issuance, prior to the
Effective Time. Norwest and Wells Fargo also agreed that the employee benefit
plans in place at the Effective Time with respect to employees of Norwest and
Wells Fargo, as the case may be, will remain in effect for such employees until
such time as the combined company adopts new benefit plans covering employees of
both parties who continue to be employed by the combined company (the "NEW
BENEFIT PLANS"). Norwest and Wells Fargo agreed to cooperate in reviewing,
evaluating and analyzing the Norwest Benefit Plans (as defined herein) and the
Wells Fargo Benefit Plans (as defined herein) with a view towards developing
appropriate New Benefit Plans. Norwest and Wells Fargo also indicated their
intention, during the period shortly following the execution of the Agreement,
to coordinate efforts towards establishing a retention and severance program.
Norwest and Wells Fargo also reached certain agreements with respect to
directors' and officers' indemnification and insurance, and with respect to
dividends. See "--Interests of Certain Persons in the Merger."
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Each of Norwest and Wells Fargo has further agreed to give the other party
access to all of its properties, books, contracts, commitments and records and
to furnish information concerning its businesses, properties and personnel,
subject to the restrictions and for the purposes set forth in the Agreement.
The Agreement also provides that, subject to the adoption of the Amendments
by Norwest Stockholders and in connection with the consummation of the Merger,
Norwest will amend the Norwest Certificate to change its name to "Wells Fargo &
Company," increase the authorized Norwest Common Stock to 4,000,000,000 shares
and increase the authorized Norwest Preferred Stock to 20,000,000 shares.
Norwest will amend the Norwest By-Laws to provide that the Norwest Board will
consist of not less than ten or more than twenty-eight directors.
In addition, except as expressly contemplated by the Agreement or specified
in a schedule thereto, or as contemplated by the Option Agreements, each of
Norwest and Wells Fargo has agreed that, without the consent of the other party,
it and its subsidiaries will not, among other things:
(i) other than in the ordinary course of business, incur any
indebtedness for borrowed money (other than short-term indebtedness incurred
to refinance short-term indebtedness and indebtedness of Norwest or any of
its subsidiaries to Norwest or any of its subsidiaries, on the one hand, or
of Wells Fargo or any of its subsidiaries to Wells Fargo or any of its
subsidiaries, on the other hand), assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any other
individual, corporation or other entity, or make any loan or advance;
(ii) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock (except, (a) in the case of
Wells Fargo, for regular quarterly cash dividends at a rate not in excess of
$1.30 per share of Wells Fargo Common Stock and regular quarterly cash
dividends on the Wells Fargo Preferred Stock outstanding as of the date of
the Agreement at the rate set forth in the applicable Certificate of
Designations, (b) in the case of Norwest, for regular quarterly cash
dividends on Norwest Common Stock at a rate not in excess of $.19 per share
of Norwest Common Stock and regular quarterly cash dividends on the Norwest
Preferred Stock outstanding as of the date of the Agreement at the rates set
forth in the applicable Certificate of Designations (as defined herein), and
(c) for dividends paid by any of the subsidiaries of each of Norwest and
Wells Fargo to Norwest or Wells Fargo or any of their subsidiaries,
respectively, and dividends paid in the ordinary course of business by any
subsidiaries (whether or not wholly owned) of each of Wells Fargo and
Norwest); grant any stock appreciation rights or grant any individual,
corporation or other entity any right to acquire any shares of its capital
stock other than (a) pursuant to the Norwest Rights Agreements, (b) pursuant
to Norwest or Wells Fargo employee or director stock plans in the ordinary
course of business or (c) the conversion of employee or director stock
options pursuant to the consummation of certain acquisitions by Norwest or
Wells Fargo permitted under the Agreement; or issue any additional shares of
capital stock except for the issuance by Merger Sub of shares of Merger Sub
Common Stock to Norwest in connection with the organization of Merger Sub,
and pursuant to (a) the exercise of stock options, convertible preferred
stock, convertible debt or warrants outstanding as of June 7, 1998 or issued
thereafter in compliance with the Agreement, (b) the Option Agreements, (c)
the Norwest Rights Agreement, (d) in the ordinary course of business and
consistent with the Norwest Dividend Reinvestment Plan, the Norwest director
and employee stock plans, the Wells Fargo Dividend Reinvestment Plan and the
Wells Fargo Employee Stock Purchase Plan, (e) in connection with pending
acquisitions by Norwest in an amount not to exceed 19,800,000 shares of
Norwest Common Stock in the aggregate and in connection with acquisitions
initiated by Norwest after the date of the Agreement in an amount not to
exceed
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40,000,000 shares of Norwest Common Stock in the aggregate, and (f) in
connection with acquisitions initiated by Wells Fargo after the date of the
Agreement in an amount not to exceed 4,000,000 shares of Wells Fargo Common
Stock in the aggregate;
(iii) sell, transfer, mortgage, encumber or otherwise dispose of any of
its material properties or assets to any individual, corporation or other
entity other than a subsidiary, or cancel, release or assign any
indebtedness to any such person or any claims held by any such person,
except in the ordinary course of business or pursuant to contracts or
agreements in force at the date of the Agreement;
(iv) except for transactions in the ordinary course of business or
pursuant to contracts or agreements in force at the date of or permitted by
the Agreement, make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity
other than a subsidiary;
(v) except for transactions in the ordinary course of business,
terminate, or waive any material provision of, any material contract or
agreement, or make any change in any instrument or agreement governing the
terms of any of its securities or material lease or contract, other than
normal renewals of contracts and leases without material adverse changes of
terms;
(vi) increase in any manner the compensation or fringe benefits of any
of its employees or pay any pension or retirement allowance not required by
any existing plan or agreement to any such employees or become a party to,
amend or commit itself to any pension, retirement, profit-sharing or welfare
benefit plan or agreement or employment agreement with or for the benefit of
any employee other than in the ordinary course of business or accelerate the
vesting of, or the lapsing of restrictions with respect to, any stock
options or other stock-based compensation;
(vii) solicit or encourage from any third party or enter into any
negotiations, discussions or agreement in respect of, or authorize any
individual, corporation or other entity to solicit or encourage from any
third party or enter into any negotiations, discussions or agreement in
respect of, or provide or cause to be provided any confidential information
in connection with, any inquiries or proposals relating to the disposition
of all or substantially all of its business or assets, or the acquisition of
its voting securities, or the merger of it or any of its subsidiaries with
any corporation or other entity other than as provided by the Agreement (and
each party will promptly notify the other of all of the relevant details
relating to all inquiries and proposals which it may receive relating to any
of such matters);
(viii) settle any material claim, action or proceeding involving money
damages, except in the ordinary course of business;
(ix) knowingly take any action that would prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting treatment or (ii)
as a reorganization within the meaning of Section 368 of the Code, PROVIDED
that this agreement will not limit the ability of Norwest or Wells Fargo to
exercise its rights under the Wells Fargo Option Agreement (as defined
herein) or the Norwest Option Agreement (as defined herein), as the case may
be;
(x) amend its certificate of incorporation or its by-laws;
(xi) other than in prior consultation with the other party, restructure
or materially change its investment securities portfolio or its gap
position, through purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported;
(xii) take any action that is intended or expected to result in any of
its representations and warranties set forth in the Agreement being or
becoming untrue in any material respect at any time prior to the Effective
Time, or in any of the conditions to the Merger set forth in the
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Agreement not being satisfied or in a violation of any provision of the
Agreement, except, in every case, as may be required by applicable law;
(xiii) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or regulatory
guidelines; or
(xiv) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
listed above.
CONDITIONS TO CONSUMMATION OF THE MERGER
Each party's obligation to effect the Merger is subject to the satisfaction
or waiver, where permissible, of the following conditions at or prior to the
Effective Time:
(i) the Agreement shall have been adopted by the requisite affirmative
vote of the Wells Fargo Stockholders entitled to vote thereon and the
issuance of the Norwest Common Stock and the amendment to the Norwest
Certificate to increase the authorized shares of Norwest Common Stock and
Norwest Preferred Stock shall each have been approved by the requisite
affirmative vote of the holders of Norwest Common Stock entitled to vote
thereon;
(ii) the shares of Norwest Common Stock and Norwest Series B Preferred
Stock that are to be issued to holders of Wells Fargo Common Stock and Wells
Fargo Series B Preferred Stock, respectively, upon consummation of the
Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance;
(iii) the Requisite Regulatory Approvals will have been obtained and
will remain in full force and effect and all statutory waiting periods with
respect to such approvals will have expired;
(iv) the Registration Statement (as defined herein) of which this Joint
Proxy Statement-Prospectus forms a part shall have become effective and no
stop order suspending the effectiveness thereof will have been issued and no
proceedings for that purpose will have been initiated or threatened by the
Commission;
(v) no order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or any of the other transactions contemplated
by the Agreement shall be in effect and no statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or
enforced by any court, administrative agency or commission or other
governmental authority or instrumentality which prohibits or makes illegal
the consummation of the Merger;
(vi) Norwest and Wells Fargo each shall have received the opinions of
Wachtell, Lipton, Rosen & Katz and Sullivan & Cromwell, in form and
substance reasonably satisfactory to Norwest and Wells Fargo dated as of the
Closing Date, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in each such opinion which are
consistent with the state of facts existing at the Effective Time: (a) the
Merger will constitute a reorganization under Section 368(a) of the Code and
Norwest, Merger Sub and Wells Fargo will each be a party to the
reorganization; (b) no gain or loss will be recognized by Norwest, Merger
Sub or Wells Fargo as a result of the Merger; (c) no gain or loss will be
recognized by Wells Fargo Stockholders who exchange their Wells Fargo Common
Stock solely for Norwest Common Stock pursuant to the Merger (except with
respect to cash received in lieu of a fractional share interest in Norwest
Common Stock);
(vii) Each of Norwest and Wells Fargo shall have received a letter from
KPMG Peat Marwick LLP addressed thereto, as the case may be, to the effect
that the Merger will qualify for "pooling of interests" accounting
treatment;
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(viii) the representations and warranties of the other party to the
Agreement shall be true and correct in all material respects as of the date
of the Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though
made on the Closing Date, PROVIDED that for purposes of this condition, such
representations and warranties will be deemed to be true and correct unless
the failure or failures of such representations and warranties to be so true
and correct, individually or in the aggregate, and without giving effect to
any qualification as to materiality set forth in such representations and
warranties, would have a Material Adverse Effect (as defined in the
Agreement) on such party; and
(ix) each party shall have performed in all material respects all
obligations required to be performed by it under the Agreement at or prior
to the Closing Date.
No assurance can be provided as to if or when the Requisite Regulatory
Approvals necessary to consummate the Merger will be obtained or whether all of
the other conditions precedent to the Merger will be satisfied or waived by the
party permitted to do so. If the Merger is not effected on or before June 7,
1999, the Agreement may be terminated by either Norwest or Wells Fargo, unless
the failure to effect the Merger by such date is due to the failure of the party
seeking to terminate the Agreement to perform or observe covenants and
agreements of such party set forth therein.
REGULATORY APPROVALS REQUIRED FOR THE MERGER
Norwest and Wells Fargo have agreed to use their reasonable best efforts to
obtain all regulatory approvals required to consummate the transactions
contemplated by the Agreement (together with the expiration of any statutory
waiting periods in respect thereof, the "REQUISITE REGULATORY APPROVALS"), which
include approval from the Board of Governors of the Federal Reserve System (the
"FEDERAL RESERVE BOARD") and various state regulatory authorities, and either
intend to complete the filing of applications and notifications to obtain such
Requisite Regulatory Approvals promptly after the date of this Joint Proxy
Statement-Prospectus or have completed the filing of such applications and
notifications prior to such date. The Merger cannot proceed in the absence of
the Requisite Regulatory Approvals. There can be no assurance that such
Requisite Regulatory Approvals will be obtained, and, if obtained, there can be
no assurance as to the date of any such approvals or the absence of any
litigation challenging such approvals. There can likewise be no assurance that
the United States Department of Justice ("DOJ") or any state attorney general
will not attempt to challenge the Merger on antitrust grounds, or, if such a
challenge is made, as to the result thereof.
Norwest and Wells Fargo are not aware of any other material governmental
approvals or actions that are required prior to the parties' consummation of the
Merger other than those described below. It is presently contemplated that if
any such additional governmental approvals or actions are required, such
approvals or actions will be sought. There can be no assurance, however, that
any such additional approvals or actions will be obtained.
FEDERAL RESERVE BOARD. The Merger is subject to approval by the Federal
Reserve Board pursuant to Sections 3 and 4 of the Bank Holding Company Act of
1956, as amended (the "BHCA") and Section 25(a) of the Federal Reserve Act, as
amended (the "FEDERAL RESERVE ACT"). Norwest has filed the required application
and notifications with the Federal Reserve Board for approval of the Merger.
Assuming Federal Reserve Board approval, the Merger may not be consummated until
30 days after such approval, during which time the DOJ may challenge the Merger
on antitrust grounds. With the approval of the Federal Reserve Board and the
DOJ, the waiting period may be reduced to no less than 15 days.
The Federal Reserve Board is prohibited from approving any transaction under
the applicable statutes that would result in a monopoly, or that would be in
furtherance of any combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any part of the
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United States, or that may have the effect in any section of the United States
of substantially lessening competition, or tending to create a monopoly, or
resulting in a restraint of trade, unless the Federal Reserve Board finds that
the anti-competitive effects of the transaction are clearly outweighed in the
public interest by the probable effect of the transaction in meeting the
convenience and needs of the communities to be served. In this connection, the
companies have proposed divestitures of branches having aggregate deposits of
approximately $1 billion in various markets in Arizona and Nevada. These
divestitures will also bring the combined company into compliance in Nevada with
the 30% deposit ceiling imposed by Section 3(d) of the BHCA on the amount of
deposits held in any state.
In addition, in reviewing a transaction under the BHCA, the Federal Reserve
Board will consider the financial and managerial resources of the companies and
their subsidiary banks and the convenience and needs of the communities to be
served. As part of consideration of these factors, it is anticipated that the
Federal Reserve Board will consider the regulatory status of Norwest and Wells
Fargo, their progress in achieving resolution of Year 2000 computer problems and
the overall capital and safety and soundness standards established by the
Federal Deposit Insurance Corporation Improvement Act of 1991 and the
regulations promulgated thereunder.
Under the Community Reinvestment Act of 1977, as amended (the "CRA"), the
Federal Reserve Board will take into account the record of performance of each
of Norwest and Wells Fargo in meeting the credit needs of the entire community,
including low- and moderate-income neighborhoods, served by each company. Each
of Norwest's and Wells Fargo's banking subsidiaries has received an outstanding
or a satisfactory CRA rating from its federal regulator, and the principal bank
subsidiary of both Norwest and Wells Fargo received an outstanding rating.
The Federal Reserve Board will furnish notice and a copy of the application
for approval of the Merger to the Office of the Comptroller of the Currency (the
"OCC"), the Federal Deposit Insurance Corporation (the "FDIC") and the
appropriate state regulatory authorities. These agencies have 30 days to submit
their views and recommendations to the Federal Reserve Board. The Federal
Reserve Board is required to hold a public hearing in the event it receives a
written recommendation of disapproval of the application from any of these
agencies within such 30-day period. Furthermore, the BHCA and Federal Reserve
Board regulations require publication of notice of, and the opportunity for
public comment on, the application submitted by Norwest for approval of the
Merger, and authorize the Federal Reserve Board to hold a public hearing or
meeting in connection therewith if the Federal Reserve Board determines that
such a hearing or meeting would be appropriate. Any such hearing or meeting or
comments provided by third parties could prolong the period during which the
application is under review by the Federal Reserve Board. On August 31, 1998,
the Federal Reserve Board announced that a public meeting with respect to the
Merger would be held on September 17, 1998 in Minneapolis, Minnesota, and that
the public comment period with respect to the Norwest application would close on
September 17, 1998.
If the DOJ were to commence an antitrust action, it would stay the
effectiveness of Federal Reserve Board approval of the Merger unless a court
specifically orders otherwise. In reviewing the Merger, the DOJ could analyze
the Merger's effect on competition differently than the Federal Reserve Board,
and thus it is possible that the DOJ could reach a different conclusion than the
Federal Reserve Board regarding the Merger's competitive effects. In particular,
the DOJ may focus on the impact of the Merger on competition for loans and other
financial services to small and middle market businesses. Failure of the DOJ to
object to the Merger may not prevent the filing of antitrust actions by private
persons or state attorneys general.
Norwest's and Wells Fargo's rights to exercise their respective options
under the Option Agreements are also subject to the prior approval of the
Federal Reserve Board, to the extent that the exercise of their respective
options under the Option Agreements would result in Norwest or Wells Fargo, as
the case may be, owning more than 5% of the outstanding shares of Wells Fargo
Common
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Stock or Norwest Common Stock, respectively. Each of Norwest and Wells Fargo has
filed or intends to file the required application and notifications with the
Federal Reserve Board for approval of the exercise of its option under the
relevant Option Agreement. In considering whether to approve Norwest's or Wells
Fargo's right to exercise its respective option, including its respective right
to purchase more than 5% of the outstanding shares of Wells Fargo Common Stock
or Norwest Common Stock, as the case may be, the Federal Reserve Board would
generally apply the same statutory criteria it would apply to its consideration
of approval of the Merger.
STATE REGULATORY AUTHORITIES. Applications or notifications have been filed
with various state financial institution regulatory and insurance authorities in
connection with acquisitions or changes in control of subsidiaries of Wells
Fargo that may be deemed to result from the consummation of the Merger. In
addition, the Merger may be reviewed by the attorneys general in the various
states in which Norwest and Wells Fargo own banking subsidiaries. Such
authorities may be empowered under the applicable state laws and regulations to
investigate and/or disapprove the Merger under the circumstances and based upon
the review set forth in applicable state laws and regulations.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated United States federal
income tax consequences of the Merger to Wells Fargo Stockholders who hold Wells
Fargo Common Stock as a capital asset. The summary is based on the Code,
Treasury regulations thereunder and administrative rulings and court decisions
in effect as of the date hereof, all of which are subject to change at any time,
possibly with retroactive effect. This summary is not a complete description of
all of the tax consequences of the Merger and, in particular, may not address
United States federal income tax considerations applicable to stockholders
subject to special treatment under United States federal income tax law
(including, for example, foreign persons, financial institutions, dealers in
securities, insurance companies, tax-exempt entities, holders who acquired their
shares of Wells Fargo Common Stock pursuant to the exercise of an employee stock
option or right or otherwise as compensation and holders who hold Wells Fargo
Common Stock as part of a hedge, straddle or conversion transaction). In
addition, no information is provided herein with respect to the tax consequences
of the Merger under applicable foreign, state or local laws.
HOLDERS OF WELLS FARGO COMMON STOCK ARE URGED TO CONSULT WITH THEIR TAX
ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES OF THE MERGER TO THEM,
INCLUDING THE EFFECTS OF UNITED STATES FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS.
GENERAL. In connection with the filing of the Registration Statement, the
law firms of Wachtell, Lipton, Rosen & Katz and Sullivan & Cromwell have
delivered their respective opinions, dated the date hereof, addressing the
United States federal income tax consequences of the Merger described below.
Such opinions have been rendered on the basis of facts, representations and
assumptions set forth or referred to in such opinions. In rendering these
opinions, Wachtell, Lipton, Rosen & Katz and Sullivan & Cromwell required and
relied upon factual representations contained in certificates of officers of
Norwest, Merger Sub and Wells Fargo. The opinions are to the effect that, for
United States federal income tax purposes:
(i) The Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, and Norwest, Wells Fargo and Merger Sub will
each be a party to the reorganization;
(ii) No gain or loss will be recognized by Norwest, Merger Sub or Wells
Fargo as a result of the Merger;
(iii) No gain or loss will be recognized by Wells Fargo Stockholders who
exchange their Wells Fargo Common Stock solely for Norwest Common Stock
pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in Norwest Common Stock).
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The obligations of Norwest and Wells Fargo to consummate the Merger are
conditioned upon the receipt of further opinions of Wachtell, Lipton, Rosen &
Katz and Sullivan & Cromwell, dated the Closing Date and as further described
under "--Conditions to Consummation of the Merger." None of the tax opinions to
be delivered to the parties in connection with the Merger as described herein
are binding on the Internal Revenue Service (the "IRS") or the courts, and the
parties do not intend to request a ruling from the IRS with respect to the
Merger. In the event that either Norwest or Wells Fargo fails to receive such
opinions, Norwest or Wells Fargo determines to waive the condition to its
obligation to consummate the Merger relating thereto and the material federal
income tax consequences to Norwest Stockholders or Wells Fargo Stockholders, as
the case may be, are different from those described above, Norwest or Wells
Fargo, as the case may be, will resolicit approval of the Norwest Stockholders
or the Wells Fargo Stockholders, respectively, prior to proceeding with
consummation of the Merger.
Cash received by a Wells Fargo Stockholder in lieu of a fractional share
interest in Norwest Common Stock will be treated as received in redemption of
such fractional share interest, and a Wells Fargo Stockholder should generally
recognize capital gain or loss for United States federal income tax purposes
measured by the difference between the amount of cash received and the portion
of the tax basis of the share of Wells Fargo Common Stock allocable to such
fractional share interest. Such capital gain or loss would be a long-term
capital gain or loss if the holding period for such share of Wells Fargo Common
Stock is greater than one year at the Effective Time. The holding period of a
share of Norwest Common Stock received in the Merger (including a fractional
share interest deemed received and redeemed as described above) will include the
holder's holding period in the Wells Fargo Common Stock surrendered in exchange
therefor.
INFORMATION REPORTING AND BACKUP WITHHOLDING. Payments in respect of Wells
Fargo Common Stock may be subject to information reporting to the IRS and to a
31% backup withholding tax. Backup withholding will not apply, however, to a
payment to a holder of Wells Fargo Common Stock or other payee if such
stockholder or payee completes and signs the substitute Form W-9 that will be
included as part of the transmittal letter, or otherwise proves to Norwest and
the Exchange Agent that it is exempt from backup withholding.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a "pooling of
interests" transaction under GAAP. Under such method of accounting, Wells Fargo
Stockholders and Norwest Stockholders will be deemed to have combined their
existing voting common stock interests by virtue of the exchange of shares of
Wells Fargo Common Stock for shares of Norwest Common Stock. Accordingly, the
book value of the assets, liabilities and stockholders' equity of each of
Norwest and Wells Fargo, as reported on its respective consolidated balance
sheet, will be carried over to the consolidated balance sheet of the combined
company, and no goodwill will be created. The combined company will be able to
include in its consolidated income the consolidated income of both companies for
the entire fiscal year in which the Merger occurs.
It is a condition to consummation of the Merger that each of Norwest and
Wells Fargo receive an opinion from KPMG Peat Marwick LLP, their respective
independent accountants, to the effect that the Merger will be accounted for as
a "pooling of interests." See "--Conditions to Consummation of the Merger." In
order to facilitate the treatment of the Merger as a "pooling of interests" and,
therefore, to facilitate the satisfaction of this condition, Wells Fargo will
register and issue approximately 2.5 million shares of Wells Fargo Common Stock
prior to the consummation of the Merger. Wells Fargo also rescinded its share
repurchase programs as of June 7, 1998. Norwest's stock repurchase plan does not
preclude pooling of interests accounting because Norwest uses a systematic plan
of share repurchase to fund specific requirements in connection with its benefit
plans, direct purchase program and business combinations accounted for as
purchases, as well as for other corporate purposes.
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The unaudited pro forma financial information contained in this Joint Proxy
Statement-Prospectus has been prepared using the "pooling of interests"
accounting method to account for the Merger. See "Summary--Unaudited Comparative
Per Share Data" and "Unaudited Pro Forma Condensed Combined Financial
Information."
TERMINATION OF THE MERGER AGREEMENT
The Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval by holders of Norwest Common Stock and Wells
Fargo Common Stock:
(i) by mutual consent of Norwest and Wells Fargo in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board of Directors;
(ii) by either the Norwest Board or the Wells Fargo Board if any
governmental entity which must grant a Requisite Regulatory Approval has
denied approval of the Merger and such denial has become final and
non-appealable or any governmental entity of competent jurisdiction has
issued a final non-appealable order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by the Agreement;
(iii) by either the Norwest Board or the Wells Fargo Board if the Merger
is not consummated on or before June 7, 1999, unless the failure of the
Closing Date to occur by such date is due to the failure of the party
seeking to terminate the Agreement to perform or observe the covenants and
agreements of such party set forth therein; or
(iv) by either the Norwest Board or the Wells Fargo Board (provided that
the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained in the Agreement) if there
has been a material breach of any of the covenants or agreements or any of
the representations or warranties set forth in the Agreement on the part of
Wells Fargo, in the case of a termination by Norwest, or on the part of
Norwest, in the case of a termination by Wells Fargo, which breach,
individually or in the aggregate, would constitute, if occurring or
continuing on the Closing Date, the failure of the conditions described in
either paragraph (viii) or (ix) under "--Conditions to Consummation of the
Merger," which breach is not cured within 45 days following written notice
to the party committing such breach, or which breach, by its nature, cannot
be cured prior to the Closing Date.
Whether or not the Merger is consummated, all fees and expenses incurred in
connection with the Merger and the transactions contemplated thereby will be
paid by the party incurring such expenses, except that the costs and expenses of
printing and mailing this Joint Proxy Statement-Prospectus, and all filing and
other fees paid to the Commission in connection with the Merger, will be borne
equally by Norwest and Wells Fargo.
EXTENSION, WAIVER AND AMENDMENT OF THE AGREEMENT
EXTENSION AND WAIVER. At any time prior to the Effective Time, Norwest and
Wells Fargo, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties contained in the
Agreement or in any document delivered pursuant to the Agreement and (iii) waive
compliance with any of the agreements or conditions contained in the Agreement;
except that after any approval of the transactions contemplated by the Agreement
by the respective stockholders of Norwest or Wells Fargo, there may not be,
without further approval of such stockholders, any extension or waiver of the
Agreement which reduces the amount or changes the form of the consideration to
be delivered to the Wells Fargo Stockholders, other than as contemplated by the
Agreement.
AMENDMENT. Subject to compliance with applicable law and the ability of the
parties to change the method of effecting the combination of Wells Fargo and
Norwest, the Agreement may be amended
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by Norwest and Wells Fargo by action taken or authorized by their respective
Boards of Directors at any time before or after approval of the matters
presented in connection with the Merger by Norwest Stockholders or Wells Fargo
Stockholders, except that after any approval of the transactions contemplated by
the Agreement by the Norwest Stockholders or Wells Fargo Stockholders, there may
not be, without further approval of such stockholders, any amendment of the
Agreement which changes the amount or the form of the consideration to be
delivered to the Wells Fargo Stockholders, other than as contemplated by the
Agreement.
EMPLOYEE BENEFITS AND PLANS
From and after the Effective Time, unless otherwise mutually determined, the
employee or director benefit plans, arrangements or agreements maintained, or
contributed to, as of the date of the Agreement, by Wells Fargo and certain
affiliates and disclosed to Norwest in connection with the execution and
delivery of the Agreement (the "WELLS FARGO BENEFIT PLANS") and by Norwest and
certain affiliates and disclosed to Wells Fargo in connection with the execution
and delivery of the Agreement (the "NORWEST BENEFIT PLANS"), in each case, as in
effect as of the date of the Agreement, will remain in effect with respect to
employees of Wells Fargo or Norwest (or their subsidiaries) covered by such
plans at the Effective Time until such time as Norwest, subject to applicable
law, the terms of the Agreement and the terms of such plans, adopts the New
Benefit Plans. In the Agreement, Wells Fargo and Norwest have agreed that, prior
to the Closing Date, they will cooperate in reviewing, evaluating and analyzing
the Norwest Benefit Plans and the Wells Fargo Benefit Plans with a view towards
developing appropriate New Benefit Plans for the employees covered thereby
subsequent to the Merger.
Norwest is obligated under the Agreement to honor in accordance with their
terms all disclosed Norwest Benefit Plans, Wells Fargo Benefit Plans and other
employee benefit plans, contracts, arrangements, commitments or understandings,
except that the combined company may amend, modify or terminate any Norwest
Benefit Plans, Wells Fargo Benefit Plans, or other employee benefit plans,
contracts, arrangements, commitments or understandings, in accordance with their
terms and applicable law.
STOCK EXCHANGE LISTING
Norwest has agreed to cause the shares of Norwest Common Stock and Norwest
Series B Preferred Stock to be issued in the Merger to be approved for listing
on the NYSE. It is a condition to the consummation of the Merger that such
shares of Norwest Common Stock and Norwest Series B Preferred Stock be
authorized for listing on the NYSE, subject to official notice of issuance.
EXPENSES
The Agreement provides that each of Norwest and Wells Fargo will pay its own
expenses in connection with the Merger and the transactions contemplated
thereby, provided that Norwest and Wells Fargo will divide equally the payment
of all printing costs and filing fees and registration fees paid to the
Commission in connection with the Merger.
DIVIDENDS
The Agreement provides that Norwest and Wells Fargo will coordinate the
declaration and payment of dividends in respect of Norwest Common Stock and
Wells Fargo Common Stock with the intent that holders thereof will not receive
two dividends for a single quarter or fail to receive one dividend which they
would otherwise receive in the absence of the Merger.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Norwest's and Wells Fargo's management and the Norwest
Board and Wells Fargo Board have interests in the Merger that are in addition to
their interests as Norwest Stockholders or Wells Fargo Stockholders generally.
The Norwest and Wells Fargo Boards were aware of these interests and considered
them, among other matters, in approving the Agreement and the transactions
contemplated thereby.
The directors, officers and principal stockholders of Wells Fargo and their
associates may have had in the past, and expect to have in the future,
transactions in the ordinary course of business with Norwest and its
subsidiaries and affiliates. The directors, officers and principal stockholders
of Norwest and their associates may have had in the past, and expect to have in
the future, transactions in the ordinary course of business with Wells Fargo and
its subsidiaries and affiliates. Such transactions were, and are expected to be,
on substantially the same terms as those prevailing at the time for comparable
transactions with others.
EMPLOYMENT AGREEMENTS WITH NORWEST. In connection with the execution of the
Agreement, Norwest entered into employment agreements (the "EMPLOYMENT
AGREEMENTS") with each of Messrs. Hazen and Jacobs (the "EXECUTIVES"). Mr.
Hazen's Employment Agreement is for a term of five years, and Mr. Jacobs'
Employment Agreement is for a term of three years, in each case commencing at
the Effective Time and terminating on the fifth or third anniversary thereof, as
the case may be (the "EMPLOYMENT PERIOD"). During the Employment Period, Mr.
Hazen will serve as the Chairman of the Board of Directors of the combined
company, and Mr. Jacobs will serve as a senior executive reporting directly to
either the Chief Executive Officer (the "CEO") or the Chairman of the Board of
Directors of the combined company. Each Executive will also serve as a member of
the combined company's Board of Directors. During the Employment Period, Messrs.
Hazen and Jacobs will each receive an annual base salary and annual bonus of not
less than the annual base salary and annual bonus paid to the CEO (in the case
of Mr. Hazen) and to his peer executive officer (in the case of Mr. Jacobs). Mr.
Hazen will be granted 250,000 shares of restricted common stock of the combined
company as of the Effective Time and 125,000 shares of restricted common stock
of the combined company on each of the first and second anniversaries of the
Effective Time (collectively, the "HAZEN RESTRICTED STOCK"). Mr. Hazen will be
granted stock options to acquire 500,000 shares of common stock of the combined
company as of the Effective Time and 250,000 shares of common stock of the
combined company on each of the first and second anniversaries of the Effective
Time (collectively, the "HAZEN STOCK OPTIONS"). Subject to accelerated vesting
upon certain qualifying terminations as described herein, the Hazen Restricted
Stock will vest in five equal installments on each of the first through fifth
anniversaries of the date of grant, and the Hazen Stock Options will vest in
three equal installments on each of the first through third anniversaries of the
date of grant. Pursuant to the Employment Agreements, commencing upon an
Executive's termination of employment for any reason, the Executive will be paid
an annual retirement benefit of not less than 25% of the Executive's 1997
Compensation (the "RETIREMENT BENEFIT"). The Employment Agreements further
provide that, upon the termination of an Executive's employment other than for
Cause, death or Disability, or if the Executive terminates employment for Good
Reason, each Executive is entitled to a lump-sum cash payment equal to the sum
of (i) any unpaid base salary, (ii) a pro rata annual bonus, based on the
highest bonus earned in the three years prior to the date of termination and
(iii) the product of (x) the number of months from the date of termination until
the end of the Employment Period, divided by 12 and (y) the sum of the
Executive's base salary and the highest bonus earned in the three years prior to
the date of termination. Upon any such covered termination and upon the
Executive's death or Disability, the Hazen Restricted Stock, the Hazen Stock
Options and any other stock awards granted to either Executive during the
Employment Period will vest immediately. In addition, upon a covered
termination, each Executive will be entitled to receive lifetime medical and
dental benefits coverage, on the same basis as such benefits were provided to
the Executive immediately prior to the date of
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termination, and will be entitled to the continued provision of certain other
benefits. In certain circumstances in which amounts payable to an Executive
under the Employment Agreement or otherwise would subject such Executive to the
excise tax under section 4999 of the Code, the combined company will make an
additional payment to the Executive such that after the payment of all income
and excise taxes, the Executive will be in the same after-tax position as if no
excise tax under section 4999 of the Code had been imposed. Norwest believes
that no Gross-Up Payments will be payable to the Executives. The Employment
Agreements prohibit the Executives from disclosing confidential information and
competing with the combined company during the Employment Period and for
specified periods thereafter. If either Executive breaches the non-competition
provision, the combined company's obligation to pay that Executive's Retirement
Benefit will be suspended and will recommence only when the Executive is no
longer in violation of the provision, but with a 50% reduction of the Retirement
Benefit. Capitalized terms used in this paragraph but not defined here have the
meaning given them in the Employment Agreements.
SEVERANCE BENEFITS. The Wells Fargo severance plan (the "WELLS FARGO
SEVERANCE PLAN") provides severance benefits (at levels designated by the
Management Development and Compensation Committee of the Wells Fargo Board (the
"WELLS COMMITTEE")) to employees designated by the Wells Committee if their
employment is terminated under certain circumstances within the two-year period
following a change of control. Consummation of the Merger will be a change of
control for purposes of the Wells Fargo Severance Plan. Under the Wells Fargo
Severance Plan, if, for example, the employment of each of Terri A. Dial,
Charles M. Johnson and Clyde W. Ostler (the "WELLS FARGO EXECUTIVES") were
terminated under circumstances entitling any such executive to benefits
thereunder, the severance benefit payable would equal the product of (i) three
and (ii) the sum of the Wells Fargo Executive's base salary and the higher of
the (a) highest annual bonus earned in the three years prior to the Merger or
(b) the annual bonus earned in the most recent year prior to the Wells Fargo
Executive's date of termination. In addition, the Wells Fargo Executives would
be entitled to continued welfare benefits coverage and other benefits during the
three-year period following the date of termination.
STOCK-BASED RIGHTS. The Agreement provides that, at the Effective Time,
each outstanding and unexercised stock option to acquire shares of Wells Fargo
Common Stock granted under the Wells Fargo Stock Plans will cease to represent
the right to acquire shares of Wells Fargo Common Stock and will be converted
into and become a right with respect to Norwest Common Stock, and the Wells
Fargo Stock Plans will be assumed by Norwest.
RETENTION. In the Agreement, Norwest and Wells Fargo have agreed to
coordinate in establishing a key employee retention and severance program,
consistent with the companies' strategy for the Merger, in order to provide for
equitable treatment of similarly situated employees of each company, and to
retain and provide appropriate incentives to key personnel for the benefit of
the combined company.
INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. The Agreement provides
that, after the Effective Time, in the event of any threatened or actual claim
or proceeding in which any person who is or has been a director, officer or
employee of Wells Fargo or any of its subsidiaries is, or is threatened to be,
made a party based in whole or in part on, or pertaining to, (i) the fact that
such person was a director, officer or employee of Wells Fargo or any of its
subsidiaries or, (ii) the Agreement, the Option Agreements or the transactions
contemplated thereby, Norwest will, subject to the conditions set forth in the
Agreement, indemnify such person to the fullest extent permitted by law against
any liability or expense incurred in connection with any such claim or
proceeding. The Agreement further provides that Norwest will, subject to the
conditions set forth in the Agreement, use its best reasonable efforts to cause
the persons serving as officers and directors of Wells Fargo or its subsidiaries
immediately prior to the Effective Time of the Merger to be covered for a period
of at least
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six years following the Effective Time by Wells Fargo's directors' and officers'
liability insurance policy (or any equivalent substitute therefor) with respect
to acts or omissions occurring prior to the Effective Time which were committed
by such officers and directors in their capacity as such.
OTHER INTERESTS. A subsidiary bank of Norwest has made several loans to Mr.
Hazen and Ann-Eve Hazen, as trustees for the Hazen Family Trust, dated May 7,
1992, as amended. Such loans, which are personally guaranteed by Mr. Hazen and
Mrs. Hazen, were not made in connection with the Merger and were made in the
ordinary course of business, on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than the normal risk of
collectability or present other unfavorable features for Norwest.
NORWEST AND WELLS FARGO OPTION AGREEMENTS
Immediately after the execution of the Agreement, Norwest executed and
delivered a stock option agreement, dated June 7, 1998 (the "NORWEST OPTION
AGREEMENT"), pursuant to which Norwest granted Wells Fargo an option to purchase
Norwest Common Stock from Norwest under the conditions set forth below (the
"NORWEST OPTION"). At the same time, Wells Fargo executed and delivered a stock
option agreement, dated June 7, 1998 (the "WELLS FARGO OPTION AGREEMENT" and,
together with the Norwest Option Agreement, the "OPTION AGREEMENTS"), pursuant
to which Wells Fargo granted to Norwest an option to purchase Wells Fargo Common
Stock from Wells Fargo under the conditions set forth below (the "WELLS FARGO
OPTION"). Norwest and Wells Fargo approved and entered into the Option
Agreements to induce each other to enter into the Agreement.
Except as otherwise noted below, the terms and conditions of the Norwest
Option Agreement and the Wells Fargo Option Agreement are identical in all
material respects. For purposes of this section, except as otherwise noted, (i)
the Norwest Option Agreement or the Wells Fargo Option Agreement, as the case
may be, is sometimes referred to as the "ISSUER OPTION AGREEMENT," (ii) Norwest,
as issuer of the Norwest Common Stock, and Wells Fargo, as issuer of the Wells
Fargo Common Stock, upon the exercise of the Norwest Option and the Wells Fargo
Option, respectively, are sometimes individually referred to as the "ISSUER,"
(iii) Norwest and Wells Fargo, as the holder of the Wells Fargo Option and the
Norwest Option, respectively, are sometimes individually referred to as the
"OPTIONEE," (iv) the Norwest Option or the Wells Fargo Option, as the case may
be, is sometimes referred to as the "ISSUER OPTION" and (v) the Norwest Common
Stock and the Wells Fargo Common Stock, as the case may be, is referred to as
"ISSUER COMMON STOCK."
The Option Agreements are intended to increase the likelihood that the
Merger will be consummated in accordance with the terms of the Agreement and to
compensate the Optionee if the Merger is not so consummated. Consequently,
certain aspects of the Option Agreements may have the effect of discouraging
persons who might now or at any other time prior to the Effective Time be
interested in acquiring all of or a significant interest in Norwest or Wells
Fargo from considering or proposing such an acquisition, even if, in the case of
Wells Fargo, such persons were prepared to offer to pay consideration to the
Wells Fargo Stockholders that had a higher current market price than the shares
of Norwest Common Stock to be received per share of Wells Fargo Common Stock
pursuant to the Agreement. The acquisition of Norwest or Wells Fargo by a third
party could cause the Norwest Option or the Wells Fargo Option, as the case may
be, to become exercisable. The existence of the Issuer Options could
significantly increase the cost to a potential acquiror of acquiring either
Issuer compared to its cost had the Option Agreements and the Agreement not been
entered into. Such increased cost might discourage a potential acquiror from
considering or proposing an acquisition or might result in a potential acquiror
proposing to pay a lower per share price to acquire such Issuer than it might
otherwise have proposed to pay. Moreover, following consultation with their
respective independent accountants, Wells Fargo and Norwest believe that the
exercise or repurchase of either of
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the Issuer Options is likely to prohibit any other acquiror of an Issuer from
accounting for any acquisition of such Issuer using the "pooling of interests"
accounting method for a period of two years.
The Norwest Option Agreement provides for the purchase by Wells Fargo of up
to 151,139,585 shares (the "NORWEST OPTION SHARES" or the "ISSUER OPTION
SHARES," as the case may be) of Norwest Common Stock at an exercise price of
$39.6875 per share (the closing price on the NYSE composite tape on the last
trading day before the execution of the Agreement and the Option Agreements),
payable in cash. The Norwest Option Shares, if issued pursuant to the Norwest
Option Agreement, will in no event exceed 19.9% of the Norwest Common Stock
issued and outstanding without giving effect to the issuance of any Norwest
Common Stock subject to the Norwest Option.
The Wells Fargo Option Agreement provides for the purchase by Norwest of up
to 16,932,066 shares (the "WELLS FARGO OPTION SHARES" or the "ISSUER OPTION
SHARES," as the case may be) of Wells Fargo Common Stock at an exercise price of
$362.0625 per share (the closing price on the NYSE composite tape on the last
trading day before the execution of the Agreement and the Option Agreements),
payable in cash. The Wells Fargo Option Shares, if issued pursuant to the Wells
Fargo Option Agreement, will in no event exceed 19.9% of the Wells Fargo Common
Stock issued and outstanding without giving effect to the issuance of any Wells
Fargo Common Stock subject to the Wells Fargo Option.
The number of shares of Issuer Common Stock subject to the applicable Issuer
Option will be increased or decreased, as appropriate, to the extent that
additional shares of Issuer Common Stock are either (i) issued or otherwise
become outstanding (other than pursuant to an exercise of an Issuer Option) or
(ii) redeemed, repurchased, retired or otherwise cease to be outstanding after
June 7, 1998, such that, after such event, the number of Issuer Option Shares
will continue to equal 19.9% of the Issuer Common Stock then issued and
outstanding without giving effect to the issuance of any Issuer Common Stock
subject to such Issuer Option. In the event of any change in, or distributions
in respect of, the number of shares of Issuer Common Stock by reason of a stock
dividend, split-up, merger, recapitalization, combination, subdivision,
conversion, exchange of shares, distribution on or in respect of such Issuer
Common Stock that would be prohibited by the Agreement, or similar transaction,
the type and number of Issuer Option Shares purchasable upon exercise of the
applicable Issuer Option, and the applicable option price will also be adjusted
in such a manner as will fully preserve the economic benefits of the Option.
Each Issuer Option Agreement provides that the Optionee or any other holder
or holders of the Issuer Option (as used in this section, collectively, the
"HOLDER") may exercise the Issuer Option, in whole or in part, subject to
regulatory approval, if both an Initial Triggering Event (as defined herein) and
a Subsequent Triggering Event (as defined herein) has occurred prior to the
occurrence of an Exercise Termination Event (as defined herein); provided that
the Holder has sent to the Issuer written notice of such exercise within 90 days
following such Subsequent Triggering Event (subject to extension as provided in
each Issuer Option Agreement). The terms Initial Triggering Event and Subsequent
Triggering Event generally relate to attempts by one or more third parties to
acquire a significant interest in the Issuer. Any exercise of the Issuer Option
will be deemed to occur on the date such notice is sent.
For purposes of each Issuer Option Agreement:
(i) The term "INITIAL TRIGGERING EVENT" means the occurrence of any of
the following events or transactions after June 7, 1998: (a) the Issuer or
any subsidiary of the Issuer, without the Optionee's prior written consent,
enters into an agreement to engage in, or the Issuer's Board of Directors
recommends that stockholders of the Issuer approve or accept, an Acquisition
Transaction (as defined herein) with any person or group (other than as
contemplated by the Agreement); (b) the Issuer or any subsidiary of the
Issuer, without the Optionee's prior written consent, authorizes,
recommends, proposes or publicly announces its intention to authorize,
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recommend or propose to engage in an Acquisition Transaction, or the
Issuer's Board of Directors publicly withdraws or modifies, or publicly
announces its intention to withdraw or modify, in any manner adverse to the
Optionee, its recommendation that its stockholders approve the Agreement in
anticipation of engaging in an Acquisition Transaction; (c) any person,
other than the Optionee, any subsidiary of the Optionee or any Issuer
subsidiary acting in a fiduciary capacity in the ordinary course of business
acquires beneficial ownership, or the right to acquire beneficial ownership,
of 10% or more of the outstanding shares of Issuer Common Stock; (d) any
person other than the Optionee or any subsidiary of the Optionee makes a
BONA FIDE proposal to the Issuer or its stockholders by public announcement
or written communication that becomes the subject of public disclosure to
engage in an Acquisition Transaction; (e) the Issuer breaches any covenant
or obligation in the Agreement after any person, other than the Optionee or
any subsidiaries of the Optionee, has proposed an Acquisition Transaction,
and such breach (1) would entitle the Optionee to terminate the Agreement
and (2) is not remedied prior to the date of the Optionee's notice to the
Issuer of the exercise of the Option; or (f) any person other than the
Optionee or any subsidiary of the Optionee, other than in connection with a
transaction to which the Optionee has given its prior written consent, files
an application or notice with the Federal Reserve Board, or other federal or
state bank regulatory authority, which application or notice has been
accepted for processing, for approval to engage in an Acquisition
Transaction.
(ii) For purposes of each Issuer Option Agreement, the term "ACQUISITION
TRANSACTION" means (a) a merger or consolidation, or any similar transaction
with the Issuer or any of its Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X of the Commission); (b) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets or
deposits of the Issuer or any of its Significant Subsidiaries; (c) a
purchase or other acquisition of securities representing 10% or more of the
voting power of the Issuer; or (d) any substantially similar transaction,
PROVIDED, HOWEVER, that in no event will any merger, consolidation, purchase
or similar transaction involving only the Issuer and one or more of its
subsidiaries or involving only any two or more of such subsidiaries,
provided that any such transaction is not entered into in violation of the
terms of the Agreement or any acquisition permitted under the Agreement, be
deemed to be an Acquisition Transaction.
(iii) The term "SUBSEQUENT TRIGGERING EVENT" means the occurrence of
either of the following events or transactions after June 7, 1998: (a) the
acquisition by any person of beneficial ownership of 20% or more of the then
outstanding shares of Issuer Common Stock; or (b) the occurrence of the
Initial Triggering Event described above in clause (i)(a), except that the
percentage referred to in clause (ii)(c) of the definition of "Acquisition
Transaction" set forth above will be 20%.
Each Issuer Option will expire upon the occurrence of an "EXERCISE
TERMINATION EVENT," which includes: (i) the Effective Time; (ii) termination of
the Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event, except in the
case of the termination of the Agreement by the Optionee as a result of an
uncured material breach by the Issuer of any of its representations, warranties,
covenants or agreements unless the breach by the Issuer is non-volitional; or
(iii) the date that is 12 months after the termination of the Agreement if such
termination occurs after the occurrence of an Initial Triggering Event or is a
termination by the Optionee as a result of an uncured material breach by the
Issuer of any of its representations, warranties, covenants or agreements unless
the breach by the Issuer is non-volitional (provided that, if an Initial
Triggering Event continues or occurs beyond such termination of the Agreement
and prior to the passage of such 12-month period, the Issuer Option will
terminate 12 months from the expiration of the last Initial Triggering Event to
expire, but in no event more than 18 months after such termination of the
Agreement).
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As of the date of this Joint Proxy Statement-Prospectus, to the knowledge of
Norwest and Wells Fargo, no Initial Triggering Event or Subsequent Triggering
Event has occurred.
Immediately prior to the occurrence of a Repurchase Event (as defined
herein), (i) following a request of a Holder, delivered prior to an Exercise
Termination Event, the Issuer (or any successor thereto) will repurchase the
Issuer Option from the Holder at a price (the "ISSUER OPTION REPURCHASE PRICE")
equal to the amount by which (a) the market/offer price (as defined herein)
exceeds (b) the exercise price, multiplied by the number of shares for which the
Issuer Option may then be exercised and (ii) at the request of the owner of
Issuer Option Shares from time to time (the "OWNER"), delivered within 90 days
of such occurrence (or such later period as provided in Section 10 of each of
the Option Agreements), the Issuer will repurchase such number of the Issuer
Option Shares from the Owner as the Owner will designate at a price (the "ISSUER
OPTION SHARE REPURCHASE PRICE") equal to the market/offer price multiplied by
the number of Option Shares so designated.
The term "MARKET/OFFER PRICE" means the highest of (i) the price per share
of Issuer Common Stock at which a tender offer or exchange offer therefor has
been made, (ii) the price per share of Issuer Common Stock to be paid by any
third party pursuant to an agreement with Issuer, (iii) the highest closing
price for shares of Issuer Common Stock within the six-month period immediately
preceding the date the Holder gives notice of the required repurchase of the
Issuer Option or the Owner gives notice of the required repurchase of Issuer
Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of the Issuer's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of the
Issuer as determined by a nationally recognized investment banking firm selected
by the Holder or the Owner, as the case may be, and the Issuer, divided by the
number of shares of Issuer Common Stock outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
will be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, and the Issuer. However, if the
Issuer at any time after delivery of a notice of repurchase as described in this
paragraph is prohibited under applicable law or regulation from delivering to
the Holder and/or the Owner, as appropriate, the Issuer Option Repurchase Price
and the Issuer Option Share Repurchase Price in full, the Holder or Owner may
revoke its notice of repurchase of the Issuer Option or the Issuer Option
Shares, either in whole or to the extent of the prohibition, whereupon, in the
latter case, the Issuer will promptly (i) deliver to the Holder and/or the
Owner, as appropriate, that portion of the Issuer Option Repurchase Price or the
Issuer Option Share Repurchase Price that the Issuer is not prohibited from
delivering and (ii) deliver, as appropriate, (a) to the Holder, a new Issuer
Option Agreement evidencing the right of the Holder to purchase that number of
shares of the Issuer Common Stock obtained by multiplying the number of shares
of the Issuer Common Stock for which the surrendered Issuer Option Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Issuer Option Repurchase Price less the portion
thereof theretofore delivered to the Holder and the denominator of which is the
Issuer Option Repurchase Price, and (b) to the Owner, a certificate for the
Issuer Option Shares it is then so prohibited from repurchasing. A "REPURCHASE
EVENT" is deemed to have occurred (i) upon the consummation of an Acquisition
Transaction or (ii) upon the acquisition by any person of the beneficial
ownership of 50% or more of the then outstanding Issuer Common Stock, provided
that a Subsequent Triggering Event has occurred prior to an Exercise Termination
Event.
In the event that, prior to an Exercise Termination Event, the Issuer enters
into any agreement (i) to consolidate with or merge into any person, other than
the Optionee or one of its subsidiaries, such that Issuer is not the continuing
or surviving corporation of such consolidation or merger; (ii) to permit any
person, other than the Optionee or one of its subsidiaries, to merge into the
Issuer and the Issuer is the continuing or surviving corporation, but, in
connection with such consolidation or merger, then outstanding shares of the
Issuer Common Stock are changed into or exchanged for stock
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<PAGE>
or other securities of any other person or cash or any other property, or the
then outstanding shares of Issuer Common Stock after such merger will represent
less than 50% of the outstanding voting shares and voting share equivalents of
the merged corporation; or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than the Optionee or any of
its subsidiaries, then, and in each such case, the agreement governing such
transaction must provide that, upon consummation of such transaction and upon
terms and conditions set forth in the Issuer Option Agreement, the Option will
be converted into, or exchanged for, an option having substantially the same
terms as the Option (the "SUBSTITUTE OPTION") to purchase securities, at the
election of the Holder, of either the acquiring person or any person that
controls the acquiring person. At the request of the Holder of the Substitute
Option, the issuer of the Substitute Option will repurchase it at a price, and
subject to such other terms and conditions, as set forth in the Issuer Option
Agreement.
The Optionee may, at any time during which the Issuer would be required to
repurchase the Issuer Option or any Issuer Option Shares as described above,
surrender the Issuer Option (together with any Issuer Option Shares issued to
and then owned by the Holder) to the Issuer in exchange for a cash payment equal
to the Surrender Price (as defined herein), except that the Optionee may not
exercise this right if the Issuer has previously repurchased the Issuer Option
(or any portion thereof) or any Issuer Option Shares as described above. The
"SURRENDER PRICE" is (i) $1.2 billion, plus (ii) if applicable, the aggregate
purchase price previously paid by the Optionee with respect to any Issuer Option
Shares, minus (iii) if applicable, the excess of (a) the net cash, if any,
received by the Optionee pursuant to the arm's-length sale of Issuer Option
Shares (or any other securities into which such Issuer Option Shares were
converted or exchanged) to any party not affiliated with the Optionee, over (b)
the purchase price paid by the Optionee with respect to such Issuer Option
Shares.
Within 90 days after the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Date (subject to extension as provided
in the Issuer Option Agreement), the Optionee may request the Issuer to prepare,
file and keep current with respect to the Option Shares, a registration
statement with the Commission. The Issuer is required to use its reasonable best
efforts to cause such registration statement to become effective and then to
remain effective for 180 days or such shorter time as may be reasonably
necessary to effect such sales or other dispositions of Option Shares. The
Optionee has the right to demand two such registrations.
Neither the Issuer nor the Optionee may assign any of its rights or
obligations under the Issuer Option Agreements or the Issuer Option to any other
person without the express written consent of the other party, except that, if a
Subsequent Triggering Event occurs prior to an Exercise Termination Event, the
Optionee, subject to the terms of the Issuer Option Agreement, may assign, in
whole or in part, its rights and obligations thereunder, within 90 days (subject
to extension as provided in the Issuer Option Agreement) of such Subsequent
Triggering Event; provided that, until the date 15 days after the date on which
the Federal Reserve Board approves an application by the Optionee to acquire the
Issuer Option Shares, the Optionee may not assign its rights under the Issuer
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of the Issuer, (iii) an assignment to a single party for
the purpose of conducting a widely dispersed public distribution on the
Optionee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
Certain rights and obligations of the Optionee and the Issuer under the
Option Agreement are subject to receipt of required regulatory approvals. The
approval of the Federal Reserve Board is required for the acquisition by the
Optionee of more than 5% of the outstanding shares of Issuer Common Stock.
Accordingly, the Optionee has included or will include in its applications with
the Federal Reserve Board a request for approval of the right of the Optionee to
exercise its rights under the Issuer Option Agreement, including its right to
purchase more than 5% of the outstanding shares of Issuer Common Stock. See
"--Regulatory Approvals Required for the Merger."
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<PAGE>
RESTRICTIONS ON RESALES BY AFFILIATES
The issuance of shares of Norwest Common Stock to Wells Fargo Stockholders
and the issuance of shares of Norwest New Preferred Stock to holders of Wells
Fargo Preferred Stock in the Merger have been registered under the Securities
Act. The shares of Norwest Common Stock exchanged in the Merger may be traded
freely and without restriction by those stockholders not deemed to be
"affiliates" of Wells Fargo as that term is defined under the Securities Act. An
affiliate of Wells Fargo, as defined by the rules promulgated pursuant to the
Securities Act, is a person who directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
Wells Fargo. Any subsequent transfer of such shares by any person who is an
affiliate of Wells Fargo at the time the Merger is submitted for vote of the
holders of Wells Fargo Common Stock will, under existing law, require either (i)
the further registration under the Securities Act of the shares of Norwest
Common Stock to be transferred, (ii) compliance with Rule 145 promulgated under
the Securities Act (permitting limited sales under certain circumstances) or
(iii) the availability of another exemption from registration. The foregoing
restrictions are expected to apply to the directors and executive officers of
Wells Fargo and the holders of 10% or more of the Wells Fargo Common Stock (and
to certain relatives or the spouse of any such person and any trusts, estates,
corporations or other entities in which any such person has a 10% or greater
beneficial or equity interest). Stop transfer instructions will be given by
Norwest to the transfer agent with respect to the Norwest Common Stock to be
received by persons subject to the restrictions described above, and the
certificates for such stock will be appropriately legended.
Commission guidelines regarding qualifying for the "pooling of interests"
method of accounting also limit sales of shares of the acquiring and acquired
company by affiliates of either company in a business combination. Commission
guidelines indicate further that the "pooling of interests" method of accounting
will generally not be challenged on the basis of sales by affiliates of the
acquiring or acquired company if such affiliates do not dispose of any of the
shares of the corporation they own or shares of a corporation they receive in
connection with a merger during the period beginning 30 days before the merger
and ending when financial results covering at least 30 days of post-merger
operations of the combined entity have been published.
Each of Wells Fargo and Norwest has agreed in the Agreement to use its best
efforts to cause each person who is an affiliate (for purposes of Rule 145 and
for purposes of qualifying the Merger for "pooling of interests" accounting
treatment) of such party to deliver to the other party a written agreement
intended to ensure compliance with the Securities Act and preserve the ability
to treat the Merger as a "pooling of interests."
Norwest has agreed in the Agreement to use its best efforts to publish, not
later than 90 days after the end of the first month after the Effective Time in
which there are at least 30 days of post-Merger combined operations, combined
sales and net income figures as contemplated by and in accordance with the terms
of the Commission's Accounting Series Release No. 135.
NORWEST AND WELLS FARGO DIVIDEND REINVESTMENT PLANS
Pursuant to the Agreement, the Norwest Direct Purchase Plan and the Wells
Fargo Dividend Reinvestment and Employee Stock Purchase Plans may continue
through the Effective Time, provided that issuances thereunder be in the
ordinary course of Norwest's or Wells Fargo's business, as the case may be.
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<PAGE>
MANAGEMENT AND OPERATIONS AFTER THE MERGER
BOARD OF DIRECTORS. At the Effective Time, the Board of Directors of the
combined company will consist of an equal number of Norwest and Wells Fargo
directors, up to a maximum combined total of 28 directors. Norwest and Wells
Fargo expect that the individuals named below will comprise the Board of
Directors of the combined company at the Effective Time.
<TABLE>
<S> <C>
NORWEST WELLS FARGO
Leslie S. Biller Michael R. Bowlin
J. A. Blanchard III Edward M. Carson
David A. Christensen William S. Davila
Susan E. Engel Paul Hazen
William A. Hodder Rodney J. Jacobs
Reatha Clark King Philip J. Quigley
Richard M. Kovacevich Donald B. Rice
Richard D. McCormick Judith M. Runstad
Cynthia H. Milligan Susan G. Swenson
Benjamin F. Montoya Daniel M. Tellep
Ian M. Rolland Chang-Lin Tien
Michael W. Wright John A. Young
</TABLE>
MANAGEMENT. It is expected that, at the Effective Time, Mr. Hazen will be
the Chairman of the Board of Directors and Mr. Kovacevich will be President and
Chief Executive Officer of the combined company. It is also expected that Mr.
Biller will be a senior executive officer of the combined company with
responsibilities comparable to those of his current position and that Mr. Jacobs
will be Chief Financial Officer of the combined company. In addition, at the
Effective Time the following individuals are expected to have the positions with
the combined company listed below:
<TABLE>
<CAPTION>
NAME AND CURRENT POSITION POSITION WITH THE COMBINED COMPANY
- -------------------------------------------- --------------------------------------------
<S> <C>
Patricia Callahan, Executive Vice President Human Resources
of Wells Fargo Bank, N.A. and head of
wholesale banking systems, finance and
operations
Thomas E. Emerson, Executive Vice President Chief Auditor
and Chief Auditor of Norwest
John E. Ganoe, Executive Vice President and Corporate Development
head of corporate development and
acquisitions of Norwest
Michael J. Gillfillan, Vice Chairman and Chief Credit Officer
Chief Credit Officer of Wells Fargo
Lawrence P. Haeg, Senior Vice President of Corporate Communications
corporate communications of Norwest
Eric D. Shand, Executive Vice President and Risk Asset Review
Chief Loan Examiner of Wells Fargo
Robert S. Strickland, Vice President of Investor Relations
investor relations for Norwest
Stanley S. Stroup, Executive Vice President General Counsel
and General Counsel of Norwest
</TABLE>
Except for the foregoing, key staff positions within the combined company to
be held by Norwest management and Wells Fargo management have not yet been
finally determined. From time to time prior to consummation of the Merger,
decisions may be made with respect to the management and
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<PAGE>
operations of the combined company, including the selection of executive
officers and other senior management. Messrs. Biller and Jacobs will head a
transition team in charge of determining the organization and operations of the
combined company after the Merger. The transition team will select managers and
other employees from the best performers from Norwest and Wells Fargo without
regard for which company such employee previously worked.
Information about the current Norwest directors and executive officers can
be found in Norwest's proxy statement, which is incorporated by reference into
Norwest's Annual Report on Form 10-K for the year ended December 31, 1997.
Information about the current Wells Fargo directors and executive officers can
be found in Wells Fargo's proxy statement, which is incorporated by reference
into Wells Fargo's Annual Report on Form 10-K for the year ended December 31,
1997. Norwest's and Wells Fargo's Annual Reports on Form 10-K are incorporated
by reference into this Joint Proxy Statement-Prospectus. See "Where You Can Find
More Information."
OPERATIONS. While there can be no assurances as to the achievement of such
business and financial goals, Norwest and Wells Fargo currently expect to
achieve approximately $650 million in annual pre-tax cost savings as a result of
the Merger, currently anticipated to be fully realized by the end of the third
year following the Effective Time. Of this annual amount, approximately $200
million is expected to be achieved through reduction in systems-related costs,
including conversion to a single system platform and elimination of duplicate
systems development and maintenance; approximately $120 million is expected to
be achieved through the consolidation of the operations of the individual
companies; approximately $175 million is expected to be achieved through branch
consolidations in those regions in which there is geographic overlap of served
markets; and approximately $155 million is expected to be achieved through
reducing general administrative costs, including through the elimination of
duplicate overhead functions. Norwest and Wells Fargo's estimates of the impact
of the Merger on earnings per share assume that revenues will be unaffected by
the Merger. Norwest and Wells Fargo anticipate, however, that the Merger will
create certain revenue enhancement opportunities. For example, Norwest and Wells
Fargo believe that up to $850 million of additional revenues could potentially
be realized from cross-selling opportunities. Norwest and Wells Fargo also
estimate that an additional improvement in pre-tax earnings of about $400
million could potentially result if Norwest's efficiency ratio were improved to
the pre-Merger efficiency ratio of Wells Fargo. However, due to the contingent
nature and timing of these potential revenue enhancements and efficiency
improvements, they have not been taken into account in arriving at the estimates
of the Merger's impact on future earnings per share. Norwest and Wells Fargo
also currently expect that the combined company will incur a non-recurring
merger and integration charge of approximately $950 million before tax. In
addition, a modest amount of divestitures of certain assets or deposit
liabilities could be required by regulatory authorities in connection with the
Merger. It is also expected that, in connection with the consummation of the
Merger, Norwest, Wells Fargo and Merger Sub will enter into supplemental
indentures with respect to the senior and subordinated debt of Wells Fargo then
outstanding, and that pursuant thereto the obligations of Wells Fargo thereunder
will be assumed by Merger Sub and guaranteed by Norwest. The foregoing
statements constitute "forward-looking statements" for purposes of the Private
Securities Litigation Reform Act of 1995, and actual results, which are
dependent on a number of factors, many of which are beyond the control of
Norwest and Wells Fargo, may differ materially. See "Forward-Looking
Statements."
The combined company will have its corporate headquarters in San Francisco,
California.
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<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
NORWEST. Norwest Common Stock is listed on the NYSE and traded under the
symbol "NOB." Norwest Common Stock is also listed on the Chicago Stock Exchange,
Inc. The following table sets forth, for the periods indicated, the high and low
reported closing sale prices per share of Norwest Common Stock on the NYSE
Composite Transactions reporting system and cash dividends declared per share of
Norwest Common Stock. The cash dividend and stock price information for 1996 and
the first three quarters of 1997 have been adjusted to reflect the two-for-one
split, effected in the form of a 100% stock dividend, of Norwest Common Stock on
October 10, 1997.
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
------------------ DIVIDENDS
HIGH LOW DECLARED
------- ------- -------------
<S> <C> <C> <C>
1996
First Quarter............................................. $18 1/2 15 1/2 .120
Second Quarter............................................ 18 3/4 16 15/16 .135
Third Quarter............................................. 20 3/8 16 1/4 .135
Fourth Quarter............................................ 23 3/8 21 .135
1997
First Quarter............................................. 26 1/2 21 5/8 .150
Second Quarter............................................ 29 7/16 22 7/8 .150
Third Quarter............................................. 32 1/8 28 1/2 .150
Fourth Quarter............................................ 38 7/8 31 1/16 .165
1998
First Quarter............................................. 43 7/16 35 9/16 .165
Second Quarter............................................ 43 1/8 34 1/4 .165
Third Quarter (through September 10, 1998)................ 39 3/8 30 5/16
</TABLE>
The timing and amount of future dividends will depend upon earnings, cash
requirements, the financial condition of Norwest and its subsidiaries,
applicable government regulations and other factors deemed relevant by the
Norwest Board. As described under "Regulation and Supervision-- Dividend
Restrictions," various state and federal laws limit the ability of affiliate
banks to pay dividends to Norwest. The Agreement restricts the cash dividends
that may be paid on Norwest Common Stock pending consummation of the Merger. See
"The Merger--Conduct of Business Pending the Merger and Other Agreements."
Norwest and Wells Fargo have not yet finally determined the dividend policy
of the combined company, although they expect the dividend policy of the
combined company to be comparable to Norwest's existing policy. Dividends from
Wells Fargo Bank, N.A. may be an indirect source of funds for the payment of
dividends by the parent company, even if not required for the parent company to
pay dividends in accordance with such policy. Because of limitations on the
ability of Wells Fargo Bank, N.A. to pay dividends, OCC approval will likely be
required before Wells Fargo Bank, N.A. may pay dividends to the parent company.
See "Regulation and Supervision--Dividend Restrictions."
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<PAGE>
WELLS FARGO. Wells Fargo Common Stock is listed on the NYSE and traded
under the symbol "WFC." Wells Fargo Common Stock is also listed on the Pacific
Exchange, Inc. The following table sets forth the high and low closing sales
prices for Wells Fargo Common Stock for the periods indicated, as listed in the
NYSE Composite Transaction reporting system, and the quarterly cash dividends
declared per share for the periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
------------------ DIVIDENDS
HIGH LOW DECLARED
------- ------- -------------
<S> <C> <C> <C>
1996
First Quarter.............................................. $261 1/4 203 1/8 1.30
Second Quarter.............................................. 264 1/2 232 1/8 1.30
Third Quarter............................................... 264 220 1/8 1.30
Fourth Quarter.............................................. 289 7/8 250 1/4 1.30
1997
First Quarter............................................... 319 1/4 271 1.30
Second Quarter.............................................. 287 7/8 246 1.30
Third Quarter............................................... 279 7/8 250 1/8 1.30
Fourth Quarter.............................................. 339 7/16 275 3/4 1.30
1998
First Quarter............................................... 337 7/8 295 1.30
Second Quarter.............................................. 387 1/4 329 1/8 1.30
Third Quarter (through September 10, 1998).................. 392 15/16 300 3/16 1.30
</TABLE>
The timing and amount of future dividends will depend upon earnings, cash
requirements, the financial condition of Wells Fargo and its subsidiaries,
applicable government regulations and other factors deemed relevant by the Wells
Fargo Board. As described under "Regulation and Supervision-Dividend
Restrictions," various state and federal laws limit the ability of affiliate
banks to pay dividends to Wells Fargo. The Agreement restricts the cash
dividends that may be paid on Wells Fargo Common Stock pending consummation of
the Merger. See "The Merger--Conduct of Business Pending the Merger and Other
Agreements."
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<PAGE>
INFORMATION ABOUT NORWEST
GENERAL
Norwest is a diversified financial solutions company organized under the
laws of Delaware in 1929 and registered under the BHCA. As a diversified
financial solutions organization, it owns subsidiaries engaged in banking and in
a variety of related businesses. Norwest's subsidiaries provide retail,
commercial and corporate banking services to customers through banks located in
Arizona, Colorado, Illinois, Indiana, Iowa, Minnesota, Montana, Nebraska,
Nevada, New Mexico, North Dakota, Ohio, South Dakota, Texas, Wisconsin and
Wyoming. Additional financial services are provided to customers by Norwest's
subsidiaries engaged in various businesses, principally mortgage banking,
consumer finance, equipment leasing, agricultural finance, commercial finance,
and data processing services, trust services, mortgage-backed securities
servicing and venture capital investment.
At June 30, 1998, Norwest's consolidated total assets were $93.15 billion,
its consolidated total deposits were $56.8 billion and its consolidated total
stockholders' equity was $7.3 billion. Based on total assets at June 30, 1998,
Norwest was the 12th largest commercial banking organization in the United
States. At June 30, 1998, Norwest had five pending acquisitions (exclusive of
the Merger) with total assets of approximately $2.3 billion, and it is expected
that approximately 14.0 million common shares will be issued upon consummation
of these acquisitions. These pending acquisitions are expected to be completed
by the end of 1998 and are not significant to Norwest's consolidated financial
statements, either individually or in the aggregate.
Norwest expands its businesses in part by acquiring banking institutions and
other companies engaged in activities closely related to banking. Norwest
continues to explore, subject to the Agreement, opportunities to acquire banking
institutions and other companies permitted by the BHCA. Discussions are
continually being carried on relating to such acquisitions. It is not presently
known whether, or on what terms, such discussions will result in further
acquisitions. It is the policy of Norwest not to comment on such discussions or
possible acquisitions until a definitive agreement with respect thereto has been
signed.
Norwest is a legal entity separate and distinct from its banking and
non-banking subsidiaries. Accordingly, the right of Norwest, and thus the right
of Norwest's creditors, to participate in any distribution of the assets or
earnings of any subsidiary, other than in its capacity as a creditor of such
subsidiary, is subject to the prior payment of claims of creditors of such
subsidiary. The principal sources of Norwest's revenues are dividends and fees
from its subsidiaries. See "Regulation and Supervision--Dividend Restrictions"
for a discussion of the restrictions on the subsidiary banks' ability to pay
dividends to Norwest.
Norwest's executive offices are located at Norwest Center, Sixth and
Marquette, Minneapolis, Minnesota 55479, and its telephone number is (612)
667-1234.
RECENT DEVELOPMENTS
See "Information about Wells Fargo--Recent Developments."
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to executive compensation, various benefit
plans (including stock option plans), voting securities and the principal
holders thereof, certain relationships and related transactions and other
related matters as to Norwest is incorporated by reference or set forth in
Norwest's Annual Report on Form 10-K for the year ended December 31, 1997,
incorporated herein by reference. Stockholders desiring copies of such documents
may contact Norwest at its address or telephone number indicated under "Where
You Can Find More Information."
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<PAGE>
INFORMATION ABOUT WELLS FARGO
GENERAL
Wells Fargo is a bank holding company registered under the BHCA, and
incorporated in Delaware. Based on assets as of June 30, 1998, Wells Fargo was
the 11th largest bank holding company in the United States.
Wells Fargo's principal subsidiary is Wells Fargo Bank, N.A., which is the
successor to the banking portion of the business founded by Henry Wells and
William G. Fargo in 1852. Today, Wells Fargo operates one of the largest banking
businesses in the United States. Wells Fargo Bank, N.A. provides a broad range
of financial products and services through electronic and traditional channels.
Wells Fargo Bank, N.A. is primarily engaged in retail, commercial and corporate
banking, real estate lending and trust investment services.
Wells Fargo is also the parent corporation of Wells Fargo Bank (Texas),
N.A., through which banking operations in Texas are primarily conducted, and
Wells Fargo Bank (Arizona), N.A., which operates its credit card business. Wells
Fargo has a majority ownership interest in the Wells Fargo HSBC Trade Bank,
N.A., which provides trade financing, letters of credit and collection services.
Wells Fargo also has wholly-owned subsidiaries, which provide various
banking-related services.
Other than the Merger, Wells Fargo has no current plans for any other
mergers or acquisitions.
At June 30, 1998, Wells Fargo's total assets were $93.20 billion, its total
deposits were $70.5 billion, and its total stockholders' equity was $13.0
billion.
Wells Fargo is a legal entity separate and distinct from its banking and
non-banking subsidiaries. Accordingly, the right of Wells Fargo, and thus the
right of Wells Fargo's creditors, to participate in any distribution of the
assets or earnings of any subsidiary, other than in its capacity as a creditor
of such subsidiary, is subject to the prior payment of claims of creditors of
such subsidiary. The principal sources of Wells Fargo's revenues are dividends
and fees from its subsidiaries. See "Regulation and Supervision--Dividend
Restrictions" for a discussion of the restrictions on the subsidiary banks'
ability to pay dividends to Wells Fargo.
Wells Fargo's executive offices are located at 420 Montgomery Street, San
Francisco, California 94163, and its telephone number is (800) 411-4932.
RECENT DEVELOPMENTS
Since the date of the announcement by Norwest and Wells Fargo that they had
entered into the Agreement, seven purported stockholder class actions (the
"ACTIONS") were filed in the Court of Chancery of the State of Delaware. The
Actions name as defendants Norwest, Wells Fargo, and the members of the Wells
Fargo Board. The Actions allege that the directors of Wells Fargo breached their
fiduciary duties to the Wells Fargo Stockholders by agreeing to enter into the
Agreement allegedly without taking affirmative steps to facilitate competing
proposals or evaluating possible alternatives, and that Norwest allegedly aided
and abetted such conduct. The Actions seek injunctive relief and unspecified
damages. Each of Norwest and Wells Fargo believe that the allegations in the
Actions are without merit and intend to vigorously defend against the Actions.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to executive compensation, various benefit
plans (including stock option plans), voting securities and the principal
holders thereof, certain relationships and related transactions and other
related matters as to Wells Fargo is incorporated by reference or set forth in
Wells Fargo's Annual Report on Form 10-K for the year ended December 31, 1997,
incorporated herein by reference. Stockholders desiring copies of such documents
may contact Wells Fargo at its address or telephone number indicated under
"Where You Can Find More Information."
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<PAGE>
REGULATION AND SUPERVISION
The following discussion sets forth the material elements of the regulatory
framework applicable to bank holding companies and their subsidiaries and
provides certain specific information relevant to Norwest and Wells Fargo. This
regulatory framework is intended primarily for the protection of depositors and
the federal deposit insurance funds and not for the protection of security
holders. To the extent that the following information describes statutory and
regulatory provisions, it is qualified in its entirety by reference to those
provisions. A change in the statutes, regulations or regulatory policies
applicable to Norwest and Wells Fargo or their respective subsidiaries may have
a material effect on the business of Norwest and Wells Fargo, as the case may
be. Further information is contained in the documents incorporated herein by
reference. See "Where You Can Find More Information."
GENERAL
As a bank holding company, each of Norwest and Wells Fargo is subject to
regulation under the BHCA, and to inspection, examination and supervision by the
Federal Reserve Board. Under the BHCA, bank holding companies generally may not
acquire the ownership or control of more than 5% of the voting shares or
substantially all the assets of any company, including a bank, without the
Federal Reserve Board's prior approval. In addition, bank holding companies
generally may engage, directly or indirectly, only in banking and such other
activities as are determined by the Federal Reserve Board to be closely related
to banking.
Each of Norwest's and Wells Fargo's affiliate national banking associations
are subject to regulation and examination primarily by the OCC and, secondarily,
by the FDIC and the Federal Reserve Board. Each of Norwest's and Wells Fargo's
state-chartered banks are subject to primary federal regulation and examination
by the FDIC or the Federal Reserve Board and, in addition, are regulated and
examined by their respective state banking departments. Norwest, Wells Fargo and
their respective subsidiaries also are affected by the fiscal and monetary
policies of the federal government and the Federal Reserve Board, and by various
other governmental requirements and regulations.
CAPITAL REQUIREMENTS
Each of Norwest and Wells Fargo is subject to risk-based capital
requirements and guidelines imposed by the Federal Reserve Board, which are
substantially similar to the capital requirements and guidelines imposed by the
Federal Reserve Board, the OCC and the FDIC on the depository institutions
within their respective jurisdictions. For this purpose, a depository
institution's or holding company's assets and certain specified off-balance
sheet commitments and obligations are assigned to various risk categories. A
depository institution's or holding company's capital, in turn, is classified in
one of three tiers: core ("TIER 1") capital, which includes common equity,
non-cumulative perpetual preferred stock, a limited amount of cumulative
perpetual preferred stock at the holding company level and minority interests in
equity accounts of consolidated subsidiaries, less goodwill, and most intangible
assets; supplementary ("TIER 2") capital, which includes, among other items,
perpetual preferred stock not meeting the Tier 1 definition, mandatory
convertible securities, subordinated debt and allowances for loan and lease
losses, subject to certain limitations; and market risk ("TIER 3") capital,
which includes qualifying unsecured subordinated debt.
Each of Norwest and Wells Fargo, like other bank holding companies,
currently is required to maintain Tier 1 capital and "TOTAL CAPITAL" (the sum of
Tier 1, Tier 2 and Tier 3 capital) equal, respectively, to at least 4% and 8% of
its total risk-weighted assets (including certain off-balance-sheet items, such
as standby letters of credit). In addition, in order for a holding company or
depository institution to be considered "well capitalized" for regulatory
purposes, its Tier 1 and total capital
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ratios must be 6% and 10% on a risk-adjusted basis, respectively. At June 30,
1998, each of Norwest and Wells Fargo met both requirements, with Tier 1 and
total capital equal to 8.84% and 10.64% (in the case of Norwest), and 8.08% and
11.94% (in the case of Wells Fargo) of its respective total risk-weighted
assets.
The Federal Reserve Board, the FDIC and the OCC have adopted rules to
incorporate market and interest rate risk components into their risk-based
capital standards. Amendments to the risk-based capital requirements,
incorporating market risk, became effective January 1, 1998. Under the new
market risk requirements, capital will be allocated to support the amount of
market risk related to a financial institution's ongoing trading activities.
The Federal Reserve Board also requires bank holding companies to maintain a
minimum "leverage ratio" (Tier 1 capital to adjusted total assets) of 3% if the
holding company has the highest regulatory rating and meets certain other
requirements, or of 3% plus an additional "cushion" of at least 100 to 200 basis
points if the holding company does not meet these requirements. At June 30,
1998, Norwest's leverage ratio was 6.44% and Wells Fargo's leverage ratio was
7.53%.
The Federal Reserve Board may set capital requirements higher than the
minima noted above for holding companies whose circumstances warrant it. For
example, holding companies experiencing or anticipating significant growth may
be expected to maintain capital positions substantially above the minimum
supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve Board has indicated that it will consider a
"tangible Tier 1 capital leverage ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
Each of Norwest's and Wells Fargo's banking subsidiaries is subject to
similar risk-based and leverage capital requirements adopted by its applicable
federal banking agency, and each was in compliance with the applicable capital
requirements as of June 30, 1998.
Failure to meet capital requirements could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business.
DIVIDEND RESTRICTIONS
Various federal and state statutory provisions limit the amount of dividends
Norwest's and Wells Fargo's affiliate banks can pay to Norwest or Wells Fargo,
as the case may be, without regulatory approval. Dividend payments by national
banks are limited to the lesser of (i) the level of undivided profits and (ii)
absent regulatory approval, an amount not in excess of net income for the
current year combined with retained net income for the preceding two years.
Likewise, the approval of the Federal Reserve Board is required for any dividend
by a state-chartered bank that is a member of the Federal Reserve System (a
"STATE MEMBER BANK") if the total of all dividends declared by the bank in any
calendar year would exceed the total of its net profits (as defined by
regulatory agencies) for such year combined with its retained net profits for
the preceding two years. In addition, a state member bank may not pay a dividend
in an amount greater than its net profits then on hand. At June 30, 1998, $655.2
million of the total stockholders' equity of Norwest's affiliate banks was
available for payment of dividends to Norwest without approval by the applicable
regulatory authority. In addition, Norwest's non-bank subsidiaries could have
declared dividends totaling $1,169.7 million at June 30, 1998. Wells Fargo Bank,
N.A., with the express approval of the OCC, declared dividends in 1997 and 1996
of $1.5 billion in excess of its net income of $2.0 billion for those years.
Therefore, before it could declare dividends in 1998 without the approval of the
OCC, Wells Fargo Bank, N.A. must have net income of $1.5 billion plus an amount
equal to or greater than the dividends declared in 1998. Since it is not
expected to have net income of $1.5 billion plus an amount equal to or greater
than the dividends expected to be declared in 1998, Wells Fargo Bank, N.A. needs
to obtain the approval of the OCC before any dividends are declared in 1998.
Consequently, in the six months ended June 30, 1998, Wells Fargo
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Bank, N.A. received OCC approval to declare dividends of $990 million, which was
$472 million in excess of its net income of $518 million for that period. The
other banking subsidiaries of Wells Fargo are subject to the same general
restrictions as Wells Fargo Bank, N.A. However, any such restrictions have not
had a material impact on the banking subsidiaries of Wells Fargo or on Wells
Fargo.
In addition, federal bank regulatory authorities have authority to prohibit
Norwest's and Wells Fargo's affiliate banks from engaging in unsafe or unsound
practices in conducting their business. The payment of dividends, depending upon
the financial condition of the bank in question, could be deemed such an unsafe
or unsound practice. The ability of Norwest's and Wells Fargo's affiliate banks
to pay dividends in the future is currently, and could be further, influenced by
bank regulatory policies and capital guidelines.
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NORWEST CAPITAL STOCK AND
COMPARISON OF STOCKHOLDER RIGHTS
As a result of the conversion of shares of Wells Fargo Common Stock and
Wells Fargo Preferred Stock to shares of Norwest Common Stock and Norwest New
Preferred Stock, respectively, at the Effective Time, Wells Fargo stockholders
will become Norwest stockholders. The rights of Norwest stockholders are
governed by the Delaware Law, the Norwest Certificate and the Norwest By-Laws.
The following is a description of Norwest capital stock, including the
Norwest Common Stock to be issued in the Merger, reflecting the anticipated
state of affairs at the Effective Time, and a summary of the material
differences between the rights of holders of Norwest Common Stock, on the one
hand, and Wells Fargo Common Stock, on the other hand.
DESCRIPTION OF NORWEST CAPITAL STOCK
GENERAL. As of the Effective Time, the authorized capital stock of Norwest
will consist of 4,000,000,000 shares of Norwest Common Stock, 20,000,000 shares
of Norwest preferred stock and 4,000,000 shares of Norwest preference stock. As
of the Norwest Record Date, 768,497,329 shares of Norwest Common Stock were
issued and outstanding, 1,073,289 shares of Norwest Preferred Stock (consisting
of 980,000 shares of Cumulative Tracking Preferred Stock of Norwest ("NORWEST
TRACKING PREFERRED STOCK"), of which 25,000 were held by a subsidiary of
Norwest, 9,890 shares of ESOP Cumulative Convertible Preferred Stock of Norwest
("NORWEST ESOP PREFERRED STOCK"), 20,396 shares of 1995 ESOP Cumulative
Convertible Preferred Stock of Norwest ("NORWEST 1995 ESOP PREFERRED STOCK"),
22,458 shares of 1996 ESOP Cumulative Convertible Preferred Stock of Norwest
("NORWEST 1996 ESOP PREFERRED STOCK"), 19,977 shares of 1997 ESOP Cumulative
Convertible Preferred Stock of Norwest ("NORWEST 1997 ESOP PREFERRED STOCK") and
20,568 shares of 1998 ESOP Cumulative Convertible Preferred Stock of Norwest
("NORWEST 1998 ESOP PREFERRED STOCK")) were issued and outstanding and no shares
of Norwest preference stock, no par value per share ("NORWEST PREFERENCE STOCK")
were issued and outstanding. As of the Effective Time, it is expected that there
also will be outstanding 1,500,000 shares of Norwest Series B Preferred Stock
and 4,000,000 shares of Norwest Series H Preferred Stock due to the conversion
of shares of Wells Fargo Preferred Stock in the Merger.
The Norwest Board has designated 1,250,000 shares of Norwest Preferred Stock
for issuance as Series A Junior Participating Preferred Stock ("NORWEST SERIES A
PREFERRED SHARES") pursuant to the Norwest Rights Agreement. No such shares are
outstanding as of the date of this Joint Proxy Statement--Prospectus. See
"--Description of Norwest Capital Stock--Norwest Rights Plan."
The Norwest Board is authorized to issue Norwest Preferred Stock and Norwest
Preference Stock in one or more series and to fix the relative rights,
preferences, privileges and restrictions thereof, including dividend rates,
conversion rights, voting rights, terms of redemption, liquidation preferences,
and the designation of any series and the number of shares constituting such
series, all without any vote or other action on the part of stockholders,
except that holders of Norwest Preference Stock will not be entitled to more
than one vote per share. To designate a series of Norwest Preferred Stock or
Norwest Preference Stock for issuance, Norwest files a certificate with the
Delaware Secretary of State designating the rights, preferences, privileges and
restrictions of the series (each, a "CERTIFICATE OF DESIGNATIONS"). Norwest
generally files a copy of each Certificate of Designations as part of an annual,
quarterly or current report filed with the Commission. The Certificate of
Designations for each series of Norwest Preferred Stock outstanding as of the
date of this Joint Proxy Statement-Prospectus is filed with or incorporated by
reference as an exhibit to Norwest's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998 and is incorporated by reference herein. See
"Where You Can Find More Information."
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NORWEST COMMON STOCK
The issued and outstanding shares of Norwest Common Stock are fully paid and
nonassessable. Norwest Bank Minnesota, National Association, a subsidiary of
Norwest, is the transfer agent and registrar for the shares of Norwest Common
Stock.
VOTING. Each share of Norwest Common Stock entitles the holder to one vote
on all matters submitted to a vote of stockholders. Holders of Norwest Common
Stock do not have cumulative voting rights. For that reason, holders of a
majority of the shares of Norwest Common Stock entitled to vote in any election
of directors of Norwest may elect all of the directors standing for election.
DIVIDENDS. Norwest Stockholders are entitled to receive ratably such
dividends, if any, as may be declared by the Norwest Board out of funds legally
available therefor, subject to (i) preferential dividend rights of all then
outstanding shares of Norwest Preferred Stock and Norwest Preference Stock and
(ii) such other restrictions as may be imposed on Norwest pursuant to financing
agreements and other contracts entered into by Norwest from time to time. See
"Regulation and Supervision-- Dividend Restrictions."
ASSETS UPON DISSOLUTION. Upon the liquidation, dissolution or winding up of
Norwest, subject to the prior rights of all then-outstanding shares of Norwest
Preferred Stock and Norwest Preference Stock, holders of Norwest Common Stock
are entitled to receive ratably the assets of Norwest available after the
payment of all debts and other liabilities.
NO PREEMPTIVE OR CONVERSION RIGHTS. Norwest Stockholders do not, as such,
have any preemptive or subscription rights to purchase additional securities
issued by Norwest or any rights to convert their Norwest Common Stock into other
securities of Norwest or to have their shares redeemed by Norwest.
PREFERRED SHARE PURCHASE RIGHTS. Each issued share of Norwest Common Stock
includes a Norwest Stockholder Right. See "--Description of Norwest Capital
Stock--Norwest Rights Plan."
EXISTING NORWEST PREFERRED STOCK
NORWEST TRACKING PREFERRED STOCK. Norwest Tracking Preferred Stock has a
stated value of $200.00 per share. The holders of Norwest Tracking Preferred
Stock are also collectively the assignees of Norwest's entire beneficial
ownership interest in Class A preferred limited liability company interests (the
"CLASS A PREFERRED SECURITIES") of Residential Home Mortgage, L.L.C., a
subsidiary of Norwest (the "LIMITED LIABILITY COMPANY").
Norwest Tracking Preferred Stock provides for cumulative annual cash
dividends per share of Norwest Tracking Preferred Stock equal to the product of
the Dividend Rate (as defined in the Certificate of Designations for Norwest
Tracking Preferred Stock) and $200, payable quarterly. The Dividend Rate is
currently 9.3% and will be reset on January 1, 2000 and on January 1 of each
fifth year thereafter as described in the Certificate of Designations for
Norwest Tracking Preferred Stock. Norwest Tracking Preferred Stock also provides
for certain additional cash distributions based upon the results of operations
of the Limited Liability Company, payable on December 31, 1999 and on December
31 of each fifth year thereafter. The terms of Norwest Tracking Preferred Stock
provide that the amount of certain dividends distributed or distributions paid
to the holders of Norwest Tracking Preferred Stock as assignees of Norwest's
interest in the Class A Preferred Securities will reduce dollar for dollar,
respectively, the dividends and distributions to which the holders of the
Norwest Tracking Preferred Stock would otherwise be entitled pursuant to the
terms of the Certificate of Designations for Norwest Tracking Preferred Stock.
Norwest Tracking Preferred Stock is subject to redemption, in whole or in
part, at the option of Norwest, at a per share price equal to the greater of (i)
$200 per share, plus accrued and unpaid
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dividends thereon to the date fixed for redemption, and (ii) the fair market
value of a "PER SHARE TRACKING INTEREST" in the Limited Liability Company (as
defined in the Certificate of Designations for Norwest Tracking Preferred
Stock). Subject to certain exceptions set forth in the Certificate of
Designations for Norwest Tracking Preferred Stock, Norwest Tracking Preferred
Stock is not subject to redemption prior to December 31, 1999. Any redemption
payments received by a holder of Norwest Tracking Preferred Stock as an assignee
of Norwest's interest in Class A Preferred Securities will reduce dollar for
dollar the amount of redemption payments to which the holders of Norwest
Tracking Preferred Stock would otherwise be entitled pursuant to the terms of
the Certificate of Designations for Norwest Tracking Preferred Stock.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of Norwest, the holders of Norwest Tracking Preferred Stock are entitled to
receive out of the assets of Norwest available for distribution to stockholders,
before any distribution of assets is made to Norwest Stockholders, a per share
amount equal to the greater of (i) $200 per share, plus accrued and unpaid
dividends to the date of final distribution, and (ii) the fair market value of a
Per Share Tracking Interest in the Limited Liability Company. Any liquidation
payments received by a holder of Norwest Tracking Preferred Stock as an assignee
of Norwest's interest in Class A Preferred Securities will reduce dollar for
dollar the amount to which the holders of the Norwest Tracking Preferred Stock
would otherwise be entitled pursuant to the terms of the Certificate of
Designations for Norwest Tracking Preferred Stock, provided that no such
reduction shall result from a payment made prior to December 31, 1999 in
connection with the voluntary dissolution of the Limited Liability Company.
Except as required by law and other than in certain limited circumstances,
the holders of Norwest Tracking Preferred Stock are not entitled to vote.
Norwest Tracking Preferred Stock does not have preemptive rights and is not
subject to any sinking fund or other obligation of Norwest to repurchase or
redeem Norwest Tracking Preferred Stock.
NORWEST ESOP PREFERRED STOCK. Norwest ESOP Preferred Stock has a stated
value of $1,000 per share. Norwest ESOP Preferred Stock provides for cumulative
quarterly dividends at the rate of 9% PER ANNUM calculated as a percentage of
stated value. All outstanding shares of Norwest ESOP Preferred Stock are held of
record by a trustee acting on behalf of the Norwest Corporation Savings
Investment Plan and Master Savings Trust, or any successor to such plan (the
"NORWEST SAVINGS INVESTMENT PLAN"). Norwest ESOP Preferred Stock is subject to
redemption, in whole or in part, at the option of Norwest at a price equal to
the higher of (i) $1,000 per share, plus accrued and unpaid dividends thereon to
the date fixed for redemption, and (ii) the fair market value (as determined
pursuant to the Certificate of Designations for Norwest ESOP Preferred Stock)
per share of Norwest ESOP Preferred Stock on the date fixed for redemption.
Norwest ESOP Preferred Stock is mandatorily convertible, without any further
action on the part of Norwest or the holder thereof, into Norwest Common Stock
at the then applicable Conversion Price (as defined in the Certificate of
Designations for Norwest ESOP Preferred Stock) when (i) Norwest ESOP Preferred
Stock is released from the unallocated reserve of the Norwest Savings Investment
Plan in accordance with the terms thereof or (ii) when record ownership of the
shares of Norwest ESOP Preferred Stock is transferred to any person other than a
successor trustee under the Norwest Savings Investment Plan. In addition, a
holder of Norwest ESOP Preferred Stock is entitled, at any time prior to the
date fixed for redemption, to convert shares of Norwest ESOP Preferred Stock
held by such holder into shares of Norwest Common Stock at the then applicable
Conversion Price.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of Norwest, the holders of Norwest ESOP Preferred Stock are entitled to
receive out of the assets of Norwest available for distribution to stockholders,
before any distribution of assets is made to Norwest Stockholders, $1,000 per
share, plus accrued and unpaid dividends. Except as required by law and other
than in certain limited circumstances, the holders of Norwest ESOP Preferred
Stock are not entitled to vote.
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Norwest ESOP Preferred Stock does not have preemptive rights and is not subject
to any sinking fund or other obligation of Norwest to repurchase or redeem the
Norwest ESOP Preferred Stock.
NORWEST 1995 ESOP PREFERRED STOCK. Norwest 1995 ESOP Preferred Stock has a
stated value of $1,000 per share. Norwest 1995 ESOP Preferred Stock provides for
cumulative quarterly dividends at the rate of 10% PER ANNUM calculated as a
percentage of stated value. All outstanding shares of Norwest 1995 ESOP
Preferred Stock are held of record by a trustee acting on behalf of the Norwest
Savings Investment Plan. Norwest 1995 ESOP Preferred Stock is subject to
redemption, in whole or in part, at the option of Norwest at a price equal to
the higher of (i) $1,000 per share, plus accrued and unpaid dividends thereon to
the date fixed for redemption, and (ii) the fair market value (as determined
pursuant to the Certificate of Designations for Norwest 1995 ESOP Preferred
Stock) per share of Norwest 1995 ESOP Preferred Stock on the date fixed for
redemption.
Norwest ESOP Preferred Stock is mandatorily convertible, without any further
action on the part of Norwest or the holder thereof, into Norwest Common Stock
at the then applicable Conversion Price (as defined in the Certificate of
Designations for Norwest 1995 ESOP Preferred Stock) when (i) the Norwest 1995
ESOP Preferred Stock is released from the unallocated reserve of the Norwest
Savings Investment Plan in accordance with the terms thereof, or (ii) when
record ownership of the shares of Norwest 1995 ESOP Preferred Stock is
transferred to any person other than a successor trustee under the Norwest
Savings Investment Plan. In addition, a holder of Norwest 1995 ESOP Preferred
Stock is entitled, at any time prior to the date fixed for redemption, to
convert shares of Norwest 1995 ESOP Preferred Stock held by such holder into
shares of Norwest Common Stock at the then applicable Conversion Price.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of Norwest, the holders of Norwest 1995 ESOP Preferred Stock are entitled to
receive out of the assets of Norwest available for distribution to stockholders,
before any distribution of assets is made to Norwest Stockholders, $1,000 per
share, plus accrued and unpaid dividends. Except as required by law and other
than in certain limited circumstances, the holders of Norwest 1995 ESOP
Preferred Stock are not entitled to vote. The Norwest 1995 ESOP Preferred Stock
does not have preemptive rights and is not subject to any sinking fund or other
obligation of Norwest to repurchase or redeem the Norwest 1995 ESOP Preferred
Stock.
NORWEST 1996 ESOP PREFERRED STOCK. Norwest 1996 ESOP Preferred Stock has a
stated value of $1,000 per share. The Norwest 1996 ESOP Preferred Stock provides
for cumulative quarterly dividends at the rate of $85, $90 or $95 PER ANNUM
based on the Current Market Price (as defined in the Certificate of Designations
for the Norwest 1996 ESOP Preferred Stock) of one share of Norwest Common Stock
as of a fixed trading date. All outstanding shares of Norwest 1996 ESOP
Preferred Stock are held of record by a trustee acting on behalf of the Norwest
Savings Investment Plan. Norwest 1996 ESOP Preferred Stock is subject to
redemption, in whole or in part, at the option of Norwest at a price equal to
the higher of (i) $1,000 per share, plus accrued and unpaid dividends thereon to
the date fixed for redemption, and (ii) the fair market value (as determined
pursuant to the Certificate of Designations for Norwest 1996 ESOP Preferred
Stock) per share of Norwest 1996 ESOP Preferred Stock on the date fixed for
redemption.
Norwest 1996 ESOP Preferred Stock is mandatorily convertible, without any
further action on the part of Norwest or the holder thereof, into Norwest Common
Stock at the then applicable Conversion Price (as defined in the Certificate of
Designations for Norwest 1996 ESOP Preferred Stock) when (i) Norwest 1996 ESOP
Preferred Stock is released from the unallocated reserve of the Norwest Savings
Investment Plan in accordance with the terms thereof or (ii) when record
ownership of the shares of Norwest 1996 ESOP Preferred Stock is transferred to
any person other than a successor trustee under the Norwest Savings Investment
Plan. In addition, a holder of Norwest 1996 ESOP Preferred Stock is entitled, at
any time prior to the date fixed for redemption, to convert shares
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of Norwest 1996 ESOP Preferred Stock held by such holder into shares of Norwest
Common Stock at the then applicable Conversion Price.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of Norwest, the holders of Norwest 1996 ESOP Preferred Stock are entitled to
receive out of the assets of Norwest available for distribution to stockholders,
before any distribution of assets is made to Norwest Stockholders, $1,000 per
share, plus accrued and unpaid dividends. Except as required by law and other
than in certain limited circumstances, the holders of Norwest 1996 ESOP
Preferred Stock are not entitled to vote. Norwest 1996 ESOP Preferred Stock does
not have preemptive rights and is not subject to any sinking fund or other
obligation of Norwest to repurchase or redeem the Norwest 1996 ESOP Preferred
Stock.
NORWEST 1997 ESOP PREFERRED STOCK. Norwest 1997 ESOP Preferred Stock has a
stated value of $1,000.00 per share. Norwest 1997 ESOP Preferred Stock provides
for cumulative quarterly dividends at the rate of $95, $100 or $105 PER ANNUM
based on the Current Market Price (as defined in the Certificate of Designations
for Norwest 1997 ESOP Preferred Stock) of one share of Norwest Common Stock as
of a fixed trading date. All outstanding shares of Norwest 1997 ESOP Preferred
Stock are held of record by a trustee acting on behalf of the Norwest Savings
Investment Plan. Norwest 1997 ESOP Preferred Stock is subject to redemption, in
whole or in part, at the option of Norwest at a price equal to the higher of (i)
$1,000 per share, plus accrued and unpaid dividends thereon to the date fixed
for redemption, and (ii) the fair market value (as determined pursuant to the
Certificate of Designations for Norwest 1997 ESOP Preferred Stock) per share of
Norwest 1997 ESOP Preferred Stock on the date fixed for redemption.
Norwest 1997 ESOP Preferred Stock is mandatorily convertible, without any
further action on the part of Norwest or the holder thereof, into Norwest Common
Stock at the then applicable Conversion Price (as defined in the Certificate of
Designations for Norwest 1997 ESOP Preferred Stock) when (i) Norwest 1997 ESOP
Preferred Stock is released from the unallocated reserve of the Norwest Savings
Investment Plan in accordance with the terms thereof or (ii) when record
ownership of the shares of Norwest 1997 ESOP Preferred Stock is transferred to
any person other than a successor trustee under the Norwest Savings Investment
Plan. In addition, a holder of Norwest 1997 ESOP Preferred Stock is entitled, at
any time prior to the date fixed for redemption, to convert shares of Norwest
1997 ESOP Preferred Stock held by such holder into shares of Norwest Common
Stock at the then applicable Conversion Price.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of Norwest, the holders of Norwest 1997 ESOP Preferred Stock are entitled to
receive out of the assets of Norwest available for distribution to stockholders,
before any distribution of assets is made to Norwest Stockholders, $1,000 per
share, plus accrued and unpaid dividends. Except as required by law and other
than in certain limited circumstances, the holders of Norwest 1997 ESOP
Preferred Stock are not entitled to vote. Norwest 1997 ESOP Preferred Stock does
not have preemptive rights and is not subject to any sinking fund or other
obligation of Norwest to repurchase or redeem Norwest 1997 ESOP Preferred Stock.
NORWEST 1998 ESOP PREFERRED STOCK. Norwest 1998 ESOP Preferred Stock has a
stated value of $1,000 per share. Norwest 1998 ESOP Preferred Stock provides for
cumulative quarterly dividends at the rate of $107.50, $112.50 or $117.50 PER
ANNUM based on the Current Market Price (as defined in the Certificate of
Designations for Norwest 1998 ESOP Preferred Stock) of one share of Norwest
Common Stock as of a fixed trading date. All outstanding shares of Norwest 1998
ESOP Preferred Stock are held of record by a trustee acting on behalf of the
Norwest Savings Investment Plan. Norwest 1998 ESOP Preferred Stock is subject to
redemption, in whole or in part, at the option of Norwest at a price equal to
the higher of (i) $1,000 per share, plus accrued and unpaid dividends thereon to
the date fixed for redemption, and (ii) the fair market value (as determined
pursuant to the
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Certificate of Designations for Norwest 1998 ESOP Preferred Stock) per share of
Norwest 1998 ESOP Preferred Stock on the date fixed for redemption.
Norwest 1998 ESOP Preferred Stock is mandatorily convertible, without any
further action on the part of Norwest or the holder thereof, into Norwest Common
Stock at the then applicable Conversion Price (as defined in the Certificate of
Designations for Norwest 1998 ESOP Preferred Stock) when (i) Norwest 1998 ESOP
Preferred Stock is released from the unallocated reserve of the Norwest Savings
Investment Plan in accordance with the terms thereof or (ii) when record
ownership of the shares of Norwest 1998 ESOP Preferred Stock is transferred to
any person other than a successor trustee under the Norwest Savings Investment
Plan. In addition, a holder of Norwest 1998 ESOP Preferred Stock is entitled, at
any time prior to the date fixed for redemption, to convert shares of Norwest
1998 ESOP Preferred Stock held by such holder into shares of Norwest Common
Stock at the then applicable Conversion Price.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of Norwest, the holders of Norwest 1998 ESOP Preferred Stock are entitled to
receive out of the assets of Norwest available for distribution to stockholders,
before any distribution of assets is made to Norwest Stockholders, $1,000 per
share, plus accrued and unpaid dividends. Except as required by law and other
than in certain limited circumstances, the holders of Norwest 1998 ESOP
Preferred Stock are not entitled to vote. The Norwest 1998 ESOP Preferred Stock
does not have preemptive rights and is not subject to any sinking fund or other
obligation of Norwest to repurchase or redeem the Norwest 1998 ESOP Preferred
Stock.
NORWEST NEW PREFERRED STOCK
The shares of Norwest New Preferred Stock described below will be
substantially similar to the shares of Wells Fargo Preferred Stock, except that
such shares will have no par value. The shares of Norwest New Preferred Stock
will rank on parity with the existing Norwest Preferred Stock as to dividends
and upon liquidation. Upon consummation of the Merger, each share of Wells Fargo
Preferred Stock will be converted, automatically and without the requirement of
any exchange of any certificate representing such stock, into one share of the
corresponding series of Norwest New Preferred Stock. See "The Merger--Conversion
of Stock; Treatment of Options." Forms of the Certificates of Designations
setting forth the rights, designations and preferences of Norwest Series B
Preferred Stock and Norwest Series H Preferred Stock are set forth as exhibits
to the Registration Statement, and the following summary of the terms of Norwest
Series B Preferred Stock and Norwest Series H Preferred Stock is qualified in
its entirety by reference to such exhibits. See "Where You Can Find More
Information."
GENERAL. The shares of Norwest New Preferred Stock will have preference
over Norwest Common Stock with respect to the payment of dividends and the
distribution of assets in the event of liquidation, winding up or dissolution of
Norwest. Each of such series will rank on parity with each other series of
Norwest Preferred Stock as to dividends and the distribution of assets upon
liquidation, winding up or dissolution of Norwest. The holders of Norwest New
Preferred Stock will have no voting rights except as described below. If the
equivalent of six quarterly dividends payable on a series of Norwest New
Preferred Stock are in default, the holders of such outstanding series of
Norwest New Preferred Stock together with the holders of shares of every other
series of Norwest Preferred Stock similarly entitled to vote for the election of
two directors, acting together as a single class, will be entitled to elect two
of the authorized number of members of the Norwest Board (in the case of Norwest
Series H Preferred Stock, the number of directors of Norwest will be increased
by two) at the next annual meeting and at each subsequent annual meeting of
Norwest Stockholders to serve until all dividends accumulated have been fully
paid or set apart for payment.
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NORWEST SERIES B PREFERRED STOCK. Norwest Series B Preferred Stock is
expected to be listed on the NYSE. Dividends on the Norwest Series B Preferred
Stock will be cumulative and payable quarterly on the 15th day of February, May,
August and November of each year at the rate of 76% of the highest of the
three-month Treasury Bill discount rate or ten-year constant maturity Treasury
security yield or 20-year constant maturity Treasury security yield, but in no
event shall be less than 5.5% PER ANNUM or greater than 10.5% PER ANNUM. The
average dividend rate on Wells Fargo Series B Preferred Stock was 5.5%, 5.5% and
5.8% during 1997, 1996 and 1995, respectively.
NORWEST SERIES H PREFERRED STOCK. Norwest Series H Preferred Stock may not
be redeemed prior to October 1, 2001. At any time or from time to time on and
after October 1, 2001, Norwest, at its option, may redeem shares of the Norwest
Series H Preferred Stock, in whole or in part, at a redemption price of $50 per
share, plus accrued but unpaid dividends to the redemption date. At any time, if
the percentage of dividends received deduction as specified in Section 243(a)(1)
of the Code or any successor provision is equal to less than 40% and, as a
result the dividends payable on Norwest Series H Preferred Stock will be
adjusted upward as specified in its Certificate of Designations, Norwest, at its
option, may redeem all, but not less than all, of the outstanding shares of
Norwest Series H Preferred Stock at an initial redemption price of $52 per share
and such redemption price will decrease each year by $.50, but in no event will
the redemption price be less than $50.
Dividends on Norwest Series H Preferred Stock will generally not be
cumulative and will be payable quarterly on the first day of January, April,
July and October of each year at the rate of 6.59% PER ANNUM through October 1,
2001. For each quarterly dividend period after October 1, 2001, the dividend
rate will be .44% plus the highest of the three-month Treasury Bill discount
rate or ten-year constant maturity Treasury security yield or 30-year constant
maturity Treasury security yield, subject to adjustment in the case of certain
amendments to the Code, but in no event will be less than 7% PER ANNUM or
greater than 13% PER ANNUM.
NORWEST RIGHTS PLAN
On November 22, 1988, the Norwest Board declared a dividend of one Norwest
Stockholder Right for each outstanding share of Norwest Common Stock. The
dividend was paid on December 9, 1988 (the "RIGHTS RECORD DATE") to the Norwest
Stockholders of record on that date. Each Norwest Stockholder Right originally
entitled the registered holder to purchase from Norwest one one-hundredth of a
Norwest Series A Preferred Share, subject to adjustment, at a price of $175 per
one one-hundredth of a Norwest Series A Preferred Share (the "PURCHASE PRICE").
As of the date of this Joint Proxy Statement-Prospectus, each Norwest
Stockholder Right entitles the registered holder to purchase from Norwest one
eight-hundredth of a Norwest Series A Preferred Share. The description and terms
of the Norwest Stockholder Rights are set forth in the Norwest Rights Agreement.
Until the earlier to occur of (i) ten days following a public announcement
that a person or group of affiliated or associated persons (an "ACQUIRING
PERSON") have acquired beneficial ownership of 25% or more of the outstanding
shares of Norwest Common Stock or (ii) ten business days (or such later date as
may be determined by action of the Norwest Board prior to such time as any
person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 25% or more of such outstanding shares of Norwest Common Stock (the
earlier of such dates being called the "DISTRIBUTION DATE"), the Norwest
Stockholder Rights will be evidenced, with respect to any of the Norwest Common
Stock certificates outstanding as of the Rights Record Date, by such Norwest
Common Stock certificate with a copy of the Summary of Rights attached to the
Rights Agreement as Exhibit C (the "SUMMARY OF RIGHTS") attached to such
certificate.
The Norwest Rights Agreement provides that, until the Distribution Date, the
Norwest Stockholder Rights will be transferred only with the shares of Norwest
Common Stock. Until the
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Distribution Date (or earlier redemption or expiration of the Norwest
Stockholder Rights), new Norwest Common Stock certificates issued after the
Rights Record Date, upon transfer or new issuance of Norwest Common Stock, will
contain a notation incorporating the Norwest Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or expiration of the Norwest
Stockholder Rights), the surrender for transfer of any certificates for shares
of Norwest Common Stock, outstanding as of the Rights Record Date, even without
such notation or a copy of the Summary of Rights being attached thereto, will
also constitute the transfer of the Norwest Stockholder Rights associated with
the shares of Norwest Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Norwest Stockholder Rights ("NORWEST RIGHT CERTIFICATES") will be mailed to
holders of record of the shares of Norwest Common Stock as of the close of
business on the Distribution Date and such separate Norwest Right Certificates
alone will evidence the Norwest Stockholder Rights.
The Norwest Stockholder Rights are not exercisable until the Distribution
Date. The Norwest Stockholder Rights will expire on November 23, 1998 (the
"FINAL EXPIRATION DATE"), unless the Final Expiration Date is extended or unless
the Norwest Stockholder Rights are earlier redeemed by Norwest, in each case, as
described below.
The Purchase Price payable, and the number of Norwest Series A Preferred
Shares or other securities or property issuable, upon exercise of the Norwest
Stockholder Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Norwest Series A Preferred Shares, (ii) upon the
grant to holders of the Norwest Series A Preferred Shares of certain rights or
warrants to subscribe for or purchase Norwest Series A Preferred Shares at a
price, or securities convertible into Norwest Series A Preferred Shares with a
conversion price, less than the then current market price of the Norwest Series
A Preferred Shares or (iii) upon the distribution to holders of the Norwest
Series A Preferred Shares of evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings or retained earnings or
dividends payable in Norwest Series A Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Norwest Stockholder Rights and the number of one
one-hundredths of a Norwest Series A Preferred Share issuable upon exercise of
each Norwest Stockholder Right are also subject to adjustment in the event of a
stock split of the shares of Norwest Common Stock or a stock dividend on the
shares of Norwest Common Stock payable in shares of Norwest Common Stock or
subdivisions, consolidations or combinations of the shares of Norwest Common
Stock occurring, in any such case, prior to the Distribution Date.
On June 27, 1989, the Norwest Board declared a two-for-one split of the
shares of Norwest Common Stock to be effected in the form of a 100% stock
dividend payable on July 21, 1989, to Norwest Stockholders of record on July 7,
1989; on April 27, 1993, the Norwest Board declared a two-for-one split of the
shares of Norwest Common Stock to be effected in the form of a 100% stock
dividend payable on June 28, 1993, to Norwest Stockholders of record on June 4,
1993; and on September 23, 1997, the Norwest Board declared a two-for-one split
of the shares of Norwest Common Stock to be effected in the form of a 100% stock
dividend payable on October 10, 1997, to Norwest Stockholders of record on
October 2, 1997 (collectively, the "NORWEST STOCK DIVIDENDS"). Pursuant to the
provisions of the Norwest Rights Agreement, certain adjustments to the number of
Norwest Stockholder Rights outstanding, the number of Norwest Series A Preferred
Shares purchasable upon exercise of each Norwest Stockholder Right, and the
Redemption Price (as defined in the Norwest Rights Agreement) are required as a
result of the Norwest Stock Dividends. A copy of a Certificate of Adjustment
dated July 21, 1989, a Certificate of Adjustment dated June 28, 1993 and a
Certificate of Adjustment dated October 10, 1997, delivered by Norwest to the
Norwest Rights Agent and setting forth the required adjustments, are attached as
Exhibits 3, 4 and 5, respectively, to Norwest's
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Registration Statement on Form 8-A dated December 6, 1988, as amended by Form
8-A/A filed October 14, 1997, and are incorporated herein by reference.
Norwest Series A Preferred Shares purchasable upon exercise of the Norwest
Stockholder Rights will not be redeemable. Each Norwest Series A Preferred Share
will be entitled to a minimum preferential quarterly dividend payment of $1 per
share but will be entitled to an aggregate dividend of 800 times the dividend
declared per share of Norwest Common Stock. In the event of liquidation, the
holders of the Norwest Series A Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 800 times the payment made per share of Norwest Common
Stock. Each Norwest Series A Preferred Share will have 800 votes, voting
together with the shares of Norwest Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Norwest Common
Stock are exchanged, each Norwest Series A Preferred Share will be entitled to
receive 800 times the amount received per share of Norwest Common Stock. These
rights are protected by customary antidilution provisions.
Because of the nature of the Norwest Series A Preferred Shares' dividend,
liquidation and voting rights, the value of the one eight-hundredth interest in
a Norwest Series A Preferred Share purchasable upon exercise of each Norwest
Stockholder Right should approximate the value of one share of Norwest Common
Stock.
In the event that Norwest is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Norwest
Stockholder Right will thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Norwest Stockholder Right,
that number of shares of common stock of the acquiring company that at the time
of such transaction will have a market value of two times the exercise price of
the Norwest Stockholder Right. In the event that (i) any person or group of
affiliated or associated persons becomes the beneficial owner of 25% or more of
the outstanding shares of Norwest Common Stock (unless such person first
acquires 25% or more of the outstanding shares of Norwest Common Stock by a
purchase pursuant to a tender offer for all of the shares of Norwest Common
Stock for cash, which purchase increases such person's beneficial ownership to
85% or more of the outstanding shares of Norwest Common Stock) or (ii) during
such time as there is an Acquiring Person, there shall be a reclassification of
securities or a recapitalization or reorganization of Norwest or other
transaction or series of transactions involving Norwest that has the effect of
increasing by more than 1% the proportionate share of the outstanding shares of
any class of equity securities of Norwest or any of its subsidiaries
beneficially owned by the Acquiring Person, proper provision will be made so
that each holder of a Norwest Stockholder Right, other than Norwest Stockholder
Rights beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
shares of Norwest Common Stock having a market value of two times the exercise
price of the Norwest Stockholder Right (or, at the option of Norwest, an
equivalent number of one eight-hundredths of a Norwest Series A Preferred
Share).
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 25% or more of the outstanding
shares of Norwest Common Stock and prior to the acquisition by such person or
group of 50% or more of the outstanding shares of Norwest Common Stock, the
Norwest Board may exchange the Norwest Stockholder Rights (other than Norwest
Stockholder Rights owned by such person or group which have become void), in
whole or in part, at an exchange ratio of one share of Norwest Common Stock, or
one eight-hundredth of a Norwest Series A Preferred Share (or of a share of a
class or series of Norwest Preferred Stock having equivalent rights, preferences
and privileges), per Norwest Stockholder Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Norwest
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Series A Preferred Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Norwest Series A Preferred Share,
which may, at the election of Norwest, be evidenced by scrip or depositary
receipts), and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Norwest Series A Preferred Shares on the last trading day
prior to the date of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 25% or more of the outstanding
shares of Norwest Common Stock, the Norwest Board may redeem the Norwest
Stockholder Rights in whole, but not in part, at a price of $.00125 per Norwest
Stockholder Right (the "RIGHTS REDEMPTION PRICE"). The redemption of the Norwest
Stockholder Rights may be made effective at such time on such basis and with
such conditions as the Norwest Board, in its sole discretion, may establish.
Immediately upon any redemption of the Norwest Stockholder Rights, the right to
exercise the Norwest Stockholder Rights will terminate and the only right of the
holders of Norwest Stockholder Rights will be to receive the Rights Redemption
Price.
The terms of the Norwest Stockholder Rights may be amended by the Norwest
Board without the consent of the holders of the Norwest Stockholder Rights,
including an amendment to lower the 25% triggering thresholds described above to
not less than the greater of (i) any percentage greater than the largest
percentage of the outstanding shares of Norwest Common Stock then known to
Norwest to be beneficially owned by any person or group of affiliated or
associated persons and (ii) 15%, except that from and after such time as any
person becomes an Acquiring Person no such amendment may adversely affect the
interests of the holders of the Norwest Stockholder Rights.
Until a Norwest Stockholder Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of Norwest, including, without limitation,
the right to vote or to receive dividends.
THE NORWEST STOCKHOLDER RIGHTS HAVE CERTAIN ANTI-TAKEOVER EFFECTS. The
Norwest Stockholder Rights will cause substantial dilution to a person or group
that attempts to acquire Norwest on terms not approved by the Norwest Board,
except pursuant to an offer conditioned on a substantial number of Norwest
Stockholder Rights being acquired. The Norwest Stockholder Rights should not
interfere with any merger or other business combination approved by the Norwest
Board since the Norwest Stockholder Rights may be redeemed by Norwest at the
Rights Redemption Price prior to the time that a person or group has acquired
beneficial ownership of 25% or more of the shares of Norwest Common Stock.
The Norwest Rights Agreement is currently scheduled to expire on November
23, 1998. Prior thereto, Norwest is likely to either renew the Norwest Rights
Agreement or enter into a successor rights agreement, with similar terms and
effects as the Norwest Rights Agreement prior to such expiration.
In connection with the execution and delivery of the Agreement and the
Option Agreements, Norwest and the rights agent amended the Norwest Rights
Agreement as of June 7, 1998 to provide that the Norwest Stockholder Rights
would not separate from the Norwest Common Stock or become exercisable as a
result of such agreements or the transactions contemplated thereby. The Norwest
Rights Agreement, specifying the terms of the Norwest Stockholder Rights and
including the form of the Certificate of Designation setting forth the terms of
the Norwest Series A Preferred Shares as an exhibit thereto, the press release
announcing the declaration of the Norwest Stockholder Rights, and the
Certificates of Adjustment setting forth adjustments required by the Norwest
Stock Dividends are attached as exhibits to Norwest's Registration Statement on
Form 8-A, as amended by Form 8-A/A filed October 14, 1997 and Form 8-K filed
June 18, 1998, and are incorporated herein by reference. The foregoing
description of the Norwest Stockholder Rights is qualified in its entirety by
reference to such exhibits.
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COMPARISON OF RIGHTS OF NORWEST STOCKHOLDERS AND WELLS FARGO STOCKHOLDERS
THE CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE COMBINED COMPANY AT THE
EFFECTIVE TIME WILL BE SUBSTANTIALLY IDENTICAL TO THOSE OF NORWEST CURRENTLY,
WITH THE AMENDMENTS DESCRIBED UNDER "AMENDMENTS TO THE NORWEST RESTATED
CERTIFICATE OF INCORPORATION" AND THE MAXIMUM NUMBER OF DIRECTORS CONTEMPLATED
BY THE NORWEST BY-LAWS BEING INCREASED FROM 23 TO 28. THE RIGHTS OF NORWEST
STOCKHOLDERS ARE CURRENTLY GOVERNED BY THE DELAWARE LAW AND THE NORWEST
CERTIFICATE AND NORWEST BY-LAWS, WHILE THE RIGHTS OF WELLS FARGO STOCKHOLDERS
ARE CURRENTLY GOVERNED BY THE DELAWARE LAW AND THE WELLS FARGO CERTIFICATE AND
THE WELLS FARGO BY-LAWS. IN MOST RESPECTS, THE RIGHTS OF WELLS FARGO
STOCKHOLDERS ARE SIMILAR TO THOSE OF NORWEST STOCKHOLDERS. THE FOLLOWING IS A
SUMMARY OF THE MATERIAL DIFFERENCES BETWEEN THE NORWEST CERTIFICATE AND NORWEST
BY-LAWS, ON THE ONE HAND, AND THE WELLS FARGO CERTIFICATE AND THE WELLS FARGO
BY-LAWS, ON THE OTHER. THIS SUMMARY DOES NOT PURPORT TO BE A COMPLETE DISCUSSION
OF, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, THE NORWEST CERTIFICATE,
THE NORWEST BY-LAWS, THE WELLS FARGO CERTIFICATE, THE WELLS FARGO BY-LAWS AND
THE DELAWARE LAW.
CAPITAL STOCK. The Norwest Certificate provides that the authorized capital
stock of Norwest consists of 2,000,000,000 shares of Norwest Common Stock,
5,000,000 shares of Norwest Preferred Stock and 4,000,000 shares of Norwest
Preference Stock.
The Wells Fargo Certificate provides that the authorized capital stock of
Wells Fargo consists of 150,000,000 shares of Wells Fargo Common Stock and
25,000,000 shares of Wells Fargo preferred stock, par value $5.00 per share. In
addition, Wells Fargo Stockholders have approved an amendment to the Wells Fargo
Certificate, increasing the authorized shares of Wells Fargo Common Stock to
500,000,000; such amendment has not been filed by Wells Fargo in Delaware and is
not expected to be filed if the Merger is consummated.
At or prior to the Effective Time, the Norwest Certificate will be amended
so that the authorized capital stock of Norwest will consist of 4,000,000,000
shares of Norwest Common Stock, 20,000,000 shares of Norwest Preferred Stock and
4,000,000 shares of Norwest Preference Stock. See "Amendments to the Norwest
Restated Certificate of Incorporation."
DIRECTORS. The Norwest By-Laws provide for the Norwest Board to consist of
not less than ten nor more than 23 members, with the exact number to be
designated by resolution of the Board. At the Effective Time, the Norwest
By-Laws will provide for a maximum of 28 directors. Only persons nominated in
accordance with the Norwest By-Laws are eligible for election to the Norwest
Board. The Norwest By-Laws provide that vacancies on the Norwest Board may be
filled by the affirmative vote of a majority of the remaining directors then in
office, though less than a quorum.
The Wells Fargo By-Laws provide for the Wells Fargo Board to consist of not
less than ten nor more than 17 members, with the exact number to be fixed from
time to time by a by-law adopted by the Wells Fargo Stockholders or by the Wells
Fargo Board. The Wells Fargo By-Laws provide that vacancies on the Wells Fargo
Board may be filled by the affirmative vote of a majority of the remaining
directors then in office, though less than a quorum, or by a sole remaining
director, and the Wells Fargo Stockholders may elect a director at any time to
fill any vacancy not filled by the Wells Fargo Board.
STOCKHOLDER PROPOSALS. The Norwest By-Laws provide that business may be
brought before any annual meeting of Norwest Stockholders and that nominations
of directors for election at any meeting of Norwest Stockholders may be made by
the Norwest Board or by Norwest Stockholders; PROVIDED, in the case of Norwest
Stockholders, that the stockholder gives notice to the Corporate Secretary of
Norwest not less that 30 days nor more than 60 days before such meeting and in
the event that less than 40 days notice of such meeting is given to Norwest
Stockholders, then notice must be received not later than ten business days
following the day on which notice of such meeting was mailed or public
disclosure of the meeting was first made. A Norwest Stockholder's notice to the
Corporate
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Secretary of Norwest must also contain certain information, including, without
limitation, a brief description of the business to be brought before the annual
meeting or information concerning the director nominee and the person making the
nomination, the name and address of such stockholder and the class and number of
shares beneficially owned by such Norwest Stockholder.
The Wells Fargo By-Laws provide that proposals by Wells Fargo Stockholders
and persons nominated for election as directors by Wells Fargo Stockholders will
be considered only if such stockholders give notice to the Secretary of Wells
Fargo (i) in the case of any annual meeting, not fewer than 90 nor more than 120
days prior to the date of the meeting; PROVIDED, HOWEVER, that if the date of
the meeting is first publicly announced or disclosed less than 100 days prior to
the date of the meeting, such advance notice must be given not more than ten
days after the date of such first announcement; and (ii) in the case of a
special meeting at which directors are to be elected, not later than ten days
after the earlier of the date the notice was first mailed or public announcement
was made. Such notice must set forth the text of such proposal and a brief
written statement of the reasons why such stockholder favors the proposal and
setting forth such stockholder's name and address, the number and class of all
shares of each class of Wells Fargo Capital Stock beneficially owned by such
stockholder and any material interest of such stockholder in the proposal (other
than as a stockholder). Such notice, in the case of a nomination of a person for
election as a director, must set forth (i) the name of the person to be
nominated, the number and class of all shares of each class of Wells Fargo
Capital Stock beneficially owned by such person, the information regarding such
person required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K
adopted by the Commission, (ii) such person's signed consent to serve as a
director of Wells Fargo, if elected, and confirmation that such person agrees,
if elected, to abide by legal requirements and lawful contractual obligations of
Wells Fargo and not to cause or induce Wells Fargo to violate or breach such
legal requirements and lawful contractual obligations, (iii) such stockholder's
name and address, (iv) confirmation of the number and class of all shares of
each class of Wells Fargo Capital Stock beneficially owned by such stockholder
and (v) a confirmation that any governmental approvals required in connection
with such person's nomination, election or taking officer as a director of Wells
Fargo have been obtained by such stockholder and/or nominee, as applicable, and
are in full force and effect as of the date of submission of such notice of
nomination.
RIGHT TO CALL SPECIAL MEETINGS OF STOCKHOLDERS. The Norwest By-Laws provide
that special meetings of stockholders of the corporation may be called by the
Chairman, a Vice Chairman or the President of Norwest or by a majority of the
Norwest Board.
The Wells Fargo By-Laws provide that special meetings of stockholders of
Wells Fargo may be called by the Wells Fargo Board, the Chairman of the Board,
the President or the Chief Executive Officer (if other than the Chairman of the
Board or the President).
STOCKHOLDER RIGHTS PLANS. Norwest has entered into the Norwest Rights
Agreement pursuant to which each share of Norwest Common Stock is issued a
Norwest Stockholder Right. See "--Description of Norwest Capital Stock--Norwest
Rights Plan."
Wells Fargo does not have a stockholder rights plan.
The combined company is expected to be subject to the Norwest Rights
Agreement if the Merger is consummated prior to November 23, 1998 until the
expiration thereof, and may be covered thereafter by a renewal thereof or a
successor rights agreement. See "--Description of Norwest Capital Stock--Norwest
Rights Plan."
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AMENDMENTS TO THE NORWEST RESTATED CERTIFICATE OF INCORPORATION
The Agreement provides that, immediately prior to the Effective Time, the
Norwest Certificate will be amended in accordance with the Delaware Law as
follows: (i) the number of authorized shares of Norwest Common Stock will be
increased from 2,000,000,000 to 4,000,000,000 and (ii) the number of authorized
shares of Norwest Preferred Stock will be increased from 5,000,000 to
20,000,000. Promptly after the Effective Time, the Norwest Certificate will be
amended in accordance with the Delaware Law to provide that the name of the
corporation will be changed to "Wells Fargo & Company."
In addition, at or prior to the Effective Time, Norwest will file
Certificates of Designations with the Secretary of State of the State of
Delaware fixing the preferences, limitation and relative rights of Norwest
Series B Preferred Stock and Norwest Series H Preferred Stock, shares of which
are to be issued in the Merger.
As of the Norwest Record Date, there were 768,497,329 shares of Norwest
Common Stock outstanding and an additional 169,338,943 shares of Norwest Common
Stock were reserved for issuance. Approximately 880,000,000 shares of Norwest
Common Stock will be issued in the Merger and approximately 21,700,000
additional shares of Norwest Common Stock will be reserved in connection with
the Merger for issuance following the Merger. After giving effect to the Merger,
without the Amendments, approximately 160,000,000 shares of Norwest Common Stock
would be available for issuance. As of the Norwest Record Date, there were
1,073,289 shares of Norwest Preferred Stock outstanding and 1,125,000 shares of
Norwest Preferred Stock reserved for issuance. The Agreement contemplates the
issuance by Norwest of 5,500,000 additional shares of Norwest Preferred Stock;
if the number of authorized shares of Norwest Preferred Stock were not increased
pursuant to the Amendments, there would not be a sufficient number of such
shares to complete the Merger.
The increase in authorized shares of Norwest capital stock will, in addition
to providing sufficient Norwest Preferred Stock for issuance in connection with
the Merger, provide additional shares for general corporate purposes, including
stock dividends and stock splits, raising additional capital, issuance pursuant
to employee and director stock plans and possible future acquisitions. For
example, Norwest has in the past expanded its franchise through strategic
acquisitions and split Norwest Common Stock on several occasions. There are,
however, no current plans, understandings or arrangements for issuing a material
number of additional shares of Norwest Common Stock from the additional shares
proposed to be authorized pursuant to the Amendments.
The issuance of shares of Norwest Common Stock, including the additional
shares that would be authorized if the proposed Amendments are adopted, may
generally dilute the present equity ownership position of current holders of
Norwest Common Stock and the issuance of additional shares of Norwest capital
stock may be made without stockholder approval, unless otherwise required by
applicable laws or stock exchange regulations. The Amendments might also have
the effect of discouraging an attempt by another person or entity, through the
acquisition of a substantial number of shares of Norwest Common Stock, to
acquire control of Norwest with a view to consummating a merger, sale of all or
any part of Norwest's assets, or a similar transaction, because the issuance of
new shares could be used to dilute the stock ownership of such person or entity.
Approval of the Amendments requires the affirmative vote of a majority of
the shares of Norwest Common Stock outstanding on the Norwest Record Date,
abstensions and broker non-votes will have the same effect as votes against such
adoption. See "Norwest Special Meeting." Assuming the requisite approval of
Norwest Stockholders of the Amendments is obtained, Norwest intends to file with
the Secretary of State of the State of Delaware a certificate of amendment
relating to the increase in authorized shares immediately before or at the
Effective Time, and to file a certificate of amendment relating to the change of
name to "Wells Fargo & Company" as promptly as practicable
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following the Effective Time. Accordingly, Norwest does not intend to effect the
Amendments if the Merger is not consummated, and the Amendments are contingent
upon such consummation.
THE NORWEST BOARD HAS UNANIMOUSLY APPROVED THE AMENDMENTS AND DECLARED THEM
TO BE ADVISABLE, AND RECOMMENDS THAT NORWEST STOCKHOLDERS VOTE "FOR" ADOPTION OF
THE AMENDMENTS.
DISSENTERS' APPRAISAL RIGHTS
Neither Norwest Stockholders or Wells Fargo Stockholders will be entitled to
dissenters' appraisal rights under Delaware law or any other statute in
connection with the Merger. See "Norwest Capital Stock and Comparison of
Stockholder Rights--Comparison of Rights of Norwest Stockholders and Wells Fargo
Stockholders."
LEGAL MATTERS
The validity of the Norwest Common Stock to be issued in connection with the
Merger will be passed upon by Stanley S. Stroup, Esq., Executive Vice President
and General Counsel, Norwest. Mr. Stroup beneficially owns shares of Norwest
Common Stock and options to purchase additional shares of Norwest Common Stock.
As of the date of this Joint Proxy Statement-Prospectus, the number of shares
Mr. Stroup owns or has the right to acquire upon exercise of his options is, in
the aggregate, less than 0.1% of the outstanding shares of Norwest Common Stock.
EXPERTS
The consolidated financial statements of Norwest and its subsidiaries
incorporated in this Joint Proxy Statement-Prospectus by reference to the
Norwest Annual Report on Form 10-K for the year ended December 31, 1997 have
been so incorporated by reference herein in reliance on the report with respect
thereto of KPMG Peat Marwick LLP, independent public accountants, given upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Wells Fargo and its subsidiaries
incorporated in this Joint Proxy Statement-Prospectus by reference to the Wells
Fargo Annual Report on Form 10-K for the year ended December 31, 1997 have been
so incorporated by reference herein in reliance on the report with respect
thereto of KPMG Peat Marwick LLP, independent public accountants, given upon the
authority of said firm as experts in accounting and auditing.
STOCKHOLDER PROPOSALS
Stockholders of Norwest may submit proposals to be considered for
stockholder action at the 1999 Annual Meeting of Norwest Stockholders if they do
so in accordance with applicable regulations of the Commission. Any such
proposals must be received by the Secretary of Norwest no later than November
18, 1998 in order to be considered for inclusion in Norwest's 1999 proxy
materials. Any proposal from a Norwest Stockholder to be presented at the 1999
Annual Meeting of Norwest Stockholders that is submitted outside the processes
of Rule 14a-8 under the Exchange Act and that therefore will not be included in
proxy materials to be sent to Norwest Stockholders by Norwest, must be received
by the Secretary of Norwest not earlier than 60 days prior nor later than 30
days prior to the date of such meeting (unless less than 40 days' notice or
prior public disclosure of the date of such meeting is given or made to Norwest
Stockholders, in which case a stockholder proposal must be received not later
than the close of business on the 10th day following the date on which Norwest's
notice was mailed or public disclosure was made with respect to such meeting) in
order to be considered timely received under the Norwest By-Laws.
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Wells Fargo will hold a 1999 Annual Meeting of Stockholders only if the
Merger is not consummated before the time of such meeting. In the event that
such a meeting is held, any proposals of Wells Fargo Stockholders intended to be
presented at the 1999 Annual Meeting must be received by the Secretary of Wells
Fargo no later than November 16, 1998 in order to be considered for inclusion in
the Wells Fargo proxy materials relating to such meeting. Any proposal from a
Wells Fargo Stockholder that is submitted outside the processes of Rule 14a-8
under the Exchange Act and that therefore will not be included in proxy
materials to be sent to Wells Fargo Stockholders by Wells Fargo, must be
received by the Secretary of Wells Fargo not earlier than 90 days prior nor
later than 120 days prior to the date of such meeting (unless less than 100
days' notice or prior public disclosure of the date of such meeting is given or
made to Wells Fargo Stockholders, in which case a stockholder proposal must be
received no later than the close of business on the 10th day following the date
on which Norwest's notice was mailed or public disclosure was made with respect
to such meeting) in order to be considered timely received under the Wells Fargo
By-Laws.
OTHER MATTERS
As of the date of this Joint Proxy Statement-Prospectus, the Wells Fargo
Board and the Norwest Board know of no matters that will be presented for
consideration at the Wells Fargo Special Meeting or the Norwest Special Meeting,
respectively, other than as described in this Joint Proxy Statement-Prospectus.
If any other matters shall properly come before either such Special Meeting or
any adjournments or postponements thereof and be voted upon, the enclosed
proxies will be deemed to confer discretionary authority on the individuals
named as proxies therein to vote the shares represented by such proxies as to
any such matters. The individuals named as proxies intend to vote or not to vote
in accordance with the recommendation of the respective managements of Wells
Fargo and Norwest.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of KPMG Peat Marwick LLP will be present at each of the
Norwest Special Meeting and the Wells Fargo Special Meeting. In each case, such
representatives will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.
89
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Norwest has filed with the Commission a Registration Statement under the
Securities Act that registers the distribution to Wells Fargo Stockholders of
the shares of Norwest Common Stock to be issued in connection with the Merger
(the "REGISTRATION STATEMENT"). The Registration Statement, including the
attached exhibits and schedules, contains additional relevant information about
Norwest and Norwest Common Stock. The rules and regulations of the Commission
allow us to omit certain information included in the Registration Statement from
this Joint Proxy Statement-Prospectus.
In addition, Norwest and Wells Fargo file reports, proxy statements and
other information with the Commission under the Exchange Act. You may read and
copy this information at the following locations of the Commission:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates.
The Commission also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like Norwest and
Wells Fargo, who file electronically with the Commission. The address of that
site is http://www.sec.gov.
You can also inspect reports, proxy statements and other information about
Norwest and Wells Fargo at the offices of the NYSE, 20 Broad Street, New York,
New York 10005.
The Commission allows Norwest and Wells Fargo to "incorporate by reference"
information into this Joint Proxy Statement-Prospectus. This means that the
companies can disclose important information to you by referring you to another
document filed separately with the Commission. The information incorporated by
reference is considered to be a part of this Joint Proxy Statement-Prospectus,
except for any information that is superseded by information that is included
directly in this document.
This Joint Proxy Statement-Prospectus incorporates by reference the
documents listed below that Norwest and Wells Fargo have previously filed with
the Commission. They contain important information about our companies and their
financial condition.
90
<PAGE>
<TABLE>
<CAPTION>
NORWEST SEC FILINGS PERIOD
- --------------------------------------------------------------------- ------------------------------------------
<S> <C>
Annual Report on Form 10-K........................................... Year ended December 31, 1997, as filed
February 27, 1998
Quarterly Reports on Form 10-Q....................................... Quarter ended March 31, 1998, as filed May
13, 1998; quarter ended June 30, 1998, as
filed August 14, 1998
The description of Norwest Common Stock set forth in the Norwest
Current Report on Form 8-K filed on October 13, 1997, including any
amendment or report filed with the Commission for the purpose of
updating such description.
The description of Norwest Preferred Stock Purchase Rights set forth
in the Norwest registration statement filed under Section 12 of the
Exchange Act of 1934, as amended (the "EXCHANGE ACT") on Form 8-A
on December 6, 1988, including any amendment or report filed with
the Commission for the purpose of updating such description
Current Reports on Form 8-K.......................................... Filed:
- January 22, 1998
- April 20, 1998
- April 22, 1998
- June 8, 1998
- June 9, 1998
- June 12, 1998
- June 18, 1998
- July 22, 1998
- August 5, 1998
<CAPTION>
WELLS FARGO SEC FILINGS PERIOD
- --------------------------------------------------------------------- ------------------------------------------
<S> <C>
Annual Report on Form 10-K........................................... Year ended December 31, 1997, as filed
March 16, 1998
Quarterly Reports on Form 10-Q....................................... Quarter ended March 31, 1998, as filed May
14, 1998; quarter ended June 30, 1998, as
filed August 13, 1998
The description of Wells Fargo Common Stock set forth in the Wells
Fargo registration statement filed pursuant to Section 12 of the
Exchange Act on Form 8-B on June 17, 1987, including any amendment
or report filed with the Commission for the purpose of updating
such description
Current Reports on Form 8-K.......................................... Filed:
- January 20, 1998
- March 20, 1998
- April 3, 1998
- April 21, 1998
- May 21, 1998
- June 8, 1998
- June 9, 1998
- June 11, 1998
- June 18, 1998
- July 21, 1998
- July 24, 1998
</TABLE>
Norwest and Wells Fargo incorporate by reference additional documents that
either company may file with the Commission between the date of this Joint Proxy
Statement-Prospectus and the dates of the Norwest Special Meeting and the Wells
Fargo Special Meeting. These documents include periodic reports, such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, as well as proxy statements.
91
<PAGE>
Norwest has supplied all information contained or incorporated by reference
in this Joint Proxy Statement-Prospectus relating to Norwest, as well as all pro
forma financial information, and Wells Fargo has supplied all such information
relating to Wells Fargo.
You can obtain any of the documents incorporated by reference in this
document through Norwest or Wells Fargo, as the case may be, or from the
Commission through the Commission's web site at the address described above.
Documents incorporated by reference are available from the companies without
charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this Joint Proxy
Statement-Prospectus. You can obtain documents incorporated by reference in this
Joint Proxy Statement-Prospectus by requesting them in writing or by telephone
from the appropriate company at the following addresses:
<TABLE>
<S> <C>
NORWEST WELLS FARGO
Investor Relations Investor/Public Relations
Norwest Corporation Wells Fargo & Company
Norwest Center MAC #0163-029
Sixth and Marquette 343 Sansome Street
Minneapolis, Minnesota 55479 San Francisco, California 94163
Telephone (888) 662-7865 Telephone (415) 396-0560
</TABLE>
If you would like to request documents, please do so by October 9, 1998 to
receive them before the Special Meetings. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, within one business day after we receive your request.
We have not authorized anyone to give any information or make any
representation about the Merger or our companies that is different from, or in
addition to, that contained in this Joint Proxy Statement-Prospectus or in any
of the materials that we've incorporated into this document. Therefore, if
anyone does give you information of this sort, you should not rely on it. If you
are in a jurisdiction where offers to exchange or sell, or solicitations of
offers to exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
92
<PAGE>
FORWARD-LOOKING STATEMENTS
This Joint Proxy Statement-Prospectus (including information included or
incorporated by reference herein) contains certain forward-looking statements
with respect to the financial condition, results of operations, plans,
objectives, future performance and business of each of Norwest and Wells Fargo,
as well as certain information relating to the Merger, including, without
limitation (i) statements relating to the cost savings and accretion to reported
earnings estimated to result from the Merger, (ii) statements relating to
revenues estimated to result from the Merger, (iii) statements relating to the
merger and integration costs estimated to be incurred in connection with the
Merger and (iv) statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "estimates" or similar expressions. These
forward-looking statements involve certain risks and uncertainties. Actual
results may differ materially from those contemplated by such forward-looking
statements due to, among others, the following factors: (a) expected cost
savings from the Merger are not fully realized or are not realized within the
expected time frame or additional or unexpected costs are incurred; (b) revenues
following the Merger are lower than expected; (c) competitive pressures among
financial services companies increase; (d) costs or difficulties related to the
integration of the business of Norwest and Wells Fargo or other acquired
businesses are greater than expected; (e) changes in the interest rate
environment reduce interest margins; (f) general economic conditions, either
internationally or nationally or in the states or countries in which Norwest or
Wells Fargo is doing business, change or are less favorable than expected; (g)
legislative or regulatory changes adversely affect the businesses in which
Norwest or Wells Fargo are engaged; (h) personal or commercial customers'
bankruptcies increase; (i) technological changes (including "Year 2000" data
systems compliance issues) are more difficult or expensive than anticipated; and
(j) changes occur in the securities markets.
See "Where You Can Find More Information."
93
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
The following unaudited pro forma condensed combined financial information
and explanatory notes are presented to show the impact on the historical
financial positions and results of operations of Norwest and Wells Fargo of the
Merger under the "pooling of interests" method of accounting. The unaudited pro
forma condensed combined financial information combines the historical financial
information of Norwest and Wells Fargo as of June 30, 1998 and for the six
months ended June 30, 1998 and 1997 and for the twelve-month periods ended
December 31, 1997, 1996, and 1995, respectively. The unaudited pro forma
condensed combined statements of income give effect to the Merger as if the
Merger had been consummated at the beginning of the earliest period presented.
The pro forma condensed combined balance sheet assumes the Merger was
consummated on June 30, 1998. The Merger, which is expected to be completed in
the fourth quarter of 1998, provides for the exchange of 10 shares of Norwest
Common Stock for each outstanding share of Wells Fargo Common Stock. The pro
forma condensed combined financial information as of June 30, 1998 and for the
six months ended June 30, 1998 and 1997 and each of the three years ended
December 31, 1997, 1996 and 1995 is based on and derived from, and should be
read in conjunction with, (i) the historical consolidated financial statements
and the related notes thereto of Norwest, which are incorporated by reference
herein, and (ii) the historical consolidated financial statements and the
related notes thereto of Wells Fargo, which are incorporated by reference
herein. See "Where You can Find More Information." Pro forma stockholders'
equity at June 30, 1998 includes the effect of an estimated non-recurring Merger
charge of $950 million ($625 million after taxes). See Note 3 to the unaudited
pro forma financial information on page 101 for further information. The pro
forma condensed combined financial statements do not give effect to the
anticipated cost savings or potential revenue enhancements in connection with
the Merger. See "Management and Operations After the Merger-- Operations."
The pro forma data are presented for comparative purposes only and are not
necessarily indicative of the future financial position or results of operations
of the combined company or of the combined financial position or the results of
operations that would have been realized had the Merger been consummated during
the periods or as of the dates for which the pro forma data are presented.
94
<PAGE>
NORWEST CORPORATION AND WELLS FARGO & COMPANY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AT JUNE 30, 1998
(IN MILLIONS)
<TABLE>
<CAPTION>
WELLS PRO FORMA
NORWEST FARGO ADJUSTMENTS COMBINED
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks............ $ 4,954 7,130 -- 12,084
Interest-bearing deposits.......... 63 17 -- 80
Federal funds sold and resale
agreements....................... 866 590 -- 1,456
----------------- -------- -------- -----------------
Total cash and cash equivalents.... 5,883 7,737 -- 13,620
----------------- -------- -------- -----------------
Trading account securities......... 247 941 -- 1,188
Investment securities available for
sale............................. 18,432 8,449 -- 26,881
Investment securities held to
maturity......................... 752 405 -- 1,157
----------------- -------- -------- -----------------
Total investment securities........ 19,184 8,854 -- 28,038
----------------- -------- -------- -----------------
Loans held for sale................ 3,470 1,085 -- 4,555
Mortgages held for sale............ 12,191 319 -- 12,510
Loans and leases, net of unearned
discount......................... 43,391 62,916 -- 106,307
Allowance for credit losses........ (1,262) (1,835) -- (3,097)
----------------- -------- -------- -----------------
Net loans and leases............... 42,129 61,081 -- 103,210
----------------- -------- -------- -----------------
Premises and equipment, net........ 1,377 2,017 (107) 3,287
Mortgage servicing rights, net..... 2,904 -- -- 2,904
Goodwill and intangible assets..... 1,141 8,596 -- 9,737
Interest receivable and other
assets........................... 4,627 2,570 -- 7,197
----------------- -------- -------- -----------------
TOTAL ASSETS....................... $ 93,153 93,200 (107) 186,246
----------------- -------- -------- -----------------
----------------- -------- -------- -----------------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Deposits
Noninterest-bearing.............. $ 17,797 23,411 -- 41,208
Interest-bearing................. 38,998 47,039 -- 86,037
----------------- -------- -------- -----------------
Total deposits................... 56,795 70,450 -- 127,245
----------------- -------- -------- -----------------
Short-term borrowings.............. 12,188 1,549 -- 13,737
Accrued expenses and other
liabilities...................... 4,508 2,537 660 7,705
Long-term debt..................... 12,316 4,415 -- 16,731
Guaranteed preferred beneficial
interest in Wells Fargo
subordinated debentures.......... -- 1,299 -- 1,299
Preferred stock.................... 186 275 -- 461
Common stock....................... 1,285 425 993 2,703
Surplus............................ 483 8,347 (993) 7,837
Retained earnings.................. 5,365 3,837 (767) 8,435
Accumulated other comprehensive
income........................... 375 66 -- 441
Notes receivable from ESOP......... (5) -- -- (5)
Treasury stock..................... (343) -- -- (343)
----------------- -------- -------- -----------------
Total stockholders' equity....... 7,346 12,950 (767) 19,529
----------------- -------- -------- -----------------
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY........................... $ 93,153 93,200 (107) 186,246
----------------- -------- -------- -----------------
----------------- -------- -------- -----------------
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
financial information.
95
<PAGE>
NORWEST CORPORATION AND WELLS FARGO & COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1998
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NORWEST WELLS FARGO ADJUSTMENTS PROFORMA COMBINED
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INTEREST INCOME ON
Loans and leases................... $ 2,384 2,959 -- 5,343
Investment securities available for
sale............................. 631 275 -- 906
Investment securities held to
maturity......................... 13 12 -- 25
Loans held for sale................ 139 42 -- 181
Mortgages held for sale............ 353 26 -- 379
Money market investments........... 21 17 -- 38
Trading account securities......... 28 30 -- 58
----------------- ----------------- ----------------- -----------------
Total interest income............ 3,569 3,361 -- 6,930
----------------- ----------------- ----------------- -----------------
INTEREST EXPENSE ON
Deposits........................... 739 811 -- 1,550
Short-term borrowings.............. 291 72 -- 363
Long-term debt..................... 391 148 -- 539
Guaranteed preferred beneficial
interest in Wells Fargo
subordinated debentures.......... -- 51 -- 51
----------------- ----------------- ----------------- -----------------
Total interest expense........... 1,421 1,082 -- 2,503
----------------- ----------------- ----------------- -----------------
Net interest income.............. 2,148 2,279 -- 4,427
Provision for credit losses........ 264 350 -- 614
----------------- ----------------- ----------------- -----------------
Net interest income after
provision for credit losses.... 1,884 1,929 -- 3,813
----------------- ----------------- ----------------- -----------------
NON-INTEREST INCOME
Mortgage banking................... 540 38 -- 578
Trust and investment fees and
commissions...................... 256 271 -- 527
Service charges and fees........... 311 607 -- 918
Credit card fee revenue............ 73 176 -- 249
Insurance.......................... 205 -- -- 205
Data processing.................... 33 -- -- 33
Net investment securities available
for sale gains................... 42 23 -- 65
Net venture capital gains.......... 112 -- -- 112
Trading............................ 66 38 -- 104
Other.............................. 123 283 -- 406
----------------- ----------------- ----------------- -----------------
Total non-interest income........ 1,761 1,436 -- 3,197
----------------- ----------------- ----------------- -----------------
NON-INTEREST EXPENSES
Salaries and benefits.............. 1,389 875 (4) 2,260
Net occupancy...................... 174 199 -- 373
Equipment rentals, depreciation and
maintenance...................... 183 197 5 385
Business development............... 132 87 -- 219
Communication...................... 159 127 -- 286
Data processing.................... 78 30 -- 108
Intangible asset amortization...... 86 293 -- 379
Other.............................. 334 357 -- 691
----------------- ----------------- ----------------- -----------------
Total non-interest expenses...... 2,535 2,165 1 4,701
----------------- ----------------- ----------------- -----------------
INCOME BEFORE INCOME TAXES......... 1,110 1,200 (1) 2,309
Income tax expense................. 360 548 -- 908
----------------- ----------------- ----------------- -----------------
NET INCOME......................... $ 750 652 (1) 1,401
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
NET INCOME PER COMMON SHARE
Basic.............................. $ 0.98 7.52 -- 0.86
Diluted............................ 0.96 7.45 -- 0.85
WEIGHTED AVERAGE COMMON AND
POTENTIAL COMMON SHARES
Basic.............................. 757.8 85.5 769.7 1,613.0
Diluted............................ 771.5 86.4 777.1 1,635.0
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
financial information.
96
<PAGE>
NORWEST CORPORATION AND WELLS FARGO & COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1997
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WELLS PROFORMA
NORWEST FARGO ADJUSTMENTS COMBINED
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INTEREST INCOME ON
Loans and leases................... $ 2,211 3,002 -- 5,213
Investment securities available for
sale.............................. 690 398 -- 1,088
Investment securities held to
maturity.......................... 14 12 -- 26
Loans held for sale................ 112 42 -- 154
Mortgages held for sale............ 196 13 -- 209
Money market investments........... 31 12 -- 43
Trading account securities......... 15 11 -- 26
----------------- ----------------- ----------------- -----------------
Total interest income............ 3,269 3,490 -- 6,759
----------------- ----------------- ----------------- -----------------
INTEREST EXPENSE ON
Deposits........................... 715 851 -- 1,566
Short-term borrowings.............. 215 71 -- 286
Long-term debt..................... 381 159 -- 540
Guaranteed preferred beneficial
interest in Wells Fargo
subordinated debentures........... -- 50 -- 50
----------------- ----------------- ----------------- -----------------
Total interest expense........... 1,311 1,131 -- 2,442
----------------- ----------------- ----------------- -----------------
Net interest income.............. 1,958 2,359 -- 4,317
Provision for credit losses........ 232 245 -- 477
----------------- ----------------- ----------------- -----------------
Net interest income after
provision for credit losses.... 1,726 2,114 -- 3,840
----------------- ----------------- ----------------- -----------------
NON-INTEREST INCOME
Mortgage banking................... 399 14 -- 413
Trust and investment fees and
commissions....................... 209 253 -- 462
Service charges and fees........... 276 580 -- 856
Credit card fee revenue............ 56 146 -- 202
Insurance.......................... 190 -- -- 190
Data processing.................... 36 -- -- 36
Net investment securities available
for sale gains (losses)........... 4 7 -- 11
Net venture capital gains.......... 113 -- -- 113
Trading............................ 52 38 -- 90
Other.............................. 106 251 -- 357
----------------- ----------------- ----------------- -----------------
Total non-interest income........ 1,441 1,289 -- 2,730
----------------- ----------------- ----------------- -----------------
NON-INTEREST EXPENSES
Salaries and benefits.............. 1,117 872 (4) 1,985
Net occupancy...................... 160 196 -- 356
Equipment rentals, depreciation and
maintenance....................... 166 192 5 363
Business development............... 122 63 -- 185
Communication...................... 143 154 -- 297
Data processing.................... 87 26 -- 113
Intangible asset amortization...... 83 308 -- 391
Other.............................. 283 522 -- 805
----------------- ----------------- ----------------- -----------------
Total non-interest expenses...... 2,161 2,333 1 4,495
----------------- ----------------- ----------------- -----------------
INCOME BEFORE INCOME TAXES......... 1,006 1,070 (1) 2,075
Income tax expense................. 353 502 -- 855
----------------- ----------------- ----------------- -----------------
NET INCOME......................... $ 653 568 (1) 1,220
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
NET INCOME PER COMMON SHARE
Basic.............................. $ 0.86 6.12 -- 0.73
Diluted............................ 0.85 6.06 -- 0.72
WEIGHTED AVERAGE COMMON AND
POTENTIAL COMMON SHARES
Basic.............................. 747.4 89.9 809.1 1,646.4
Diluted............................ 757.7 90.9 818.2 1,666.8
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
financial information.
97
<PAGE>
NORWEST CORPORATION AND WELLS FARGO & COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WELLS PROFORMA
NORWEST FARGO ADJUSTMENTS COMBINED
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INTEREST INCOME ON
Loans and leases................... $ 4,553 5,986 -- 10,539
Investment securities available for
sale.............................. 1,331 732 -- 2,063
Investment securities held to
maturity.......................... 28 25 -- 53
Loans held for sale................ 232 80 -- 312
Mortgages held for sale............ 462 28 -- 490
Money market investments........... 50 18 -- 68
Trading account securities......... 41 35 -- 76
----------------- ----------------- ----------------- -----------------
Total interest income............ 6,697 6,904 -- 13,601
----------------- ----------------- ----------------- -----------------
INTEREST EXPENSE ON
Deposits........................... 1,447 1,703 -- 3,150
Short-term borrowings.............. 439 171 -- 610
Long-term debt..................... 778 315 -- 1,093
Guaranteed preferred beneficial
interest in Wells Fargo
subordinated debentures........... -- 101 -- 101
----------------- ----------------- ----------------- -----------------
Total interest expense........... 2,664 2,290 -- 4,954
----------------- ----------------- ----------------- -----------------
Net interest income.............. 4,033 4,614 -- 8,647
Provision for credit losses........ 525 615 -- 1,140
----------------- ----------------- ----------------- -----------------
Net interest income after
provision for credit losses.... 3,508 3,999 -- 7,507
----------------- ----------------- ----------------- -----------------
NON-INTEREST INCOME
Mortgage banking................... 876 51 -- 927
Trust and investment fees and
commissions....................... 435 519 -- 954
Service charges and fees........... 579 1,168 -- 1,747
Credit card fee revenue............ 123 325 -- 448
Insurance.......................... 336 -- -- 336
Data processing.................... 71 -- -- 71
Net investment securities available
for sale gains.................... 38 20 -- 58
Net venture capital gains.......... 191 -- -- 191
Trading............................ 79 72 -- 151
Other.............................. 234 494 -- 728
----------------- ----------------- ----------------- -----------------
Total non-interest income........ 2,962 2,649 -- 5,611
----------------- ----------------- ----------------- -----------------
NON-INTEREST EXPENSES
Salaries and benefits.............. 2,361 1,715 (8) 4,068
Net occupancy...................... 326 388 -- 714
Equipment rentals, depreciation and
maintenance....................... 341 385 10 736
Business development............... 254 136 -- 390
Communication...................... 295 295 -- 590
Data processing.................... 168 49 -- 217
Intangible asset amortization...... 169 610 -- 779
Other.............................. 506 916 -- 1,422
----------------- ----------------- ----------------- -----------------
Total non-interest expenses...... 4,420 4,494 2 8,916
----------------- ----------------- ----------------- -----------------
INCOME BEFORE INCOME TAXES......... 2,050 2,154 (2) 4,202
Income tax expense................. 699 999 (1) 1,697
----------------- ----------------- ----------------- -----------------
NET INCOME......................... $ 1,351 1,155 (1) 2,505
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
NET INCOME PER COMMON SHARE
Basic.............................. $ 1.78 12.77 -- 1.51
Diluted............................ 1.75 12.64 -- 1.49
WEIGHTED AVERAGE COMMON AND
POTENTIAL COMMON SHARES
Basic.............................. 750.1 88.4 796.0 1,634.5
Diluted............................ 760.1 89.4 804.4 1,653.9
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
financial information.
98
<PAGE>
NORWEST CORPORATION AND WELLS FARGO & COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1996
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WELLS PROFORMA
NORWEST FARGO ADJUSTMENTS COMBINED
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INTEREST INCOME ON
Loans and leases................... $ 4,302 5,592 -- 9,894
Investment securities available for
sale.............................. 1,170 779 -- 1,949
Investment securities held to
maturity.......................... 36 13 -- 49
Loans held for sale................ 254 74 -- 328
Mortgages held for sale............ 469 22 -- 491
Money market investments........... 62 33 -- 95
Trading account securities......... 25 10 -- 35
----------------- ----------------- ----------------- -----------------
Total interest income............ 6,318 6,523 -- 12,841
----------------- ----------------- ----------------- -----------------
INTEREST EXPENSE ON
Deposits........................... 1,325 1,586 -- 2,911
Short-term borrowings.............. 453 108 -- 561
Long-term debt..................... 838 302 -- 1,140
Guaranteed preferred beneficial
interest in Wells Fargo
subordinated debentures........... -- 6 -- 6
----------------- ----------------- ----------------- -----------------
Total interest expense........... 2,616 2,002 -- 4,618
----------------- ----------------- ----------------- -----------------
Net interest income.............. 3,702 4,521 -- 8,223
Provision for credit losses........ 395 105 -- 500
----------------- ----------------- ----------------- -----------------
Net interest income after
provision for credit losses.... 3,307 4,416 -- 7,723
----------------- ----------------- ----------------- -----------------
NON-INTEREST INCOME
Mortgage banking................... 822 26 -- 848
Trust and investment fees and
commissions....................... 360 438 -- 798
Service charges and fees........... 484 1,082 -- 1,566
Credit card fee revenue............ 122 228 -- 350
Insurance.......................... 280 -- -- 280
Data processing.................... 73 -- -- 73
Net investment securities available
for sale gains (losses)........... (47) 10 -- (37)
Net venture capital gains.......... 256 -- -- 256
Trading............................ 35 44 -- 79
Other.............................. 180 329 -- 509
----------------- ----------------- ----------------- -----------------
Total non-interest income........ 2,565 2,157 -- 4,722
----------------- ----------------- ----------------- -----------------
NON-INTEREST EXPENSES
Salaries and benefits.............. 2,097 1,866 (8) 3,955
Net occupancy...................... 316 366 -- 682
Equipment rentals, depreciation and
maintenance....................... 328 399 10 737
Business development............... 228 194 -- 422
Communication...................... 285 312 -- 597
Data processing.................... 163 55 -- 218
Intangible asset amortization...... 162 519 -- 681
Other.............................. 511 883 -- 1,394
----------------- ----------------- ----------------- -----------------
Total non-interest expenses...... 4,090 4,594 2 8,686
----------------- ----------------- ----------------- -----------------
INCOME BEFORE INCOME TAXES......... 1,782 1,979 (2) 3,759
Income tax expense................. 628 908 (1) 1,535
----------------- ----------------- ----------------- -----------------
NET INCOME......................... $ 1,154 1,071 (1) 2,224
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
NET INCOME PER COMMON SHARE
Basic.............................. $ 1.55 12.21 -- 1.38
Diluted............................ 1.54 12.05 -- 1.36
WEIGHTED AVERAGE COMMON AND
POTENTIAL COMMON SHARES
Basic.............................. 731.8 82.2 739.9 1,553.9
Diluted............................ 739.5 83.3 749.5 1,572.3
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
financial information.
99
<PAGE>
NORWEST CORPORATION AND WELLS FARGO & COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1995
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WELLS PROFORMA
NORWEST FARGO ADJUSTMENTS COMBINED
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INTEREST INCOME ON
Loans and leases................... $ 3,956 3,435 -- 7,391
Investment securities available for
sale.............................. 1,065 599 -- 1,664
Investment securities held to
maturity.......................... 84 3 -- 87
Loans held for sale................ 196 31 -- 227
Mortgages held for sale............ 366 13 -- 379
Money market investments........... 35 4 -- 39
Trading account securities......... 15 -- -- 15
----------------- ----------------- ----------------- -----------------
Total interest income............ 5,717 4,085 -- 9,802
----------------- ----------------- ----------------- -----------------
INTEREST EXPENSE ON
Deposits........................... 1,156 997 -- 2,153
Short-term borrowings.............. 516 231 -- 747
Long-term debt..................... 776 203 -- 979
----------------- ----------------- ----------------- -----------------
Total interest expense........... 2,448 1,431 -- 3,879
----------------- ----------------- ----------------- -----------------
Net interest income.............. 3,269 2,654 -- 5,923
Provision for credit losses........ 312 -- -- 312
----------------- ----------------- ----------------- -----------------
Net interest income after
provision for credit losses.... 2,957 2,654 -- 5,611
----------------- ----------------- ----------------- -----------------
NON-INTEREST INCOME
Mortgage banking................... 536 19 -- 555
Trust and investment fees and
commissions....................... 284 274 -- 558
Service charges and fees........... 342 581 -- 923
Credit card fee revenue............ 133 160 -- 293
Insurance.......................... 225 -- -- 225
Data processing.................... 72 -- -- 72
Net investment securities held to
maturity gains.................... 1 -- -- 1
Net investment securities available
for sale (losses)................. (45) (17) -- (62)
Net venture capital gains.......... 102 -- -- 102
Trading............................ 40 27 -- 67
Other.............................. 158 255 -- 413
----------------- ----------------- ----------------- -----------------
Total non-interest income........ 1,848 1,299 -- 3,147
----------------- ----------------- ----------------- -----------------
NON-INTEREST EXPENSES
Salaries and benefits.............. 1,745 995 (8) 2,732
Net occupancy...................... 254 211 -- 465
Equipment rentals, depreciation and
maintenance....................... 273 193 10 476
Business development............... 172 109 -- 281
Communication...................... 225 147 -- 372
Data processing.................... 136 11 -- 147
Intangible asset amortization...... 125 88 -- 213
Other.............................. 452 422 -- 874
----------------- ----------------- ----------------- -----------------
Total non-interest expenses...... 3,382 2,176 2 5,560
----------------- ----------------- ----------------- -----------------
INCOME BEFORE INCOME TAXES......... 1,423 1,777 (2) 3,198
Income tax expense................. 467 745 (1) 1,211
----------------- ----------------- ----------------- -----------------
NET INCOME......................... $ 956 1,032 (1) 1,987
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
NET INCOME PER COMMON SHARE
Basic.............................. $ 1.39 20.37 -- 1.67
Diluted............................ 1.36 20.06 -- 1.63
WEIGHTED AVERAGE COMMON AND
POTENTIAL COMMON SHARES
Basic.............................. 658.4 48.6 437.5 1,144.5
Diluted............................ 680.2 49.4 444.1 1,173.7
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
financial information.
100
<PAGE>
NORWEST CORPORATION
AND WELLS FARGO & COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(1) BASIS OF PRESENTATION. The unaudited pro forma condensed financial
information has been prepared using the pooling of interests method of
accounting, giving effect to the Merger as if it had occurred as of the
beginning of the earliest period presented. The pro forma financial information
presented is not necessarily indicative of the results of operations had the
Merger been consummated at the beginning of the periods presented, nor is it
necessarily indicative of the results of operations in future periods or the
future financial position of the combined entities. Certain historical financial
information has been reclassified to conform with the current presentation. The
Merger, which is expected to be completed in the fourth quarter of 1998,
provides for issuance of ten shares of Norwest Common Stock for each outstanding
share of Wells Fargo Common Stock, and is subject to regulatory and Norwest
Stockholder and Wells Fargo Stockholder approval. At June 30, 1998, Norwest had
five pending acquisitions (exclusive of the Merger) with total assets of
approximately $2.3 billion, and it is expected that approximately 14.0 million
common shares will be issued upon consummation of these acquisitions. The pro
forma information does not give effect to these other pending acquisitions of
Norwest as they are not material to the pro forma condensed combined financial
information, either individually or in the aggregate. Norwest and Wells Fargo
anticipate that, in order to comply with DOJ merger guidelines, the companies
will be requested to sell a modest level of deposits. In this connection, the
companies expect to divest branches in various markets having aggregate deposits
of approximately $1 billion. The impact of such divestitures is not expected to
be material and no adjustment has been included in the unaudited pro forma
combined financial statements for the anticipated divestitures.
(2) ACCOUNTING POLICIES AND FINANCIAL STATEMENT CLASSIFICATIONS. Norwest
and Wells Fargo have identified and conformed certain accounting policies, and
as described below in Note (4), the accompanying pro forma financial information
reflects such conforming accounting adjustments. The accounting policies of both
Norwest and Wells Fargo are in the process of being reviewed in detail. Upon
completion of such review, other conforming adjustments or financial statement
reclassifications may be determined. At June 30, 1998, Wells Fargo goodwill and
intangibles amounted to $8.6 billion, and Norwest goodwill and intangibles
amounted to $1.1 billion. In conjunction with the Merger and recent financial
projections, management is currently in the process of assessing such
intangibles for impairment. Transactions between Norwest and Wells Fargo are not
material in relation to the pro forma financial information and therefore
intercompany balances have not been eliminated from the pro forma combined
amounts.
(3) NON-RECURRING MERGER CHARGE. Pro forma stockholders' equity includes
the effect of an estimated non-recurring charge of approximately $950 million,
$625 million net of income taxes. Since the estimated charge is non-recurring,
it has not been reflected in the pro forma condensed combined statements of
income and related per common share calculations. The charge does not include
any impairment of intangibles that may be identified upon completion of the
review discussed in Note (2).
101
<PAGE>
The estimated non-recurring charge consists of the following (in millions):
<TABLE>
<S> <C>
Employee-related expense............................................. $ 295
Costs associated with systems integration,
operations and customer conversions................................ 350
Branch consolidations, name change and signage....................... 185
Investment banking, legal and accounting fees........................ 120
---------
950
Income tax benefit................................................... 325
---------
Total estimated non-recurring charge............................. $ 625
---------
---------
</TABLE>
The pro forma condensed combined financial information does not reflect any
benefit expected from revenue enhancements or derived from potential cost
savings related to the Merger. Although management anticipates revenue
enhancements and cost savings will result from the Merger, there can be no
assurance these items will be achieved.
(4) PRO FORMA ADJUSTMENTS. The following pro forma adjustments have been
reflected in the pro forma condensed combined financial information:
- Common stock and surplus were adjusted by $993 million, based on 85.1
million shares of Wells Fargo Common Stock outstanding at June 30, 1998,
reflecting the exchange of ten shares of Norwest Common Stock for each
share of Wells Fargo Common Stock, and accounting for the Merger as a
pooling of interests. The adjustment reflects the reclassification from
surplus to common stock to reflect the $1 2/3 par value of Norwest Common
Stock. The number of shares of Norwest Common Stock to be issued upon
consummation of the Merger will be based on the number of shares of Wells
Fargo Common Stock outstanding at that time and will include approximately
2.5 million shares of Wells Fargo Common Stock that Wells Fargo intends to
issue to cure a portion of previously repurchased "tainted" shares prior
to the Merger. For the two-year period from June 8, 1996 to the
announcement date of the Merger, Wells Fargo repurchased and retired
shares of Wells Fargo Common Stock that are presumed to be tainted under
Accounting Principles Board (APB) Opinion No. 16 and authoritative
interpretations thereof. Wells Fargo rescinded its stock repurchase
programs as of June 7, 1998. These tainted shares may be deemed to result
in certain conditions to the use of pooling of interests accounting for
the Merger not being met. Wells Fargo intends to cure such "tainted"
shares prior to the Effective Time by issuing shares of Wells Fargo Common
Stock in a manner that complies with the requirements of APB Opinion No.
16 and authoritative interpretations thereof.
- Other liabilities and retained earnings were adjusted by $950 million
($625 million net of income taxes), to reflect the non-recurring Merger
charge discussed in Note (3).
- Other liabilities and retained earnings have been adjusted by $153 million
before taxes ($100 million, net of income taxes) reflecting the transition
obligation for the Wells Fargo postretirement medical and life insurance
benefits upon initial adoption of Statement of Financial Accounting
Standards No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions (FAS 106) at the beginning of 1992. Norwest adopted FAS 106
in 1992 and immediately recognized the accumulated postretirement benefit
obligations at the time of adoption as a cumulative effect of change in
accounting principle. Subsequent to 1992, salaries and benefits expense
has been reduced and retained earnings has been credited to eliminate the
annual charge of $8 million ($5 million, net of income taxes) related to
the amortization of the Wells Fargo transition obligations.
102
<PAGE>
- Premises and equipment and retained earnings have been adjusted by $107
million before taxes ($70 million, net of income taxes) reflecting the
conforming of capitalization policies for premises and equipment. The
capitalization policy of the pro forma combined company reflects a higher
dollar threshold for capitalizing purchases of furniture and equipment
that is currently used by one of the parties to the Merger. Use of a
higher dollar threshold amount is consistent with the size of the combined
company. Equipment expense has been adjusted by $5 million for the first
half of 1998 and 1997, respectively, and by $10 million for each of the
years ended December 31, 1997, 1996 and 1995, reflecting adjustments for
capitalization of such items, partially offset by related depreciation
previously recorded.
At June 30, 1998, the net adjustment to accrued expenses and other
liabilities is determined as follows (dollar amounts in millions):
<TABLE>
<S> <C> <C>
Non-recurring Merger charge.................................... $ 950
Tax effect of non-recurring Merger charge...................... (325)
Postretirement transition obligations.......................... 153
Less amortization through June 30, 1998........................ (43) 110
Tax effect of unamortized postretirement transition
obligations.................................................. (38)
Tax effect of $107 adjustment to premises and equipment........ (37)
Net adjustment to accrued expenses and other liabilities....... $ 660
---------
At June 30, 1998, the net adjustment to retained earnings is
determined as follows (dollar amounts in millions):
Non-recurring Merger charge, net of income taxes............... $ (625)
Postretirement transition obligation adjustment, net of
amortization and income taxes................................ (72)
Adjustment to premises and equipment, net of income taxes...... (70)
---------
Net adjustment to retained earnings............................ $ (767)
---------
---------
</TABLE>
(5) PRO FORMA EARNINGS PER SHARE. The pro forma combined basic and diluted
earnings per share for the respective periods presented is based on the combined
weighted average number of common and dilutive potential common shares and
adjusted weighted shares of Norwest and Wells Fargo. The number of weighted
average common shares and adjusted weighted average shares,
103
<PAGE>
including all dilutive potential common shares, reflects the exchange of ten
shares of Norwest Common Stock for each share of Wells Fargo Common Stock.
Amounts used in the determination of pro forma basic and diluted earnings per
share are as follows:
<TABLE>
<CAPTION>
(IN MILLIONS)
-----------------------------------------------------
FOR THE
SIX MONTHS FOR THE YEAR ENDED DECEMBER 31,
ENDED JUNE 30,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net income $ 1,401 1,220 2,505 2,224 1,987
Less dividends accrued on
preferred stock.......................................... 18 26 43 85 81
Income available to common
stockholders - basic..................................... 1,383 1,194 2,462 2,139 1,906
Add interest expense and amortization of debt expense, net
of taxes, on convertible subordinated debentures and
dividends accrued on convertible preferred stock......... -- -- -- -- 11
--------- --------- --------- --------- ---------
Income available to common stockholders - diluted.......... $ 1,383 1,194 2,462 2,139 1,917
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average shares outstanding........................ 1,613.0 1,646.4 1,634.5 1,553.9 1,144.5
Adjustments for dilutive securities:
Assumed exercise of stock options and restricted share
rights................................................. 22.0 20.4 19.4 18.4 12.4
Assumed conversion of preferred stock and convertible
subordinated debentures................................ -- -- -- -- 16.8
--------- --------- --------- --------- ---------
Diluted common shares...................................... 1,635.0 1,666.8 1,653.9 1,572.3 1,173.7
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
104
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE NO.
---------------
<S> <C>
Acquiring Person.......................... 81
Acquisition Transaction................... 62
Actions................................... 71
Agreement................................. 14
Amendments................................ 14
Base Date................................. 30
BHCA...................................... 52
broker non-votes.......................... 16
Cash EPS.................................. 31
Cash ROACE................................ 31
CEO....................................... 58
Certificate of Designations............... 75
Class A Preferred Securities.............. 76
Closing Date.............................. 47
Code...................................... 26
Commission................................ 29
Comparable Companies...................... 43
Comparable Transactions................... 44
CRA....................................... 53
CSFB...................................... 23
CSFB Opinion.............................. 41
Delaware Law.............................. 15
Distribution Date......................... 81
DPC Shares................................ 45
DOJ....................................... 52
Effective Time............................ 21
Employment Agreements..................... 58
Employment Period......................... 58
EPS....................................... 31
Excess Capital Case....................... 44
Exchange Act.............................. 91
Exchange Agent............................ 46
Exchange Fund............................. 46
Exchange Ratio............................ 21
Executives................................ 58
Exercise Termination Event................ 62
FDIC...................................... 53
Federal Reserve Act....................... 52
Federal Reserve Board..................... 52
Final Expiration Date..................... 82
GAAP...................................... 25
GAAP EPS.................................. 31
GAAP ROACE................................ 31
Goldman Sachs............................. 22
Hazen Restricted Stock.................... 58
Hazen Stock Options....................... 58
Holder.................................... 61
<CAPTION>
PAGE NO.
---------------
<S> <C>
IBES...................................... 27
Initial Triggering Event.................. 61
IRS....................................... 55
Issuance.................................. 14
Issuer.................................... 60
Issuer Common Stock....................... 60
Issuer Option............................. 60
Issuer Option Agreement................... 60
Issuer Option Repurchase Price............ 63
Issuer Option Share Repurchase Price...... 63
Issuer Option Shares...................... 61
Limited Liability Company................. 76
Management Case........................... 43
market/offer price........................ 63
Meetings.................................. 18
Merger.................................... 14
Merger Consideration...................... 45
Merger Sub................................ 14
Merger Sub Common Stock................... 21
New Benefit Plans......................... 48
No Excess Capital Case.................... 44
Norwest................................... 14
Norwest 1995 ESOP Preferred Stock......... 75
Norwest 1996 ESOP Preferred Stock......... 75
Norwest 1997 ESOP Preferred Stock......... 75
Norwest 1998 ESOP Preferred Stock......... 75
Norwest Benefit Plans..................... 57
Norwest Board............................. 14
Norwest By-Laws........................... 15
Norwest Certificate....................... 14
Norwest Common Stock...................... 14
Norwest ESOP Preferred Stock.............. 75
Norwest-Management Projections............ 31
Norwest New Preferred Stock............... 21
Norwest Opinion........................... 29
Norwest Option............................ 60
Norwest Option Agreement.................. 60
Norwest Option Shares..................... 61
Norwest Pension Plan...................... 16
Norwest Preference Stock.................. 75
Norwest Preferred Stock................... 14
Norwest Record Date....................... 15
</TABLE>
105
<PAGE>
<TABLE>
<CAPTION>
PAGE NO.
---------------
<S> <C>
Norwest Right Certificates................ 82
Norwest Rights Agent...................... 21
Norwest Rights Agreement.................. 21
Norwest Savings Investment Plan........... 77
Norwest Series A Preferred Shares......... 75
Norwest Series B Preferred Stock.......... 21
Norwest Series H Preferred Stock.......... 21
Norwest Special Meeting................... 14
Norwest Stock Dividends................... 82
Norwest Stockholder Rights................ 21
Norwest Stockholders...................... 14
Norwest Tracking Preferred Stock.......... 75
NYSE...................................... 15
OCC....................................... 53
Option Agreements......................... 60
Optionee.................................. 60
Owner..................................... 63
Per Share Tracking Interest............... 77
Purchase Price............................ 81
Registration Statement.................... 90
Repurchase Event.......................... 63
Requisite Regulatory Approvals............ 52
Retirement Benefit........................ 58
Rights Record Date........................ 81
Rights Redemption Price................... 84
ROACE..................................... 31
Securities Act............................ 29
Selected Companies........................ 31
state member bank......................... 73
SIP....................................... 15
Street Case............................... 43
Subsequent Triggering Event............... 62
Substitute Option......................... 64
Summary of Rights......................... 81
Surrender Price........................... 64
<CAPTION>
PAGE NO.
---------------
<S> <C>
Surviving Corporation..................... 21
Synergies................................. 30
Terminal Values........................... 32
Tier 1.................................... 72
Tier 2.................................... 72
Tier 3.................................... 72
total capital............................. 72
Trust Account Shares...................... 45
Wells Committee........................... 59
Wells Fargo............................... 14
Wells Fargo Benefit Plans................. 57
Wells Fargo Board......................... 18
Wells Fargo By-Laws....................... 19
Wells Fargo Capital Stock................. 21
Wells Fargo Certificate................... 19
Wells Fargo Common Stock.................. 18
Wells Fargo Executives.................... 59
Wells Fargo-IBES.......................... 31
Wells Fargo-Management Projections........ 31
Wells Fargo Opinion....................... 34
Wells Fargo Option........................ 60
Wells Fargo Option Agreement.............. 60
Wells Fargo Option Shares................. 61
Wells Fargo Preferred Stock............... 21
Wells Fargo Record Date................... 19
Wells Fargo Selected Companies............ 36
Wells Fargo Series B Preferred Stock...... 21
Wells Fargo Series H Preferred Stock...... 21
Wells Fargo Severance Plan................ 59
Wells Fargo Special Meeting............... 18
Wells Fargo Stockholders.................. 18
Wells Fargo Stock Plans................... 46
</TABLE>
106
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
by and among
WELLS FARGO & COMPANY
NORWEST CORPORATION
and
WFC HOLDINGS CORPORATION
a wholly-owned subsidiary of Norwest Corporation
---------
DATED AS OF JUNE 7, 1998
AND
AMENDED AND RESTATED AS OF SEPTEMBER 10, 1998
<PAGE>
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
ARTICLE I
THE MERGER
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
1.1 The Merger........................................................................................ A-1
1.2 Effective Time.................................................................................... A-1
1.3 Effects of the Merger............................................................................. A-2
1.4 Conversion of Wells Fargo Common Stock; Wells Fargo Preferred Stock............................... A-2
1.5 Merger Sub Capital Stock.......................................................................... A-3
1.6 Options........................................................................................... A-3
1.7 Certificate of Incorporation...................................................................... A-3
1.8 By-Laws........................................................................................... A-3
1.9 Tax and Accounting Consequences................................................................... A-4
1.10 Management........................................................................................ A-4
1.11 Board of Directors................................................................................ A-4
1.12 Headquarters of Norwest and the Surviving Corporation............................................. A-4
ARTICLE II
EXCHANGE OF SHARES
2.1 Norwest to Make Shares Available.................................................................. A-4
2.2 Exchange of Shares................................................................................ A-4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORWEST
3.1 Corporate Organization............................................................................ A-6
3.2 Capitalization.................................................................................... A-6
3.3 Authority; No Violation........................................................................... A-8
3.4 Consents and Approvals............................................................................ A-9
3.5 Reports........................................................................................... A-9
3.6 Financial Statements.............................................................................. A-9
3.7 Broker's Fees..................................................................................... A-10
3.8 Absence of Certain Changes or Events.............................................................. A-10
3.9 Legal Proceedings................................................................................. A-11
3.10 Taxes and Tax Returns............................................................................. A-11
3.11 Employees......................................................................................... A-12
3.12 SEC Reports....................................................................................... A-13
3.13 Compliance with Applicable Law.................................................................... A-13
3.14 Certain Contracts................................................................................. A-13
3.15 Agreements with Regulatory Agencies............................................................... A-14
3.16 Interest Rate Risk Management Instruments......................................................... A-14
3.17 Undisclosed Liabilities........................................................................... A-15
3.18 Insurance......................................................................................... A-15
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
3.19 Environmental Liability........................................................................... A-15
3.20 State Takeover Laws; Norwest Rights Agreement..................................................... A-15
3.21 Year 2000......................................................................................... A-15
3.22 Reorganization; Pooling of Interests.............................................................. A-16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WELLS FARGO
4.1 Corporate Organization............................................................................ A-16
4.2 Capitalization.................................................................................... A-16
4.3 Authority; No Violation........................................................................... A-17
4.4 Consents and Approvals............................................................................ A-18
4.5 Reports........................................................................................... A-18
4.6 Financial Statements.............................................................................. A-18
4.7 Broker's Fees..................................................................................... A-19
4.8 Absence of Certain Changes or Events.............................................................. A-19
4.9 Legal Proceedings................................................................................. A-19
4.10 Taxes and Tax Returns............................................................................. A-20
4.11 Employees......................................................................................... A-20
4.12 SEC Reports....................................................................................... A-22
4.13 Compliance with Applicable Law.................................................................... A-22
4.14 Certain Contracts................................................................................. A-22
4.15 Agreements with Regulatory Agencies............................................................... A-23
4.16 Interest Rate Risk Management Instruments......................................................... A-23
4.17 Undisclosed Liabilities........................................................................... A-23
4.18 Insurance......................................................................................... A-24
4.19 Environmental Liability........................................................................... A-24
4.20 State Takeover Laws............................................................................... A-24
4.21 Year 2000......................................................................................... A-24
4.22 Reorganization; Pooling of Interests.............................................................. A-24
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time................................................. A-24
5.2 Forbearances...................................................................................... A-25
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters................................................................................ A-27
6.2 Access to Information............................................................................. A-28
6.3 Stockholders' Approvals........................................................................... A-28
6.4 Legal Conditions to Merger........................................................................ A-28
6.5 Affiliates; Publication of Combined Financial Results............................................. A-29
6.6 Stock Exchange Listing............................................................................ A-29
6.7 Employee Benefit Plans............................................................................ A-29
6.8 Indemnification; Directors' and Officers' Insurance............................................... A-29
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
6.9 Additional Agreements............................................................................. A-30
6.10 Advice of Changes................................................................................. A-30
6.11 Dividends......................................................................................... A-30
6.12 Norwest Certificate............................................................................... A-31
6.13 By-Laws of Norwest................................................................................ A-31
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger........................................ A-31
7.2 Conditions to Obligations of Wells Fargo.......................................................... A-32
7.3 Conditions to Obligations of Norwest.............................................................. A-33
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination....................................................................................... A-33
8.2 Effect of Termination............................................................................. A-34
8.3 Amendment......................................................................................... A-34
8.4 Extension; Waiver................................................................................. A-34
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing........................................................................................... A-34
9.2 Nonsurvival of Representations, Warranties and Agreements......................................... A-34
9.3 Expenses.......................................................................................... A-35
9.4 Notices........................................................................................... A-35
9.5 Interpretation.................................................................................... A-35
9.6 Counterparts...................................................................................... A-35
9.7 Entire Agreement.................................................................................. A-35
9.8 Governing Law..................................................................................... A-36
9.9 Publicity......................................................................................... A-36
9.10 Assignment; Third Party Beneficiaries............................................................. A-36
Exhibit A--Wells Fargo Option Agreement
Exhibit B--Norwest Option Agreement
Exhibit 6.5(a)(1)--Form of Affiliate Letter Addressed to Norwest
Exhibit 6.5(a)(2)--Form of Affiliate Letter Addressed to Wells Fargo
</TABLE>
A-iii
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
SECTION PAGE NO.
--------------------------------- -----------
<S> <C> <C>
1995 ESOP Convertible Preferred................................... 3.2(a)........................... A-7
1996 ESOP Convertible Preferred................................... 3.2(a)........................... A-7
1997 ESOP Convertible Preferred................................... 3.2(a)........................... A-6
1998 ESOP Convertible Preferred................................... 3.2(a)........................... A-6
Agreement......................................................... Recitals......................... A-1
BHC Act........................................................... 3.1(a)........................... A-6
CERCLA............................................................ 3.19............................. A-15
Certificate....................................................... 1.4(d)........................... A-2
Certificate of Merger............................................. 1.2.............................. A-1
Closing........................................................... 9.1.............................. A-34
Closing Date...................................................... 9.1.............................. A-34
Code.............................................................. 1.6(b)........................... A-3
Confidentiality Agreement......................................... 6.2(b)........................... A-28
Delaware Secretary................................................ 1.2.............................. A-2
DGCL.............................................................. 1.1(a)........................... A-1
DPC Shares........................................................ 1.4(a)........................... A-2
Effective Time.................................................... 1.2.............................. A-2
ERISA............................................................. 3.11(a).......................... A-12
ESOP Convertible Preferred........................................ 3.2(a)........................... A-7
Exchange Act...................................................... 3.6.............................. A-10
Exchange Agent.................................................... 2.1.............................. A-4
Exchange Fund..................................................... 2.1.............................. A-4
Exchange Ratio.................................................... 1.4(a)........................... A-2
Federal Reserve Board............................................. 3.4.............................. A-9
GAAP.............................................................. 1.9.............................. A-4
Governmental Entity............................................... 3.4.............................. A-9
Indemnified Parties............................................... 6.8(a)........................... A-30
Injunction........................................................ 7.1(e)........................... A-32
IRS............................................................... 3.10(a).......................... A-11
Joint Proxy Statement............................................. 3.4.............................. A-9
Liens............................................................. 3.2(b)........................... A-8
Material Adverse Effect........................................... 3.1(a)........................... A-6
Merger............................................................ Recitals......................... A-1
Merger Consideration.............................................. 1.1(b)........................... A-1
Merger Sub........................................................ Recitals......................... A-1
Merger Sub Common Stock........................................... 1.5.............................. A-3
New Benefit Plans................................................. 6.7(a)........................... A-29
Non-Subsidiary Affiliate.......................................... 3.2(b)........................... A-8
Norwest........................................................... Recitals......................... A-1
Norwest 10-K...................................................... 3.6.............................. A-10
Norwest Benefit Plans............................................. 3.11(a).......................... A-12
Norwest Capital Stock............................................. 3.2(a)........................... A-7
Norwest Certificate............................................... 3.1.............................. A-6
Norwest Common Stock.............................................. 1.4(a)........................... A-2
Norwest Contract.................................................. 3.14(a).......................... A-14
Norwest Convertible Debentures.................................... 3.2(a)........................... A-7
Norwest Convertible Preferred Stock............................... 3.2(a)........................... A-7
</TABLE>
A-iv
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE NO.
--------------------------------- -----------
<S> <C> <C>
Norwest Disclosure Schedule....................................... 3................................ A-6
Norwest DRIP...................................................... 3.2(a)........................... A-7
Norwest ERISA Affiliate........................................... 3.11(a).......................... A-12
Norwest New Preferred Stock....................................... 1.4(c)........................... A-2
Norwest Option Agreement.......................................... Recitals......................... A-1
Norwest Preference Stock.......................................... 3.2(a)........................... A-7
Norwest Preferred Stock........................................... 3.2(a)........................... A-6
Norwest Regulatory Agreement...................................... 3.15............................. A-14
Norwest Reports................................................... 3.12............................. A-13
Norwest Rights.................................................... 3.2(a)........................... A-7
Norwest Rights Agreement.......................................... 1.4(a)........................... A-2
Norwest Series B Adjustable Preferred............................. 1.4(b)........................... A-2
Norwest Series H Adjustable Preferred............................. 1.4(c)........................... A-2
Norwest Stock Plans............................................... 3.2(a)........................... A-7
Norwest Stockholder Rights........................................ 1.4(a)........................... A-2
Norwest Warrants.................................................. 3.2(a)........................... A-7
NYSE.............................................................. 2.2(e)........................... A-5
OCC............................................................... 3.5.............................. A-9
Option Agreements................................................. Recitals......................... A-1
Pending Norwest Acquisitions...................................... 3.2(a)........................... A-7
Permitted Norwest Acquisitions.................................... 5.2(b)(iv)....................... A-26
Permitted Wells Fargo Acquisitions................................ 5.2(b)(iv)....................... A-26
Regulatory Agencies............................................... 3.5.............................. A-9
Requisite Regulatory Approvals.................................... 7.1(c)........................... A-32
S-4............................................................... 3.4.............................. A-9
SBA............................................................... 3.4.............................. A-9
SEC............................................................... 3.4.............................. A-9
Securities Act.................................................... 3.12............................. A-13
SRO............................................................... 3.4.............................. A-9
State Approvals................................................... 3.4.............................. A-9
State Regulator................................................... 3.5.............................. A-9
Subsidiary........................................................ 3.1(a)........................... A-6
Surviving Corporation............................................. Recitals......................... A-1
Tax............................................................... 3.10(b).......................... A-12
Taxes............................................................. 3.10(b).......................... A-12
Trust Account Shares.............................................. 1.4(a)........................... A-2
Wells Fargo....................................................... Recitals......................... A-1
Wells Fargo 10-K.................................................. 4.6.............................. A-19
Wells Fargo Benefit Plans......................................... 4.11(a).......................... A-21
Wells Fargo Capital Stock......................................... 1.4(a)........................... A-2
Wells Fargo Certificate........................................... 4.1(a)........................... A-16
Wells Fargo Common Stock.......................................... 1.4(a)........................... A-2
Wells Fargo Contract.............................................. 4.14(a).......................... A-23
Wells Fargo Disclosure Schedule................................... 4................................ A-16
Wells Fargo DRIP.................................................. 4.2(a)........................... A-16
Wells Fargo ERISA Affiliate....................................... 4.11(a).......................... A-21
Wells Fargo ESPP.................................................. 4.2(a)........................... A-16
Wells Fargo Option Agreement...................................... Recitals......................... A-1
Wells Fargo Preferred Stock....................................... 1.4(c)........................... A-2
Wells Fargo Regulatory Agreement.................................. 4.15............................. A-23
</TABLE>
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<TABLE>
<CAPTION>
SECTION PAGE NO.
--------------------------------- -----------
<S> <C> <C>
Wells Fargo Reports............................................... 4.12............................. A-22
Wells Fargo Rights................................................ 4.2(a)........................... A-17
Wells Fargo Series B Preferred.................................... 1.4(b)........................... A-2
Wells Fargo Series H Preferred.................................... 1.4(c)........................... A-2
Wells Fargo Stock Plans........................................... 4.2(a)........................... A-16
Year 2000 Issues.................................................. 3.21............................. A-15
</TABLE>
A-vi
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 7, 1998, and amended and
restated as of September 10, 1998 (this "Agreement"), by and among WELLS FARGO &
COMPANY, a Delaware corporation ("Wells Fargo"), NORWEST CORPORATION, a Delaware
corporation ("Norwest") and WFC Holdings Corporation, a Delaware corporation and
a wholly-owned subsidiary of Norwest ("Merger Sub").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Norwest, Merger Sub and Wells Fargo have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the strategic business combination transaction
provided for herein in which Wells Fargo will, subject to the terms and
conditions set forth herein, merge with and into Merger Sub (the "Merger"), so
that Merger Sub is the surviving corporation (hereinafter sometimes referred to
in such capacity as the "Surviving Corporation") in the Merger; and
WHEREAS, as soon as practicable after consummation of the Merger, Norwest
shall take appropriate action in order to change its name to "Wells Fargo &
Company"; and
WHEREAS, as a condition to, and immediately after, the execution of this
Agreement, and as a condition to the execution of the Norwest Option Agreement,
Wells Fargo and Norwest are entering into a Wells Fargo stock option agreement
(the "Wells Fargo Option Agreement") in the form attached hereto as Exhibit A;
and
WHEREAS, as a condition to, and immediately after, the execution of this
Agreement, and as a condition to the execution of the Wells Fargo Option
Agreement, Wells Fargo and Norwest are entering into a Norwest stock option
agreement (the "Norwest Option Agreement"; and together with the Wells Fargo
Option Agreement, the "Option Agreements") in the form attached hereto as
Exhibit B; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. (a) Subject to the terms and conditions of this Agreement,
in accordance with General Corporation Law of the State of Delaware (the
"DGCL"), at the Effective Time, Wells Fargo shall merge with and into Merger
Sub. Merger Sub shall be the Surviving Corporation in the Merger, and shall
continue its corporate existence under the laws of the State of Delaware. Upon
consummation of the Merger, the separate corporate existence of Wells Fargo
shall terminate.
(b) Norwest and Wells Fargo may at any time change the method of
effecting the combination of Wells Fargo and Norwest (including without
limitation the provisions of this Article I) if and to the extent they deem such
change to be desirable, including without limitation to provide for a merger of
Wells Fargo with Norwest or another wholly-owned Subsidiary of Norwest;
provided, however, that no such change shall (A) alter or change the amount of
consideration to be provided to holders of Wells Fargo Capital Stock as provided
for in this Agreement (the "Merger Consideration"), (B) adversely affect the tax
treatment of stockholders as a result of receiving the Merger Consideration or
(C) materially impede or delay consummation of the transactions contemplated by
this Agreement.
1.2 EFFECTIVE TIME. The Merger shall become effective as set forth in the
certificate of merger (the "Certificate of Merger") which shall be filed with
the Secretary of State of the State of Delaware
<PAGE>
(the "Delaware Secretary") on the Closing Date. The term "Effective Time" shall
be the date and time when the Merger becomes effective, as set forth in the
Certificate of Merger.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Sections 259 and 261 of the DGCL.
1.4 CONVERSION OF WELLS FARGO COMMON STOCK; WELLS FARGO PREFERRED
STOCK. At the Effective Time, by virtue of the Merger and without any action on
the part of Wells Fargo, Norwest or the holder of any of the following
securities:
(a) Subject to Section 2.2(e), each share of the common stock, par value
$5.00 per share, of Wells Fargo (the "Wells Fargo Common Stock" and, together
with the Wells Fargo Preferred Stock, the "Wells Fargo Capital Stock") issued
and outstanding immediately prior to the Effective Time, except for shares of
Wells Fargo Common Stock owned by Wells Fargo as treasury stock or owned,
directly or indirectly, by Wells Fargo, Norwest or Merger Sub or any of their
respective wholly-owned subsidiaries (other than shares of Wells Fargo Common
Stock held, directly or indirectly, in trust accounts, managed accounts and the
like, or otherwise held in a fiduciary capacity, that are beneficially owned by
third parties (any such shares, whether held directly or indirectly by Wells
Fargo or Norwest, as the case may be, being referred to herein as "Trust Account
Shares") and other than any shares of Wells Fargo Capital Stock held by Wells
Fargo or Norwest or any of their respective Subsidiaries in respect of a debt
previously contracted (any such shares of Wells Fargo Capital Stock, and shares
of Norwest Common Stock which are similarly held, whether held directly or
indirectly by Wells Fargo or Norwest or any of their respective Subsidiaries,
being referred to herein as "DPC Shares")) shall be converted into the right to
receive 10.0 shares (the "Exchange Ratio") of the common stock, par value $1 2/3
per share, of Norwest (together with the preferred share purchase rights (the
"Norwest Stockholder Rights") issued to the holders thereof pursuant to that
certain Rights Agreement, dated as of November 22, 1988 (as such may be amended,
supplemented, restated or replaced from time to time), between Norwest and
Citibank, N.A. (the "Norwest Rights Agreement"), (the "Norwest Common Stock")),
together with the same number of Norwest Stockholder Rights attached thereto,
unless the Norwest Rights Agreement expires and is not renewed or replaced prior
to the Effective Time..
(b) Each share of Wells Fargo Adjustable Rate Cumulative Preferred Stock,
Series B, without par value (the "Wells Fargo Series B Preferred"), issued and
outstanding immediately prior to the Effective Time shall be converted,
automatically and without the requirement of any exchange of any certificate
representing such stock, into one share of adjustable-rate cumulative preferred
stock of Norwest designated as the Adjustable Rate Cumulative Preferred Stock,
Series B, of Norwest (the "Norwest Series B Adjustable Preferred"). The terms of
the Norwest Series B Adjustable Preferred shall be substantially the same as the
terms of the Wells Fargo Series B Preferred.
(c) Each share of Wells Fargo 6.59% Adjustable Rate Noncumulative Preferred
Stock, Series H, without par value (the "Wells Fargo Series H Preferred" and,
together with the Wells Fargo Series B Preferred, the "Wells Fargo Preferred
Stock"), issued and outstanding immediately prior to the Effective Time, shall
be converted, automatically and without the requirement of any exchange of any
certificate representing such stock, into one share of 6.59% Adjustable-Rate
Noncumulative Preferred Stock of Norwest, Series H (the "Norwest Series H
Adjustable Preferred" and, together with the Norwest Series B Adjustable
Preferred, the "Norwest New Preferred Stock"). The terms of the Norwest Series H
Adjustable Preferred shall be substantially the same as the terms of the Wells
Fargo Series H Preferred.
(d) All of the shares of Wells Fargo Common Stock converted into the right
to receive Norwest Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist as of
the Effective Time, and each certificate (each a "Certificate") previously
representing any such shares of Wells Fargo Common Stock shall thereafter
represent only the right to receive (i) a certificate representing the number of
whole shares of Norwest Common Stock and (ii) cash in lieu of fractional shares
into which the shares of Wells Fargo Common Stock
A-2
<PAGE>
represented by such Certificate have been converted pursuant to this Section 1.4
and Section 2.2(e). Certificates previously representing shares of Wells Fargo
Common Stock shall be exchanged for certificates representing whole shares of
Norwest Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Certificates in accordance
with Section 2.2, without any interest thereon. If, prior to the Effective Time,
the outstanding shares of Norwest Common Stock or Wells Fargo Common Stock shall
have been increased, decreased, changed into or exchanged for a different number
or kind of shares or securities as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, or other similar change in capitalization, an appropriate and
proportionate adjustment shall be made to the Exchange Ratio.
(e) At the Effective Time, all shares of Wells Fargo Common Stock that are
owned, directly or indirectly, by Wells Fargo or Norwest or any of their
respective wholly owned Subsidiaries (other than Trust Account Shares and DPC
Shares) shall be cancelled and shall cease to exist and no stock of Norwest or
other consideration shall be delivered in exchange therefor.
(f) All of the shares of Wells Fargo Preferred Stock converted into Norwest
New Preferred Stock pursuant to this Article I shall no longer be outstanding
and shall automatically be cancelled and shall cease to exist as of the
Effective Time, and each certificate previously representing any such shares of
Wells Fargo Preferred Stock shall as of the Effective Time be deemed to
represent as of the Effective Time the number of shares of corresponding Norwest
New Preferred Stock into which the shares of Wells Fargo Preferred Stock
represented by such preferred stock certificate have been converted pursuant to
this Section 1.4.
1.5 MERGER SUB CAPITAL STOCK. At and after the Effective Time, each share
of common stock, par value $1.00 per share, of Merger Sub ("Merger Sub Common
Stock") issued and outstanding immediately prior to the Effective Time shall
remain an issued and outstanding share of common stock of the Surviving
Corporation and shall not be affected by the Merger.
1.6 OPTIONS. (a) At the Effective Time, each option granted by Wells Fargo
to purchase shares of Wells Fargo Common Stock which is outstanding and
unexercised immediately prior thereto shall cease to represent a right to
acquire shares of Wells Fargo Common Stock and shall be converted automatically
into an option to purchase shares of Norwest Common Stock in an amount and at an
exercise price determined as provided below (and otherwise subject to the terms
of the Wells Fargo Stock Plans and the agreements evidencing grants thereunder):
(i) The number of shares of Norwest Common Stock to be subject to the
new option shall be equal to the product of the number of shares of Wells
Fargo Common Stock subject to the original option and the Exchange Ratio,
PROVIDED that any fractional shares of Norwest Common Stock resulting from
such multiplication shall be rounded to the nearest whole share; and
(ii) The exercise price per share of Norwest Common Stock under the new
option shall be equal to the exercise price per share of Wells Fargo Common
Stock under the original option divided by the Exchange Ratio, PROVIDED that
such exercise price shall be rounded to the nearest whole cent.
(b) The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")), shall be and is intended to be effected
in a manner which is consistent with Section 424(a) of the Code. The duration
and other terms of the new option shall be the same as the original option
except that all references to Wells Fargo shall be deemed to be references to
Norwest.
1.7 CERTIFICATE OF INCORPORATION. At the Effective Time, the Certificate
of Incorporation of Merger Sub shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
A-3
<PAGE>
1.8 BY-LAWS. At the Effective Time, the By-Laws of Merger Sub shall be the
By-Laws of the Surviving Corporation until thereafter amended in accordance with
applicable law.
1.9 TAX AND ACCOUNTING CONSEQUENCES. It is intended that the Merger shall
constitute a "reorganization" within the meaning of Section 368(a) of the Code,
that this Agreement shall constitute a "plan of reorganization" for the purposes
of Sections 354 and 361 of the Code and that the Merger shall be accounted for
as a "pooling of interests" under generally accepted accounting principles
("GAAP").
1.10 MANAGEMENT. (a) At the Effective Time, Paul Hazen shall be Chairman
of the Board of Directors of Norwest and Richard M. Kovacevich shall be
President and Chief Executive Officer of Norwest.
(b) At the Effective Time, the officers of Merger Sub immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and By-Laws of the Surviving Corporation, or as otherwise provided
by the DGCL.
1.11 BOARD OF DIRECTORS. (a) From and after the Effective Time, until duly
changed in compliance with applicable law and the Certificate of Incorporation
and By-Laws of Norwest, the Board of Directors of Norwest shall consist of (i)
Mr. Kovacevich, Mr. Hazen, Leslie S. Biller and Rodney L. Jacobs and (ii) the
then-current members of the Norwest Board of Directors, other than Messrs.
Kovacevich and Biller and (iii) a number of persons designated by Mr. Hazen and
the Board of Directors of Wells Fargo equal to the number of directors
contemplated by clause (ii) of this sentence.
(b) From and after the Effective Time, until duly changed in
compliance with applicable law and the Certificate of Incorporation and By-Laws
of the Surviving Corporation, the Board of Directors of the Surviving
Corporation shall consist of the directors of Merger Sub immediately prior to
the Effective Time.
1.12 HEADQUARTERS OF NORWEST AND THE SURVIVING CORPORATION. From and after
the Effective Time, the location of the headquarters and principal executive
offices of Norwest and the Surviving Corporation shall each be that of the
headquarters and principal executive offices of Wells Fargo as of the date of
this Agreement.
ARTICLE II
EXCHANGE OF SHARES
2.1 NORWEST TO MAKE SHARES AVAILABLE. At or prior to the Effective Time,
Norwest shall deposit, or shall cause to be deposited, with Norwest Bank
Minnesota, N.A., or another bank or trust company reasonably acceptable to each
of Wells Fargo and Norwest (the "Exchange Agent"), for the benefit of the
holders of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of Norwest Common Stock, and cash in lieu
of any fractional shares (such cash and certificates for shares of Norwest
Common Stock, together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund"), to be issued pursuant to
Section 1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding
shares of Wells Fargo Common Stock.
2.2 EXCHANGE OF SHARES. (a) As soon as practicable after the Effective
Time, and in no event later than five business days thereafter, the Exchange
Agent shall mail to each holder of record of one or more Certificates a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of Norwest Common Stock and any cash in lieu of fractional shares into
which the shares of Wells Fargo Common Stock represented by such Certificate or
A-4
<PAGE>
Certificates shall have been converted pursuant to this Agreement. Upon proper
surrender of a Certificate or Certificates for exchange and cancellation to the
Exchange Agent, together with such properly completed letter of transmittal,
duly executed, the holder of such Certificate or Certificates shall be entitled
to receive in exchange therefor, as applicable, (i) a certificate representing
that number of whole shares of Norwest Common Stock to which such holder of
Wells Fargo Common Stock shall have become entitled pursuant to the provisions
of Article I and (ii) a check representing the amount of any cash in lieu of
fractional shares which such holder has the right to receive in respect of the
Certificate or Certificates surrendered pursuant to the provisions of this
Article II, and the Certificate or Certificates so surrendered shall forthwith
be cancelled. No interest will be paid or accrued on any cash in lieu of
fractional shares or on any unpaid dividends and distributions payable to
holders of Certificates.
(b) No dividends or other distributions declared with respect to
Norwest Common Stock shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of Norwest Common
Stock represented by such Certificate.
(c) If any certificate representing shares of Norwest Common Stock is
to be issued in a name other than that in which the Certificate or Certificates
surrendered in exchange therefor is or are registered, it shall be a condition
of the issuance thereof that the Certificate or Certificates so surrendered
shall be properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any transfer
or other taxes required by reason of the issuance of a certificate representing
shares of Norwest Common Stock in any name other than that of the registered
holder of the Certificate or Certificates surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of Wells Fargo of the shares of Wells Fargo Capital Stock that
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of Norwest Common Stock or Norwest New
Preferred Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Norwest Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Norwest Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
Norwest. In lieu of the issuance of any such fractional share, Norwest shall pay
to each former stockholder of Wells Fargo who otherwise would be entitled to
receive such fractional share an amount in cash determined by multiplying (i)
the average of the closing-sale prices of Norwest Common Stock on the New York
Stock Exchange, Inc. (the "NYSE") as reported by THE WALL STREET JOURNAL for the
five trading days immediately preceding the date of the Effective Time by (ii)
the fraction of a share (rounded to the nearest thousandth when expressed in
decimal form) of Norwest Common Stock to which such holder would otherwise be
entitled to receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Wells Fargo for 12 months after the Effective Time shall be paid
to Norwest. Any former stockholders of Wells Fargo who have not theretofore
complied with this Article II shall thereafter look only to Norwest for payment
of the shares of Norwest Common Stock, cash in lieu of any fractional shares and
any unpaid dividends and distributions on the Norwest Common Stock deliverable
in respect of each share of Wells Fargo Common Stock, as the case may be, such
stockholder holds as determined
A-5
<PAGE>
pursuant to this Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of Wells Fargo, Norwest, the Exchange Agent
or any other person shall be liable to any former holder of shares of Wells
Fargo Common Stock for any amount delivered in good faith to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if reasonably required by
Norwest, the posting by such person of a bond in such amount as Norwest may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of Norwest
Common Stock and any cash in lieu of fractional shares deliverable in respect
thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORWEST
Except as disclosed in the Norwest disclosure schedule delivered to Wells
Fargo concurrently herewith (the "Norwest Disclosure Schedule") Norwest hereby
represents and warrants to Wells Fargo as follows:
3.1 CORPORATE ORGANIZATION. (a) Norwest is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Norwest has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on Norwest. As used in this Agreement, the term "Material Adverse Effect"
means, with respect to Wells Fargo, Norwest or the Surviving Corporation, as the
case may be, a material adverse effect on (i) the business, operations, results
of operations or financial condition of such party and its Subsidiaries taken as
a whole or (ii) the ability of such party to timely consummate the transactions
contemplated hereby. As used in this Agreement, the word "Subsidiary" when used
with respect to any party, means any bank, corporation, partnership, limited
liability company, or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial reporting
purposes and shall include, in the case of Norwest, Merger Sub. Norwest is duly
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended (the "BHC Act"). True and complete copies of the Restated Certificate
of Incorporation of Norwest (the "Norwest Certificate") and By-Laws of Norwest,
as in effect as of the date of this Agreement, have previously been made
available by Norwest to Wells Fargo.
(b) Each Norwest Subsidiary (i) is duly organized and validly existing under
the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on Norwest and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
3.2 CAPITALIZATION. (a) The authorized capital stock of Norwest consists
of (i) 2,000,000,000 shares of Norwest Common Stock (each of which includes one
Norwest Stockholder Right), of which, as of May 31, 1998, 759,498,405 shares
were issued and outstanding and 11,614,744 shares were held in treasury, (ii)
5,000,000 shares of preferred stock, without par value (the "Norwest Preferred
Stock"), of which, as of the date hereof, (A) 27,508 shares were issued and
outstanding as 1998 ESOP Cumulative Convertible Preferred Stock, $1,000 stated
value per share (the "1998 ESOP Convertible Preferred"); (B) 20,135 shares were
issued and outstanding as 1997 ESOP Cumulative Convertible
A-6
<PAGE>
Preferred Stock, $1,000 stated value per share (the "1997 ESOP Convertible
Preferred"); (C) 22,644 shares were issued and outstanding as 1996 ESOP
Cumulative Convertible Preferred Stock, $1,000 stated value per share (the "1996
ESOP Convertible Preferred"); (D) 20,510 shares were issued and outstanding as
1995 ESOP Cumulative Convertible Preferred Stock, $1,000 stated value per share
(the "1995 ESOP Convertible Preferred"); (E) 9,956 shares were issued and
outstanding as ESOP Cumulative Convertible Preferred Stock, $1,000 stated value
per share (the "ESOP Convertible Preferred" and, together with the 1998 ESOP
Convertible Preferred, the 1997 ESOP Convertible Preferred, the 1996 ESOP
Convertible Preferred and the 1995 ESOP Convertible Preferred, the "Norwest
Convertible Preferred Stock"); (F) 980,000 shares (including 25,000 shares held
by a Norwest Subsidiary) were issued and outstanding as Cumulative Tracking
Preferred Stock, $200 stated value per share; and (F) no shares were issued or
outstanding as Series A Junior Participating Preferred Stock or of any other
series, and (iii) 4,000,000 shares of Norwest Preference Stock, without par
value (the "Norwest Preference Stock"), of which no shares are issued or
outstanding as of the date hereof. All of the issued and outstanding shares of
Norwest Common Stock, Norwest Preferred Stock and Norwest Preference Stock
(collectively, the "Norwest Capital Stock") have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. As of the date of
this Agreement, except pursuant to the terms of (i) the Norwest Option
Agreement, (ii) options and stock issued pursuant to employee and director stock
plans of Norwest in effect as of the date hereof (the "Norwest Stock Plans"),
(iii) the Norwest Convertible Preferred Stock, (iv) the Norwest Rights
Agreement, (v) the Norwest 6-3/4% Convertible Subordinated Debentures, due 2003
(the "Norwest Convertible Debentures"), (vi) warrants exercisable for shares of
Norwest Common Stock held by Subsidiaries of Norwest as described in the Norwest
10-K (the "Norwest Warrants") and (vii) for certain acquisitions (the "Pending
Norwest Acquisitions") pending as of the date hereof (a list of which has
previously been made available to Wells Fargo) pursuant to which not more than
19,800,000 shares of Norwest Common Stock in the aggregate shall be issued or
become issuable, Norwest does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Norwest Capital
Stock or any other equity securities of Norwest or any securities representing
the right to purchase or otherwise receive any shares of Norwest Capital Stock
(collectively, including the items contemplated by clauses (i) through (v) of
this sentence, the "Norwest Rights"). As of May 31, 1998, no shares of Norwest
Capital Stock were reserved for issuance, except for 151,139,585 shares of
Norwest Common Stock reserved for issuance upon exercise of the Norwest Option
Agreement, 2,500,057 shares of Norwest Common Stock reserved for issuance in
connection with the Norwest Direct Purchase Plan, including dividend
reinvestment (the "Norwest DRIP"), 131,949,375 shares of Norwest Common Stock
reserved for issuance upon the exercise of stock options pursuant to the Norwest
Stock Plans and in respect of the employee and director savings, compensation
and deferred compensation plans described in the Norwest 10-K and 34,600 shares
of Norwest Common Stock reserved for issuance in connection with the Norwest
Convertible Debentures, 35,928,348 shares of Norwest Common Stock reserved for
issuance in respect of the Norwest Warrants, 19,800,000 shares of Norwest Common
Stock reserved in connection with the Pending Norwest Acquisitions and 1,125,000
shares of Series A Junior Participating Preferred Stock reserved for issuance in
connection with the Norwest Rights Agreement. Since May 31, 1998, Norwest has
not issued any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than as permitted by
Section 5.2(b) and pursuant to the Norwest Option Agreement. Norwest has
previously provided Wells Fargo with a list of the option holders, the date of
each option to purchase Norwest Common Stock granted, the number of shares
subject to each such option, the expiration date of each such option, and the
price at which each such option may be exercised under an applicable Norwest
Stock Plan. In no event will the aggregate number of shares of Norwest Common
Stock outstanding at the Effective Time (including all shares of Norwest Common
Stock subject to Norwest Rights other than the Norwest Option Agreement) exceed
the number specified in Section 3.2(a) of the Norwest Disclosure Schedule. The
authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub
Common
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Stock, all of which are validly issued, fully paid and nonassessable, and are
owned by Norwest free and clear of any Lien.
(b) Norwest owns, directly or indirectly, all of the issued and outstanding
shares of capital stock or other equity ownership interests of each of the
Norwest Subsidiaries, free and clear of any liens, pledges, charges,
encumbrances and security interests whatsoever ("Liens"), and all of such shares
or equity ownership interests are duly authorized and validly issued and are
fully paid, nonassessable (subject to 12 U.S.C. Section 55) and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. No Norwest Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
such Subsidiary. Section 3.2(b) of the Norwest Disclosure Schedule sets forth a
list of the material investments of Norwest in corporations, joint ventures,
partnerships, limited liability companies and other entities other than its
Subsidiaries (each a "Non-Subsidiary Affiliate"). Merger Sub does not have any
subsidiaries or material investments of any kind in any entity. Merger Sub has
been incorporated on behalf of Norwest solely for purposes of accomplishing the
Merger, has not engaged in any other business activity and has conducted its
operations only as contemplated hereby.
3.3 AUTHORITY; NO VIOLATION. (a) Each of Norwest and Merger Sub has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of each of Norwest and
Merger Sub. Norwest, as sole stockholder of Merger Sub, has approved this
Agreement and the transactions contemplated hereby. The Board of Directors of
Norwest has directed that the issuance of Norwest Common Stock in the Merger and
the amendments to the Norwest Certificate contemplated by Section 6.12 be
submitted to Norwest's stockholders for adoption at a meeting of such
stockholders and, except for (i) the approval of the issuance of Norwest Common
Stock in the Merger by the affirmative vote of the holders of a majority of the
shares of Norwest Common Stock voting at such meeting and the adoption of the
amendments to the Norwest Certificate contemplated by Section 6.12 by the
affirmative vote of the holders of a majority of the outstanding shares of
Norwest Common Stock, (ii) the filing by Norwest with the Delaware Secretary of
certificate of designations with respect to the Norwest New Preferred Stock and
(iii) the amendment of the Norwest Certificate contemplated by Section 6.12 and
the amendment of the Norwest By-Laws contemplated by Section 6.13, no other
corporate proceedings on the part of Norwest are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Norwest and Merger Sub and
(assuming due authorization, execution and delivery by Wells Fargo) constitutes
a valid and binding obligation of Norwest and Merger Sub, enforceable against
Norwest and Merger Sub in accordance with its terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors generally and the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement by Norwest or
Merger Sub nor the consummation by Norwest or Merger Sub of the transactions
contemplated hereby, nor compliance by Norwest or Merger Sub with any of the
terms or provisions hereof, will (i) violate any provision of the Certificate of
Incorporation or By-Laws of Norwest or Merger Sub or (ii) assuming that the
consents and approvals referred to in Section 3.4 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Norwest, any of its Subsidiaries or Non-Subsidiary
Affiliates or any of their respective properties or assets or (y) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Norwest, any of its Subsidiaries or Non-Subsidiary Affiliates under,
any of the terms, conditions or provisions of any
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note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Norwest, any of its Subsidiaries or its
Non-Subsidiary Affiliates is a party, or by which they or any of their
respective properties or assets may be bound or affected, except (in the case of
clause (y) above) for such violations, conflicts, breaches or defaults which,
either individually or in the aggregate, will not have a Material Adverse Effect
on Norwest.
3.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and the Federal Reserve
Act, as amended, and approval of such applications and notices, (ii) the filing
of any required applications or notices with any state or foreign agencies and
approval of such applications and notices (the "State Approvals"), (iii) the
filing with the Securities and Exchange Commission (the "SEC") of a joint proxy
statement in definitive form relating to the meetings of Wells Fargo's and
Norwest's stockholders to be held in connection with this Agreement and the
transactions contemplated hereby (the "Joint Proxy Statement"), and of the
registration statement on Form S-4 (the "S-4") in which the Joint Proxy
Statement will be included as a prospectus, (iv) the filing of the Certificate
of Merger with the Delaware Secretary pursuant to the DGCL, (v) any notices to
or filings with the Small Business Administration ("SBA"), (vi) any consents,
authorizations, approvals, filings or exemptions in connection with compliance
with the applicable provisions of federal and state securities laws relating to
the regulation of broker-dealers, investment advisers or transfer agents, and
federal commodities laws relating to the regulation of futures commission
merchants and the rules and regulations thereunder and of any applicable
industry self-regulatory organization ("SRO"), and the rules of the NYSE, or
which are required under consumer finance, mortgage banking and other similar
laws, (vii) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Norwest Capital Stock pursuant to this Agreement and
(viii) the approval of this Agreement by the requisite vote of the stockholders
of Wells Fargo, the approval of the issuance of shares of Norwest Common Stock
pursuant hereto by the requisite vote of stockholders of Norwest and the
approval of the amendment of the Norwest Certificate contemplated by Section
6.12 by the stockholders of Norwest, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") are
necessary in connection with (A) the execution and delivery by Norwest of this
Agreement and (B) the consummation by Norwest of the Merger and the other
transactions contemplated hereby.
3.5 REPORTS. Norwest and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1996 with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation, (iii) any state regulatory authority (each a "State Regulator"),
(iv) the Office of the Comptroller of the Currency (the "OCC"), (v) the SEC and
(vi) any SRO (collectively "Regulatory Agencies"), and all other reports and
statements required to be filed by them since January 1, 1996, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state, or any Regulatory
Agency, and have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration or
statement or to pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on Norwest. Except for normal
examinations conducted by a Regulatory Agency in the ordinary course of the
business of Norwest and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of Norwest, investigation into the business
or operations of Norwest or any of its Subsidiaries since January 1, 1996,
except where such proceedings or investigation will not, either individually or
in the aggregate, have a Material Adverse Effect on Norwest. There is no
unresolved violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of Norwest or
any of its Subsidiaries which, in the reasonable judgment of Norwest, will,
either individually or in the aggregate, have a Material Adverse Effect on
Norwest.
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3.6 FINANCIAL STATEMENTS. Norwest has previously made available to Wells
Fargo copies of (i) the consolidated balance sheets of Norwest and its
Subsidiaries as of December 31, for the fiscal years 1996 and 1997, and the
related consolidated statements of income, comprehensive income, changes in
stockholders' equity and cash flows for the fiscal years 1995 through 1997,
inclusive, as reported in Norwest's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 (the "Norwest 10-K") filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case
accompanied by the audit report of KPMG Peat Marwick LLP, independent public
accountants with respect to Norwest; and (ii) the consolidated balance sheets of
Norwest and its Subsidiaries as of March 31, 1998 and the related consolidated
statements of comprehensive income, changes in stockholders' equity and cash
flows for the three months ended March 31, 1998, as reported in Norwest's
Quarterly Report on Form 10-Q for the three months ended March 31, 1998 filed
with the SEC under the Exchange Act. The March 31, 1998 consolidated balance
sheet of Norwest (including the related notes, where applicable) fairly presents
in all material respects the consolidated financial position of Norwest and its
Subsidiaries as of the date thereof, and the other financial statements referred
to in this Section 3.6 (including the related notes, where applicable) fairly
present in all material respects the results of the consolidated operations and
changes in stockholders' equity and consolidated financial position of Norwest
and its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth, subject to normal adjustments in the case of unaudited
statements; each of such statements (including the related notes, where
applicable) complies in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes, where
applicable) has been prepared in all material respects in accordance with GAAP
consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. The books and records of
Norwest and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
3.7 BROKER'S FEES. Neither Norwest nor any Norwest Subsidiary nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement or the Option Agreements.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as publicly disclosed
in Norwest Reports filed prior to the date hereof, since December 31, 1997, no
event or events have occurred that have had, either individually or in the
aggregate, a Material Adverse Effect on Norwest.
(b) Except as publicly disclosed in Norwest Reports filed prior to the date
hereof, since December 31, 1997, Norwest and its Subsidiaries have carried on
their respective businesses in all material respects in the ordinary course.
(c) Since December 31, 1997, neither Norwest nor any of its Subsidiaries has
(i) except for such actions as are in the ordinary course of business or except
as required by applicable law, (A) increased the wages, salaries, compensation,
pension, or other fringe benefits or perquisites payable to any executive
officer, employee, or director from the amount thereof in effect as of December
31, 1997, or (B) granted any severance or termination pay, entered into any
contract to make or grant any severance or termination pay, or paid any bonuses,
which in the aggregate exceed 5% of Norwest's 1997 salary and employee benefits
expenses (other than customary year-end bonuses for fiscal 1997 and, if
applicable, 1998) or (ii) suffered any strike, work stoppage, slowdown, or other
labor disturbance which will, either individually or in the aggregate, have a
Material Adverse Effect on Norwest.
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3.9 LEGAL PROCEEDINGS. (a) Neither Norwest nor any of its Subsidiaries is
a party to any, and there are no pending or, to the best of Norwest's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against
Norwest or any of its Subsidiaries or challenging the validity or propriety of
the transactions contemplated by this Agreement or the Norwest Option Agreement
as to which, in any such case, there is a reasonable probability of an adverse
determination and which, if adversely determined, will, either individually or
in the aggregate, have a Material Adverse Effect on Norwest.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies or banks) imposed upon Norwest, any of its Subsidiaries or the assets
of Norwest or any of its Subsidiaries that has had, or will have, either
individually or in the aggregate, a Material Adverse Effect on Norwest or the
Surviving Corporation.
3.10 TAXES AND TAX RETURNS. (a) Each of Norwest and its Subsidiaries has
duly filed all federal, state, foreign and local information returns and tax
returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provisions for the payment of all Taxes and other governmental charges
which have been incurred or are due or claimed to be due from it by federal,
state, foreign or local taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent applicable, those
due in respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or other charges
which are not yet delinquent or are being contested in good faith and have not
been finally determined, or (ii) information returns, tax returns, Taxes or
other governmental charges as to which the failure to file, pay or make
provision for will not, either individually or in the aggregate, have a Material
Adverse Effect on Norwest. The federal income tax returns of Norwest and its
Subsidiaries have been examined by the Internal Revenue Service (the "IRS") for
all years to and including 1990 and for 1992 and any liability with respect
thereto has been satisfied or any liability with respect to deficiencies
asserted as a result of such examination is covered by adequate reserves. To the
best of Norwest's knowledge, there are no material disputes pending, or claims
asserted for, Taxes or assessments upon Norwest or any of its Subsidiaries for
which Norwest does not have adequate reserves. In addition, (A) proper and
accurate amounts have been withheld by Norwest and its Subsidiaries from their
employees for all prior periods in compliance in all material respects with the
tax withholding provisions of applicable federal, state and local laws, except
where failure to do so will not, either individually or in the aggregate, have a
Material Adverse Effect on Norwest, (B) federal, state, and local returns which
are accurate and complete in all material respects have been filed by Norwest
and its Subsidiaries for all periods for which returns were due with respect to
income tax withholding, Social Security and unemployment taxes, except where
failure to do so will not, either individually or in the aggregate, have a
Material Adverse Effect on Norwest, (C) the amounts shown on such federal, state
or local returns to be due and payable have been paid in full or adequate
provision therefor has been included by Norwest in its consolidated financial
statements, except where failure to do so will not, either individually or in
the aggregate, have a Material Adverse Effect on Norwest and (D) there are no
Tax liens upon any property or assets of Norwest or its Subsidiaries except
liens for current taxes not yet due or liens that will not, either individually
or in the aggregate, have a Material Adverse Effect on Norwest. Neither Norwest
nor any of its Subsidiaries has been required to include in income any
adjustment pursuant to Section 481 of the Code by reason of a voluntary change
in accounting method initiated by Norwest or any of its Subsidiaries, and the
IRS has not initiated or proposed any such adjustment or change in accounting
method, in either case which has had or will have, either individually or in the
aggregate, a Material Adverse Effect on Norwest. Except as set forth in the
financial statements described in Section 3.6, neither Norwest nor any of its
Subsidiaries has entered into a transaction which is being accounted for as an
installment obligation under Section 453 of the Code, which will have, either
individually or in the aggregate, a Material Adverse Effect on Norwest.
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(b) As used in this Agreement, the term "Tax" or "Taxes" means all federal,
state, local, and foreign income, excise, gross receipts, gross income, AD
VALOREM, profits, gains, property, capital, sales, transfer, use, payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies or like assessments together with
all penalties and additions to tax and interest thereon.
(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Norwest or any Subsidiary
of Norwest under any contract, plan, program, arrangement or understanding will
have, either individually or in the aggregate, a Material Adverse Effect on
Norwest.
3.11 EMPLOYEES. (a) The Norwest Disclosure Schedule sets forth a true and
complete list of each material employee or director benefit plan, arrangement or
agreement that is maintained, or contributed to, as of the date of this
Agreement (the "Norwest Benefit Plans") by Norwest, any of its Subsidiaries or
by any trade or business, whether or not incorporated (a "Norwest ERISA
Affiliate"), all of which together with Norwest would be deemed a "single
employer" within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
(b) Norwest has heretofore made available to Wells Fargo true and complete
copies of each of the Norwest Benefit Plans and certain related documents,
including, but not limited to, (i) the actuarial report for such Norwest Benefit
Plan (if applicable) for each of the last two years and (ii) the most recent
determination letter from the IRS (if applicable) for such Norwest Benefit Plan.
(c) (i) Each of the Norwest Benefit Plans has been operated and administered
in all material respects in compliance with applicable laws, including, but not
limited to, ERISA and the Code, (ii) each of the Norwest Benefit Plans intended
to be "qualified" within the meaning of Section 401(a) of the Code is so
qualified, and there are no existing circumstances or any events that have
occurred that will adversely affect the qualified status of any such Norwest
Benefit Plan, (iii) with respect to each Norwest Benefit Plan that is subject to
Title IV of ERISA, the present value of accrued benefits under such Norwest
Benefit Plan, based upon the actuarial assumptions used for funding purposes in
the most recent actuarial report prepared by such Norwest Benefit Plan's actuary
with respect to such Norwest Benefit Plan, did not, as of its latest valuation
date, exceed the then current value of the assets of such Norwest Benefit Plan
allocable to such accrued benefits, (iv) no Norwest Benefit Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees or directors of
Norwest or its Subsidiaries beyond their retirement or other termination of
service, other than (A) coverage mandated by applicable law, (B) death benefits
or retirement benefits under any "employee pension plan" (as such term is
defined in Section 3(2) of ERISA), (C) deferred compensation benefits accrued as
liabilities on the books of Norwest or its Subsidiaries or (D) benefits the full
cost of which is borne by the current or former employee or director (or his
beneficiary), (v) no material liability under Title IV of ERISA has been
incurred by Norwest, its Subsidiaries or any Norwest ERISA Affiliate that has
not been satisfied in full, and no condition exists that presents a material
risk to Norwest, its Subsidiaries or any Norwest ERISA Affiliate of incurring a
material liability thereunder, (vi) no Norwest Benefit Plan is a "multiemployer
pension plan" (as such term is defined in Section 3(37) of ERISA), (vii) all
contributions or other amounts payable by Norwest or its Subsidiaries as of the
Effective Time with respect to each Norwest Benefit Plan in respect of current
or prior plan years have been paid or accrued in accordance with GAAP and
Section 412 of the Code, (viii) none of Norwest, its Subsidiaries or any other
person, including any fiduciary, has engaged in a transaction in connection with
which Norwest, its Subsidiaries or any Norwest Benefit Plan will be subject to
either a material civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code,
and (ix) to the best knowledge of Norwest there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the
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Norwest Benefit Plans or any trusts related thereto that will have, either
individually or in the aggregate, a Material Adverse Effect on Norwest.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result (either alone or upon the
occurrence of any additional acts or events) in any payment (including, without
limitation, severance, unemployment compensation, "excess parachute payment"
(within the meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any director or any employee of Norwest or any of its
affiliates from Norwest or any of its affiliates under any Norwest Benefit Plan
or otherwise, (ii) increase any benefits otherwise payable under any Norwest
Benefit Plan or (iii) other than the Norwest Corporation Directors' Stock
Deferral Plan and the Norwest Corporation Employees' Stock Deferral Plan, result
in any acceleration of the time of payment or vesting of any such benefits which
will, either individually or in the aggregate, have a Material Adverse Effect on
Norwest.
3.12 SEC REPORTS. Norwest has previously made available to Wells Fargo an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1996 by
Norwest with the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act (the "Norwest Reports") and prior to the
date hereof and (b) communication mailed by Norwest to its stockholders since
January 1, 1996 and prior to the date hereof, and no such Norwest Report or
communication, as of the date thereof, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date (but before the date hereof) shall be deemed to modify
information as of an earlier date. Since January 1, 1996, as of their respective
dates, all Norwest Reports filed under the Securities Act and the Exchange Act
complied in all material respects with the published rules and regulations of
the SEC with respect thereto.
3.13 COMPLIANCE WITH APPLICABLE LAW. (a) Norwest and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
Norwest or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
will not, either individually or in the aggregate, have a Material Adverse
Effect on Norwest.
(b) Except as will not have, either individually or in the aggregate, a
Material Adverse Effect on Norwest, Norwest and each Norwest Subsidiary have
properly administered all accounts for which it acts as a fiduciary, including
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents, applicable state and federal law and
regulation and common law. None of Norwest, any Norwest Subsidiary, or any
director, officer or employee of Norwest or of any Norwest Subsidiary, has
committed any breach of trust with respect to any such fiduciary account that
will have a Material Adverse Effect on Norwest, and the accountings for each
such fiduciary account are true and correct in all material respects and
accurately reflect the assets of such fiduciary account.
3.14 CERTAIN CONTRACTS. (a) Neither Norwest nor any of its Subsidiaries is
a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees, other than in the ordinary course of business consistent
with past practice, (ii) which, upon the consummation or stockholder approval of
the transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming
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due from Wells Fargo, Norwest, the Surviving Corporation, or any of their
respective Subsidiaries to any officer or employee thereof, (iii) which is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) to be performed after the date of this Agreement that has not
been filed or incorporated by reference in the Norwest Reports, (iv) which
materially restricts the conduct of any line of business by Norwest or upon
consummation of the Merger will materially restrict the ability of the Surviving
Corporation to engage in any line of business in which a bank holding company
may lawfully engage, (v) with or to a labor union or guild (including any
collective bargaining agreement) or (vi) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any stockholder approval or the
consummation of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement, other than (with respect to
clauses (ii) and (vi) of this sentence) the Norwest Corporation Directors' Stock
Deferral Plan and the Norwest Corporation Employees' Stock Deferral Plan.
Norwest has previously made available to Wells Fargo true and correct copies of
all employment and deferred compensation agreements which are in writing and to
which Norwest is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 3.14(a), whether or not set
forth in the Norwest Disclosure Schedule, is referred to herein as a "Norwest
Contract", and neither Norwest nor any of its Subsidiaries knows of, or has
received notice of, any violation of the above by any of the other parties
thereto which, either individually or in the aggregate, will have a Material
Adverse Effect on Norwest.
(b) (i) Each Norwest Contract is valid and binding on Norwest or any of its
Subsidiaries, as applicable, and in full force and effect, (ii) Norwest and each
of its Subsidiaries has in all material respects performed all obligations
required to be performed by it to date under each Norwest Contract, except where
such noncompliance, either individually or in the aggregate, will not have a
Material Adverse Effect on Norwest, and (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, will constitute, a
material default on the part of Norwest or any of its Subsidiaries under any
such Norwest Contract, except where such default, either individually or in the
aggregate, will not have a Material Adverse Effect on Norwest.
3.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither Norwest nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1996, a recipient of any supervisory letter from, or since January 1,
1996, has adopted any board resolutions at the request of any Regulatory Agency
or other Governmental Entity that currently restricts in any material respect
the conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business (each,
whether or not set forth in the Norwest Disclosure Schedule, a "Norwest
Regulatory Agreement"), nor has Norwest or any of its Subsidiaries been advised
since January 1, 1996, by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any such Regulatory Agreement.
3.16 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of Norwest or for the account
of a customer of Norwest or one of its Subsidiaries, were entered into in the
ordinary course of business and, to Norwest's knowledge, in accordance with
prudent banking practice and applicable rules, regulations and policies of any
Regulatory Authority and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations of Norwest
or one of its Subsidiaries enforceable in accordance with their terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the availability of
equitable remedies), and are in full
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force and effect. Norwest and each of its Subsidiaries have duly performed in
all material respects all of their material obligations thereunder to the extent
that such obligations to perform have accrued; and, to Norwest's knowledge,
there are no material breaches, violations or defaults or allegations or
assertions of such by any party thereunder.
3.17 UNDISCLOSED LIABILITIES. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Norwest
included in the Norwest March 31, 1998 Form 10-Q and for liabilities incurred in
the ordinary course of business consistent with past practice, since March 31,
1998, neither Norwest nor any of its Subsidiaries has incurred any liability of
any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either individually or in the aggregate, has
had or will have a Material Adverse Effect on Norwest.
3.18 INSURANCE. Norwest and its Subsidiaries have in effect insurance
coverage with reputable insurers or are self-insured, which in respect of
amounts, premiums, types and risks insured, constitutes reasonably adequate
coverage against all risks customarily insured against by bank holding companies
and their subsidiaries comparable in size and operations to Norwest and its
Subsidiaries.
3.19 ENVIRONMENTAL LIABILITY. There are no legal, administrative, arbitral
or other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that could reasonably result in the imposition, on
Norwest of any liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), pending or
threatened against Norwest, which liability or obligation will, either
individually or in the aggregate, have a Material Adverse Effect on Norwest. To
the knowledge of Norwest, there is no reasonable basis for any such proceeding,
claim, action or governmental investigation that would impose any liability or
obligation that will, individually or in the aggregate, have a Material Adverse
Effect on Norwest. Norwest is not subject to any agreement, order, judgment,
decree, letter or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any liability or obligation with
respect to the foregoing that will have, either individually or in the
aggregate, a Material Adverse Effect on Norwest.
3.20 STATE TAKEOVER LAWS; NORWEST RIGHTS AGREEMENT. (a) The Board of
Directors of Norwest has approved the transactions contemplated by this
Agreement and the Option Agreements for purposes of Section 203(a)(1) of the
DGCL such that the provisions of Section 203 of the DGCL will not apply to this
Agreement or the Option Agreements or any of the transactions contemplated
hereby or thereby.
(b) Norwest has taken all action, if any, necessary or appropriate so that
the entering into of this Agreement and the Stock Option Agreements, and the
consummation of the transactions contemplated hereby and thereby do not and will
not result in the ability of any person to exercise any Norwest Stockholder
Rights under the Norwest Rights Agreement or enable or require the Norwest
Stockholder Rights to separate from the shares of Norwest Common Stock to which
they are attached or to be triggered or become exercisable. No "Distribution
Date" or "Shares Acquisition Date" (as such terms are defined in the Norwest
Rights Plan) has occurred.
3.21 YEAR 2000. None of Norwest or any of the Norwest Subsidiaries has
received, or reasonably expects to receive, a "Year 2000 Deficiency Notification
Letter" (as such term is employed in the Federal Reserve's Supervision and
Regulation Letter No. SR 98-3(SUP), dated March 4, 1998). Norwest has disclosed
to Wells Fargo a complete and accurate copy of Norwest's plan, including an
estimate of the anticipated associated costs, for addressing the issues ("Year
2000 Issues") set forth in the statements of the Federal Financial Institutions
Examination Council, dated May 5, 1997, entitled
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"Year 2000 Project Management Awareness," and December 1997, entitled "Safety
and Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect Norwest and its Subsidiaries. Between the date of this Agreement and the
Effective Time, Norwest shall use commercially practicable efforts to implement
such plan.
3.22 REORGANIZATION; POOLING OF INTERESTS. As of the date of this
Agreement, Norwest has no reason to believe that the Merger will not qualify as
a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF WELLS FARGO
Except as disclosed in the Wells Fargo disclosure schedule delivered to
Norwest concurrently herewith (the "Wells Fargo Disclosure Schedule") Wells
Fargo hereby represents and warrants to Norwest as follows:
4.1 CORPORATE ORGANIZATION. (a) Wells Fargo is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Wells Fargo has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on Wells Fargo. Wells Fargo is duly registered as a bank holding company
under the BHC Act. True and complete copies of the Restated Certificate of
Incorporation (the "Wells Fargo Certificate") and By-Laws of Wells Fargo, as in
effect as of the date of this Agreement, have previously been made available by
Wells Fargo to Norwest.
(b) Each Wells Fargo Subsidiary (i) is duly organized and validly existing
under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether Federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on Wells Fargo, and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
4.2 CAPITALIZATION. (a) The authorized capital stock of Wells Fargo
consists of 150,000,000 shares of Wells Fargo Common Stock, of which, as of May
31, 1998, 85,085,763 shares were issued and outstanding, and 25,000,000 shares
of Wells Fargo Preferred Stock, no par value, of which (i) 1,500,000 shares were
designated, issued and outstanding as Wells Fargo Series B Preferred and (ii)
4,000,000 shares were designated, issued and outstanding as Wells Fargo Series H
Preferred. As of May 31, 1998, no shares of Wells Fargo Common Stock were held
in Wells Fargo's treasury. As of the date hereof, no shares of Wells Fargo
Common Stock or Wells Fargo Preferred Stock were reserved for issuance, except
for (i) the shares of Wells Fargo Common Stock issuable pursuant to the Wells
Fargo Option Agreement, (ii) 5,975,188 shares reserved for issuance pursuant to
the Wells Fargo Tax Advantage and Retirement Plan, the Wells Fargo Long-Term and
Equity Incentive Plans and other employee and director stock plans of Wells
Fargo in effect as of the date hereof (the "Wells Fargo Stock Plans"), (iii)
4,065,122 shares reserved for issuance pursuant to the Wells Fargo Dividend
Reinvestment and Common Stock Purchase Plan (the "Wells Fargo DRIP") and (iv)
587,220 shares reserved for issuance pursuant to the Wells Fargo Employee Stock
Purchase Plan (the "Wells Fargo ESPP"). All of the issued and outstanding shares
of Wells Fargo Capital Stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this Agreement,
except for the
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Wells Fargo Option Agreement, the Wells Fargo Stock Plans and the Wells Fargo
mandatory convertible debt (as described in the Wells Fargo 10-K), Wells Fargo
does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Wells Fargo Capital Stock or any other
equity securities of Wells Fargo or any securities representing the right to
purchase or otherwise receive any shares of Wells Fargo Capital Stock
(collectively, "Wells Fargo Rights"). Since May 31, 1997, Wells Fargo has not
issued any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than as permitted by
Section 5.2(b) and pursuant to (A) the exercise of employee stock options
granted prior to such date, (B) the Wells Fargo DRIP and the Wells Fargo ESPP,
and (C) pursuant to the Wells Fargo Option Agreement. Wells Fargo has previously
provided Norwest with a list of the option holders, the date of each option to
purchase Wells Fargo Common Stock granted, the number of shares subject to each
such option, the expriation date of each such option and the price at which each
such option may be exercised under an applicable Wells Fargo Stock Plan. In no
event will the aggregate number of shares of Wells Fargo Common Stock
outstanding at the Effective Time (including all shares of Wells Fargo Common
Stock subject to then-outstanding Wells Fargo Rights other than the Wells Fargo
Option Agreement) exceed the number specified in Section 4.2(a) of the Wells
Fargo Disclosure Schedule.
(b) Wells Fargo owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each
of the Wells Fargo Subsidiaries, free and clear of any Liens, and all of such
shares or equity ownership interests are duly authorized and validly issued and
are fully paid, nonassessable (subject to 12 U.S.C. Section 55) and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. No Wells Fargo Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary. Section 4.2(b) of the Wells Fargo Disclosure
Schedule sets forth a list of the material investments of Wells Fargo in
Non-Subisidiary Affiliates.
4.3 AUTHORITY; NO VIOLATION. (a) Wells Fargo has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Wells Fargo. The Board of
Directors of Wells Fargo has directed that this Agreement and the transactions
contemplated hereby be submitted to Wells Fargo's stockholders for adoption at a
meeting of such stockholders and, except for the adoption of this Agreement by
the affirmative vote of the holders of a majority of the outstanding shares of
Wells Fargo Common Stock, no other corporate proceedings on the part of Wells
Fargo are necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Wells Fargo and (assuming due authorization, execution and delivery
by Norwest) constitutes a valid and binding obligation of Wells Fargo,
enforceable against Wells Fargo in accordance with its terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies).
(b) Neither the execution and delivery of this Agreement by Wells Fargo, nor
the consummation by Wells Fargo of the transactions contemplated hereby, nor
compliance by Wells Fargo with any of the terms or provisions hereof, will (i)
violate any provision of the Wells Fargo Certificate or By-Laws, or (ii)
assuming that the consents and approvals referred to in Section 4.4 are duly
obtained, (x) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Wells Fargo, any of its
Subsidiaries or Non-Subsidiary Affiliates or any of their respective properties
or assets or (y) violate, conflict with, result in a breach of any provision of
or the loss of any benefit under,
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constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Wells Fargo, any of its Subsidiaries or its Non-Subsidiary Affiliates
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Wells Fargo, any of its Subsidiaries or Non-Subsidiary
Affiliates is a party, or by which they or any of their respective properties or
assets may be bound or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults which either individually or in
the aggregate will not have a Material Adverse Effect on Wells Fargo.
4.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and the
Federal Reserve Act, as amended, and approval of such applications and notices,
(ii) the State Approvals, (iii) the filing with the SEC of the Joint Proxy
Statement and the S-4, (iv) the filing of the Certificate of Merger with the
Delaware Secretary pursuant to the DGCL, (v) any notices to or filings with the
SBA, (vi) any consents, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of federal and state
securities laws relating to the regulation of broker-dealers, investment
advisers or transfer agents, and federal commodities laws relating to the
regulation of futures commission merchants and the rules and regulations
thereunder and of any applicable SRO, and the rules of the NYSE, or which are
required under consumer finance, mortgage banking and other similar laws, (vii)
such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of these shares of Norwest Capital Stock pursuant to this Agreement and (viii)
the approval of this Agreement by the requisite vote of the stockholders of
Wells Fargo, the approval of the issuance of shares of Norwest Common Stock
pursuant hereto by the requisite vote of stockholders of Norwest and the
approval of the amendment of the Norwest Certificate contemplated by Section
6.12, no consents or approvals of or filings or registrations with any
Governmental Entity are necessary in connection with (A) the execution and
delivery by Wells Fargo of this Agreement and (B) the consummation by Wells
Fargo of the Merger and the other transactions contemplated hereby.
4.5 REPORTS. Wells Fargo and each of its Subsidiaries have timely filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to file since January
1, 1996 with the Regulatory Agencies, and all other reports and statements
required to be filed by them since January 1, 1996, including, without
limitation, any report or statement required to be filed pursuant to the laws,
rules or regulations of the United States, any state, or any Regulatory Agency,
and have paid all fees and assessments due and payable in connection therewith,
except where the failure to file such report, registration or statement or to
pay such fees and assessments, either individually or in the aggregate, will not
have a Material Adverse Effect on Wells Fargo. Except for normal examinations
conducted by a Regulatory Agency in the ordinary course of the business of Wells
Fargo and its Subsidiaries, no Regulatory Agency has initiated any proceeding
or, to the best knowledge of Wells Fargo, investigation into the business or
operations of Wells Fargo or any of its Subsidiaries since January 1, 1996,
except where such proceedings or investigation will not have, either
individually or in the aggregate, a Material Adverse Effect on Wells Fargo.
There is no unresolved violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of
Wells Fargo or any of its Subsidiaries which, in the reasonable judgment of
Wells Fargo, will have, either individually or in the aggregate, a Material
Adverse Effect on Wells Fargo.
4.6 FINANCIAL STATEMENTS. Wells Fargo has previously made available to
Norwest copies (i) of the consolidated balance sheets of Wells Fargo and its
Subsidiaries as of December 31, for the fiscal years 1996 and 1997, and the
related consolidated statements of income, changes in stockholders'
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equity and cash flows for the fiscal years 1995 through 1997, inclusive, as
reported in Wells Fargo's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 filed with the SEC under the Exchange Act (the "Wells Fargo
10-K"), in each case accompanied by the audit report of KPMG Peat Marwick LLP,
independent public accountants with respect to Wells Fargo; and (ii) the
consolidated balance sheets of Wells Fargo and its Subsidiaries as of March 31,
1998 and the related consolidated statements of income, changes in stockholders'
equity and cash flows for the three months ended March 31, 1998, as reported in
Wells Fargo's Quarterly Report on Form 10-Q for the three months ended March 31,
1998 filed with the SEC under the Exchange Act. The March 31, 1998 consolidated
balance sheet of Wells Fargo (including the related notes, where applicable)
fairly presents in all material respects the consolidated financial position of
Wells Fargo and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 4.6 (including the related notes, where
applicable) fairly present in all material respects the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of Wells Fargo and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth, subject to normal year-
end audit adjustments in the case of unaudited statements; each of such
statements (including the related notes, where applicable) complies in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been prepared in
all material respects in accordance with GAAP consistently applied during the
periods involved, except in each case as indicated in such statements or in the
notes thereto. The books and records of Wells Fargo and its Subsidiaries have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
4.7 BROKER'S FEES. Neither Wells Fargo nor any Wells Fargo Subsidiary nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement or the Option Agreements.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as publicly disclosed
in Wells Fargo Reports filed prior to the date hereof, since December 31, 1997,
no event or events have occurred which has had, individually or in the
aggregate, a Material Adverse Effect on Wells Fargo.
(b) Except as publicly disclosed in Wells Fargo Reports filed prior to the
date hereof, since December 31, 1997, Wells Fargo and its Subsidiaries have
carried on their respective businesses in all material respects in the ordinary
course.
(c) Since December 31, 1997, neither Wells Fargo nor any of its Subsidiaries
has (i) except for such actions as are in the ordinary course of business or
except as required by applicable law, (A) increased the wages, salaries,
compensation, pension, or other fringe benefits or perquisites payable to any
executive officer, employee, or director from the amount thereof in effect as of
December 31, 1997, or (B) granted any severance or termination pay, entered into
any contract to make or grant any severance or termination pay, or paid any
bonuses, which in the aggregate exceed 5% of Wells Fargo's 1997 salary and
employee benefit expenses (other than customary year-end bonuses for fiscal 1997
and, if applicable, 1998) or (ii) suffered any strike, work stoppage, slowdown,
or other labor disturbance which will have, either individually or in the
aggregate, a Material Adverse Effect on Wells Fargo.
4.9 LEGAL PROCEEDINGS. (a) Neither Wells Fargo nor any of its Subsidiaries
is a party to any, and there are no pending or, to the best of Wells Fargo's
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against Wells Fargo or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement or the Wells Fargo
Option Agreement as to which, in any such case, there is a reasonable
probability of an adverse determination and which, if adversely determined, will
have, either individually or in the aggregate, a Material Adverse Effect on
Wells Fargo.
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(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies or banks) imposed upon Wells Fargo, any of its Subsidiaries or the
assets of Wells Fargo or any of its Subsidiaries that has had or will have,
either individually or in the aggregate, a Material Adverse Effect on Wells
Fargo or the Surviving Corporation.
4.10 TAXES AND TAX RETURNS. (a) Each of Wells Fargo and its Subsidiaries
has duly filed all federal, state, foreign and local information returns and tax
returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provisions for the payment of all Taxes and other governmental charges
which have been incurred or are due or claimed to be due from it by federal,
state, foreign or local taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent applicable, those
due in respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or other charges
which are not yet delinquent or are being contested in good faith and have not
been finally determined, or (ii) information returns, tax returns, Taxes or
other governmental charges as to which the failure to file, pay or make
provision for will not have, either individually or in the aggregate, a Material
Adverse Effect on Wells Fargo. The federal income tax returns of Wells Fargo and
its Subsidiaries have been examined by the IRS through 1993 and any liability
with respect thereto has been satisfied or any liability with respect to
deficiencies asserted as a result of such examination is covered by adequate
reserves. To the best of Wells Fargo's knowledge, there are no material disputes
pending, or claims asserted for, Taxes or assessments upon Wells Fargo or any of
its Subsidiaries for which Wells Fargo does not have adequate reserves. In
addition, (A) proper and accurate amounts have been withheld by Wells Fargo and
its Subsidiaries from their employees for all prior periods in compliance in all
material respects with the tax withholding provisions of applicable federal,
state and local laws, except where failure to do so will not, either
individually or in the aggregate, have a Material Adverse Effect on Wells Fargo,
(B) federal, state and local returns which are accurate and complete in all
material respects have been filed by Wells Fargo and its Subsidiaries for all
periods for which returns were due with respect to income tax withholding,
Social Security and unemployment taxes, except where failure to do so will not,
either individually or in the aggregate, have a Material Adverse Effect on Wells
Fargo, (C) the amounts shown on such federal, state or local returns to be due
and payable have been paid in full or adequate provision therefor has been
included by Wells Fargo in its consolidated financial statements, except where
failure to do so will not, individually or in the aggregate, have a Material
Adverse Effect on Wells Fargo and (D) there are no Tax liens upon any property
or assets of Wells Fargo or its Subsidiaries except liens for current taxes not
yet due or liens that will not have, either individually or in the aggregate, a
Material Adverse Effect on Wells Fargo. Neither Wells Fargo nor any of its
Subsidiaries has been required to include in income any adjustment pursuant to
Section 481 of the Code by reason of a voluntary change in accounting method
initiated by Wells Fargo or any of its Subsidiaries, and the IRS has not
initiated or proposed any such adjustment or change in accounting method, in
either case, which has had or will have, either individually or in the
aggregate, a Material Adverse Effect on Wells Fargo. Except as set forth in the
financial statements described in Section 4.6, neither Wells Fargo nor any of
its Subsidiaries has entered into a transaction which is being accounted for as
an installment obligation under Section 453 of the Code, which will have, either
individually or in the aggregate, a Material Adverse Effect on Wells Fargo.
(b) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Wells Fargo or any
Subsidiary of Wells Fargo under any contract, plan, program, arrangement or
understanding will have, either individually or in the aggregate, a Material
Adverse Effect on Wells Fargo.
4.11 EMPLOYEES. (a) The Wells Fargo Disclosure Schedule sets forth a true
and complete list of each material employee benefit plan, arrangement or
agreement that is maintained, or contributed to,
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as of the date of this Agreement (the "Wells Fargo Benefit Plans") by Wells
Fargo, any of its Subsidiaries or by any trade or business, whether or not
incorporated (a "Wells Fargo ERISA Affiliate"), all of which together with Wells
Fargo would be deemed a "single employer" within the meaning of Section 4001 of
ERISA.
(b) Wells Fargo has heretofore made available to Norwest true and complete
copies of each of the Wells Fargo Benefit Plans and certain related documents,
including, but not limited to, (i) the actuarial report for such Wells Fargo
Benefit Plan (if applicable) for each of the last two years, and (ii) the most
recent determination letter from the IRS (if applicable) for such Wells Fargo
Benefit Plan.
(c) (i) Each of the Wells Fargo Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the Wells Fargo
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified, and there are no existing circumstances or any events
that have occurred that will adversely affect the qualified status of any such
Wells Fargo Benefit Plan, (iii) with respect to each Wells Fargo Benefit Plan
which is subject to Title IV of ERISA, the present value of accrued benefits
under such Wells Fargo Benefit Plan, based upon the actuarial assumptions used
for funding purposes in the most recent actuarial report prepared by such Wells
Fargo Benefit Plan's actuary with respect to such Wells Fargo Benefit Plan, did
not, as of its latest valuation date, exceed the then current value of the
assets of such Wells Fargo Benefit Plan allocable to such accrued benefits, (iv)
no Wells Fargo Benefit Plan provides benefits, including, without limitation,
death or medical benefits (whether or not insured), with respect to current or
former employees or directors of Wells Fargo or its Subsidiaries beyond their
retirement or other termination of service, other than (A) coverage mandated by
applicable law, (B) death benefits or retirement benefits under any "employee
pension plan" (as such term is defined in Section 3(2) of ERISA), (C) deferred
compensation benefits accrued as liabilities on the books of Wells Fargo or its
Subsidiaries or (D) benefits the full cost of which is borne by the current or
former employee or director (or his beneficiary), (v) no material liability
under Title IV of ERISA has been incurred by Wells Fargo, its Subsidiaries or
any Wells Fargo ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to Wells Fargo, its Subsidiaries
or any Wells Fargo ERISA Affiliate of incurring a material liability thereunder,
(vi) no Wells Fargo Benefit Plan is a "multiemployer pension plan" (as such term
is defined in Section 3(37) of ERISA), (vii) all contributions or other amounts
payable by Wells Fargo or its Subsidiaries as of the Effective Time with respect
to each Wells Fargo Benefit Plan in respect of current or prior plan years have
been paid or accrued in accordance with GAAP and Section 412 of the Code, (viii)
none of Wells Fargo, its Subsidiaries or any other person, including any
fiduciary, has engaged in a transaction in connection with which Wells Fargo,
its Subsidiaries or any Wells Fargo Benefit Plan will be subject to either a
material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
material tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix) to
the best knowledge of Wells Fargo there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Wells Fargo Benefit Plans or any trusts related thereto which
will have, either individually or in the aggregate, a Material Adverse Effect on
Wells Fargo.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result (either alone or upon the
occurrence of any additional acts or events) in any payment (including, without
limitation, severance, unemployment compensation, "excess parachute payment"
(within the meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any director or any employee of Wells Fargo or any of
its affiliates from Wells Fargo or any of its affiliates under any Wells Fargo
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any Wells Fargo Benefit Plan or (iii) result in any acceleration of the time of
payment or vesting
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of any such benefits that will have, either individually or in the aggregate, a
Material Adverse Effect on Wells Fargo.
4.12 SEC REPORTS. Wells Fargo has previously made available to Norwest an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1996 by
Wells Fargo with the SEC pursuant to the Securities Act or the Exchange Act (the
"Wells Fargo Reports") and prior to the date hereof and (b) communication mailed
by Wells Fargo to its stockholders since January 1, 1996 and prior to the date
hereof, and no such Wells Fargo Report or communication, as of the date thereof,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date (but before the date
hereof) shall be deemed to modify information as of an earlier date. Since
January 1, 1996, as of their respective dates, all Wells Fargo Reports filed
under the Securities Act and the Exchange Act complied in all material respects
with the published rules and regulations of the SEC with respect thereto.
4.13 COMPLIANCE WITH APPLICABLE LAW. (a) Wells Fargo and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to Wells
Fargo or any of its Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default will not,
either individually or in the aggregate, have a Material Adverse Effect on Wells
Fargo.
(b) Except as will not have, either individually or in the aggregate, a
Material Adverse Effect on Wells Fargo, Wells Fargo and each Wells Fargo
Subsidiary have properly administered all accounts for which it acts as a
fiduciary, including accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents, applicable state and
federal law and regulation and common law. None of Wells Fargo, any Wells Fargo
Subsidiary, or any director, officer or employee of Wells Fargo or of any Wells
Fargo Subsidiary, has committed any breach of trust with respect to any such
fiduciary account that will have a Material Adverse Effect on Wells Fargo, and
the accountings for each such fiduciary account are true and correct in all
material respects and accurately reflect the assets of such fiduciary account.
4.14 CERTAIN CONTRACTS. (a) Neither Wells Fargo nor any of its
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) with respect to the employment of
any directors, officers or employees other than in the ordinary course of
business consistent with past practice, (ii) which, upon the consummation or
stockholder approval of the transactions contemplated by this Agreement will
(either alone or upon the occurrence of any additional acts or events) result in
any payment (whether of severance pay or otherwise) becoming due from Wells
Fargo, Norwest, the Surviving Corporation, or any of their respective
Subsidiaries to any officer or employee thereof, (iii) which is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) to be performed after the date of this Agreement that has not been filed or
incorporated by reference in the Wells Fargo Reports, (iv) which materially
restricts the conduct of any line of business by Wells Fargo or upon
consummation of the Merger will materially restrict the ability of the Surviving
Corporation to engage in any line of business in which a bank holding company
may lawfully engage, (v) with or to a labor union or guild (including any
collective bargaining agreement) or (vi) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any stockholder approval or the
consummation of any of the transactions contemplated by this Agreement, or the
value of any of
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the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Wells Fargo has previously made available to
Norwest true and correct copies of all employment and deferred compensation
agreements which are in writing and to which Wells Fargo is a party. Each
contract, arrangement, commitment or understanding of the type described in this
Section 4.14(a), whether or not set forth in the Wells Fargo Disclosure
Schedule, is referred to herein as a "Wells Fargo Contract", and neither Wells
Fargo nor any of its Subsidiaries knows of, or has received notice of, any
violation of the above by any of the other parties thereto which will have,
individually or in the aggregate, a Material Adverse Effect on Wells Fargo.
(b) (i) Each Wells Fargo Contract is valid and binding on Wells Fargo or any
of its Subsidiaries, as applicable, and in full force and effect, (ii) Wells
Fargo and each of its Subsidiaries has in all material respects performed all
obligations required to be performed by it to date under each Wells Fargo
Contract, except where such noncompliance, either individually or in the
aggregate, will not have a Material Adverse Effect on Wells Fargo, and (iii) no
event or condition exists which constitutes or, after notice or lapse of time or
both, will constitute, a material default on the part of Wells Fargo or any of
its Subsidiaries under any such Wells Fargo Contract, except where such default,
either individually or in the aggregate, will not have a Material Adverse Effect
on Wells Fargo.
4.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither Wells Fargo nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1996, a recipient of any supervisory letter from, or since January 1,
1996, has adopted any board resolutions at the request of any Regulatory Agency
or other Governmental Entity that currently restricts in any material respect
the conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business (each,
whether or not set forth in the Wells Fargo Disclosure Schedule, a "Wells Fargo
Regulatory Agreement"), nor has Wells Fargo or any of its Subsidiaries been
advised since January 1, 1996, by any Regulatory Agency or other Governmental
Entity that it is considering issuing or requesting any such Regulatory
Agreement.
4.16 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of Wells Fargo or for the
account of a customer of Wells Fargo or one of its Subsidiaries, were entered
into in the ordinary course of business and, to Wells Fargo's knowledge, in
accordance with prudent banking practice and applicable rules, regulations and
policies of any Regulatory Authority and with counterparties believed to be
financially responsible at the time and are legal, valid and binding obligations
of Wells Fargo or one of its Subsidiaries enforceable in accordance with their
terms (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies), and are in full force and effect. Wells
Fargo and each of its Subsidiaries have duly performed in all material respects
all of their material obligations thereunder to the extent that such obligations
to perform have accrued; and to Wells Fargo's knowledge, there are no material
breaches, violations or defaults or allegations or assertions of such by any
party thereunder.
4.17 UNDISCLOSED LIABILITIES. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Wells Fargo
included in the Wells Fargo March 31, 1998 Form 10-Q and for liabilities
incurred in the ordinary course of business consistent with past practice, since
March 31, 1998, neither Wells Fargo nor any of its Subsidiaries has incurred any
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either individually or in the
aggregate, has had or will have, a Material Adverse Effect on Wells Fargo.
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4.18 INSURANCE. Wells Fargo and its Subsidiaries have in effect insurance
coverage with reputable insurers or are self-insured, which in respect of
amounts, premiums, types and risks insured, constitutes reasonably adequate
coverage against all risks customarily insured against by bank holding companies
and their subsidiaries comparable in size and operations to Wells Fargo and its
Subsidiaries.
4.19 ENVIRONMENTAL LIABILITY. There are no legal, administrative, arbitral
or other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could result in the imposition, on
Wells Fargo of any liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA, pending or threatened against Wells
Fargo, which liability or obligation will have, either individually or in the
aggregate, a Material Adverse Effect on Wells Fargo. To the knowledge of Wells
Fargo, there is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any liability or obligation that
will have, either individually or in the aggregate, a Material Adverse Effect on
Wells Fargo. Wells Fargo is not subject to any agreement, order, judgment,
decree, letter or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any liability or obligation with
respect to the foregoing that will have, either individually or in the
aggregate, a Material Adverse Effect on Wells Fargo.
4.20 STATE TAKEOVER LAWS. (a) The Board of Directors of Wells Fargo has
approved the transactions contemplated by this Agreement and the Option
Agreements for purposes of Section 203(a)(1) of the DGCL such that the
provisions of Section 203 of the DGCL will not apply to this Agreement or the
Option Agreements or any of the transactions contemplated hereby or thereby.
4.21 YEAR 2000. None of Wells Fargo or any of the Wells Fargo Subsidiaries
has received, or reasonably expects to receive, a Year 2000 Deficiency
Notification Letter. Wells Fargo has disclosed to Norwest a complete and
accurate copy of Wells Fargo's plan, including an estimate of the anticipated
associated costs, for addressing Year 2000 Issues as such issues affect Wells
Fargo and its Subsidiaries. Between the date of this Agreement and the Effective
Time, Wells Fargo shall use commercially practicable efforts to implement such
plan.
4.22 REORGANIZATION; POOLING OF INTERESTS. As of the date of this
Agreement, Wells Fargo has no reason to believe that the Merger will not qualify
as a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement (including the Norwest Disclosure
Schedule and the Wells Fargo Disclosure Schedule) or the Option Agreements, each
of Wells Fargo and Norwest shall, and shall cause each of their respective
Subsidiaries to, (a) conduct its business in the ordinary course, (b) use
reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain the
services of its key officers and key employees and (c) take no action which
would adversely affect or delay the ability of either Wells Fargo or Norwest to
obtain any necessary approvals of any Regulatory Agency or other governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement or the Option Agreements or to
consummate the transactions contemplated hereby or thereby.
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5.2 FORBEARANCES. During the period from the date of this Agreement to the
Effective Time, except as set forth in the Wells Fargo Disclosure Schedule or
the Norwest Disclosure Schedule, as the case may be, and, except as expressly
contemplated or permitted by this Agreement or the Option Agreements, neither
Wells Fargo nor Norwest shall, and neither Wells Fargo nor Norwest shall permit
any of their respective Subsidiaries to, without the prior written consent of
the other party to this Agreement:
(a) other than in the ordinary course of business, incur any
indebtedness for borrowed money (other than short-term indebtedness incurred
to refinance short-term indebtedness and indebtedness of Norwest or any of
its wholly-owned Subsidiaries to Norwest or any of its Subsidiaries, on the
one hand, or of Wells Fargo or any of its Subsidiaries to Wells Fargo or any
of its wholly-owned Subsidiaries, on the other hand), assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, or make
any loan or advance (it being understood and agreed that incurrence of
indebtedness in the ordinary course of business shall include, without
limitation, the creation of deposit liabilities, purchases of Federal funds,
sales of certificates of deposit and entering into repurchase agreements);
(b) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any
securities or obligations convertible (whether currently
convertible or convertible only after the passage of time or
the occurrence of certain events) into or exchangeable for any
shares of its capital stock (except (A) in the case of Norwest,
for regular quarterly cash dividends at a rate not in excess of
$.19 per share of Norwest Common Stock and regular quarterly
cash dividends on the Norwest Preferred Stock outstanding as of
the date hereof at the rates required by the terms thereof, (B)
in the case of Wells Fargo, for regular quarterly cash
dividends on Wells Fargo Common Stock at a rate not in excess
of $1.30 per share of Wells Fargo Common Stock and regular
quarterly cash dividends on the Wells Fargo Preferred Stock
outstanding as of the date hereof at the rates required by the
terms thereof, and (C) dividends paid by any of the
Subsidiaries of each of Wells Fargo and Norwest to Wells Fargo
or Norwest or any of their Subsidiaries, respectively, and
dividends paid in the ordinary course of business consistent
with past practice by any subsidiaries (whether or not wholly
owned) of each of Wells Fargo and Norwest);
(iii) grant any stock appreciation rights or grant any individual,
corporation or other entity any right to acquire any shares of
its capital stock, other than (A) pursuant to the Norwest
Rights Agreement, (B) pursuant to the Norwest Stock Plans or
the Wells Fargo Stock Plans, as the case may be, in the
ordinary course of business, or (C) the conversion of employee
or director stock options pursuant to the consummation of the
Pending Norwest Acquisitions, the Permitted Norwest
Acquisitions or the Permitted Wells Fargo Acquisitions; or
(iv) issue any additional shares of capital stock except for the
issuance by Merger Sub of shares of Merger Sub Common Stock to
Norwest in connection with the organization of Merger Sub and
pursuant to (A) the exercise of stock options, convertible
preferred stock, convertible debt or warrants outstanding as of
the date hereof or issued in compliance with Section
5.2(b)(iii), (B) the Option Agreements, (C) the Norwest Rights
Agreement, or any renewal or replacement thereof, (D) in the
ordinary course of business and consistent with past practice
in connection with the Norwest DRIP, the Norwest Stock Plans,
the Wells Fargo DRIP and the Wells
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Fargo ESPP; (E) in connection with the Pending Norwest
Acquisitions in an amount not to exceed 19,800,000 shares of
Norwest Common Stock in the aggregate and in connection with
acquisitions by Norwest initiated after the date hereof,
provided that the shares of Norwest Common Stock that are
issued or become issuable in connection therewith shall not
exceed 40,000,000 in the aggregate (the "Permitted Norwest
Acquisitions") and (F) in connection with acquisitions by Wells
Fargo initiated after the date hereof, provided that the shares
of Wells Fargo Common Stock that are issued or become issuable
in connection therewith shall not exceed 4,000,000 in the
aggregate and that such acquisitions shall not, either
individually or in the aggregate, have a Material Adverse
Effect on Wells Fargo (the "Permitted Wells Fargo
Acquisitions");
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of its
material properties or assets to any individual, corporation or other entity
other than a Subsidiary, or cancel, release or assign any indebtedness to any
such person or any claims held by any such person, except in the ordinary course
of business or pursuant to contracts or agreements in force at the date of this
Agreement;
(d) except for transactions in the ordinary course of business or pursuant
to contracts or agreements in force at the date of or permitted by this
Agreement, make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity other
than a Subsidiary thereof;
(e) except for transactions in the ordinary course of business, terminate,
or waive any material provision of, any Norwest Contract or Wells Fargo
Contract, as the case may be, or make any change in any instrument or agreement
governing the terms of any of its securities, or material lease or contract,
other than normal renewals of contracts and leases without material adverse
changes of terms;
(f) increase in any manner the compensation or fringe benefits of any of its
employees or pay any pension or retirement allowance not required by any
existing plan or agreement to any such employees or become a party to, amend or
commit itself to any pension, retirement, profit-sharing or welfare benefit plan
or agreement or employment agreement with or for the benefit of any employee
other than in the ordinary course of business, or accelerate the vesting of, or
the lapsing of restrictions with respect to, any stock options or other
stock-based compensation;
(g) solicit or encourage from any third party or enter into any
negotiations, discussions or agreement in respect of, or authorize any
individual, corporation or other entity to solicit or encourage from any third
party or enter into any negotiations, discussions or agreement in respect of, or
provide or cause to be provided any confidential information in connection with,
any inquiries or proposals relating to the disposition of all or substantially
all of its business or assets, or the acquisition of its voting securities, or
the merger of it or any of its Subsidiaries with any corporation or other
entity, other than as provided by this Agreement (and each party shall promptly
notify the other of all of the relevant details relating to all inquiries and
proposals which it may receive relating to any of such matters);
(h) settle any material claim, action or proceeding involving money damages,
except in the ordinary course of business;
(i) knowingly take any action that would prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; PROVIDED, HOWEVER,
that nothing contained herein shall limit the ability of Wells Fargo or Norwest
to exercise its rights under the Norwest Option Agreement or the Wells Fargo
Option Agreement, as the case may be;
(j) amend its certificate of incorporation or its bylaws;
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(k) other than in prior consultation with the other party to this Agreement,
restructure or materially change its investment securities portfolio or its gap
position, through purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported;
(l) take any action that is intended or expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article VII not being satisfied
or in a violation of any provision of this Agreement, except, in every case, as
may be required by applicable law;
(m) implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by GAAP or regulatory guidelines; or
(n) agree to take, make any commitment to take, or adopt any resolutions of
its board of directors in support of, any of the actions prohibited by this
Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS. (a) Wells Fargo and Norwest shall promptly prepare
and file with the SEC the Joint Proxy Statement and Norwest shall promptly
prepare and file with the SEC the S-4, in which the Joint Proxy Statement will
be included as a prospectus. Each of Wells Fargo and Norwest shall use their
reasonable best efforts to have the S-4 declared effective under the Securities
Act as promptly as practicable after such filing, and Wells Fargo and Norwest
shall thereafter mail or deliver the Joint Proxy Statement to their respective
stockholders. Norwest shall also use its reasonable best efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement, and Wells Fargo shall
furnish all information concerning Wells Fargo and the holders of Wells Fargo
Capital Stock as may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger) and the Option Agreements,
and to comply with the terms and conditions of all such permits, consents,
approvals and authorizations of all such Governmental Entities. Wells Fargo and
Norwest shall have the right to review in advance, and, to the extent
practicable, each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
Norwest or Wells Fargo, as the case may be, and any of their respective
Subsidiaries, which appear in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and the Option Agreements and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) Wells Fargo and Norwest shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Joint Proxy Statement, the S-4 or any other statement,
filing, notice or application made by or on behalf of Wells Fargo, Norwest or
any
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of their respective Subsidiaries to any Governmental Entity in connection with
the Merger and the other transactions contemplated by this Agreement.
(d) Wells Fargo and Norwest shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement or
the Option Agreements that causes such party to believe that there is a
reasonable likelihood that any Requisite Regulatory Approval will not be
obtained or that the receipt of any such approval will be materially delayed.
6.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of Wells Fargo and
Norwest, for the purposes of verifying the representations and warranties of the
other and preparing for the Merger and the other matters contemplated by this
Agreement, shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of Wells Fargo and Norwest
shall, and shall cause their respective Subsidiaries to, make available to the
other party (i) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of federal securities laws or federal or state banking laws (other
than reports or documents which Wells Fargo or Norwest, as the case may be, is
not permitted to disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as such party may reasonably
request. Neither Wells Fargo nor Norwest nor any of their respective
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of Wells
Fargo's or Norwest's, as the case may be, customers, jeopardize the
attorney-client privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) Each of Wells Fargo and Norwest shall hold all information furnished by
or on behalf of the other party or any of such party's Subsidiaries or
representatives pursuant to Section 6.2(a) in confidence to the extent required
by, and in accordance with, the provisions of the confidentiality agreement,
dated June 1, 1998, between Wells Fargo and Norwest (the "Confidentiality
Agreement").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.3 STOCKHOLDERS' APPROVALS. Each of Wells Fargo and Norwest shall call a
meeting of its stockholders to be held as soon as reasonably practicable for the
purpose of voting upon the requisite stockholder approvals required in
connection with this Agreement and the Merger, and each shall use its reasonable
best efforts to cause such meetings to occur as soon as reasonably practicable
and on the same date. The Board of Directors of each of Norwest and Wells Fargo
shall use its reasonable best efforts to obtain from the stockholders of Norwest
and Wells Fargo, as the case may be, the vote in favor of the adoption of this
Agreement required by the DGCL (in the case of Wells Fargo) and the votes in
favor of the issuance of shares of Norwest Common Stock pursuant hereto required
by the rules of the NYSE and in favor of the matters contemplated by Section
6.12 required by the DGCL (in the case of Norwest), in each case required to
consummate the transactions contemplated hereby.
6.4 LEGAL CONDITIONS TO MERGER. Each of Wells Fargo and Norwest shall, and
shall cause its Subsidiaries to, use their reasonable best efforts (a) to take,
or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements that may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VII hereof, to consummate the transactions contemplated by this
Agreement, and (b) to obtain (and to
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cooperate with the other party to obtain) any material consent, authorization,
order or approval of, or any exemption by, any Governmental Entity and any other
third party that is required to be obtained by Norwest or Wells Fargo or any of
their respective Subsidiaries in connection with the Merger and the other
transactions contemplated by this Agreement.
6.5 AFFILIATES; PUBLICATION OF COMBINED FINANCIAL RESULTS. (a) Each of
Wells Fargo and Norwest shall use its reasonable best efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act and for purposes of qualifying the Merger
for "pooling of interests" accounting treatment) of such party to deliver to the
other party hereto, as soon as practicable after the date of this Agreement, and
prior to the date of the stockholders' meetings called by Wells Fargo and
Norwest to approve this Agreement, a written agreement, in the form of Exhibit
6.5(a)(1) or (2), as applicable, hereto, providing that such person will not
sell, pledge, transfer or otherwise dispose of any shares of Wells Fargo Capital
Stock, or Norwest Capital Stock held by such "affiliate" and, in the case of the
"affiliates" of Wells Fargo, the shares of Norwest Capital Stock to be received
by such "affiliate" in the Merger.
(b) Norwest shall use its best efforts to publish as promptly as reasonably
practical, but in no event later than 90 days after the end of the first month
after the Effective Time in which there are at least 30 days of post-Merger
combined operations (which month may be the month in which the Effective Time
occurs), combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
6.6 STOCK EXCHANGE LISTING. Norwest shall cause the shares of Norwest
Common Stock and the Norwest Series B Adjustable Preferred to be issued in the
Merger to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Effective Time.
6.7 EMPLOYEE BENEFIT PLANS. (a) From and after the Effective Time, unless
otherwise mutually determined, the Norwest Benefit Plans and Wells Fargo Benefit
Plans in effect as of the date of this Agreement shall remain in effect with
respect to employees of Norwest or Wells Fargo (or their Subsidiaries),
respectively, covered by such plans at the Effective Time until such time as
Norwest shall, subject to applicable law, the terms of this Agreement and the
terms of such plans, adopt new benefit plans with respect to employees of
Norwest and its Subsidiaries (the "New Benefit Plans"). Prior to the Closing
Date, Norwest and Wells Fargo shall cooperate in reviewing, evaluating and
analyzing the Wells Fargo Benefit Plans and Norwest Benefit Plans with a view
towards developing appropriate New Benefit Plans for the employees covered
thereby.
(b) The foregoing notwithstanding, Norwest agrees to honor in accordance
with their terms all benefits vested as of the date hereof under the Wells Fargo
Benefit Plans or the Norwest Benefit Plans or under other contracts,
arrangements, commitments, or understandings described in the Wells Fargo
Disclosure Schedule and the Norwest Disclosure Schedule.
(c) Nothing in this Section 6.7 shall be interpreted as preventing Norwest
from amending, modifying or terminating any Wells Fargo Benefit Plans, Norwest
Benefit Plans, or other contracts, arrangements, commitments or understandings,
in accordance with their terms and applicable law.
(d) It is the intention of Norwest and Wells Fargo, during the period
shortly following the execution of the Agreement, to coordinate efforts towards
establishing a retention and severance program, consistent with the strategy for
the Merger, in an effort to retain and provide incentives to key personnel for
the benefit of the combined company in a manner that provides for equitable
treatment of similarly situated employees of Norwest and Wells Fargo.
6.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) In the event
of any threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative, including, without limitation, any
such claim, action, suit, proceeding or investigation in which any individual
who is now, or has been at any time prior to the date of this Agreement, or who
becomes
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prior to the Effective Time, a director or officer or employee of Wells Fargo or
any of its Subsidiaries, including any entity specified in the Wells Fargo
Disclosure Schedule (the "Indemnified Parties"), is, or is threatened to be,
made a party based in whole or in part on, or arising in whole or in part out
of, or pertaining to (i) the fact that he is or was a director, officer or
employee of Wells Fargo or any of its Subsidiaries or any entity specified in
the Wells Fargo Disclosure Schedule or any of their respective predecessors or
(ii) this Agreement, the Option Agreements or any of the transactions
contemplated hereby or thereby, whether in any case asserted or arising before
or after the Effective Time, the parties hereto agree to cooperate and use their
best efforts to defend against and respond thereto. It is understood and agreed
that after the Effective Time, Norwest shall indemnify and hold harmless, as and
to the fullest extent permitted by law, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation.
(b) Norwest shall use its reasonable best efforts to cause the individuals
serving as officers and directors of Wells Fargo, its Subsidiaries or any entity
specified in the Wells Fargo Disclosure Schedule immediately prior to the
Effective Time to be covered for a period of six (6) years from the Effective
Time (or the period of the applicable statute of limitations, if longer) by the
directors' and officers' liability insurance policy maintained by Wells Fargo
(PROVIDED that Norwest may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are not less
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time which were committed by such officers and directors in
their capacity as such.
(c) In the event Norwest or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Norwest
assume the obligations set forth in this Section 6.8.
(d) The provisions of this Section 6.8 shall survive the Effective Time and
are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
6.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
Norwest, on the one hand, and a Subsidiary of Wells Fargo, on the other) or to
vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of any of the parties to the
Merger, the proper officers and directors of each party to this Agreement and
their respective Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, Norwest.
6.10 ADVICE OF CHANGES. Wells Fargo and Norwest shall each promptly advise
the other party of any change or event (i) having a Material Adverse Effect on
it or (ii) which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein.
6.11 DIVIDENDS. After the date of this Agreement, each of Wells Fargo and
Norwest shall coordinate with the other the declaration of any dividends in
respect of Wells Fargo Common Stock and Norwest Common Stock and the record
dates and payment dates relating thereto, it being the intention of the parties
hereto that holders of Wells Fargo Common Stock shall not receive two dividends,
or fail to receive one dividend, for any quarter with respect to their shares of
Wells Fargo
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Common Stock and any shares of Norwest Common Stock any such holder receives in
exchange therefor in the Merger.
6.12 NORWEST CERTIFICATE. (a) Immediately prior to the Effective Time and
subject to the stockholder approval contemplated by Section 6.3 and to the
satisfaction or waiver of all other conditions to the consummation of the Merger
set forth in Article VII, Norwest shall cause the Norwest Certificate to be
amended until thereafter amended in accordance with applicable law as set forth
below:
(i) The first sentence of Article FOURTH of the Norwest Certificate
shall be amended to state in its entirety:
FOURTH: The total number of shares of all classes of stock which
the corporation shall have authority to issue is Four Billion
Twenty-Four Million (4,024,000,000), consisting of Twenty Million
(20,000,000) shares of Preferred Stock without par value, Four
Million (4,000,000) shares of Preference Stock without par value, and
Four Billion (4,000,000,000) shares of Common Stock of the par value
of $1 2/3 per share.
(ii) The first sentence of Section 1 of Article FOURTH of the Norwest
Certificate shall be amended to state in its entirety:
1. The Preferred Stock may be issued at any time or from time to time
in any amount, provided not more than 20,000,000 shares thereof shall be
outstanding at any one time, as Preferred Stock of one or more series, as
hereinafter provided.
(b) As soon as practicable following the Effective Time and subject to
the stockholder approval contemplated by Section 6.3, Norwest shall cause
Article FIRST of the Norwest Certificate to be amended to state in its
entirety:
FIRST: The name of the corporation is Wells Fargo & Company.
6.13 BY-LAWS OF NORWEST. Immediately prior to the Effective Time and
subject to the satisfaction or waiver of all other conditions to the Merger set
forth in Article VII, Norwest shall cause the first sentence of Section 14 of
the Norwest By-Laws to be amended to read in its entirety as follows: "The
property and business of the Corporation shall be managed by its Board of not
less than ten or more than twenty-eight directors, with the number to be
designated from time to time by resolution of the Board."
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been adopted by the
requisite affirmative vote of the holders of Wells Fargo Common Stock
entitled to vote thereon and the issuance of Norwest Common Stock pursuant
hereto and the matters contemplated by Section 6.12 shall have been approved
by the requisite affirmative votes of the holders of Norwest Common Stock
entitled to vote thereon.
(b) NYSE LISTING. The shares of Norwest Common Stock and Norwest Series
B Adjustable Preferred which shall be issued to the stockholders of Wells
Fargo upon consummation of the Merger shall have been authorized for listing
on the NYSE, subject to official notice of issuance.
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(c) OTHER APPROVALS. All regulatory approvals required to consummate
the transactions contemplated hereby shall have been obtained and shall
remain in full force and effect and all statutory waiting periods in respect
thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition (an "Injunction") preventing the consummation
of the Merger or any of the other transactions contemplated by this
Agreement shall be in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, materially restricts or
makes illegal consummation of the Merger.
(f) FEDERAL TAX OPINION. The parties hereto shall have received the
opinions of Wachtell, Lipton, Rosen & Katz, and Sullivan & Cromwell, in form
and substance reasonably satisfactory to Wells Fargo and Norwest, as the
case may be, dated the Closing Date, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in each such
opinion which are consistent with the state of facts existing at the
Effective Time:
(i) The Merger will constitute a reorganization under Section
368(a) of the Code and Wells Fargo, Norwest and Merger Sub will each
be a party to the reorganization;
(ii) No gain or loss will be recognized by Wells Fargo, Norwest
or Merger Sub as a result of the Merger; and
(iii) No gain or loss will be recognized by stockholders of Wells
Fargo who exchange their Wells Fargo Common Stock solely for Norwest
Common Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in Norwest Common
Stock).
In rendering such opinions, counsel may require and rely upon
representations contained in certificates of officers of Wells Fargo,
Norwest, Merger Sub and others.
(g) POOLING OF INTERESTS. Wells Fargo and Norwest shall each have
received a letter from their respective independent accountants addressed to
Norwest or Wells Fargo, as the case may be, to the effect that the Merger
will qualify for "pooling of interests" accounting treatment.
7.2 CONDITIONS TO OBLIGATIONS OF WELLS FARGO. The obligation of Wells
Fargo to effect the Merger is also subject to the satisfaction, or waiver by
Wells Fargo, at or prior to the Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Norwest set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of this paragraph, such representations and
warranties (other than the representation set forth in the sentence
immediately preceding the last sentence of Section 3.2(a)) shall be deemed
to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, either
individually or in the aggregate, and without giving effect to any
qualification as to materiality set forth in such representations or
warranties, will have a Material Adverse Effect on Norwest or the Surviving
Corporation. Wells Fargo shall have
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<PAGE>
received a certificate signed on behalf of Norwest by the Chief Executive
Officer and the Chief Financial Officer of Norwest to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF NORWEST. Norwest shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date, and Wells Fargo shall
have received a certificate signed on behalf of Norwest by the Chief
Executive Officer and the Chief Financial Officer of Norwest to such effect.
7.3 CONDITIONS TO OBLIGATIONS OF NORWEST. The obligation of Norwest to
effect the Merger is also subject to the satisfaction or waiver by Norwest at or
prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Wells Fargo set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, provided,
however, that for purposes of this paragraph, such representations and
warranties (other than the representation set forth in the last sentence of
Section 4.2(a)) shall be deemed to be true and correct unless the failure or
failures of such representations and warranties to be so true and correct,
either individually or in the aggregate, and without giving effect to any
qualification as to materiality set forth in such representations or
warranties, will have a Material Adverse Effect on Wells Fargo. Norwest
shall have received a certificate signed on behalf of Wells Fargo by the
Chief Executive Officer and the Chief Financial Officer of Wells Fargo to
the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF WELLS FARGO. Wells Fargo shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Norwest
shall have received a certificate signed on behalf of Wells Fargo by the
Chief Executive Officer and the Chief Financial Officer of Wells Fargo to
such effect.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Wells Fargo or Norwest:
(a) by mutual consent of Wells Fargo and Norwest in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either the Board of Directors of Wells Fargo or the Board of
Directors of Norwest if any Governmental Entity that must grant a Requisite
Regulatory Approval has denied approval of the Merger and such denial has
become final and nonappealable or any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement;
(c) by either the Board of Directors of Wells Fargo or the Board of
Directors of Norwest if the Merger shall not have been consummated on or
before the first anniversary of the date of this Agreement, unless the
failure of the Closing to occur by such date shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein; or
(d) by either the Board of Directors of Wells Fargo or the Board of
Directors of Norwest (provided that the terminating party is not then in
breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a breach of any of the covenants
or agreements or any of the representations or warranties set forth in this
Agreement
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on the part of Norwest, in the case of a termination by Wells Fargo, or
Wells Fargo, in the case of a termination by Norwest, which breach, either
individually or in the aggregate, would constitute, if occurring or
continuing on the Closing Date, the failure of the conditions set forth in
Section 7.2 or 7.3, as the case may be, and which is not cured within 45
days following written notice to the party committing such breach or by its
nature or timing cannot be cured prior to the Closing Date.
8.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either Wells Fargo or Norwest as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, and none of Wells Fargo,
Norwest, any of their respective Subsidiaries or any of the officers or
directors of any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
that (i) Sections 6.2(b), 8.2, 9.2 and 9.3 shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, neither Wells Fargo nor Norwest shall be relieved or released from
any liabilities or damages arising out of its willful breach of any provision of
this Agreement.
8.3 AMENDMENT. Subject to compliance with applicable law and Section
1.1(b), this Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval of the matters presented in connection with the Merger by the
stockholders of Wells Fargo and Norwest; PROVIDED, HOWEVER, that after any
approval of the transactions contemplated by this Agreement by the respective
stockholders of Wells Fargo or Norwest, there may not be, without further
approval of such stockholders, any amendment of this Agreement that changes the
amount or the form of the consideration to be delivered hereunder to the holders
of Wells Fargo Common Stock, other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; PROVIDED, HOWEVER,
that after any approval of the transactions contemplated by this Agreement by
the respective stockholders of Wells Fargo or Norwest, there may not be, without
further approval of such stockholders, any extension or waiver of this Agreement
or any portion thereof which reduces the amount or changes the form of the
consideration to be delivered to the holders of Wells Fargo Common Stock
hereunder, other than as contemplated by this Agreement. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date
and at a place to be specified by the parties, which shall be no later than five
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VII hereof, unless
extended by mutual agreement of the parties (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the Option
Agreements and the Confidentiality Agreement, which shall
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terminate in accordance with their terms) shall survive the Effective Time,
except for Section 6.8 and for those other covenants and agreements contained
herein and therein which by their terms apply in whole or in part after the
Effective Time.
9.3 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, PROVIDED, HOWEVER, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by Wells
Fargo and Norwest.
9.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Wells Fargo, to:
Wells Fargo & Company
420 Montgomery Street
San Francisco, California 94163
Attention: Guy Rounsaville, Jr.
General Counsel
Telecopier: (415) 975-7151
and
(b) if to Norwest or Merger Sub, to:
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Attention: Stanley S. Stroup
General Counsel
Telecopier: (612) 667-4399
9.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". Unless otherwise expressly indicated, the phrases "the date of this
Agreement" or "the date hereof" or words of similar import shall mean June 7,
1998.
9.6 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof other than the Option
Agreements and the Confidentiality Agreement.
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<PAGE>
9.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law principles.
9.9 PUBLICITY. Except as otherwise required by applicable law or the rules
of the NYSE, neither Wells Fargo or Norwest shall, or shall permit any of its
Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the consent
of Norwest, in the case of a proposed announcement or statement by Wells Fargo,
or Wells Fargo, in the case of a proposed announcement or statement by Norwest,
which consent shall not be unreasonably withheld.
9.10 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor any
of the rights, interests or obligations shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Except as otherwise specifically
provided in Section 6.8, this Agreement (including the documents and instruments
referred to herein) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
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<PAGE>
IN WITNESS WHEREOF, Wells Fargo and Norwest have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of September
10, 1998.
NORWEST CORPORATION
By: /s/ RICHARD M. KOVACEVICH
-------------------------
Richard M. Kovacevich
Chairman and Chief
Executive Officer
WFC HOLDINGS CORPORATION
By: /s/ RICHARD M. KOVACEVICH
-------------------------
Richard M. Kovacevich
President
WELLS FARGO & COMPANY
By: /s/ PAUL HAZEN
--------------
Paul Hazen
Chairman and Chief
Executive Officer
<PAGE>
APPENDIX B
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated June 7, 1998, between Norwest Corporation, a
Delaware corporation ("Issuer"), and Wells Fargo & Company, a Delaware
corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor and for Grantee's entering into the Wells Fargo Option
Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 151,139,585 fully
paid and nonassessable shares of Issuer's Common Stock, par value $1 2/3 per
share ("Common Stock"), at a price of $39.6875 per share (the "Option Price");
PROVIDED, HOWEVER, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are either (i)
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of the Agreement, the number of
shares of Common Stock subject to the Option shall be increased or decreased, as
appropriate, so that, after such issuance, such number equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), PROVIDED that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within 90 days following such Subsequent Triggering Event. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Time
(as defined in the Merger Agreement) of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event, except a
termination by Grantee pursuant to Section 8.1(d) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional); or (iii) the passage of 12 months after termination of the
Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a termination by Grantee pursuant to Section 8.1(d) of
the Merger Agreement (unless the breach by Issuer giving rise to such right of
termination is non-volitional) (PROVIDED that if an Initial Triggering Event
continues or occurs beyond such termination and prior to the passage of such
12-month period, the Exercise Termination Event shall be 12 months from the
expiration of the Last Triggering Event but in no event more than
<PAGE>
18 months after such termination). The "Last Triggering Event" shall mean the
last Initial Triggering Event to expire. The term "Holder" shall mean the holder
or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall have
recommended that the stockholders of Issuer approve or accept any
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets or
deposits of Issuer or any Significant Subsidiary of Issuer, (y) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the voting
power of Issuer, or (z) any substantially similar transaction; PROVIDED,
HOWEVER, that in no event shall any merger, consolidation, purchase or
similar transaction involving only the Issuer and one or more of its
Subsidiaries or involving only any two or more of such Subsidiaries,
provided that any such transaction is not entered into in violation of the
terms of the Merger Agreement, or any Pending Norwest Acquisition or
Permitted Norwest Acquisition, be deemed to be an Acquisition Transaction;
(ii) Issuer or any Issuer Subsidiary, without having received Grantee's
prior written consent, shall have authorized, recommended, proposed or
publicly announced its intention to authorize, recommend or propose, to
engage in an Acquisition Transaction with any person other than Grantee or a
Grantee Subsidiary, or the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its interest to withdraw or
modify, in any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement in anticipation of engaging in an Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary shall have
made a BONA FIDE proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vi) Any person other than Grantee or any Grantee Subsidiary, other than
in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an
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application or notice with the Federal Reserve Board, or other federal or
state bank regulatory authority, which application or notice has been
accepted for processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of 20% or more
of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event of which it has notice
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to exercise
the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); PROVIDED that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, PROVIDED that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon receipt
by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from
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the staff of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall be removed
in its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed, subject to the receipt of applicable regulatory
approvals, to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; and (iv) promptly to take all action
provided herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common
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Stock purchasable upon the exercise of the Option and the Option Price shall be
subject to adjustment from time to time as provided in this Section 5. In the
event of any change in, or distributions in respect of, the Common Stock by
reason of stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on or in respect
of the Common Stock, or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof and the Option Price shall be appropriately
adjusted in such manner as shall fully preserve the economic benefits provided
hereunder and proper provision shall be made in any agreement governing any such
transaction to provide for such proper adjustment and the full satisfaction of
the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. The foregoing notwithstanding, if, at
the time of any request by Grantee for registration of the Option or Option
Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
and PROVIDED, HOWEVER, that after any such required reduction the number of
Option Shares to be included in such offering for the account of the Holder
shall constitute at least 25% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and PROVIDED FURTHER, however, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practical and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in secondary
offering underwriting agreements for the Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and
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(ii) at the request of the owner of Option Shares from time to time (the
"Owner"), delivered within 90 days of such occurrence (or such later period as
provided in Section 10), Issuer shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to the Market/Offer Price multiplied by the number of
Option Shares so designated. The term "Market/Offer Price" shall mean the
highest of (i) the price per share of Common Stock at which a tender offer or
exchange offer therefor has been made, (ii) the price per share of Common Stock
to be paid by any third party pursuant to an agreement with Issuer, (iii) the
highest closing price for shares of Common Stock within the six-month period
immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the Owner,
as the case may be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this Section 7. Within
the latter to occur of (x) five business days after the surrender of the Option
and/or certificates representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the time that is immediately prior to the
occurrence of a Repurchase Event, Issuer shall deliver or cause to be delivered
to the Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof, if any, that Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal approvals and to file
any required notices, in each case as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Issuer shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
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(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition by any
person of beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a Repurchase Event
unless a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event. The parties hereto agree that Issuer's obligations to
repurchase the Option or Option Shares under this Section 7 shall not terminate
upon the occurrence of an Exercise Termination Event unless no Subsequent
Triggering Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(A) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than Issuer),
(ii) Issuer in a merger in which Issuer is the continuing or surviving
person, and (iii) the transferee of all or substantially all of Issuer's
assets.
(B) "Substitute Common Stock" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as defined in
Section 7.
(4) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; PROVIDED that if Issuer is the issuer of
the Substitute Option, the Average Price shall be computed with respect to a
share of common stock issued by the person merging into Issuer or by any
company which controls or is controlled by such person, as the Holder may
elect.
(c) The Substitute Option shall have the same terms as the Option, PROVIDED,
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement, which shall be applicable to
the Substitute Option.
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(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
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(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer following a
request for repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; PROVIDED, HOWEVER, that
if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation from delivering to the Substitute Option Holder
and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to obtain all
required regulatory and legal approvals, in each case as promptly as
practicable, in order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
the prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option Repurchase Price or
the Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
10. The 90-day, or 6-month periods for exercise of certain rights under
Sections 2, 6, 7, 13 and 15 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, for the
expiration of all statutory waiting periods; (ii) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise;
and (iii) during any period in which Grantee is precluded from exercising such
rights due to an injunction or other legal restriction, plus in each case such
additional period as is reasonably necessary for the exercise of such rights
promptly following the obtaining of such approvals or the expiration of such
periods.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and reserve
and to permit it to issue, and at all times from the date hereof through the
termination of this Agreement in accordance with its terms will have reserved
for issuance upon the exercise of the Option, that number of shares of Common
Stock equal to the maximum number of shares of Common Stock at any time and from
time to time issuable hereunder, and all such shares, upon issuance pursuant
hereto, will be duly authorized, validly issued, fully paid, nonassessable, and
will be delivered free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
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(c) Issuer has taken all action (including if required redeeming all of the
Norwest Stockholder Rights or amending or terminating the Norwest Rights
Agreement) so that the entering into of this Option Agreement, the acquisition
of shares of Common Stock hereunder and the other transactions contemplated
hereby do not and will not result in the grant of any rights to any person under
the Rights Agreement or enable or require the Rights to be exercised,
distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); PROVIDED, HOWEVER, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (E.G., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Each of Grantee and Issuer will use its best efforts to make all filings
with, and to obtain consents of, all third parties and governmental authorities
necessary to the consummation of the transactions contemplated by this
Agreement, including without limitation making application to list the shares of
Common Stock issuable hereunder on the New York Stock Exchange upon official
notice of issuance and applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee shall not be
obligated to apply to state banking authorities for approval to acquire the
shares of Common Stock issuable hereunder until such time, if ever, as it deems
appropriate to do so.
15. (a) Grantee in its sole discretion may, at any time during which Issuer
would be required to repurchase the Option or any Option Shares pursuant to
Section 7, surrender the Option (together with any Option Shares issued to and
then owned by the Holder) to Issuer in exchange for a cash payment equal to the
Surrender Price (as defined herein); PROVIDED, HOWEVER, that Grantee may not
exercise its rights pursuant to this Section 15 if Issuer has previously
repurchased the Option (or any portion thereof) or any Option Shares pursuant to
Section 7. The "Surrender Price" shall be equal to (i) $1,200,000,000, plus (ii)
if applicable, the aggregate purchase price previously paid pursuant hereto by
Grantee with respect to any Option Shares, minus (iii) if applicable, the excess
of (A) the net cash, if any, received by Grantee pursuant to the arm's-length
sale of Option Shares (or any other securities into which such Option Shares
were converted or exchanged) to any party not affiliated with Grantee, over (B)
the purchase price paid by Grantee with respect to such Option Shares.
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(b) Grantee may exercise its right to surrender the Option and any Option
Shares pursuant to this Section 15 by surrendering for such purchase to Issuer,
at its principal office, a copy of this Agreement, together with certificates
for Option Shares, if any, accompanied by a written notice stating (i) that
Grantee elects to surrender the Option and Option Shares, if any, in accordance
with the provisions of this Section 15 and (ii) the Surrender Price. Within two
business days after the surrender of the Option and the Option Shares, if
applicable, Issuer shall deliver or cause to be delivered to Grantee the
Surrender Price.
(c) To the extent that the Issuer is prohibited under applicable law or
regulation from paying the Surrender Price to Grantee in full, Issuer shall
immediately so notify Grantee and thereafter deliver, or cause to be delivered,
from time to time, to Grantee, that portion of the Surrender Price that Issuer
is not or no longer prohibited from paying, within two business days after the
date on which Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if
Issuer at any time after delivery of a notice of Surrender pursuant to Section
15(b) is prohibited under applicable law or regulation from paying to Grantee
the Surrender Price in full, (i) Issuer shall (A) use its best efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to make such payments, (B) within two business
days of the submission or receipt of any documents relating to any such
regulatory and legal approvals, provide Grantee with copies of the same, and (C)
keep Grantee advised of both the status of any such request for regulatory and
legal approvals and any discussions with any relevant regulatory or other third
party reasonably related to the same, and (ii) Grantee may revoke such notice of
surrender by delivery of a notice of revocation, the Exercise Termination Event
shall be extended to a date six months from the date on which the Exercise
Termination Event would have occurred if not for the provisions of this Section
15(c) (during which period Grantee may exercise any of its rights hereunder,
including any and all rights pursuant to this Section 15).
(d) Grantee shall have rights substantially identical to those set forth in
paragraphs (a), (b) and (c) of this Section 15 with respect to the Substitute
Option and the Substitute Option Issuer during any period in which the
Substitute Option Issuer would be required to repurchase the Substitute Option
pursuant to Section 9.
16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
17. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Section 7
or Section 9, as the case may be, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), or Issuer or Substitute Option Issuer is not permitted to pay the full
Surrender Price, it is the express intention of Issuer (which shall be binding
on the Substitute Option Issuer) to allow the Holder to acquire or to require
Issuer or the Substitute Option Issuer, as the case may be, to repurchase such
lesser number of shares, or to pay such portion of the Surrender Price, as may
be permissible, without any amendment or modification hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
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<PAGE>
19. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof (except to the
extent that mandatory provisions of federal law apply).
20. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
21. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
23. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
<TABLE>
<S> <C> <C>
NORWEST CORPORATION
By: /s/ RICHARD M. KOVACEVICH
-----------------------------------------
Richard M. Kovacevich
CHAIRMAN AND CHIEF
EXECUTIVE OFFICER
WELLS FARGO & COMPANY
By: /s/ PAUL HAZEN
-----------------------------------------
Paul Hazen
CHAIRMAN AND CHIEF
EXECUTIVE OFFICER
</TABLE>
B-13
<PAGE>
APPENDIX C
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated June 7, 1998, between Wells Fargo & Company, a
Delaware corporation ("Issuer"), and Norwest Corporation, a Delaware corporation
("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor and for Grantee's entering into the Norwest Option
Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 16,932,066 fully
paid and nonassessable shares of Issuer's Common Stock, par value $5.00 per
Share ("Common Stock"), at a price of $362.0625 per share (the "Option Price");
PROVIDED, HOWEVER, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are either (i)
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of the Agreement, the number of
shares of Common Stock subject to the Option shall be increased or decreased, as
appropriate, so that, after such issuance, such number equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), PROVIDED that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within 90 days following such Subsequent Triggering Event. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Time
(as defined in the Merger Agreement) of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event, except a
termination by Grantee pursuant to Section 8.1(d) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional); or (iii) the passage of 12 months after termination of the
Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a termination by Grantee pursuant to Section 8.1(d) of
the Merger Agreement (unless the breach by Issuer giving rise to such right of
termination is non-volitional) (PROVIDED that if an Initial Triggering Event
continues or occurs beyond such termination and prior to the passage of such
12-month period, the Exercise Termination Event shall be 12 months from the
expiration of the Last Triggering Event but in no event more than
<PAGE>
18 months after such termination). The "Last Triggering Event" shall mean the
last Initial Triggering Event to expire. The term "Holder" shall mean the holder
or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall have
recommended that the stockholders of Issuer approve or accept any
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets or
deposits of Issuer or any Significant Subsidiary of Issuer, (y) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the voting
power of Issuer, or (z) any substantially similar transaction; PROVIDED,
HOWEVER, that in no event shall any merger, consolidation, purchase or
similar transaction involving only the Issuer and one or more of its
Subsidiaries or involving only any two or more of such Subsidiaries,
provided that any such transaction is not entered into in violation of the
terms of the Merger Agreement, or any Permitted Wells Fargo Acquisition, be
deemed to be an Acquisition Transaction;
(ii) Issuer or any Issuer Subsidiary, without having received Grantee's
prior written consent, shall have authorized, recommended, proposed or
publicly announced its intention to authorize, recommend or propose, to
engage in an Acquisition Transaction with any person other than Grantee or a
Grantee Subsidiary, or the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its interest to withdraw or
modify, in any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement in anticipation of engaging in an Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary shall have
made a BONA FIDE proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vi) Any person other than Grantee or any Grantee Subsidiary, other than
in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory
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<PAGE>
authority, which application or notice has been accepted for processing, for
approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of 20% or more
of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event and/or Subsequent Triggering Event of which it has
notice (together, a "Triggering Event"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); PROVIDED that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, PROVIDED that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon receipt
by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer,
C-3
<PAGE>
to the effect that such legend is not required for purposes of the 1933 Act;
(ii) the reference to the provisions to this Agreement in the above legend shall
be removed by delivery of substitute certificate(s) without such reference if
the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed, subject to the receipt of applicable regulatory
approvals, to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; and (iv) promptly to take all action
provided herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment
C-4
<PAGE>
from time to time as provided in this Section 5. In the event of any change in,
or distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock, or the
like, the type and number of shares of Common Stock purchasable upon exercise
hereof and the Option Price shall be appropriately adjusted in such manner as
shall fully preserve the economic benefits provided hereunder and proper
provision shall be made in any agreement governing any such transaction to
provide for such proper adjustment and the full satisfaction of the Issuer's
obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. The foregoing notwithstanding, if, at
the time of any request by Grantee for registration of the Option or Option
Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
and PROVIDED, HOWEVER, that after any such required reduction the number of
Option Shares to be included in such offering for the account of the Holder
shall constitute at least 25% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and PROVIDED FURTHER, however, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practical and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in secondary
offering underwriting agreements for the Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90
C-5
<PAGE>
days of such occurrence (or such later period as provided in Section 10), Issuer
shall repurchase such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so designated. The
term "Market/Offer Price" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made,
(ii) the price per share of Common Stock to be paid by any third party pursuant
to an agreement with Issuer, (iii) the highest closing price for shares of
Common Stock within the six-month period immediately preceding the date the
Holder gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or (iv)
in the event of a sale of all or a substantial portion of Issuer's assets, the
sum of the price paid in such sale for such assets and the current market value
of the remaining assets of Issuer as determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the case may be,
and reasonably acceptable to the Issuer, divided by the number of shares of
Common Stock of Issuer outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the Owner,
as the case may be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this Section 7. Within
the latter to occur of (x) five business days after the surrender of the Option
and/or certificates representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the time that is immediately prior to the
occurrence of a Repurchase Event, Issuer shall deliver or cause to be delivered
to the Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof, if any, that Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal approvals and to file
any required notices, in each case as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Issuer shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
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<PAGE>
(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition by any
person of beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a Repurchase Event
unless a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event. The parties hereto agree that Issuer's obligations to
repurchase the Option or Option Shares under this Section 7 shall not terminate
upon the occurrence of an Exercise Termination Event unless no Subsequent
Triggering Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(A) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than Issuer),
(ii) Issuer in a merger in which Issuer is the continuing or surviving
person, and (iii) the transferee of all or substantially all of Issuer's
assets.
(B) "Substitute Common Stock" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as defined in
Section 7.
(4) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; PROVIDED that if Issuer is the issuer of
the Substitute Option, the Average Price shall be computed with respect to a
share of common stock issued by the person merging into Issuer or by any
company which controls or is controlled by such person, as the Holder may
elect.
(c) The Substitute Option shall have the same terms as the Option, PROVIDED,
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement, which shall be applicable to
the Substitute Option.
C-7
<PAGE>
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
C-8
<PAGE>
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer following a
request for repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; PROVIDED, HOWEVER, that
if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation from delivering to the Substitute Option Holder
and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to obtain all
required regulatory and legal approvals, in each case as promptly as
practicable, in order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
the prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option Repurchase Price or
the Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
10. The 90-day or 6-month periods for exercise of certain rights under
Sections 2, 6, 7, 13 and 15 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; (ii) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise
and (iii) during any period in which Grantee is precluded from exercising such
rights due to an injunction or other legal restriction, plus in each case such
additional period as is reasonably necessary for the exercise of such rights
promptly following the obtaining of such approvals or the expiration of such
periods.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and reserve
and to permit it to issue, and at all times from the date hereof through the
termination of this Agreement in accordance with its terms will have reserved
for issuance upon the exercise of the Option, that number of shares of Common
Stock equal to the maximum number of shares of Common Stock at any time and from
time to time issuable hereunder, and all such shares, upon issuance pursuant
hereto, will be duly authorized, validly issued, fully paid, nonassessable, and
will be delivered free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
C-9
<PAGE>
(c) Issuer has taken all action so that the entering into of this Option
Agreement, the acquisition of shares of Common Stock hereunder and the other
transactions contemplated hereby do not and will not result in the grant of any
rights to any person under the Rights Agreement or enable or require the Rights
to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); PROVIDED, HOWEVER, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (E.G., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Each of Grantee and Issuer will use its best efforts to make all filings
with, and to obtain consents of, all third parties and governmental authorities
necessary to the consummation of the transactions contemplated by this
Agreement, including without limitation making application to list the shares of
Common Stock issuable hereunder on the New York Stock Exchange upon official
notice of issuance and applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee shall not be
obligated to apply to state banking authorities for approval to acquire the
shares of Common Stock issuable hereunder until such time, if ever, as it deems
appropriate to do so.
15. (a) Grantee may in its sole discretion, at any time during which Issuer
would be required to repurchase the Option or any Option Shares pursuant to
Section 7, surrender the Option (together with any Option Shares issued to and
then owned by the Holder) to Issuer in exchange for a cash payment equal to the
Surrender Price (as defined herein); PROVIDED, HOWEVER, the Grantee may not
exercise its rights pursuant to this Section 15 if Issuer has previously
repurchased the Option (or any portion thereof) or any Option Shares pursuant to
Section 7. The "Surrender Price" shall be equal to (i) $1,200,000,000, plus (ii)
if applicable, the aggregate purchase price previously paid pursuant hereto by
Grantee with respect to any Option Shares, minus (iii) if applicable, the excess
of (A) the net cash, if any, received by Grantee pursuant to the arm's-length
sale of Option Shares (or any other securities into which such Option Shares
were converted or exchanged) to any party not affiliated with Grantee, over (B)
the purchase price paid by Grantee with respect to such Option Shares.
C-10
<PAGE>
(b) Grantee may exercise its right to surrender the Option and any Option
Shares pursuant to this Section 15 by surrendering for such purpose to Issuer,
at its principal office, a copy of this Agreement, together with certificates
for Option Shares, if any, accompanied by a written notice stating (i) that
Grantee elects to surrender the Option and Option Shares, if any, in accordance
with the provisions of this Section 15 and (ii) the Surrender Price. Within two
business days after the surrender of the Option and the Option Shares, if
applicable, Issuer shall deliver or cause to be delivered to Grantee the
Surrender Price.
(c) To the extent that the Issuer is prohibited under applicable law or
regulation from paying the Surrender Price to Grantee in full, Issuer shall
immediately so notify Grantee and thereafter deliver, or cause to be delivered,
from time to time, to Grantee, that portion of the Surrender Price that Issuer
is not or no longer prohibited from paying, within two business days after the
date on which Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if
Issuer at any time after delivery of a notice of surrender pursuant to Section
15(b) is prohibited under applicable law or regulation from paying to Grantee
the Surrender Price in full, (i) Issuer shall (A) use its best efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to make such payments, (B) within two business
days of the submission or receipt of any documents relating to any such
regulatory and legal approvals, provide Grantee with copies of the same, and (c)
keep Grantee advised of both the status of any such request for regulatory and
legal approvals and any discussions with any relevant regulatory or other third
party reasonably related to the same, and (ii) Grantee may revoke such notice or
surrender by delivery of a notice of revocation to Issuer and, upon delivery of
such notice of revocation, the Exercise Termination Event shall be extended to a
date six months from the date on which the Exercise Termination Event would have
occurred if not for the provisions of this Section 15(c) (during which period
Grantee may exercise any of its rights hereunder, including any and all rights
pursuant to this Section 15).
(d) Grantee shall have rights substantially identical to those set forth in
paragraphs (a), (b) and (c) of this Section 15 with respect to the Substitute
Option and the Substitute Option Issuer during any period in which the
Substitute Option Issuer would be required to repurchase the Substitute Option
pursuant to Section 9.
16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
17. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Section 7
or Section 9, as the case may be, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), or Issuer or Substitute Option Issuer is not permitted to pay the full
amount of the Surrender Price pursuant to Section 15, it is the express
intention of Issuer (which shall be binding on the Substitute Option Issuer) to
allow the Holder to acquire or to require Issuer or Substitute Option Issuer to
repurchase such lesser number of shares, or to require Issuer or Substitute
Option Issuer to pay such portion of the Surrender Price, as may be permissible,
without any amendment or modification hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
C-11
<PAGE>
19. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof (except to the
extent that mandatory provisions of federal law apply).
20. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
21. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
23. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
C-12
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
<TABLE>
<S> <C> <C>
WELLS FARGO & COMPANY
By: /s/ PAUL HAZEN
-----------------------------------------
Paul Hazen
CHAIRMAN AND CHIEF
EXECUTIVE OFFICER
NORWEST CORPORATION
By: /s/ RICHARD M. KOVACEVICH
-----------------------------------------
Richard M. Kovacevich
CHAIRMAN AND CHIEF
EXECUTIVE OFFICER
</TABLE>
C-13
<PAGE>
Appendix D
[Goldman, Sachs & Co. Letterhead]
September 11, 1998
Board of Directors
Norwest Corporation
Sixth & Marquette
Minneapolis, Minnesota 55479-1016
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders of the outstanding shares of Common Stock, par value $1 2/3 per
share (the "Norwest Shares"), of Norwest Corporation ("Norwest") of the exchange
ratio of 10 Norwest Shares (the "Exchange Ratio") for each share of Common
Stock, par value $5.00 per share (the "Wells Fargo Shares"), of Wells Fargo &
Company ("Wells Fargo"), pursuant to the merger (the "Merger") contemplated by
the Agreement and Plan of Merger, dated as of June 7, 1998, by and between Wells
Fargo and Norwest (the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman, Sachs & Co.
provides a full range of financial advisory and securities services and, in the
course of its normal trading activities, may from time to time effect
transactions and hold securities, including derivative securities, of Norwest or
Wells Fargo for its own account and for the accounts of customers. We are
familiar with Norwest having acted as its financial advisor in connection with,
and having participated in certain of the negotiations leading to, the
Agreement. We also have provided certain investment banking services to Wells
Fargo from time to time, including having acted as financial advisor to Wells
Fargo in the sale of its stake in Wells Fargo Nikko Investment Advisors in
August 1995 and as a joint lead manager of its public offering of $200 million
Subordinated Bank Notes due 2008 on April 15, 1998. In addition, we anticipate
acting as lead manager in connection with an offering by Wells Fargo of Wells
Fargo Shares, which offering is anticipated to occur prior to the consummation
of the Merger. In addition, we are acting, with your consent, as Wells Fargo's
financial advisor and receiving fees therefor in connection with the Merger and
the Agreement, including rendering an opinion to Wells Fargo's Board of
Directors with respect to the fairness of the Exchange Ratio from a financial
point of view to the holders of Wells Fargo Shares.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Registration Statement on Form S-4 of Norwest dated September 11,
1998 including the Joint Proxy Statement-Prospectus relating to the Norwest and
Wells Fargo Special Meetings to be held in connection with the Merger; Annual
Reports to Stockholders and Annual Reports on Form 10-K of
<PAGE>
Norwest Corporation
September 11, 1998
Page Two
Norwest and Wells Fargo for the five years ended December 31, 1997; the
Registration Statement of Wells Fargo on Form S-4 dated November 27, 1995, as
amended, relating to the acquisition of First Interstate Bancorp by Wells Fargo;
certain interim reports to stockholders and Quarterly Reports on Form 10-Q of
Norwest and Wells Fargo; certain other communications from Norwest and Wells
Fargo to their respective stockholders; and certain internal financial analyses
and forecasts for Norwest and Wells Fargo prepared by their respective
managements including forecasts of certain cost savings and revenue
opportunities (the "Synergies") expected to be achieved as a result of the
Merger. We also have held discussions with members of the senior management of
Norwest and Wells Fargo regarding the strategic rationale for, and the potential
benefits of, the Merger and the past and current business operations, regulatory
relationships, financial condition and future prospects of their respective
companies. In addition, we have reviewed the reported price and trading activity
for the Norwest Shares and the Wells Fargo Shares, compared certain financial
and stock market information for Norwest and Wells Fargo with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the commercial banking industry specifically and in other industries generally
and performed such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. In that regard, we have assumed, with
your consent, that the financial forecasts, including, without limitation, the
Synergies and projections regarding under-performing and non-performing assets
and net charge-offs have been reasonably prepared on a basis reflecting the best
currently available judgments and estimates of Norwest and Wells Fargo and that
such forecasts will be realized in the amounts and at the times contemplated
thereby. We are not experts in the evaluation of loan and lease portfolios for
purposes of assessing the adequacy of the allowances for losses with respect
thereto and have assumed, with your consent, that such allowances for each of
Norwest and Wells Fargo are in the aggregate adequate to cover all such losses.
In addition, we have not reviewed individual credit files nor have we made an
independent evaluation or appraisal of the assets and liabilities of Norwest,
Wells Fargo or any of their subsidiaries and we have not been furnished with any
such evaluation or appraisal. We also have assumed, with your consent, that the
Merger will be accounted for as a pooling of interests under generally accepted
accounting principles and that obtaining any necessary regulatory approvals and
third party consents for the Merger or otherwise will not have a material
adverse effect on Norwest, Wells Fargo or the combined company pursuant to the
Merger. In addition, our opinion does not address the relative merits of the
Merger as compared to any alternative business transaction that might be
available to Norwest.
Our advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of Norwest in connection
with its consideration of the Merger and such opinion does not constitute a
recommendation as to how any holder of Norwest Shares should vote with respect
to such transaction.
2
<PAGE>
Norwest Corporation
September 11, 1998
Page Three
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair from a financial point of view to the
holders of Norwest Shares.
Very truly yours,
/s/Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
3
<PAGE>
Appendix E
[Goldman, Sachs & Co. Letterhead]
September 11, 1998
Board of Directors
Wells Fargo & Company
420 Montgomery Street
San Francisco, California 94163
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders of the outstanding shares of Common Stock, par value $5.00 per
share (the "Wells Fargo Shares"), of Wells Fargo & Company ("Wells Fargo") of
the exchange ratio of 10 shares of Common Stock, par value $1 2/3 per share (the
"Norwest Shares"), of Norwest Corporation ("Norwest") to be received for each
Wells Fargo Share (the "Exchange Ratio") pursuant to the merger (the "Merger")
contemplated by the Agreement and Plan of Merger dated as of June 7, 1998 by and
between Wells Fargo and Norwest (the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman, Sachs & Co.
provides a full range of financial advisory and securities services and, in the
course of its normal trading activities, may from time to time effect
transactions and hold securities, including derivative securities, of Wells
Fargo or Norwest for its own account and for the accounts of customers. We are
familiar with Wells Fargo having provided certain investment banking services to
Wells Fargo from time to time, including having acted as financial advisor to
Wells Fargo in the sale of its stake in Wells Fargo Nikko Investment Advisors in
August 1995, as joint lead manager of its public offering of $200 million of
Subordinated Bank Notes due 2008 on April 15, 1998 and as its financial advisor
in connection with, and having participated in certain of the negotiations
leading to, the Agreement. In addition, we anticipate acting as lead manager in
connection with an offering by Wells Fargo of Wells Fargo Shares, which offering
is anticipated to occur prior to the consummation of the Merger. We also have
provided, and may in the future provide, certain investment banking services to
Norwest. In this regard, with your consent, we are acting as Norwest's financial
advisor and receiving fees therefor in connection with the Merger and the
Agreement, including rendering an opinion to Norwest's Board of Directors with
respect to the fairness of the Exchange Ratio from a financial point of view to
the holders of Norwest Shares.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Registration Statement on Form S-4 of Norwest dated September 11,
1998 including the Joint Proxy Statement-Prospectus relating to the Wells Fargo
and Norwest Special Meetings to be held in
<PAGE>
Wells Fargo & Company
September 11, 1998
Page Two
connection with the Merger; Annual Reports to Stockholders and Annual Reports on
Form 10-K of Wells Fargo and Norwest for the five years ended December 31, 1997;
the Registration Statement of Wells Fargo on Form S-4 dated November 27, 1995,
as amended, relating to the acquisition of First Interstate Bancorp by Wells
Fargo; certain interim reports to stockholders and Quarterly Reports on Form
10-Q of Wells Fargo and Norwest; certain other communications from Wells Fargo
and Norwest to their respective stockholders; and certain internal financial
analyses and forecasts for Wells Fargo and Norwest prepared by their respective
managements including forecasts of certain cost savings and revenue synergies
(the "Synergies") expected to be achieved as a result of the Merger. We also
have held discussions with members of the senior management of Wells Fargo and
Norwest regarding the strategic rationale for, and the potential benefits of,
the Merger and the past and current business operations, regulatory
relationships, financial condition and future prospects of their respective
companies. In addition, we have reviewed the reported price and trading activity
for the Wells Fargo Shares and the Norwest Shares, compared certain financial
and stock market information for Wells Fargo and Norwest with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the commercial banking industry specifically and in other industries generally
and performed such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. In that regard, we have assumed, with
your consent, that the financial forecasts, including, without limitation, the
Synergies and projections regarding under-performing and non-performing assets
and net charge-offs have been reasonably prepared on a basis reflecting the best
currently available judgments and estimates of Wells Fargo and Norwest and that
such forecasts will be realized in the amounts and at the times contemplated
thereby. We are not experts in the evaluation of loan and lease portfolios for
purposes of assessing the adequacy of the allowances for losses with respect
thereto and have assumed, with your consent, that such allowances for each of
Wells Fargo and Norwest are in the aggregate adequate to cover all such losses.
In addition, we have not reviewed individual credit files nor have we made an
independent evaluation or appraisal of the assets and liabilities of Wells
Fargo, Norwest or any of their subsidiaries and we have not been furnished with
any such evaluation or appraisal. We also have assumed, with your consent, that
the Merger will be accounted for as a pooling of interests under generally
accepted accounting principles and that obtaining any necessary regulatory
approvals and third party consents for the Merger or otherwise will not have a
material adverse effect on Wells Fargo, Norwest or the combined company pursuant
to the Merger. In addition, our opinion does not address the relative merits of
the Merger as compared to any alternative business transaction that might be
available to Wells Fargo.
<PAGE>
Wells Fargo & Company
September 11, 1998
Page Three
Our advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of Wells Fargo in
connection with its consideration of the Merger and such opinion does not
constitute a recommendation as to how any holder of Wells Fargo Shares should
vote with respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair from a financial point of view to the
holders of Wells Fargo Shares.
Very truly yours,
/s/Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
<PAGE>
Appendix F
[Credit Suisse First Boston Corporation Letterhead
September 11, 1998
Board of Directors
Wells Fargo and Company
420 Montgomery Street
San Francisco, CA 94163
To the Members of the Board:
You have asked us to advise you with respect to the fairness to the stockholders
of Wells Fargo and Company (the "Company") from a financial point of view of the
consideration to be received by such stockholders pursuant to the terms of the
Merger Agreement, dated as of June 7, 1998 (the "Merger Agreement"), between the
Company and Norwest Corporation (the "Acquiror"). The Merger Agreement provides
for the merger (the "Merger") of the Company with the Acquiror pursuant to which
each outstanding share of common stock, par value $5.00 per share, of the
Company will be converted into 10 shares of common stock (the "Exchange Ratio"),
$1 2/3 par value per share, of the Acquiror.
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to the Company and the Acquiror, as well as
the Merger Agreement. We have also reviewed certain other information, including
financial forecasts, provided to us by the Company and the Acquiror, and have
met with the Company's and the Acquiror's managements to discuss the business
and prospects of the Company and the Acquiror.
We have also considered certain financial and stock market data of the Company
and the Acquiror, and we have compared those data with similar data for other
publicly held companies in businesses similar to the Company and the Acquiror
and we have considered the financial terms of certain other business
combinations and other transactions which have recently been effected. We also
considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts (including the estimates of future cost savings, operating
synergies and revenue enhancements expected to be achieved as a result of the
Merger), we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the Company's
and the Acquiror's managements. In addition, we have not been requested to make,
and have not made, an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of the Company or the Acquiror, nor have
<PAGE>
September 11, 1998
Board of Directors
Wells Fargo and Company
Page 2
we been furnished with any such evaluations or appraisals. Our opinion is
necessarily based upon financial, economic, market and other conditions as they
exist and can be evaluated on the date hereof. We are not expressing any opinion
as to the actual value of the common stock of the Acquiror when issued to the
Company's stockholders pursuant to the Merger or the prices at which such common
stock of the Acquiror will trade subsequent to the Merger.
We have acted as financial advisor to the Company in connection with the Merger
and will receive a fee for our services.
In the ordinary course of our business, we and our affiliates may actively trade
the debt and equity securities of both the Company and the Acquiror for our own
and such affiliates accounts and for the accounts of customers and, accordingly,
may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors in connection with its consideration of the Merger, does not
constitute a recommendation to any stockholder as to how such stockholder should
vote with respect to the Merger, and is not to be quoted or referred to, in
whole or in part, in any registration statement, prospectus or proxy statement,
or in any other document used in connection with the offering or sale of
securities, nor shall this letter be used for any other purposes, without our
prior written consent.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Exchange Ratio is fair to the stockholders of the Company from a
financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/Michael E. Martin
-------------------------
Michael E. Martin
Managing Director
2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes
indemnification of directors and officers of a Delaware corporation under
certain circumstances against expenses, judgments and the like in connection
with an action, suit or proceeding. Article Fourteenth of the Registrant's
Restated Certificate of Incorporation provides for broad indemnification of
directors and officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits. See Exhibit Index.
(b) Financial Statement Schedules. Not Applicable.
(c) Report, Opinion or Appraisal. See Exhibits 5.1, 8.1 and 8.2.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change in such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE>
ITEM 22. UNDERTAKINGS (CONTINUED)
(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(d) The undersigned registrant hereby undertakes that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(e) The undersigned registrant hereby undertakes that every prospectus: (i)
that is filed pursuant to paragraph (d) immediately preceding, or (ii) that
purports to meet the requirements of Sections 10(a)(3) of the Securities Act and
is used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis, State of Minnesota, on September 11, 1998.
NORWEST CORPORATION
By: /s/ RICHARD M. KOVACEVICH
-----------------------------------------
Richard M. Kovacevich
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed on September 11, 1998 by the
following persons in the capacities indicated:
<TABLE>
<C> <S>
/S/ RICHARD M. KOVACEVICH Chairman and Chief Executive Officer
- ------------------------------------------- (Principal Executive Officer)
Richard M. Kovacevich
/S/ JOHN T. THORNTON Executive Vice President and Chief
- ------------------------------------------- Financial Officer
John T. Thornton (Principal Financial Officer)
/S/ MICHAEL A. GRAF Senior Vice President and Controller
- ------------------------------------------- (Principal Accounting Officer)
Michael A. Graf
</TABLE>
<TABLE>
<C> <C> <S>
LES BILLER
J.A. BLANCHARD III
DAVID A. CHRISTENSEN
SUSAN E. ENGEL
WILLIAM A. HODDER
LLOYD P. JOHNSON
REATHA CLARK KING
RICHARD M. KOVACEVICH A majority of the
RICHARD S. LEVITT Board of Directors*
RICHARD D. McCORMICK
CYNTHIA H. MILLIGAN
BENJAMIN F. MONTOYA
IAN M. ROLLAND
MICHAEL W. WRIGHT
</TABLE>
- ------------------------
* Richard M. Kovacevich, by signing his name hereto, does hereby sign this
document on behalf of each of the directors named above pursuant to powers of
attorney duly executed by such persons.
/s/ RICHARD M. KOVACEVICH
-----------------------------------------
Richard M. Kovacevich
Attorney-in-Fact
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of June 7, 1998, and amended and restated as of September 10,
1998, by and among Wells Fargo & Company, the Registrant and WFC Holdings Corporation, included as
Appendix A to the accompanying Joint Proxy Statement-Prospectus.
3.1 Form of Amendment to the Restated Certificate of Incorporation of the Registrant with respect to
authorized capital stock.
3.2 Form of Amendment to the Restated Certificate of Incorporation of the Registrant with respect to the
name of the Registrant.
3.3 Form of Certificate of Designations of Powers, Preferences, and Rights of Norwest Adjustable Rate
Cumulative Preferred Stock, Series B.
3.4 Form of Certificate of Designations of Powers, Preferences, and Rights of Norwest Fixed/Adjustable Rate
Noncumulative Preferred Stock, Series H.
3.5 Form of By-Laws of the Registrant as expected to be in effect at the Effective Time.
4.1 Rights Agreement, dated as of November 22, 1988, between the Registrant and Citibank, N.A., as Rights
Agent (incorporated by reference to Exhibit 1 to the Registrant's Form 8-A dated December 6, 1988).
4.2 Certificate of Adjustment, dated October 10, 1997, to Rights Agreement (incorporated by reference to
Exhibit 5 to the Registrant's Form 8-A/A dated October 14, 1997).
4.3 Amendment No. 1 to Rights Agreement, dated as of June 7, 1998, between the Registrant and Citibank,
N.A., as Rights Agent (incorporated by reference to Exhibit 4(a) to the Registrant's Form 8-K dated
June 18, 1998).
5.1 Opinion of Stanley S. Stroup as to the legality of the shares to be issued (including consent).
8.1 Opinion of Wachtell, Lipton, Rosen & Katz regarding the federal income tax consequences of the Merger
(including consent).
8.2 Opinion of Sullivan & Cromwell regarding the federal income tax consequences of the Merger (including
consent).
10.1 Employment Agreement, dated as of June 7, 1998, by and between the Registrant and Paul Hazen.
10.2 Employment Agreement, dated as of June 7, 1998, by and between the Registrant and Rodney L. Jacobs.
23.1 Consent of Stanley S. Stroup (included in Exhibit 5.1).
23.2 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.1).
23.3 Consent of Sullivan & Cromwell (included in Exhibit 8.2).
23.4 Consent of KPMG Peat Marwick LLP relating to the audited financial statements of Norwest Corporation.
23.5 Consent of KPMG Peat Marwick LLP relating to the audited financial statements of Wells Fargo & Company.
24.1 Powers of Attorney.
99.1 Stock Option Agreement, dated as of June 7, 1998, by and between Wells Fargo & Company as Issuer and
the Registrant as Grantee, included as Appendix C to the accompanying Joint Proxy Statement-Prospectus.
99.2 Stock Option Agreement, dated as of June 7, 1998, by and between the Registrant as Issuer and Wells
Fargo & Company as Grantee, included as Appendix B to the accompanying Joint Proxy
Statement-Prospectus.
99.3 Consent of Goldman, Sachs & Co. relating to Norwest Corporation.
99.4 Consent of Goldman, Sachs & Co. relating to Wells Fargo & Company.
99.5 Consent of Credit Suisse First Boston Corporation.
99.6 Form of Proxy for Special Meeting of Stockholders of Norwest Corporation.
99.7 Form of Proxy for Special Meeting of Stockholders of Wells Fargo & Company.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -------------------------------------------------------------------------------------------------------
<C> <S>
99.8 Consent of Paul Hazen to being named as a person about to become a director of the Registrant.
99.9 Consent of Rodney L. Jacobs to being named as a person about to become a director of the Registrant.
99.10 Consent of Michael R. Bowlin to being named as a person about to become a director of the Registrant.
99.11 Consent of Edward M. Carson to being named as a person about to become a director of the Registrant.
99.12 Consent of William S. Davila to being named as a person about to become a director of the Registrant.
99.13 Consent of Philip J. Quigley to being named as a person about to become a director of the Registrant.
99.14 Consent of Donald B. Rice to being named as a person about to become a director of the Registrant.
99.15 Consent of Judith M. Runstad to being named as a person about to become a director of the Registrant.
99.16 Consent of Susan G. Swenson to being named as a person about to become a director of the Registrant.
99.17 Consent of Daniel M. Tellep to being named as a person about to become a director of the Registrant.
99.18 Consent of Chang-Lin Tien to being named as a person about to become a director of the Registrant.
99.19 Consent of John A. Young to being named as a person about to become a director of the Registrant.
</TABLE>
<PAGE>
Exhibit 3.1
FORM OF
NORWEST CORPORATION
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
-----------------
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
-----------------
We, Stanley S. Stroup, Executive Vice President, and Laurel A.
Holschuh, Secretary of Norwest Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), do hereby certify:
FIRST: That at a meeting of the Board of Directors of the Corporation
duly held on _____________, 1998 resolutions were adopted proposing an
amendment, as hereinafter set forth, of the Restated Certificate of
Incorporation of the Corporation, declaring the advisability of such amendment,
and directing that the amendment be presented for the consideration of the
stockholders of the Corporation at a special meeting of such stockholders.
SECOND: That at the special meeting of all such stockholders entitled
to vote on the amendment hereinafter set forth, held on _________ ___, 1998,
and called in accordance with the relevant provisions of the General
Corporation Law of the State of Delaware, the holders of a majority of the
outstanding shares of common stock of the Corporation voted in favor of such
amendment, as hereinafter set forth, to the Restated Certificate of
Incorporation of the Corporation.
THIRD: That there has been duly adopted, in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware, an amendment of the Restated Certificate of Incorporation of the
Corporation, as follows:
1. The first sentence of Article FOURTH shall be amended to state in its
entirety:
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is Four Billion Twenty-Four
Million (4,024,000,000), consisting of Twenty Million (20,000,000)
shares of Preferred Stock without par value, Four Million (4,000,000)
shares of Preference Stock without par value, and Four Billion
(4,000,000,000) shares of Common Stock of the par value of $1-2/3 per
share.
2. The first sentence of Section 1 of Article FOURTH shall be amended to
state in its entirety:
1. The Preferred Stock may be issued at any time or from time to time
in any amount, provided not more than 20,000,000 shares thereof shall
be outstanding at any one time, as Preferred Stock of one or more
series, as hereinafter provided.
IN WITNESS WHEREOF, NORWEST CORPORATION has caused its corporate
seal to be hereunto affixed and this Certificate to be signed by Stanley S.
Stroup, its Executive Vice President, and attested by Laurel A. Holschuh, its
Secretary, this day of , 1998.
NORWEST CORPORATION
(Corporate Seal)
<PAGE>
By: __________________________
Executive Vice President
ATTEST:
Secretary___________________________
<PAGE>
Exhibit 3.2
FORM OF
NORWEST CORPORATION
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
-------------------
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
-------------------
We, Stanley S. Stroup, Executive Vice President, and Laurel A. Holschuh,
Secretary, of Norwest Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), do hereby certify:
FIRST: That at a meeting of the Board of Directors of the Corporation
duly held on ____________________, 1998 resolutions were adopted proposing an
amendment, as hereinafter set forth, of the Restated Certificate of
Incorporation of the Corporation, declaring the advisability of such
amendment, and directing that the amendment be presented for the
consideration of the stockholders of the Corporation at a special meeting of
such stockholders.
SECOND: That at the special meeting of all such stockholders entitled to
vote on the amendment hereinafter set forth, held on _________, 1998, and
called in accordance with the relevant provisions of the General Corporation
Law of the State of Delaware, the holders of a majority of the outstanding
shares of common stock of the Corporation voted in favor of such amendment,
as hereinafter set forth, to the Restated Certificate of Incorporation of the
Corporation.
THIRD: That there has been duly adopted, in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware, an amendment of the Restated Certificate of Incorporation of the
Corporation, as follows:
1. Article FIRST shall be amended to state in its entirety:
FIRST: The name of this corporation is Wells Fargo & Company.
<PAGE>
IN WITNESS WHEREOF, NORWEST CORPORATION has caused its corporate seal to
be hereunto affixed and this Certificate to be signed by Stanley S. Stroup,
its Executive Vice President, and attested by Laurel A. Holschuh, its
Secretary, this day of , 1998.
NORWEST CORPORATION
(Corporate Seal)
By: ________________________
Executive Vice President
ATTEST:
__________________________
Secretary
<PAGE>
Exhibit 3.3
NORWEST CORPORATION
(to be renamed Wells Fargo & Company)
___________________________________
CERTIFICATE OF DESIGNATIONS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
___________________________________
ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK, SERIES B
(Without Par Value)
__________________________________
NORWEST CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), HEREBY CERTIFIES that the following
resolution was duly adopted by the Board of Directors of the Corporation (the
"Board"), pursuant to authority conferred upon the Board by the provisions of
the Restated Certificate of Incorporation of the Corporation, as amended, which
authorizes the issuance of up to 20,000,000 shares of Preferred Stock, without
par value (the "Preferred Stock"), at a meeting of the Board duly held on July
28, 1998:
RESOLVED that the issuance of a series of Preferred Stock, without par
value, of the Corporation is hereby authorized, and the number, designation,
powers, preferences, and relative, participating, optional, and other rights,
and qualifications, limitations and restrictions thereof, in addition to those
set forth in the Restated Certificate of Incorporation of the Corporation, as
amended, are hereby fixed as follows:
ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK, SERIES B
1. DESIGNATION.
1,500,000 shares of the preferred stock, without par value, of the
Corporation ("Preferred Stock") are hereby constituted as a series of Preferred
Stock designated as Adjustable Rate Cumulative Preferred Stock, Series B
(hereinafter called "Series B Preferred Stock" or, sometimes, "New Series B
Preferred Stock"). The number of shares of Series B Preferred Stock may not be
increased but may be decreased by a resolution duly adopted by the Board of
Directors of the Corporation (or a duly authorized committee thereof), but not
below the number of shares of Series B Preferred Stock then outstanding.
Shares of New Series B Preferred Stock shall be issued upon conversion of
shares of Adjustable Rate Cumulative Preferred Stock, Series B of Wells Fargo &
Company ("Old Series B Preferred Stock") upon the terms and subject to the
conditions set forth in
<PAGE>
the Agreement and Plan of Merger dated as of June 7, 1998 between the
Corporation and Wells Fargo & Company (the "Merger Agreement").
2. DIVIDENDS.
(a) The holders of shares of Series B Preferred Stock shall be entitled to
receive cash dividends, when, as and if declared by the Board of Directors of
the Corporation (the "Board of Directors"), out of funds legally available for
that purpose, from the date of original issuance to and including the 15th day
of the immediately following February, May, August or November, whichever month
firsts follows the date of original issue (the "Initial Dividend Period"), and
thereafter for each dividend period commencing on February 16, May 16, August 16
and November 16 and ending on and including the day next preceding the first day
of the next dividend period (the Initial Dividend Period and each of such other
periods herein referred to as a "Dividend Period") at a rate for each Dividend
Period at a rate per annum applied against $50.00 per share equal to the
Applicable Rate (as defined in Section 3) in respect of such Adjustable Dividend
Period. The amount of dividend per share payable for the Initial Dividend
Period shall equal the dividend per share payable for a full Dividend Period
less the dividend per share payable for the partial dividend period for the Old
Series B Preferred Stock occurring prior to conversion of the Old Series B
Preferred Stock into New Series B Preferred Stock pursuant to the Merger
Agreement (the "Final Old Series B Dividend Period"), such that the dividends
per share payable for the Final Old Series B Dividend Period and the Initial
Dividend Period collectively equal the dividend payable per share for a full
Dividend Period. The amount of dividend per share payable for any portion of a
Dividend Period (other than the Initial Dividend Period) less than a full
Dividend Period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in the period for which
payable. The amount of dividend per share payable for each full Dividend Period
shall be computed by dividing the annual dividend rate for each Dividend Period
by four and applying such resulting rate against $50.00 per share. Dividends
shall be payable when and as declared by the Board of Directors, out of funds
legally available therefor, on February 15, May 15, August 15 and November 15 of
each year, commencing on the final day of the Initial Dividend Period to holders
of record on such respective dates not exceeding 30 days preceding the payment
date thereof as may be determined by the Board of Directors in advance of such
payment date. Dividends on account of arrears for any past Dividend Periods may
be declared and paid at any time, without reference to any regular dividend
payment date, to holders of record on such date not exceeding 30 days preceding
the payment date thereof as may be fixed by the Board of Directors. No
dividends shall be declared on any other series or class or classes of preferred
stock ranking on a parity (as that term is defined in Section 8(d)) with the
Series B Preferred Stock as to dividends in respect of any dividend period
unless there shall likewise be or have been declared on all shares of Series B
Preferred Stock at the time outstanding like dividends for all Dividend Periods
coinciding with or ending before such dividend period, ratably in proportion to
the respective dividend rates fixed for all such other series or class or
classes of preferred stock and the Series B Preferred Stock. Dividends shall be
cumulative and will accrue on each share of Series B
2
<PAGE>
Preferred Stock from the date of original issuance thereof. No interest, or sum
of money in lieu of interest, shall be payable in respect of any dividend
payment or payments which may be in arrears.
(b) If dividends at the rate per share set out in Section 2(a) for any
Dividend Period shall not have been declared and paid or set apart for payment
on all outstanding shares of Series B Preferred Stock for such Dividend Period
and all preceding Dividend Periods from and after the date of issue thereof,
then, until the aggregate deficiency shall be declared and fully paid or set
apart for payment, the Corporation shall not (i) declare or pay or set apart for
payment any dividends or make any other distribution on the common stock, $1-2/3
par value per share, of the Corporation ("Common Stock") or any other capital
stock of the Corporation ranking junior to the Series B Preferred Stock with
respect to the payment of dividends or distribution of assets on liquidation,
dissolution or winding up of the Corporation (which for all purposes of this
resolution shall mean any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary) (the Common Stock and such other
stock being herein referred to as "Junior Stock"), other than dividends or
distributions paid in shares of, or options, warrants or rights to subscribe for
or purchase shares of, Junior Stock, or (ii) make any payment on account of the
purchase, redemption or other retirement of any Junior Stock.
3. APPLICABLE RATE.
Except as provided below in this paragraph, the "Applicable Rate" for any
Dividend Period shall be (a) 76% of (b) the highest of the Treasury Bill Rate,
the Ten Year Constant Maturity Rate or the Twenty Year Constant Maturity Rate
(each as hereinafter defined) for the Dividend Period. If the Corporation
determines in good faith that for any reason one or more of such rates cannot be
determined for any Dividend Period, then the Applicable Rate for such Dividend
Period shall be 76% of the higher of whichever of such rates can be so
determined. If the Corporation determines in good faith that none of such rates
can be determined for any Dividend Period, then the Applicable Rate in effect
for the preceding Dividend Period shall be continued for such Dividend Period.
Anything herein to the contrary notwithstanding, the Applicable Rate for any
Dividend Period shall in no event be less than 5.50% per annum or greater than
10.50% per annum.
Except as provided below in this paragraph, the "Treasury Bill Rate" for
each Dividend Period shall be the arithmetic average of the two weekly per annum
market discount rates (or the one weekly per annum market discount rate, if only
one such rate shall be published during the relevant Calendar Period as provided
below) for three-month U.S. Treasury bills, published by the Federal Reserve
Board during the Calendar Period immediately prior to the ten calendar days
immediately preceding the February 15, May 15, August 15 and November 15, as the
case may be, prior to the Dividend Period for which the dividend rate on the
Series B Preferred Stock is being determined. If the Federal Reserve Board does
not publish such a weekly per annum market discount rate during such Calendar
Period, then the Treasury Bill Rate for such Dividend Period shall
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<PAGE>
be the arithmetic average of the two weekly per annum market discount rates
(or the one weekly per annum market discount rate, if only one such rate
shall be published during the relevant Calendar Period as provided below) for
three-month U.S. Treasury bills, published during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency selected
by the Corporation. If a per annum market discount rate for three-month U.S.
Treasury bills shall not be published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency during
such Calendar Period, then the Treasury Bill Rate for such Dividend Period
shall be the arithmetic average of the two weekly per annum market discount
rates (or the one weekly per annum market discount rate, if only one such
rate shall be published during the relevant Calendar Period as provided
below) for all the U.S. Treasury bills then having maturities of not less
than 80 nor more than 100 days, finally published during such Calendar Period
by the Federal Reserve Board or, if the Federal Reserve Board shall not
publish such rates, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. If the Corporation
determines in good faith that for any reason no such U.S. Treasury bill rates
are published as provided above during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic average
of the per annum market discount rates based upon the closing bids during
such Calendar Period for each of the issues of marketable non-interest
bearing U.S. Treasury securities with a maturity of not less than 80 nor more
than 100 days from the date of each such quotation, as chosen and quoted
daily for each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation by at least
three recognized U.S. Government securities dealers selected by the
Corporation. If the Corporation determines in good faith that for any reason
the Corporation cannot determine the Treasury Bill Rate for any Dividend
Period as provided above in this paragraph, the Treasury Bill Rate for such
Adjustable Dividend Period shall be the arithmetic average of the per annum
market discount rates based upon the closing bids during such Calendar Period
for each of the issues of marketable, interest-bearing U.S. Treasury
securities with a maturity of not less than 80 nor more than 100 days from
the date of each such quotation, as chosen and quoted daily for each business
day in New York City (or less frequently if daily quotations shall not be
generally available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation.
Except as provided below in this paragraph, the "Ten Year Constant Maturity
Rate" for each Dividend Period shall be the arithmetic average of the two weekly
per annum Ten Year Average Yields (or the one weekly per annum Ten Year Average
Yield, if only one such Yield shall be published during the relevant Calendar
Period as provided below), published by the Federal Reserve Board during the
Calendar Period immediately prior to the ten calendar days immediately preceding
the February 15, May 15, August 15 and November 15, as the case may be, prior to
the Dividend Period for which the dividend rate on the Series B Preferred Stock
is being determined. If the Federal Reserve Board does not publish such a
weekly per annum Ten Year Average Yield during such Calendar Period, then the
Ten Year Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the two weekly per annum Ten Year Average Yields (or
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<PAGE>
the one weekly per annum Ten Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period as provided below), published
during such Calendar Period by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. If a per annum Ten
Year Average Yield shall not be published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for such Dividend
Period shall be the arithmetic average of the two weekly per annum average
yields to maturity (or the one weekly average yield to maturity, if only one
such yield shall be published during the relevant Calendar Period as provided
below) for all of the actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) then having maturities of not
less than eight nor more than twelve years, finally published during such
Calendar Period by the Federal Reserve Board or, if the Federal Reserve Board
shall not publish such yields, by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. If the Corporation
determines in good faith that for any reason the Corporation cannot determine
the Ten Year Constant Maturity Rate for any Dividend Period as provided above in
this paragraph, then the Ten Year Constant Maturity Rate for such Dividend
Period shall be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date not less
than eight nor more than twelve years from the date of each such quotation, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities dealers
selected by the Corporation.
Except as provided below in this paragraph, the "Twenty Year Constant
Maturity Rate" for each Dividend Period shall be the arithmetic average of the
two weekly per annum Twenty Year Average Yields (or the one weekly per annum
Twenty Year Average Yield, if only one such Yield shall be published during the
relevant Calendar Period as provided below), published by the Federal Reserve
Board during the Calendar Period immediately prior to the ten calendar days
immediately preceding the February 15, May 15, August 15 and November 15, as the
case may be, prior to the Dividend Period for which the dividend rate on the
Series B Preferred Stock is being determined. If the Federal Reserve Board does
not publish such a weekly per annum Twenty Year Average Yield during such
Calendar Period, then the Twenty Year Constant Maturity Rate for such Dividend
Period shall be the arithmetic average of the two weekly per annum Twenty Year
Average Yields (or the one weekly per annum Twenty Year Average Yield, if only
one such Yield shall be published during the relevant Calendar Period as
provided below), published during such Calendar Period by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. If a per annum Twenty Year Average Yield
shall not be published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such Calendar Period,
then the Twenty Year Constant Maturity Rate for such Dividend Period shall be
the arithmetic average of the two weekly
5
<PAGE>
per annum average yields to maturity (or the one weekly average yield to
maturity, if only one such yield shall be published during the relevant Calendar
Period as provided below) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities) then
having maturities of not less than eighteen nor more than twenty-two years,
finally published during such Calendar Period by the Federal Reserve Board or,
if the Federal Reserve Board shall not publish such yields, by any Federal
Reserve Bank or by any U.S. Government department or agency selected by the
Corporation. If the Corporation determines in good faith that for any reason the
Corporation cannot determine the Twenty Year Constant Maturity Rate for any
Dividend Period as provided above in this paragraph, then the Twenty Year
Constant Maturity Rate for such Dividend Period shall be the arithmetic average
of the per annum average yields to maturity based upon the closing bids during
such Calendar Period for each of the issues of actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities) with a
final maturity date not less than eighteen nor more than twenty-two years from
the date of each such quotation, as chosen and quoted daily for each business
day in New York City (or less frequently if daily quotations shall not be
generally available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Twenty
Year Constant Maturity Rate shall each be rounded to the nearest five hundredths
of a percentage point.
The Applicable Rate with respect to each Dividend Period will be calculated
as promptly as practicable by the Corporation according to the appropriate
method described herein. The Corporation will cause each Applicable Rate to be
published in a newspaper of general circulation in New York City prior to the
commencement of the new Dividend Period to which it applies and will cause
notice of such Applicable Rate to be included with the dividend payment checks
next mailed to the holders of the Series B Preferred Stock.
For purposes of this Section, the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which can, at
the option of the holder, be surrendered at face value in payment of
any Federal estate tax or which provide tax benefits to the holder and
are priced to reflect such tax benefits or which were originally
issued at a deep or substantial discount;
(iii) The weekly per annum market discount rate for three month
U.S. Treasury bills shall be the secondary market rate;
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<PAGE>
(iv) "Ten Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest
rate securities (adjusted to constant maturities of ten years); and
(v) "Twenty Year Average Yield" shall mean the average yield
to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of twenty
years).
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, before any payment or distribution of the assets of the Corporation
shall be made to or set apart for the holders of any Junior Stock, the holders
of the shares of Series B Preferred Stock shall be entitled to receive $50.00
per share plus an amount equal to all dividends (whether or not earned or
declared) accrued and unpaid thereon to the date of final distribution to such
holders; but such holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of the
shares of the Series B Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid and liquidating payments on any other preferred
stock ranking, as to liquidation, dissolution or winding up, on a parity with
the Series B Preferred Stock, then such assets, or the proceeds thereof, shall
be distributed among the holders of Series B Preferred Stock and any such other
preferred stock ratably in accordance with the respective amounts which would be
payable on such shares of Series B Preferred Stock and any such other preferred
stock if all amounts payable thereon were paid in full. For the purposes of
this Section 4, a consolidation or merger of the Corporation with or into one or
more corporations shall not be deemed to be a liquidation, dissolution or
winding up.
(b) Subject to the rights of the holders of shares of any series or class
or classes of stock ranking on a parity with or prior to the Series B Preferred
Stock upon liquidation, dissolution or winding up, upon any liquidation,
dissolution or winding up of the Corporation, after payment shall have been made
in full to the Series B Preferred Stock as provided in this Section 4, but not
prior thereto, any Junior Stock shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the Series B Preferred Stock shall not
be entitled to share therein.
5. REDEMPTION.
(a) The Series B Preferred Stock shall be redeemable, at the option of the
Corporation, in whole or in part, at a redemption price of $50.00 per share plus
accrued and unpaid dividends thereon to the date fixed for redemption.
(b) In the event the Corporation shall redeem shares of Series B Preferred
Stock pursuant to Section 5(a), notice of such redemption shall be given by
first class
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mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to
the redemption date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (1) the redemption date; (2) the
number of shares of Series B Preferred Stock to be redeemed and, if less than
all the shares held by such holder are to be redeemed, the number of such shares
to be redeemed from such holder; (3) the redemption price and the manner in
which such redemption price is to be paid and delivered; (4) the place or places
where certificates for such shares are to be surrendered for payment of the
redemption price; and (5) that dividends on the shares to be redeemed will cease
to accrue on such redemption date. Notice having been mailed as aforesaid, from
and after the redemption date (unless default shall be made by the Corporation
in providing funds for the payment of the redemption price), dividends on the
shares of Series B Preferred Stock so called for redemption shall cease to
accrue, and said shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as shareholders of the Corporation (except the
right to receive from the Corporation the redemption price) shall cease. The
Corporation's obligation to provide funds in accordance with the preceding
sentence shall be deemed fulfilled if, on or before the redemption date, the
Corporation shall deposit with a bank or trust company (which may be an
affiliate of the Corporation), having an office or agency in the City and County
of San Francisco, State of California, having a capital and surplus of at least
$50,000,000, or with any other such bank or trust company located in the
continental United States as may be designated from time to time by the
Corporation, funds necessary for such redemption, in trust, with irrevocable
instructions that such funds be applied to the redemption of the shares of
Series B Preferred Stock so called for redemption. Any interest accrued on such
funds shall be paid to the Corporation from time to time. Any funds so
deposited and unclaimed at the end of six years from such redemption date shall
be repaid or released to the Corporation, after which the holder or holders of
such shares of Series B Preferred Stock so called for redemption shall look only
to the Corporation for payment of the redemption price.
Upon surrender in accordance with said notice of the certificates for any
shares redeemed pursuant to Section 5(a) (properly endorsed or assigned for
transfer, if the Board of Directors shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation at the redemption
price. If less than all the outstanding shares of Series B Preferred Stock are
to be redeemed, shares to be redeemed shall be selected by the Corporation from
outstanding shares of Series B Preferred Stock not previously called for
redemption by lot or pro rata (as nearly as may be) or by any other method
determined by the Board of Directors in its sole discretion to be equitable.
(d) In no event shall the Corporation redeem less than all the outstanding
shares of Series B Preferred Stock pursuant to Section 5(a) unless full
cumulative dividends shall have been paid or declared and set apart for payment
upon all outstanding shares of Series B Preferred Stock for all past Dividend
Periods.
8
<PAGE>
6. SHARES TO BE RETIRED.
All shares of Series B Preferred Stock redeemed or purchased by the
Corporation shall be retired and cancelled and shall be restored to the status
of authorized but unissued shares of Preferred Stock, without designation as to
series, and may thereafter be issued, but not as shares of Series B Preferred
Stock.
7. CONVERSION OR EXCHANGE.
The holders of shares of Series B Preferred Stock shall not have any rights
herein to convert such shares into or exchange such shares for shares of any
other class or classes or any other series of any class or classes of capital
stock (or any other security) of the Corporation.
8. VOTING.
(a) Except as hereinafter in this Section 8 expressly provided for and as
otherwise from time to time required by the laws of the State of Delaware, the
Series B Preferred Stock shall have no voting rights. Whenever, at any time or
times, dividends payable on the Series B Preferred Stock shall be in arrears in
an amount equal to at least six full quarterly dividends on the Series B
Preferred Stock at the time outstanding, whether or not consecutive, the holders
of the outstanding Series B Preferred Stock shall have the exclusive right,
voting separately as a class with holders of shares of any one or more other
series of preferred stock ranking on a parity with the Series B Preferred Stock
either as to dividends or the distribution of assets upon liquidation,
dissolution or winding up and upon which like voting rights have been conferred
and are exercisable, to elect two (2) of the authorized number of members of the
Board of Directors at the Corporation's next annual meeting of shareholders and
at each subsequent annual meeting of shareholders. At elections for such
directors, each holder of Series B Preferred Stock shall be entitled to one vote
for each share held (the holders of shares of any other series of preferred
stock ranking on such a parity and having like voting rights being entitled to
such number of votes, if any, for each share of such stock held as may be
granted to them). The right of the holders of Series B Preferred Stock, voting
separately as a class, to elect (either alone or together with the holders of
shares of any one or more other series of preferred stock ranking on such a
parity and having like voting rights) members of the Board of Directors as
aforesaid shall continue until such time as all dividends accumulated on the
Series B Preferred Stock shall have been fully paid or set apart for payment, at
which time such right shall terminate, except as herein or by law expressly
provided, subject to revesting in the event of each and every subsequent default
of the character above mentioned. Upon any termination of the right of the
holders of the Series B Preferred Stock as a class to vote for directors as
herein provided, the term of office of all directors then in office elected by
the Series B Preferred Stock shall terminate immediately. Any director who
shall have been so elected pursuant to this paragraph may be removed at any
time, either with or without cause, and any vacancy thereby created may be
filled, only by the affirmative vote of the holders of Series B Preferred
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Stock voting separately as a class (either alone or together with the holders of
shares of any one or more other series of preferred stock ranking on such a
parity and having like voting rights). If the office of any director elected by
the holders of Series B Preferred Stock voting as a class becomes vacant for any
reason other than removal from office as aforesaid, the remaining director may
choose a successor who shall hold office for the unexpired term in respect of
which such vacancy occurred.
(b) So long as any shares of Series B Preferred Stock remain outstanding,
the consent of the holders of at least two-thirds of the shares of Series B
Preferred Stock outstanding at the time (voting separately as a class together
with all other series of preferred stock ranking on a parity with the Series B
Preferred Stock either as to dividends or the distribution of assets upon
liquidation, dissolution or winding up and upon which like voting rights have
been conferred and are exercisable) given in person or by proxy, either in
writing or at any special or annual meeting called for the purpose, shall be
necessary to permit, effect or validate any one or more of the following:
(i) the authorization, creation or issuance of a new class or
series of shares having rights, preferences or privileges prior (as
that term is defined in Section 8(d)) to the shares of the Series B
Preferred Stock, or any increase in the number of authorized shares of
any class or series having rights, preferences or privileges prior to
the shares of Series B Preferred Stock; or
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Certificate of Incorporation of the Corporation or of this resolution
which would materially and adversely affect any right, preference,
privilege or voting power of the Series B Preferred Stock or of the
holders thereof; provided, however, that any increase in the amount of
authorized common stock or authorized preferred stock or the creation
and issuance of other series of common stock or preferred stock, in
each case ranking on a parity with or junior to the Series B Preferred
Stock with respect to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up, shall not be
deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.
(c) The foregoing voting provisions shall not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of Series B Preferred Stock shall have
been redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
(d) Any class or classes of stock of the Corporation shall be deemed to
rank:
(i) prior to the Series B Preferred Stock as to dividends or
as to distribution of assets upon liquidation, dissolution or winding
up if the
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holders of such class shall be entitled to the receipt of dividends or
of amounts distributable upon liquidation, dissolution or winding up,
as the case may be, in preference or priority to the holders of Series
B Preferred Stock; and on a parity with the Series B Preferred Stock
as to dividends or as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share thereof
are different from those of the Series B Preferred Stock, if the
holders of such class of stock and of the Series B Preferred Stock
shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case
may be, in proportion to their respective dividend rates or
liquidation prices, without preference or priority one over the other.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by Charles D. White, its Senior Vice President and
Treasurer, and attested by Laurel A. Holschuh, its Secretary, whereby such
Senior Vice President and Treasurer affirms, under penalties of perjury, that
this Certificate of Designations is the act and deed of the Corporation and that
the facts stated herein are true, this ___ day of __________, 1998.
NORWEST CORPORATION
By
-----------------------------------
Charles D. White
Senior Vice President and Treasurer
Attest:
- -----------------------------------
Laurel A. Holschuh
Secretary
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Exhibit 3.4
NORWEST CORPORATION
(to be renamed Wells Fargo & Company)
___________________________________
CERTIFICATE OF DESIGNATIONS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
___________________________________
FIXED/ADJUSTABLE RATE NONCUMULATIVE
PREFERRED STOCK, SERIES H
(Without Par Value)
__________________________________
NORWEST CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), HEREBY CERTIFIES that the following
resolution was duly adopted by the Board of Directors of the Corporation (the
"Board"), pursuant to authority conferred upon the Board by the provisions of
the Restated Certificate of Incorporation of the Corporation, as amended, which
authorizes the issuance of up to 20,000,000 shares of Preferred Stock, without
par value (the "Preferred Stock"), at a meeting of the Board duly held on July
28, 1998:
FIXED/ADJUSTABLE RATE NONCUMULATIVE
PREFERRED STOCK, SERIES H
1. DESIGNATIONS.
4,000,000 shares of preferred stock, without par value, of the Corporation
("Preferred Stock") are hereby constituted as a series of Preferred Stock
designated as "Fixed/Adjustable Rate Noncumulative Preferred Stock, Series H"
(hereinafter called "Series H Preferred Stock" or, sometimes, "New Series H
Preferred Stock").
Shares of New Series H Preferred Stock shall be issued upon conversion of
shares of Fixed/Adjustable Rate Noncumulative Preferred Stock, Series H of Wells
Fargo & Company ("Old Series H Preferred Stock") upon the terms and subject to
the conditions set forth in the Agreement and Plan of Merger dated as of June 7,
1998 between the Corporation and Wells Fargo & Company (the "Merger Agreement").
<PAGE>
2. DIVIDENDS.
2.1 The holders of shares of the Series H Preferred Stock shall be
entitled to receive cash dividends, when, as and if declared by the Board of
Directors of the Corporation (the "Board of Directors"), out of funds legally
available for that purpose, at the rate set forth below in this Section 2
applied to the amount of $50 per share. Such dividends shall be payable
quarterly, when, as and if declared by the Board of Directors on January 1,
April 1, July 1 and October 1 of each year, commencing on the first such date
immediately following the date of original issue of the Series H Preferred
Stock. Each such dividend shall be payable in arrears to the holders of record
of shares of the Series H Preferred Stock, as they appear on the stock register
of the Corporation on such record dates, not more than 30 nor less than 15 days
preceding the payment dates thereof, as shall be fixed by the Board of
Directors. Dividends on the Series H Preferred Stock shall not be cumulative
and no rights shall accrue to the holders of the Series H Preferred Stock if the
Corporation fails to declare one or more dividends on the Series H Preferred
Stock in any amount, whether or not the earnings or financial condition of the
Corporation were sufficient to pay such dividends in whole or in part, except as
described below under "Voting Rights".
2.2 (a) Dividend periods ("Dividend Periods") shall commence on
January 1, April 1, July 1 and October 1 of each year other than the initial
Dividend Period, which shall commence on the date of original issue of the
Series H Preferred Stock and shall end on and include the calendar day next
preceding the first day of the next Dividend Period. For each Dividend Period
the dividend rate on the shares of Series H Preferred Stock shall be 6.59% per
annum through October 1, 2001. The amount of dividends payable for each full
Dividend Period occurring prior to October 1, 2001 for the Series H Preferred
Stock shall be computed by dividing the dividend rate of 6.59% per annum by four
and applying the resulting rate of 1.6475% to the amount of $50 per share. For
each Dividend Period beginning on or after October 1, 2001, the dividend rate on
the shares of Series H Preferred Stock shall be the Applicable Rate (as defined
below) per annum. The amount of dividends payable for each full Dividend Period
beginning on or after October 1, 2001 shall be computed by dividing the
Applicable Rate per annum by four and applying the resulting rate to the amount
of $50 per share. The amount of dividends payable for any period shorter or
longer than a full Dividend Period (other than the initial Dividend Period) on
the Series H Preferred Stock shall be computed on the basis of twelve 30-day
months, a 360-day year and, for any Dividend Period of less than one month
(other than the initial Dividend Period), the actual number of days elapsed in
such period. The amount of dividend per share payable for the initial Dividend
Period shall equal the dividend per share payable for a full Dividend Period
occurring prior to October 1, 2001 less the dividend payable for the partial
dividend period for the Old Series H Preferred Stock occurring prior to
conversion of the Old Series H Preferred Stock into New Series H Preferred Stock
pursuant to the Merger Agreement (the "Final Old Series H Dividend Period"),
such that the dividends per share payable for the Final Old Series H Dividend
Period and the initial Dividend Period for the New Series H Preferred Stock
collectively equal the dividend payable per share for a full Dividend Period
occurring prior to October 1, 2001. Unless otherwise required by law, dividends
payable with respect to each share of Series H Preferred Stock, shall be rounded
to the fourth significant digit if expressed in dollars. Dividends payable to
each holder shall be determined by multiplying the
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number of shares held by such holder by the per share dividend and the product
rounded to the nearest one cent. Holders of shares called for redemption on a
redemption date between a dividend payment record date and the dividend payment
date shall not be entitled to receive the dividend payable on such dividend
payment date.
(b) The "Applicable Rate" per annum for any Dividend Period
beginning on or after October 1, 2001 shall be equal to .44% plus the Effective
Rate (as defined below), but not less than 7% or more than 13% (without taking
into consideration any adjustments as described in paragraph (viii) below),
except as described below in this paragraph. The "Effective Rate" for any
Dividend Period beginning on or after October 1, 2001 shall be equal to the
highest of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Thirty Year Constant Maturity Rate (each as defined below) for such Dividend
Period. The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Thirty Year Constant Maturity Rate shall each be rounded to the nearest five
hundredths of a percent, with .025% being rounded upward. In the event that the
Corporation determines in good faith that for any reason: (A) any one of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate or the Thirty Year
Constant Maturity Rate cannot be determined for any Dividend Period beginning on
or after October 1, 2001, then the Effective Rate for such Dividend Period shall
be equal to the higher of whichever two of such rates can be so determined; (B)
only one of the Treasury Bill Rate, the Ten Year Constant Maturity Rate or the
Thirty Year Constant Maturity Rate can be determined for any Dividend Period
beginning on or after October 1, 2001, then the Effective Rate for such Dividend
Period shall be equal to whichever such rate can be so determined; or (C) none
of the Treasury Bill Rate, the Ten Year Constant Maturity Rate or the Thirty
Year Constant Maturity Rate can be determined for any Dividend Period beginning
on or after October 1, 2001, then the Effective Rate for the preceding Dividend
Period shall be continued for such Dividend Period.
(c) The "Treasury Bill Rate" for each applicable Dividend Period
shall be the arithmetic average of the two most recent weekly per annum market
discount rates (or the one weekly per annum market discount rate, if only one
such rate is published during the relevant Calendar Period (as defined below))
for three-month U.S. Treasury bills, as published weekly by the Federal Reserve
Board (as defined below) during the Calendar Period immediately preceding the
last ten calendar days preceding the Dividend Period for which the dividend rate
on the Series H Preferred Stock is being determined, except as described below
in this paragraph. In the event that the Federal Reserve Board does not publish
such a weekly per annum market discount rate during any such Calendar Period,
then the Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the two most recent weekly per annum market discount rates (or the
one weekly per annum market discount rate, if only one such rate is published
during the relevant Calendar Period) for three-month U.S. Treasury bills, as
published weekly during such Calendar Period by any Federal Reserve Bank or by
any U.S. Government department or agency selected by the Corporation. In the
event that a per annum market discount rate for three-month U.S. Treasury bills
is not published by the Federal Reserve Board or by any Federal Reserve Bank or
by any U.S. Government department or agency during such Calendar Period, then
the Treasury Bill Rate for such Dividend Period shall be the arithmetic average
of the two most recent weekly per annum market discount rates (or the one weekly
per annum market discount rate, if only one such rate is published during the
relevant Calendar Period) for all of the U.S. Treasury bills then
3
<PAGE>
having remaining maturities of not less than 80 nor more than 100 days, as
published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board does not publish such rates, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the Corporation. In
the event that the Corporation determines in good faith that for any reason no
such U.S. Treasury bill rates are published as provided above during such
Calendar Period, then the Treasury Bill Rate for such Dividend Period shall be
the arithmetic average of the per annum market discount rates based upon the
closing bids during such Calendar Period for each of the issues of marketable
non-interest-bearing U.S. Treasury securities with a remaining maturity of not
less than 80 nor more than 100 days from the date of each such quotation, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the Corporation
by at least three recognized dealers in U.S. Government securities selected by
the Corporation. In the event that the Corporation determines in good faith
that for any reason the Corporation cannot determine the Treasury Bill Rate for
any applicable Dividend Period as provided above in this paragraph, the Treasury
Bill Rate for such applicable Dividend Period shall be the arithmetic average of
the per annum market discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable interest-bearing U.S.
Treasury securities with a remaining maturity of not less than 80 nor more than
100 days, as chosen and quoted daily for each business day in New York City (or
less frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government securities
selected by the Corporation.
(d) The "Ten Year Constant Maturity Rate" for each applicable
Dividend Period shall be the arithmetic average of the two most recent weekly
per annum Ten Year Average Yields (as defined below) (or the one weekly per
annum Ten Year Average Yield, if only one such yield is published during the
relevant Calendar Period), as published weekly by the Federal Reserve Board
during the Calendar Period immediately preceding the last ten calendar days
preceding the Dividend Period for which the dividend rate on the Series H
Preferred Stock is being determined, except as described below in this
paragraph. In the event that the Federal Reserve Board does not publish such a
weekly per annum Ten Year Average Yield during such Calendar Period, then the
Ten Year Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the two most recent weekly per annum Ten Year Average Yields (or the
one weekly per annum Ten Year Average Yield, if only one such yield is published
during the relevant Calendar Period), as published weekly during such Calendar
Period by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. In the event that a per annum Ten Year
Average Yield is not published by the Federal Reserve Board or by any Federal
Reserve Bank or by any U.S. Government department or agency during such Calendar
Period, then the Ten Year Constant Maturity Rate for such Dividend Period shall
be the arithmetic average of the two most recent weekly per annum average yields
to maturity (or the one weekly per annum average yield to maturity, if only one
such yield is published during the relevant Calendar Period) for all of the
actively traded marketable U.S. Treasury fixed interest rate securities (other
than Special Securities (as defined below)) then having remaining maturities of
not less than eight nor more than twelve years, as published during such
Calendar Period by the Federal Reserve Board or, if the Federal Reserve Board
does not publish such yields, by any Federal Reserve Bank or by any U.S.
Government
4
<PAGE>
department or agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation cannot
determine the Ten Year Constant Maturity Rate for any applicable Dividend Period
as provided above in this paragraph, then the Ten Year Constant Maturity Rate
for such Dividend Period shall be the arithmetic average of the per annum
average yields to maturity based upon the closing bids during such Calendar
Period for each of the issues of actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities) with a final maturity
date not less than eight nor more than twelve years from the date of each such
quotation, as chosen and quoted daily for each business day in New York City (or
less frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government securities
selected by the Corporation.
(e) The "Thirty Year Constant Maturity Rate" for each applicable
Dividend Period shall be the arithmetic average of the two most recent weekly
per annum Thirty Year Average Yields (as defined below) (or the one weekly per
annum Thirty Year Average Yield, if only one such yield is published during the
relevant Calendar Period), as published weekly by the Federal Reserve Board
during the Calendar Period immediately preceding the last ten calendar days
preceding the Dividend Period for which the dividend rate on the Series H
Preferred Stock is being determined, except as described below in this
paragraph. In the event that the Federal Reserve Board does not publish such a
weekly per annum Thirty Year Average Yield during such Calendar Period, then the
Thirty Year Constant Maturity Rate for such Dividend Period shall be the
arithmetic average of the two most recent weekly per annum Thirty Year Average
Yields (or the one weekly per annum Thirty Year Average Yield, if only one such
yield is published during the relevant Calendar Period), as published weekly
during such Calendar Period by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. In the event that
a per annum Thirty Year Average Yield is not published by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, then the Thirty Year Constant Maturity Rate
for such Dividend Period shall be the arithmetic average of the two most recent
weekly per annum average yields to maturity (or the one weekly per annum average
yield to maturity, if only one such yield is published during the relevant
Calendar Period) for all of the actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities) then having remaining
maturities of not less than twenty-eight nor more than thirty years, as
published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board does not publish such yields, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the Corporation. In
the event that the Corporation determines in good faith that for any reason the
Corporation cannot determine the Thirty Year Constant Maturity Rate for any
applicable Dividend Period as provided above in this paragraph, then the Thirty
Year Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the per annum average yields to maturity based upon the closing bids
during such Calendar Period for each of the issues of actively traded marketable
U.S. Treasury fixed interest rate securities (other than Special Securities)
with a final maturity date not less than twenty-eight nor more than thirty years
from the date of each such quotation, as chosen and quoted daily for each
business day in New York City (or less frequently if daily quotations are not
generally
5
<PAGE>
available) to the Corporation by at least three recognized dealers in U.S.
Government securities selected by the Corporation.
The Applicable Rate with respect to each Dividend Period beginning
on or after October 1, 2001 shall be calculated as promptly as practicable by
the Corporation according to the appropriate method described above. The
Corporation shall cause notice of each Applicable Rate to be enclosed with the
dividend payment checks next mailed to the holders of Series H Preferred Stock.
(g) As used above, the term "Calendar Period" means a period of
fourteen calendar days; the term "Federal Reserve Board" means the Board of
Governors of the Federal Reserve System; the term "Special Securities" means
securities which can, at the option of the holder, be surrendered at face value
in payment of any Federal estate tax or which provide tax benefits to the holder
and are priced to reflect such tax benefits or which were originally issued at a
deep or substantial discount; the term "Ten Year Average Yield" means the
average yield to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of ten years); and the
term "Thirty Year Average Yield" means the average yield to maturity for
actively traded marketable U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of thirty years).
(h) If one or more amendments to the Internal Revenue Code of
1986, as amended (the "Code"), are enacted that change the percentage of the
dividends received deduction as specified in Section 243(a)(1) of the Code or
any successor provision (the "Dividends Received Percentage"), the amount of
each dividend payable per share of the Series H Preferred Stock for dividend
payments made on or after the date of enactment of such change shall be adjusted
by multiplying the amount of the dividend payable determined as described above
(before adjustment) by a factor, which shall be the number determined in
accordance with the following formula (the "DRD Formula"), and rounding the
result to the nearest cent:
1 - [.35 (1- .70)]
------------------------
1 - [.35 (1 - DRP)]
For the purposes of the DRD Formula, "DRP" means the Dividends
Received Percentage applicable to the dividend in question. No amendment to the
Code, other than a change in the percentage of the dividends received deduction
set forth in Section 243(a)(1) of the Code or any successor provision, will
give rise to an adjustment. Notwithstanding the foregoing provisions, in the
event that, with respect to any such amendment, the Corporation shall receive
either an unqualified opinion of nationally recognized independent tax counsel
selected by the Corporation or a private letter ruling or similar form of
authorization from the Internal Revenue Service to the effect that such an
amendment would not apply to dividends payable on the Series H Preferred Stock,
then any such amendment shall not result in the adjustment provided for pursuant
to the DRD Formula. The opinion referenced in the previous sentence shall be
based upon a specific exception in the legislation amending the DRP or upon a
published pronouncement of the Internal Revenue Service addressing such
legislation. Unless the context otherwise requires, references to dividends in
this Certificate of Designations shall
6
<PAGE>
mean dividends as adjusted by the DRD Formula. The Corporation's calculation of
the dividends payable, as so adjusted and as certified accurate as to
calculation and reasonable as to method by the independent certified public
accountants then regularly engaged by the Corporation, shall be final and not
subject to review.
If any amendment to the Code which reduces the Dividends Received
Percentage is enacted after a record date and before the next Dividend Payment
Date, the amount of dividend payable on such Dividend Payment Date will not be
increased in accordance with paragraph (viii) above, but instead, an amount
equal to the excess of (x) the product of the dividends paid by the Corporation
on such Dividend Payment Date and the DRD Formula (where the DRP used in the DRD
Formula would be equal to the reduced Dividends Received Percentage) and (y) the
dividends paid by the Corporation on such Dividend Payment Date, will be payable
(if declared) to holders of record on the next succeeding Dividend Payment Date
in addition to any other amounts payable on such date.
(j) In the event that the amount of dividend payable per share
of the Series H Preferred Stock shall be adjusted pursuant to the DRD Formula
and/or Additional Dividends are to be paid, the Corporation will cause notice of
each such adjustment and, if applicable, any Additional Dividends, to be sent to
the holders of the Series H Preferred Stock.
(k) So long as any shares of the Series H Preferred Stock are
outstanding, no dividends shall be paid or declared upon any shares of any class
or series of stock of the Corporation ranking on a parity with the Series H
Preferred Stock in the payment of dividends for any period unless, at or prior
to the time of such payment or declaration, (i) all dividends payable on the
Series H Preferred Stock for all dividend periods ended prior to the date of
such payment or declaration shall have been paid, and (ii) a like proportionate
dividend for the same dividend period, ratably in proportion to the respective
annual dividend rates fixed thereupon, shall be paid upon or declared for the
Series H Preferred Stock then issued and outstanding.
(l) If any shares of the Series H Preferred Stock are
outstanding, no full dividends shall be declared or paid or set apart for
payment on any series of the Preferred Stock of the Corporation ranking, as to
dividends, on a parity with or junior to the Series H Preferred Stock for any
period unless full dividends have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for such
payment on the Series H Preferred Stock for all dividend periods terminating on
or prior to the date of payment of such full dividends. In the event that
dividends are not paid in full (or a sum sufficient for such full payment set
apart) upon the shares of the Series H Preferred Stock or the shares of any
other series of Preferred Stock ranking on a parity as to dividends with the
shares of the Series H Preferred Stock, dividends upon shares of the Series H
Preferred Stock and dividends on shares of such other series of Preferred Stock
shall be declared by the Board of Directors or a duly authorized committee
thereof pro rata with respect thereto so that the amount of dividends per share
on the Series H Preferred Stock and such other series of Preferred Stock so
declared shall in all cases bear to each other the same ratio that full
dividends on the shares of the Series H Preferred Stock and full dividends,
including accumulations, if any, on the shares of such other series of Preferred
Stock, bear to each other.
7
<PAGE>
(m) Except as provided in this Section, if full dividends on all
outstanding shares of the Series H Preferred Stock at the rate per share set
forth above shall not have been declared and paid or set aside for payment, the
Corporation shall not, until full dividends have been declared and paid or set
aside for payment on all outstanding shares of the Series H Preferred Stock, (i)
declare or pay or set aside for payment any dividends (other than a dividend in
common stock, $1-2/3 par value per share, of the Corporation (the "Common
Stock") or in any other stock ranking junior to the Series H Preferred Stock as
to dividends and upon liquidation, dissolution or winding up of the Corporation)
or make any other distribution on the Common Stock or any other stock of the
Corporation ranking junior to or on a parity with shares of the Series H
Preferred Stock, with respect to the payment of dividends or distribution of
assets upon liquidation, dissolution or winding up of the Corporation, or (ii)
make any payment on account of the purchase, redemption or other retirement of,
or pay or make available any moneys for a sinking fund for the redemption of,
any shares of Common Stock or such other junior or parity stock except by
conversion into or exchange for stock of the Corporation ranking junior to the
Series H Preferred Stock as to dividends and upon liquidation.
(n) Any dividend payment made on shares of the Series H
Preferred Stock shall first be credited against the earliest unpaid dividend due
with respect to such shares.
3. LIQUIDATION PREFERENCE.
3.1 In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
outstanding shares of the Series H Preferred Stock shall be entitled, before any
payment or distribution shall be made on the Common Stock or any other class of
stock ranking junior to the Series H Preferred Stock upon liquidation, to be
paid in full an amount equal to $50 per share, plus an amount equal to all
dividends (whether or not earned or declared) from the immediately preceding
dividend payment date (but without any cumulation for unpaid dividends for prior
Dividend Periods on the Series H Preferred Stock) to the date fixed for
redemption. After payment of the full amount of such liquidation distribution,
the holders of the Series H Preferred Stock shall not be entitled to any further
participation in any distribution of assets of the Corporation.
3.2 If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of the shares of the Series H Preferred Stock and the holders
of shares of all other stock of the Corporation ranking, as to liquidation,
dissolution or winding up, on a parity with the Series H Preferred Stock, shall
be insufficient to pay in full the preferential amount set forth in Section 3.1
and liquidating payments on all such other stock ranking, as to liquidation,
dissolution or winding up, on a parity with the Series H Preferred Stock, then
such assets, or the proceeds thereof, shall be distributed among the holders of
the Series H Preferred Stock and all such other stock ratably in accordance with
the respective amounts which would be payable on such shares of the Series H
Preferred Stock and any such other stock if all amounts payable thereon were
paid in full (which, in the case of such other stock, may include accumulated
dividends).
8
<PAGE>
3.3 In the event of any such liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, unless and until payment in
full is made to the holders of all outstanding shares of the Series H Preferred
Stock of the liquidation distribution to which they are entitled pursuant to
Section 3.1, no dividend or other distribution shall be made to the holders of
the Common Stock or any other class of stock ranking upon liquidation junior to
the shares of the Series H Preferred Stock and no purchase, redemption or other
acquisition for any consideration by the Corporation shall be made in respect of
the shares of the Common Stock or such other class of stock.
3.4 Neither the consolidation nor merger of the Corporation into or with
another corporation or corporations shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
3.
4. REDEMPTION.
4.1 Except as provided below, the Series H Preferred Stock may not be
redeemed prior to October 1, 2001. At any time or from time to time on and
after October 1, 2001, the Corporation, at its option, may redeem shares of the
Series H Preferred Stock, in whole or in part, out of funds legally available
therefor, at a redemption price of $50 per share, together in each case with
accrued and unpaid dividends (whether or not declared) from the immediately
preceding dividend payment date (but without any cumulation for unpaid dividends
for prior Dividend Periods on the Series H Preferred Stock) to the date fixed
for redemption.
4.2 If the Dividends Received Percentage is equal to or less than 40%
and, as a result, the amount of dividends on the Series H Preferred Stock
payable on any Dividend Payment Date will be or is adjusted upwards as described
in Section 2.2(h) above, the Corporation, at its option, may redeem all, but not
less than all, of the outstanding shares of the Series H Preferred Stock, out of
funds legally available therefor, provided, that within sixty days of the date
on which an amendment to the Code is enacted which reduces the Dividends
Received Percentage to 40% or less, the Corporation sends notice to holders of
the Series H Preferred Stock of such redemption in accordance with Section 4.6
below. Any redemption of the Series H Preferred Stock in accordance with this
Section 4.2 shall be on notice as aforesaid at the applicable redemption price
set forth in the following table, in each case plus accrued and unpaid dividends
(whether or not declared) from the immediately preceding dividend payment date
(but without any cumulation for unpaid dividends for prior Dividend Periods on
the Series H Preferred Stock) to the date fixed for redemption.
<TABLE>
<CAPTION>
Redemption Period Redemption Price Per Share
- ----------------- --------------------------
<S> <C>
Issuance to September 30, 1999 $51.50
October 1, 1999 to September 30, 2000 51.00
October 1, 2000 to September 30, 2001 50.50
On or after October 1, 2001 50.00
</TABLE>
9
<PAGE>
4.3 If the holders of the shares of the Series H Preferred Stock are
entitled to vote upon or consent to a merger or consolidation of the
Corporation, and if the Corporation offers to purchase all of the outstanding
shares of the Series H Preferred Stock (the "Offer"), then each holder of Series
H Preferred Stock who does not sell his or her shares of the Series H Preferred
Stock pursuant to the Offer shall be deemed irrevocably to have voted or
consented with respect to all shares of Series H Preferred Stock owned by such
holder in favor of the merger or consolidation of the Corporation without any
further action by the holder. The Offer shall be at a price of $50 per share,
together with accrued and unpaid dividends, if any, from the immediately
preceding dividend payment date (but without any cumulation for unpaid dividends
for prior Dividend Periods on the Series H Preferred Stock) to the date fixed
for repurchase, including any increase in dividends payable due to increases in
the Dividends Received Percentage and Additional Dividends. The Offer must
remain open for acceptance for a period of at least 30 days.
4.4 Notwithstanding the foregoing, if full dividends on all outstanding
shares of Series H Preferred Stock have not been paid or contemporaneously
declared and paid for all past dividend periods, no shares of Series H Preferred
Stock shall be redeemed pursuant to this Section unless all outstanding shares
of Series H Preferred Stock are simultaneously redeemed, and, unless the full
dividends on all outstanding shares of Series H Preferred Stock and any other
Preferred Stock ranking on a parity therewith as to dividends and upon
liquidation shall have been paid or contemporaneously are declared and paid for
all past dividend periods, the Corporation shall not purchase or otherwise
acquire any shares of Series H Preferred Stock or shares of any other series of
Preferred Stock ranking on a parity therewith as to dividends and upon
liquidation (except by conversion into or exchange for shares of the Corporation
ranking junior to the shares of the Series H Preferred Stock); provided,
however, that the foregoing shall not prevent the purchase or acquisition of
shares of the Series H Preferred Stock or of shares of such other series of
Preferred Stock pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of the Series H Preferred Stock or of such
other series.
4.5 In the event that fewer than all the outstanding shares of the
Series H Preferred Stock are to be redeemed, the number of shares to be redeemed
shall be determined by the Board of Directors or a duly authorized committee
thereof and the shares to be redeemed shall be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held
by such holders (with adjustments to avoid fractional shares).
4.6 In the event the Corporation shall redeem shares of the Series H
Preferred Stock, notice of such redemption (a "Notice of Redemption") shall be
given by first class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the redemption date, to each holder of record of the
shares to be redeemed, at such holder's address as the same appears on the stock
register of the Corporation. Each such Notice of Redemption shall state: (i)
the redemption date; (ii) the number of shares of the Series H Preferred Stock
to be redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price (specifying the amount of accrued and unpaid dividends to be
included therein); (iv) the place or places where certificates for such shares
are to
10
<PAGE>
be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accumulate on such redemption date; and (vi)
the provision hereunder pursuant to which such redemption is being made.
4.7 If a Notice of Redemption has been given, from and after the
redemption date for the shares of the Series H Preferred Stock called for
redemption (unless default shall be made by the Corporation in providing money
for the payment of the redemption price of the shares so called for redemption
plus an amount equal to full cumulative dividends thereon (whether or not earned
or declared) to the date fixed for redemption) dividends on the shares of the
Series H Preferred Stock so called for redemption shall cease to accrue and said
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
the redemption price plus an amount equal to such accumulated and unpaid
dividends) shall cease. Upon surrender in accordance with said Notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require and the
Notice shall so state), the redemption price set forth above plus an amount
equal to such accumulated and unpaid dividends shall be paid by the paying agent
for the Corporation. In the case that fewer than all of the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
4.8 Shares of Series H Preferred Stock which have been redeemed shall,
after such redemption, have the status of authorized but unissued shares of
Preferred Stock, without designation as to series, until such shares are once
more designated as part of a particular series by or on behalf of the Board of
Directors.
5. CONVERSION OR EXCHANGE.
The holders of shares of Series H Preferred Stock shall not have any right
herein to convert such shares into or exchange such shares for shares of any
other class or classes or of any other series of any class or classes of capital
stock of the Corporation.
6. RANKING.
The Series H Preferred Stock shall rank on a parity as to dividends and
liquidation with each series of Preferred Stock outstanding on the date of
issuance of the Series H Preferred Stock.
7. VOTING RIGHTS.
7.1 Holders of the Series H Preferred Stock shall not have any voting
rights except as hereinafter provided or as otherwise from time to time required
by law. If at the time of any annual meeting of stockholders for the election
of directors of the Corporation a default in preference dividends shall exist on
the Series H Preferred Stock, or any series of Preferred Stock ranking on a
parity with the Series H Preferred Stock as to dividends or upon liquidation
(the Series H Preferred Stock and any such series of Preferred Stock being
herein referred to as the "Parity Preferred Stock"), the maximum authorized
number of members of the Board of
11
<PAGE>
Directors shall automatically be increased by two. The two vacancies so created
shall be filled at such meeting by the vote of the holders of the Series H
Preferred Stock and the holders of any other Parity Preferred Stock upon which
like voting rights have been conferred and are then exercisable (the Preferred
Stock and such other Parity Preferred Stock being herein referred to as "Voting
Parity Preferred Stock"), voting together as a single class without regard to
series, to the exclusion of the holders of the Common Stock and any other class
of capital stock of the Corporation that is not Voting Parity Preferred Stock.
The holders of the Common Stock and any other class of capital stock of the
Corporation which has the right to vote at such meeting (other than the Voting
Parity Preferred Stock) shall elect the remaining directors. Such right of the
holders of the Voting Parity Preferred Stock shall continue until there are no
preference dividends in arrears upon the Voting Parity Preferred Stock of any
series at which time such right shall terminate, except as by law expressly
provided, subject to revesting in the event of each and every subsequent default
of the character above mentioned. Upon any such termination of the right of the
holders of shares of Voting Parity Preferred Stock as a class to vote for
directors as herein provided, the term of office of each director then in office
elected by such holders voting as a class (herein called a "Preferred Director")
shall terminate immediately. Any Preferred Director may be removed by, and
shall not be removed without cause except by, the vote of the holders of record
of the outstanding shares of Voting Parity Preferred Stock, voting together as a
single class without regard to series, at a meeting of the stockholders, or of
the holders of shares of Voting Parity Preferred Stock, called for such purpose.
So long as a default in any preference dividends on the Voting Parity Preferred
Stock of any series shall exist, (A) any vacancy in the office of a Preferred
Director may be filled (except as provided in the following clause (B)) by the
person appointed by an instrument in writing signed by the remaining Preferred
Director and filed with the Corporation and (B) in the case of the removal of
any Preferred Director, the vacancy may be filled by the person elected by the
vote of the holders of outstanding shares of Voting Parity Preferred Stock,
voting together as a single class without regard to series, at the same meeting
at which such removal shall be voted or at any subsequent meeting. Each
director appointed as aforesaid by the remaining Preferred Director shall be
deemed to be a Preferred Director. Whenever a default in preference dividends
on the Voting Parity Preferred Stock shall no longer exist: (i) the term of
office of the Preferred Directors shall end, (ii) the special voting powers
vested in the holders of the Voting Parity Preferred Stock as provided in this
resolution shall expire, and (iii) the number of members of the Board of
Directors shall be such number as may be provided for in the Corporation's
By-Laws irrespective of any increase made as provided in this resolution. A
"default in preference dividends" on the Voting Parity Preferred Stock of any
series shall be deemed to have occurred whenever the amount of unpaid accrued
dividends upon such series through the last preceding dividend period therefor
shall be equivalent to six quarterly dividends (which, with respect to the
Series H Preferred Stock, shall be deemed to be dividends in respect of a number
of dividend periods containing not less than 540 days) or more, and having so
occurred, such default shall be deemed to exist thereafter until, but only
until, full cumulative dividends on all shares of Voting Parity Preferred Stock
of each and every series then outstanding shall have been paid to the end of the
last preceding dividend period.
7.2 So long as any shares of Series H Preferred Stock remain
outstanding, the Corporation shall not, without the affirmative vote or consent
of the holders of at least two-thirds of the shares of the Series H Preferred
Stock outstanding at the time, given in person or by proxy,
12
<PAGE>
either in writing or at a meeting (voting separately as a class together with
all other series of Parity Preferred Stock), (i) authorize, create or issue, or
increase the authorized or issued amount of, any class or series of stock
ranking prior to the Series H Preferred Stock with respect to payment of
dividends or the distribution of assets on liquidation, or reclassify any
authorized stock of the Corporation into any such shares, or create, authorize
or issue any obligation or security convertible into or evidencing the right to
purchase any such shares; or (ii) amend, alter or repeal the provisions of the
Corporation's Restated Certificate of Incorporation or of the resolution
contained in the certificate of designation for the Series H Preferred Stock,
whether by merger, consolidation or otherwise, so as to materially and adversely
affect any right, preference, privilege or voting power of the Series H
Preferred Stock or the holders thereof; provided, however, that any increase in
the amount of the authorized Preferred Stock or the creation or issuance of
other series of Preferred Stock, or any increase in the amount of authorized
shares of such series or of any other series of Preferred Stock, in each case
ranking on a parity with or junior to the Series H Preferred Stock, shall not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting powers.
7.3 The foregoing voting provisions will not apply if, at or prior to
the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of the Series H Preferred
Stock shall have been redeemed or called for redemption and sufficient funds
shall have been deposited in trust to effect such redemption.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by Charles D. White, its Senior Vice President and
Treasurer, and attested by Laurel A. Holschuh, its Secretary, whereby such
Senior Vice President and Treasurer affirms, under penalties of perjury, that
this Certificate of Designations is the act and deed of the Corporation and that
the facts stated herein are true, this ___ day of __________, 1998.
NORWEST CORPORATION
By
-----------------------------------
Charles D. White
Senior Vice President and Treasurer
Attest:
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Laurel A. Holschuh
Secretary
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Exhibit 3.5
FORM OF
WELLS FARGO & COMPANY
(Formerly named Norwest Corporation)
Amended and Restated By-Laws
(As amended through [__________], 1998)
OFFICES
1. The principal office shall be in the City of Wilmington, County
of New Castle, State of Delaware, and the name of the resident agent in charge
thereof is The Corporation Trust Company.
The Corporation may also have an office in the City of San Francisco,
State of California and also offices at such other places as the Board of
Directors may from time to time appoint or the business of the Corporation may
require.
SEAL
2. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
STOCKHOLDERS' MEETINGS
3. PLACE. All meetings of stockholders shall be held at the office
of the Corporation in San Francisco, California or at such other place within or
without the State of Delaware as shall from time to time be designated by the
Board of Directors.
4. ANNUAL MEETING. An annual meeting of stockholders shall be held
on the fourth Tuesday of April in each year, or such other date as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting, if not a legal holiday, and if a legal holiday, then on the next
day following, at such time as shall be designated by the Board of Directors,
when the stockholders shall elect, by a plurality vote except as otherwise
provided by law, by the Certificate of Incorporation or by these By-Laws, by
ballot, a Board of Directors, and transact such other business as may properly
be brought before this meeting.
5. QUORUM. The holders of a majority of the stock issued and
outstanding, and entitled to vote thereat, present in person, or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
law, by the Certificate of Incorporation or by these By-Laws. If, however, such
majority shall not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of voting stock shall be
present. At such adjourned meeting at which the requisite amount of voting
stock shall be represented, any business may be transacted which might have been
transacted at the meeting as originally convened.
6. VOTING PROXIES. At each meeting of the stockholders every
stockholder having the right to vote shall be entitled to vote in person or by
proxy appointed by an instrument in writing subscribed by such stockholder and
bearing a date not more than one year prior to said meeting, unless said
instrument provides for a longer period. Each stockholder shall have one vote
for each share of stock having voting power registered in his name on the books
of the
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Corporation, provided that, except where the transfer books of the Corporation
shall have been closed or a date shall have been fixed as a record date for the
determination of stockholders entitled to vote, no share of stock shall be voted
at any election of directors which has been transferred on the books of the
Corporation within twenty days next preceding such election. The vote for
directors, and, upon the demand of any stockholder, the vote upon any question
before the meeting shall be by ballot. All elections shall be had and all
questions decided by a plurality vote, except such as may, under the provisions
of law, the Certificate of Incorporation, or these By-Laws, require the vote of
a larger number of shares.
7. NOTICE OF ANNUAL MEETING. Written notice of the annual meeting
shall be mailed to each stockholder entitled to vote thereat at such address as
appears on the stock records of the Corporation, at least ten days prior to the
meeting.
8. STOCKHOLDERS' LIST. A complete list of the stockholders entitled
to vote at the ensuing election, arranged in alphabetical order, shall be
prepared by the Secretary and shall, during the usual hours of business, be open
to the examination of any stockholder at the place where said election is to be
held for ten days before such election and shall be produced and kept at the
time and place of election during the whole time thereof, and subject to the
inspection of any stockholder who may be present.
9. NOTICE OF STOCKHOLDER BUSINESS AT ANNUAL MEETING. At an annual
meeting of the stockholders, only such business shall be conducted as shall have
been brought before the meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who complies with the
notice procedures set forth in this Section 9. For business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation. To
be timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation, not less than 30 days nor
more than 60 days prior to the meeting; provided, however, that in the event
that less than 40 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. A stockholder's notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (b) the name and address, as they appear on the Corporation's books, of
the stockholder proposing such business, (c) the class and number of shares of
the Corporation which are beneficially owned by the stockholder and (d) any
material interest of the stockholder in such business. Notwithstanding anything
in these By-Laws to the contrary, no business shall be conducted at an annual
meeting except in accordance with the procedures set forth in this Section 9.
The Chairman of an annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
and in accordance with the provisions of this Section 9, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
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10. SPECIAL MEETINGS - CALL. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute, may be
called by the Chairman or a Vice Chairman or the President or a majority of the
Board of Directors.
11. SPECIAL MEETING - BUSINESS. Business transacted at all special
meetings shall be confined to the objects stated in the call.
12. SPECIAL MEETINGS - NOTICE. Written notice of a special meeting
of stockholders, stating the time and place and object thereof, shall be mailed,
postage prepaid, at least ten days before such meeting, to each stockholder
entitled to vote thereat at his last known address as shown by the books of the
Corporation.
13. ACTION BY WRITTEN CONSENT OF STOCKHOLDERS. (a) Any action which
is required to be or may be taken at any annual or special meeting of
stockholders of the Corporation may be taken without a meeting, without prior
notice and without a vote, if consents in writing, setting forth the action so
taken, shall have been signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or to
take such action at a meeting at which all shares entitled to vote thereon were
present and voted; provided, however, that prompt notice of the taking of the
corporate action without a meeting and by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting shall be fixed
by the Board of Directors. Any stockholder of record seeking to have the
stockholders authorize or take corporate action by written consent without a
meeting shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. Upon receipt of such a request, the Secretary
shall place such request before the Board of Directors at its next regularly
scheduled meeting, provided, however, that if the stockholder represents in such
request that he intends, and is prepared, to commence a consent solicitation as
soon as is permitted by the Securities Exchange Act of 1934, as amended, and the
regulations thereunder and other applicable law, the Secretary shall as promptly
as practicable call a special meeting of the Board of Directors, which meeting
shall be held as promptly as practicable. At such regular or special meeting,
the Board of Directors shall fix a record date as provided in Section 40 of
these By-Laws and Section 213(a) (or its successor provision) of the Delaware
General Corporation Law. Should the Board of Directors fail to fix a record
date as provided for in this Section 13, then the record date shall be the day
on which the first written consent is expressed.
(c) In the event of the delivery to the Corporation of written
consents purporting to represent the requisite voting power to authorize or take
corporate action and/or related revocations, the Secretary of the Corporation
shall provide for the safekeeping of such consents and revocations and shall, as
promptly as practicable, engage nationally recognized independent inspectors of
election for the purpose of promptly performing a ministerial review of the
validity of the consents and revocations. No action by written consent and
without a meeting shall be effective until such inspectors have completed their
review, determined that the requisite number of valid and unrevoked consents has
been obtained to authorize or take the action specified in the
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consents, and certified such determination for entry in the records of the
Corporation kept for the purpose of recording the proceedings of meetings of
stockholders.
DIRECTORS
14. NUMBER. The property and business of the Corporation shall be
managed by its Board of not less than ten nor more than twenty-eight directors,
with the number to be designated from time to time by resolution of the Board.
Directors shall be elected at the annual meeting of the stockholders, except as
otherwise provided by the Certificate of Incorporation or by these By-Laws, and
each director shall be elected to serve until his successor shall be elected and
shall qualify.
15. NOTICE OF STOCKHOLDER NOMINEES. Only persons who are nominated
in accordance with the procedures set forth in these By-Laws shall be eligible
for election as directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of stockholders (a) by or
at the direction of the Board of Directors or (b) by any stockholder of the
Corporation entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this Section 15. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than 30 days nor more than 60 days prior to the meeting; provided, however,
that in the event that less than 40 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
such person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); and (b) as to the stockholder giving
the notice (i) the name and address, as they appear on the Corporation's books,
of such stockholder and (ii) the class and number of shares of the Corporation
which are beneficially owned by such stockholder. At the request of the Board
of Directors any person nominated by the Board of Directors for election as a
director shall furnish to the Secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in the
By-Laws. The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by these By-Laws, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.
16. VACANCIES. If the office of any director or directors becomes
vacant by reason of death, resignation, retirement, disqualification, removal
from office, or otherwise, a majority of the remaining directors, though less
than a quorum, except as otherwise provided by law, by
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the Certificate of Incorporation or by these By-Laws, shall choose a successor
until a successor or successors have been duly elected, unless sooner displaced.
17. PLACE OF MEETINGS. The directors may hold their meetings and
have one or more offices, and keep the books of the Corporation, except the
original or duplicate stock ledger, outside of Delaware, at the office of the
Corporation in the City of Minneapolis, Minnesota, or at such other places as
they may from time to time determine.
18. POWERS. In addition to the powers and authorities by these
By-Laws expressly conferred upon them, the Board may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by statute or
by the Certificate of Incorporation or by these By-Laws directed or required to
be exercised or done by the stockholders.
COMMITTEES
19. PURPOSES - POWERS. The Board of Directors may, by resolution or
resolutions, passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation, which to the extent provided in said resolution or resolutions or
in these By-Laws, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation, and
may have power to authorize the seal of the Corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be stated in these By-Laws or as may be determined from time to
time by resolution adopted by the Board of Directors.
20. MINUTES. The committees may keep regular minutes of their
proceedings and shall report to the Board when required.
COMPENSATION
21. DIRECTORS. By resolution of the Board, directors may receive a
fixed fee for their services, and a fixed sum and expenses of attendance, if
any, may be allowed for attendance at each regular or special meeting of the
Board; provided, that nothing herein contained shall be construed to preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor.
22. COMMITTEE MEMBERS. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
MEETINGS OF THE BOARD
23. ANNUAL MEETING. Immediately following the annual meeting of
stockholders and at the place of such meeting the newly elected Board shall meet
for the purpose of organization, the election of officers and the transaction of
other business, and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided that a
majority of the whole Board shall be present. In lieu of meeting at such time
and place, the newly elected Board may meet at such time and place as may be
fixed by the consent in writing of all the directors or by call issued by the
Chairman or a Vice Chairman or the President.
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24. REGULAR MEETINGS. Regular meetings of the Board may be held
without notice at such time and place as shall from time to time be determined
by the Board.
25. SPECIAL MEETINGS - CALL. Special meetings of the Board may be
called by the Chairman or a Vice Chairman or the President on two days' notice
to each director, either personally or by mail or by telegram; special meetings
shall be called by the Chairman or a Vice Chairman or the President or the
Secretary in like manner and on like notice on the written request of two
directors.
26. QUORUM. At all meetings of the Board of Directors any number of
directors constituting not less than one-third (1/3) of the total number of
members of said Board shall be necessary and sufficient to constitute a quorum
for the transaction of business, provided that where there is less than a
majority of the Board of Directors present at any meeting, no action by those
present, although constituting a quorum, shall be taken except by unanimous
vote.
OFFICERS
27. OFFICERS. The officers of the Corporation shall be a Chairman,
one or more Vice Chairmen, President, a Secretary, a Treasurer, a Controller, a
Chief Examiner, a Chief Auditor, and such other officers, and with such duties,
as may be determined by the Board as necessary for the prompt and orderly
transaction of the business of the Corporation. Any two or more offices may be
held by the same person. The Chairman and the President shall be members of the
Board of Directors and other officers may be members of the Board of Directors.
The salaries of all officers of the Corporation shall be fixed by the Board of
Directors.
In its discretion, the Board of Directors by a majority vote may leave
unfilled any offices specified in the preceding paragraph.
28. ELECTION - APPOINTMENT - TERM OF OFFICE - REMOVAL. All officers
holding the title of Chairman, Vice Chairman, President, Secretary, Treasurer,
Controller, Chief Examiner, Chief Auditor, and such other officers as may be
designated by the Board of Directors shall be elected by the Board of Directors.
Any officer elected by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors. The Board of
Directors may authorize officers elected by the Board to appoint other officers
and agents pursuant to procedures established by resolution of the Board. All
officers shall hold office until their successors are elected or appointed and
qualified, unless theretofore they shall have resigned, become disqualified or
been removed.
29. CHAIRMAN AND VICE CHAIRMAN. The Chairman may, by resolution of
the Board of Directors, be designated Chief Executive Officer of the
Corporation. The Chairman shall preside at all meetings of the stockholders and
at all meetings of the Board. If the Chairman is not designated Chief Executive
Officer, the Chairman shall assist the Chief Executive Officer in the management
of the Corporation and shall perform such other duties as the Board of Directors
shall prescribe. If the Chairman is not designated Chief Executive Officer, the
Chairman shall in the absence or disability of the Chief Executive Officer
perform the duties and exercise the powers of the Chief Executive Officer.
The Vice Chairman or Chairmen shall assist the Chief Executive Officer
in the management of the Corporation and shall perform such other duties as the
Board of Directors
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shall prescribe. In the absence or disability of the Chairman, the President or
a Vice Chairman shall perform the duties and exercise the powers of the
Chairman.
If at any time there shall be elected and serving more than one person
in the office of Vice Chairman, then in the absence or disability of the
Chairman, the President or the Vice Chairman as designated in writing by the
Chief Executive Officer shall perform the duties and exercise the powers of the
Chairman. In the absence of such designation by the Chief Executive Officer,
then the duties and powers of the Chairman shall be performed and exercised by
the President or the Vice Chairman with greater seniority of continuous service
in that office or, in the absence of such seniority, seniority of continuous
service to the Corporation and its subsidiaries.
30. PRESIDENT. The President may, by resolution of the Board of
Directors, be designated Chief Executive Officer of the Corporation. If the
President is not designated Chief Executive Officer, the President shall assist
the Chief Executive Officer in the management of the Corporation and shall
perform such other duties as the Board of Directors shall prescribe.
31. CHIEF EXECUTIVE OFFICER. The Board of Directors shall by
resolution designate either the Chairman or the President as the Chief Executive
Officer of the Corporation. The Chief Executive Officer shall be charged with
the management of the Corporation and shall see that all orders and resolutions
of the Board of Directors are carried into effect. The Chief Executive Officer
shall be charged with the duty of causing to be currently presented to the Board
of Directors full information regarding the conditions and operations of the
Corporation, as well as matters of a policy nature concerning the affairs of the
Corporation and all information requisite to enable the Board in the discharge
of its responsibilities to exercise judgment and take action upon all matters
requiring its consideration.
Except where by law the signature or action of any other officer is
required, the Chief Executive Officer shall possess the same power as any such
other officer to sign certificates, contracts and other instruments of the
Corporation and to take other action on behalf of the Corporation. The Chief
Executive Officer shall have the general powers and duties of supervision and
management usually vested in the chief executive officer of a corporation.
32. VICE PRESIDENTS. Any Vice President may, in the absence or
disability of the Chairman, all Vice Chairmen and the President, perform the
duties and exercise the powers of the Chairman, all Vice Chairmen and the
President, and shall perform such other duties as the Board of Directors shall
prescribe.
33. SECRETARY AND ASSISTANT SECRETARIES. (a) Except as may be
otherwise expressly provided in these By-Laws, the Secretary shall attend all
sessions of the Board and all meetings of the stockholders and record all votes
and the minutes of all proceedings in a book to be kept for that purpose, and
shall perform like duties for the standing or special committees when requested.
He shall give, or cause to be given, notice of all meetings of the stockholders
and of the Board of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or the Chief Executive Officer, under whose
supervision he shall be. He shall keep in safe custody the seal of the
Corporation, and, when authorized by the Board, affix the same to any instrument
requiring it and when so affixed it shall be attested by his signature or by the
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signature of the Treasurer or an Assistant Secretary or an Assistant Treasurer.
He shall be sworn to the faithful discharge of his duties.
(b) Any Assistant Secretary may, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the Secretary, and
shall perform such other duties as the Board of Directors shall prescribe.
(c) If the Board of Directors shall appoint a Secretary to the
Board, then such Secretary to the Board shall have and perform the duties of the
Secretary and with respect to attendance at and recording of votes and minutes
of all proceedings at sessions of the Board and meetings of the stockholders
and, when requested, meetings of standing and special committees.
34. TREASURER AND ASSISTANT TREASURERS. (a) The Treasurer shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts thereof, and shall deposit all moneys, and other valuable
effects, in the name and to the credit of the Corporation in such depositories
as may be designated by the Board of Directors.
(b) He shall disburse the funds of the Corporation as may be
ordered by the Board, taking proper vouchers for such disbursements, and shall
render to the Chief Executive Officer and the Board of Directors, whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the Corporation.
(c) He shall give the Corporation a bond, if required by the
Board of Directors, in a sum and with one or more sureties satisfactory to the
Board, for the faithful performance of the duties of his office, and for the
restoration to the Corporation, in case of his death, resignation, retirement or
removal from office, of all money and other property of whatever kind in his
possession or under his control belonging to the Corporation.
(d) Any Assistant Treasurer may, in the absence or disability of
the Treasurer, perform the duties and exercise the powers of the Treasurer, and
shall perform such other duties as the Board of Directors shall prescribe.
35. CONTROLLER. The Controller shall supervise all accounting and
bookkeeping of the Corporation, shall make such reports to the Board on the
financial condition of the Corporation as shall be required by the Board, and
shall perform such other duties as the Board shall prescribe. He shall be
subject to removal only by the Board of Directors.
36. CHIEF EXAMINER. The Chief Examiner shall examine and appraise
the assets of each affiliate of the Corporation, shall make, at least once a
year, a report to the Board summarizing the condition of the assets and capital
position of the Corporation and its affiliates, and shall perform such other
duties as the Board shall prescribe. He shall be subject to removal only by the
Board of Directors.
37. DUTIES OF OFFICERS MAY BE DELEGATED. In case of the absence of
any officer of the Corporation, or for any other reason that the Board may deem
sufficient, the Board may delegate, for the time being, the powers or duties, or
any of them, of such officer to any other officer or to any director, provided a
majority of the entire Board concurs therein.
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CERTIFICATED AND UNCERTIFICATED SHARES
38. Shares of the Corporation's stock may be certificated or
uncertificated, as provided under Delaware law. All certificates of stock of
the Corporation shall be numbered and shall be entered in the books of the
Corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the Chairman or a Vice Chairman or the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary. Any of or all the signatures on the
certificate may be a facsimile.
TRANSFERS OF STOCK
39. Transfers of stock shall be made on the books of the Corporation
only by the record holder of such stock, or by attorney lawfully constituted in
writing, and, in the case of stock represented by a certificate, upon surrender
of the certificate.
CLOSING OF TRANSFER BOOKS
40. The Board of Directors shall have the power to close the stock
transfer books of the Corporation for a period not exceeding fifty days
preceding the date of any meeting of stockholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or for a
period not exceeding fifty days in connection with obtaining the consent of
stockholders for any purpose; provided, however, that in lieu of closing the
stock transfer books as aforesaid, the Board of Directors may fix in advance a
date not exceeding fifty days preceding the date of any meeting of stockholders,
or the date for the payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect, or a date in connection with obtaining such consent, as a
record date for the determination of the stockholders entitled to notice of, and
to vote at, any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to exercise
the rights in respect to any such change, conversion or exchange of capital
stock, or to give such consent, and in such case such stockholders, and only
such stockholders as shall be stockholders of record on the date so fixed, shall
be entitled to notice of, and to vote at, such meeting and any adjournment
thereof, or to receive payment of any such dividends or to receive such
allotment of rights, or to exercise such rights, or to give such consent, as the
case may be, notwithstanding any transfer of such stock on the books of the
Corporation after any such record date fixed as aforesaid.
REGISTERED STOCKHOLDERS
41. The Corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof and accordingly
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, whether or not it shall have express
or other notice thereof, save as expressly provided by the laws of Delaware.
LOST CERTIFICATES
42. Any person claiming a certificate of stock to be lost or
destroyed shall make an affidavit or affirmation of the fact and advertise the
same in such manner as the Board of Directors may require, and the Board of
Directors may, in their discretion, require the owner of
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the lost or destroyed certificate, or his legal representative, to give the
Corporation a bond in such sum as they may direct to indemnify the Corporation
against any claim that may be made against it on account of the alleged loss of
any such certificate, or the issuance of a new certificate; a new certificate of
the same tenor and for the same number of shares as the one alleged to be lost
or destroyed may be issued without requiring any bond or advertisement when, in
the judgment of the directors, it is proper so to do.
CONTRACTS
43. Except as may be otherwise expressly provided in these By-Laws,
all contracts or other written instruments made in the Corporation's name shall
be signed by the Chairman or a Vice Chairman or the President or Executive Vice
President or Senior Vice President and attested by the Secretary or an Assistant
Secretary, or shall be executed by such other person or persons and in such
other manner as shall from time to time be directed by the Board of Directors by
appropriate resolutions.
STOCK HELD IN OTHER CORPORATIONS
44. VOTING - PROXIES. All capital stocks in other corporations owned
by this Corporation shall be voted at the regular and/or special meeting of the
stockholders of said other corporations by proxy by an attorney specifically
named in a proxy and given a power of attorney to represent this Corporation at
such stockholders' meeting for the purposes in said power of attorney specified;
and the Chairman or any Vice Chairman or any Vice President together with the
Secretary or any Assistant Secretary of this Corporation are hereby authorized
to execute and deliver in the name and under the seal of this Corporation
proxies in such form as may be required by the corporation whose stock is to be
voted thereunder naming as the attorney authorized to act by said proxy such
individual or individuals as said Chairman or Vice Chairman or Vice President
together with said Secretary or Assistant Secretary shall deem advisable;
provided, however, that no stock in other corporations shall be voted, and no
proxies to vote the same shall be given, with reference to the adoption,
amendment or termination of any pension or profit sharing plan or any other plan
of deferred compensation except by the affirmative vote of a majority of the
Board of Directors of this Corporation at the time when such action is taken and
such majority shall not include any director who is a salaried officer of this
Corporation or of any affiliated bank or company.
45. LOCAL DIRECTORS. In the event that this Corporation shall own in
excess of fifty percent of the capital stock of any financial or moneyed
corporation or association and if in the acquisition of such stock this
Corporation shall have agreed that as to the voting of such stock for the
election of directors this By-Law or an agreement substantially in accord
therewith shall be binding on the Corporation, then and in each such event the
stock so acquired shall, at all meetings for the election of a Board of
Directors of any such association or corporation, be voted in favor of the
election to such Board of a sufficient number of residents of the city where the
principal office of such corporation or association is located so that, if the
candidate so voted for shall be elected, at least seventy-five percent of the
members of said Board of Directors shall be residents of said city. This
Section 41 of these By-Laws shall be amended only upon the affirmative vote of
eighty percent in amount of the common stock of this Corporation
-10-
<PAGE>
outstanding at the time of such amendment or by the Board of Directors after
receipt of the written consent of the holders of at least eighty percent of the
common stock of this Corporation.
INSPECTION OF BOOKS
46. The directors shall determine from time to time whether, and, if
allowed, when and under what conditions and regulations the accounts and books
of the Corporation (except as such as may by statute be specifically open to
inspection) or any of them shall be open to the inspection of the stockholders,
and the stockholders' rights in this respect are and shall be restricted and
limited accordingly.
CHECKS
47. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or employees as the Board of
Directors may from time to time designate.
FISCAL YEAR
48. The fiscal year shall begin the first day of January in each
year.
DIVIDENDS
49. Dividends upon the capital stock of the Corporation, subject to
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in shares of the capital stock.
Before payment of any dividend there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the directors
from time to time in their absolute discretion think proper as a reserve fund to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the Corporation, or for such other purpose as the directors
shall think conducive to the interests of the Corporation.
ANNUAL STATEMENT
50. The Chairman or a Vice Chairman or the President or a Vice
President shall present at each annual meeting of stockholders a statement of
the business and condition of the Corporation.
NOTICES
51. Whenever under the provisions of these By-Laws notice is required
to be given to any director, officer or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail, by
depositing the same in the post office or letter box, in a postpaid sealed
wrapper, addressed to such stockholder, officer or director at such address as
appears on the books of the Corporation, or, in default of other address, to
such director, officer or stockholder at the General Post Office in the City of
Wilmington, Delaware, and such notice shall be deemed to be given at the time
when the same shall be thus mailed.
Any stockholder, director or officer may waive any notice required to
be given under these By-Laws.
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<PAGE>
AMENDMENTS
52. These By-Laws, except as hereinabove otherwise provided, may be
altered or amended by the affirmative vote of a majority of the stock issued and
outstanding and entitled to vote thereat, at any regular or special meeting of
the stockholders if notice of the proposed alteration or amendment be contained
in the notice of the meeting, or, except as hereinbefore and in the Certificate
of Incorporation of this Corporation otherwise provided, by the affirmative vote
of a majority of the Board of Directors; provided, however, that no change of
the time or place for the election of directors shall be made within sixty days
next before the day on which such election is to be held, and that in case of
any change of such time or place notice thereof shall be given to each
stockholder in person or by letter mailed to his last known post office address
at least twenty days before the election is held.
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<PAGE>
Exhibit 5.1
[LETTERHEAD OF STANLEY S. STROUP]
September 11, 1998
Board of Directors
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1000
Ladies and Gentlemen:
Pursuant to a registration statement on Form S-4 (the "Registration
Statement"), Norwest Corporation (the "Corporation") is proposing to register
under the Securities Act of 1933, as amended, a maximum of 910,000,000 shares
(the "Shares") of its common stock, par value $1-2/3 per share ("Common
Stock"), and associated preferred stock purchase rights (the "Rights"),
for issuance (the "Issuance") in the proposed merger of Wells Fargo & Company
with WFC Holdings Corporation, a wholly-owned subsidiary of the Corporation
(the "Merger"). Also in connection with the Merger, the Corporation is
proposing to amend its Restated Certificate of Incorporation to increase
the Corporation's authorized shares of Common Stock to 4 billion shares,
such amendment to be effective at the effective time of the Merger (the
"Certificate Amendment").
I have examined such corporate records and other documents, including
the Registration Statement, and have reviewed such matters of law as I have
deemed necessary for this opinion, and I advise you that in my opinion:
1. The Corporation is a corporation duly organized and existing
under the laws of the state of Delaware.
2. Upon the Issuance and the Certificate Amendment having
been approved by the Corporation's stockholders and becoming
effective under the General Corporation Law of the state of
Delaware, and provided that a Rights Agreement providing for
the issuance of Rights in conjunction with the issuance of Common
Stock is in effect at the time of the Merger, (a) all necessary
corporation action on the part of the Corporation will have been
taken to authorize the Issuance and (b) when issued as described
in the Registration Statement, the Shares and Rights will be
legally and validly issued, fully paid and nonassessable.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the caption "Legal Matters" in
the joint Proxy Statement-Prospectus which is part of the Registration
Statement.
Very truly yours,
/s/ Stanley S. Stroup
---------------------
<PAGE>
Exhibit 8.1
[Letterhead of Wachtell, Lipton, Rosen & Katz]
September 11, 1998
Wells Fargo & Company
420 Montgomery Street
San Francisco, California 94163
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479
Ladies/Gentlemen:
We have acted as special counsel to Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), in connection with the proposed merger
(the "Merger") of Wells Fargo with and into WFC Holdings Corporation, a
Delaware corporation ("Merger Sub") and a wholly-owned subsidiary of Norwest
Corporation, a Delaware corporation ("Norwest"), upon the terms and conditions
set forth in the Agreement and Plan of Merger (the "Merger Agreement"), dated
as of June 7, 1998, as amended through the date hereof, by and among Wells
Fargo, Norwest and Merger Sub. At your request, in connection with the filing
of the Registration Statement on Form S-4 filed with the Securities and
Exchange Commission in connection with the Merger (the "Registration
Statement"), we are rendering our opinion concerning certain federal income
tax consequences of the Merger.
For purposes of the opinion set forth below, we have relied, with the
consent of Norwest and the consent of Wells Fargo, upon the accuracy and
completeness of the statements and representations (which statements and
representations we have neither investigated nor verified) contained,
respectively, in the certificates of the officers of Norwest and Wells Fargo
dated the date hereof, and have assumed that such statements and representations
will be complete and accurate as of the Effective Time. We have also relied
upon the accuracy of the Registration Statement and the Joint Proxy
Statement-Prospectus included therein (the "Proxy Statement"). Any capitalized
term used and not defined herein has the meaning given to it in the Proxy
Statement or the appendices thereto (including the Merger Agreement).
<PAGE>
Wells Fargo & Company
Norwest Corporation
September 11, 1998
Page 2
We have also assumed that the transactions contemplated by the
Merger Agreement will be consummated in accordance therewith and as described in
the Proxy Statement.
Based upon and subject to the foregoing, it is our opinion that, for
United States federal income tax purposes:
(i) The Merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as
amended, and Norwest, Wells Fargo and Merger Sub will each be a
party to the reorganization;
(ii) No gain or loss will be recognized by Norwest, Merger Sub or
Wells Fargo as a result of the Merger; and
(iii) No gain or loss will be recognized by Wells Fargo Stockholders
who exchange their Wells Fargo Common Stock solely for Norwest
Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in
Norwest Common Stock).
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement, and to the
references to us under the caption "SUMMARY -- Certain Federal Income Tax
Consequences", under the caption "THE MERGER -- Certain Federal Income Tax
Consequences" and elsewhere in the Proxy Statement. In giving such consent, we
do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
------------------------------------
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<PAGE>
Exhibit 8.2
[Sullivan & Cromwell Letterhead]
September 11, 1998
Wells Fargo & Company,
420 Montgomery Street, 12th Floor,
San Francisco, California 94104.
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479.
Ladies and Gentlemen:
We have acted as counsel to Wells Fargo & Company, a Delaware
corporation ("Wells Fargo"), in connection with the planned merger of Wells
Fargo with and into WFC Holdings Corporation ("Merger Sub"), a Delaware
corporation and a direct wholly-owned subsidiary of Norwest Corporation, a
Delaware corporation ("Norwest"), with Merger Sub surviving, pursuant to the
Agreement and Plan of Merger (the "Agreement"), dated as of June 7, 1998 and
amended and restated as of September 10, 1998, by and among Wells Fargo,
Norwest and Merger Sub. Capitalized terms used but not defined herein shall
have the meanings specified in the Registration Statement to which this
opinion is attached as an exhibit or the appendices thereto (including the
Agreement).
We have assumed with your consent that (1) the Merger will be effected in
accordance with the Agreement and pursuant to the corporation laws of the State
of Delaware and (2) the representations contained in the letters of
representation from Wells Fargo and Norwest to us dated September 11, 1998 were
true and correct when made and will be
<PAGE>
Wells Fargo & Company
Norwest Corporation -2-
true and correct at the Effective Time.
On the basis of the foregoing, and our consideration of such other matters
of fact and law as we have deemed necessary or appropriate, it is our opinion,
under presently applicable federal income tax law, that:
(i) the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended, and
Norwest, Wells Fargo and Merger Sub will each be a party to the
reorganization;
(ii) no gain or loss will be recognized by Norwest, Merger Sub or
Wells Fargo as a result of the Merger; and
(iii) no gain or loss will be recognized by Wells Fargo Stockholders who
exchange their Wells Fargo Common Stock solely for Norwest Common Stock
pursuant to the Merger(except with respect to cash received in lieu of a
fractional share interest in Norwest Common Stock).
We express no opinion as to the effect of the Merger on any person that is
required to recognize unrealized gains and losses for federal income tax
purposes at the end of each taxable year under a mark-to-market system.
The federal income tax consequences described herein may not apply to
certain classes of taxpayers, including, without limitation, Wells Fargo
stockholders who received their Wells Fargo Common Stock upon the exercise of
employee stock options or otherwise as compensation, that hold their Wells Fargo
Common Stock as part of a "straddle" or "conversion transaction" for federal
income tax purposes, or that are foreign persons, insurance companies, financial
institutions or securities dealers.
<PAGE>
Wells Fargo & Company
Norwest Corporation -3-
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this opinion in the Registration
Statement. In giving this consent, we do not hereby admit that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Sullivan & Cromwell
-----------------------
<PAGE>
Exhibit 10.01
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT by and between Norwest Corporation, a Delaware corporation (the
"Company") and Paul Hazen (the "Executive") dated as of the 7th day of June,
1998.
The Company intends to enter into a merger (the "Merger") with Wells Fargo
& Company, a Delaware corporation ("WFC"), pursuant to the Agreement and Plan of
Merger dated as of June 7, 1998 between the Company and WFC. The Executive
presently is employed by WFC without there being an employment agreement between
the Executive and WFC. The Company desires to assure that during the periods
provided in the Agreement the Executive will provide services to the Company and
will not compete with the Company, in order to maximize the future success of
the Company. As an inducement to future performance by the Executive, the
Company desires to enter into this Agreement with the Executive and to provide
the consideration described in this Agreement. The Company has determined that
entering into this Agreement with the Executive is in the best interests of its
shareholders. Therefore, in order to accomplish these objectives, the Executive
and the Company desire to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. EFFECTIVE DATE. The "Effective Date" shall mean the effective date of
the Merger.
2. EMPLOYMENT PERIOD. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to enter into the employ of the Company subject
to the terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the fifth anniversary thereof (the "Employment
Period").
3. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i) During the
Employment Period, the Executive shall serve as Chairman of the Company with
appropriate authority, duties and responsibilities. The Executive shall serve
on the Company's Board of Directors during the Employment Period.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote substantially all of his attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto)
<PAGE>
subsequent to the Effective Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
(b) COMPENSATION (i) BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") of no less
than 100% of the annual base salary paid to the Chief Executive Officer of the
Company. Any increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Annual Base Salary
shall not be reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so increased.
As used in this Agreement, the term "affiliated companies" shall include any
company controlled by, controlling or under common control with the Company.
(ii) ANNUAL BONUS. During the Employment Period, the Executive shall
receive an annual bonus ("Annual Bonus"), whether payable in cash or otherwise,
such that the sum of the Executive's Annual Base Salary and Annual Bonus is no
less than the sum of the annual base salary and annual bonus of the Chief
Executive Officer of the Company.
(iii) INCENTIVE AWARDS. On the Effective Date, the Company shall
grant the Executive 250,000 shares of restricted stock (the "Initial Restricted
Stock") and a stock option to acquire 500,000 shares of the Company's common
stock (the "Initial Option"), in each case pursuant to the terms of the
Company's stock incentive plan. On each of the first and second anniversaries
of the Effective Date, the Company shall grant the Executive an additional
125,000 shares of Restricted Stock (the "Subsequent Restricted Stock, and
together with the Initial Restricted Stock, the "Restricted Stock") and stock
options to acquire 250,000 shares of the Company's common stock (the "Subsequent
Options", and together with the Initial Options, the "Options"). Except as
otherwise provided herein, the Restricted Stock shall vest in five equal
installments, on the first, second, third, fourth and fifth anniversaries of the
date of grant. The Options shall vest in three equal installments on the first,
second and third anniversaries of the date of grant. Any stock awards provided
pursuant to Section 3(b)(ii) shall be in addition to, and shall not reduce, the
awards provided pursuant to this Section 3(b)(iii).
(iv) RETIREMENT BENEFITS. Commencing immediately upon the
Executive's termination of employment for any reason, the Executive shall be
paid an annual retirement benefit pursuant to the terms of a nonqualified
supplemental retirement plan to be established (the "Retirement Benefit"),
provided, however, that such Retirement Benefit shall be at least equal to 25%
of the Executive's 1997 Compensation (as defined below), less any benefit
payable pursuant to any qualified defined benefit pension plan or other
nonqualified defined benefit retirement plan of the Company accrued after the
Effective Date. The Executive shall be fully vested in the Retirement Benefit
as of the Effective Date. For purposes of this Agreement, "1997 Compensation"
means the compensation (within the meaning of Section 61(a)(1) of the Internal
Revenue Code of 1986, as amended) includible in the Executive's gross income for
federal income tax purposes with respect to the calendar year 1997.
(v) OTHER EMPLOYEE BENEFIT PLANS. During the Employment Period,
except as otherwise expressly provided herein, the Executive shall be entitled
to participate in,
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<PAGE>
and shall receive awards under, all employee benefit, stock incentive, welfare
and other plans, practices, policies and programs, including perquisites
(collectively, "Employee Benefit Plan") applicable to the Chief Executive
Officer of the Company on a basis no less favorable than that provided to the
Chief Executive Officer of the Company, taking into account the other provisions
of this Agreement. For purposes of all Employee Benefit Plans, service rendered
by the Executive to WFC shall be deemed service with the Company, provided that
service credit shall only be granted to the Executive under the Company's
qualified defined benefit pension plans to the extent that such credit is
granted to employees of WFC on or after the Effective Date.
4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 11(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative.
(b) CAUSE. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the continued failure of the Executive to perform substantially
the Executive's duties with the Company or one of its affiliates (other than any
such failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the Executive by
the Board or the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer believes
that the Executive has not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company, or
(iii) conviction of a felony or guilty or nolo contendere plea by the
Executive with respect thereto.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively
3
<PAGE>
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) GOOD REASON. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean in the absence of a written consent of the Executive:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 3(a) of this Agreement, or any other action by the Company which, in
the Executive's reasonable judgment, results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 3(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(iv) any failure by the Company to comply with and satisfy Section
10(c) of this Agreement.
For purposes of this Section 4(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance
4
<PAGE>
which contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or circumstance
in enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD REASON; OTHER
THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of (1) the Executive's Annual Base Salary through the
Date of Termination to the extent not theretofore paid, and (2) the product
of (x) the highest annual bonus paid to the Executive for any of the three
years prior to the Date of Termination (the "Recent Annual Bonus") and (y)
a fraction, the numerator of which is the number of days in the fiscal year
in which the Date of Termination occurs through the Date of Termination,
and the denominator of which is 365, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1) and (2),
shall be hereinafter referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (1) the number of months and
portions thereof from the Date of Termination until the fifth anniversary
of the Effective Date, divided by twelve and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Recent Annual Bonus; and
(ii) for the remainder of the Executive's life, the Company shall
continue to provide medical and dental benefits to the Executive on the same
basis as such benefits are provided to the Executive immediately prior to the
Date of Termination (collectively "Medical Benefits");
(iii) the Restricted Stock, the Options and any other stock awards
granted after the Effective Date shall vest immediately;
5
<PAGE>
(iv) until the fifth anniversary of the Effective Date, the Executive
shall continue to be provided with the benefits described in Section 3(b)(v) and
shall be deemed to be an employee for purposes of such plans, provided that the
Executive shall not be entitled to additional awards under any of the Company's
incentive plans and shall cease to accrue additional benefits under the
Company's qualified and nonqualified retirement plans; and
(v) to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company and
its affiliated companies through the Date of Termination and shall provide the
Executive with such benefits and perquisites as are provided to the immediate
past Chairman of WFC as of the date hereof (such other amounts and benefits
shall be hereinafter referred to as the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. In addition, the Restricted Stock, the Options
and any other stock awards granted after the Effective Date shall vest
immediately. Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(b) shall include death benefits as in
effect on the date of the Executive's death with respect to the Chief Executive
Officer of the Company and his beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
In addition, the Restricted Stock, the Options and any other stock awards
granted after the Effective Date shall vest immediately. Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(c) shall include, and the Executive shall
be entitled after the Disability Effective Date to receive, disability and other
benefits as in effect at any time thereafter generally with respect to the Chief
Executive Officer of the Company and the continued provision of Medical Benefits
to the Executive.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive (x) his Annual Base Salary through the Date of Termination, and (y)
Other Benefits, in each case to the extent theretofore unpaid.
6. NON-EXCLUSIVITY OF RIGHTS. Except as specifically provided, nothing in
this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan,
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<PAGE>
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
11(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
7. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 8) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. Notwithstanding the
foregoing provisions of this Section 8(a), if it shall be determined that the
Executive is entitled to a Gross-Up Payment, but that the Payments do not exceed
110% of the greatest amount (the "Reduced Amount") that could be paid to the
Executive such that the receipt of Payments would not give rise to any Excise
Tax, then no Gross-Up Payment shall be made to the Executive and the Payments,
in the aggregate, shall be reduced to the Reduced Amount.
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(b) Subject to the provisions of Section 8(c), all determinations required
to be made under this Section 8, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by KPMG Peat Marwick
LLP or such other certified public accounting firm reasonably acceptable to the
Company as may be designated by the Executive (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to the Executive within five days of the later of
(i) the due date for the payment of any Excise Tax, and (ii) the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 8(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
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provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 8(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 8(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 8(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
9. CONFIDENTIAL INFORMATION/NONCOMPETITION. (a) The Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information,
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knowledge or data to anyone other than the Company and those designated by it.
Except as expressly provided in Section 9(c), in no event shall an asserted
violation of the provisions of this Section 9 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.
(b) During the Employment Period and for one year thereafter, the
Executive will not directly or indirectly, own, manage, operate, control or
participate in the ownership, management, operation or control of, or be
connected as an officer, employee, partner, director or otherwise with, or have
any financial interest in, any business principally engaged in the commercial
banking business in California which is in material competition with the
business conducted by the Company. Ownership for personal investment purposes
only of less than 5% of the voting stock of any publicly held corporation shall
not constitute a violation hereof.
(c) In the event of a breach or threatened breach of Section 9(a), the
Executive agrees that the Company shall be entitled to injunctive relief in a
court of appropriate jurisdiction to remedy any such breach or threatened
breach, the Executive acknowledges that damages would be inadequate and
insufficient. In the event of a breach of Section 9(b), the Company's
obligation to pay the Retirement Benefit shall cease while the Executive is in
violation of Section 9(b) and the Retirement Benefit shall commence again when
the Executive is no longer engaged in activity prohibited by Section 9(b) but
such benefit shall thereafter be reduced by 50%.
(d) Any termination of the Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 9.
10. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
11. MISCELLANEOUS. (a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
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(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
IF TO THE EXECUTIVE:
Paul Hazen
c/o Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94104
IF TO THE COMPANY:
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(iv) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) From and after the Effective Date this Agreement shall supersede any
other employment, severance or change of control agreement between the parties
with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Paul Hazen
-----------------------------
PAUL HAZEN
NORWEST CORPORATION
By /s/ Richard M. Kovacevich
--------------------------
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Exhibit 10.02
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT by and between Norwest Corporation, a Delaware corporation (the
"Company") and Rodney L. Jacobs (the "Executive") dated as of the 7th day of
June, 1998.
The Company intends to enter into a merger (the "Merger") with Wells Fargo
& Company, a Delaware corporation ("WFC"), pursuant to the Agreement and Plan of
Merger dated as of June 7, 1998 between the Company and WFC. The Executive
presently is employed by WFC without there being an employment agreement between
the Executive and WFC. The Company desires to assure that during the periods
provided in the Agreement the Executive will provide services to the Company and
will not compete with the Company, in order to maximize the future success of
the Company. As an inducement to future performance by the Executive, the
Company desires to enter into this Agreement with the Executive and to provide
the consideration described in this Agreement. The Company has determined that
entering into this Agreement with the Executive is in the best interests of its
shareholders. Therefore, in order to accomplish these objectives, the Executive
and the Company desire to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. EFFECTIVE DATE. The "Effective Date" shall mean the effective date of
the Merger.
2. EMPLOYMENT PERIOD. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to enter into the employ of the Company subject
to the terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary thereof (the "Employment
Period").
3. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i) During the
Employment Period, the Executive shall serve as a senior executive of the
Company, reporting to either the Chief Executive Officer or Chairman of the
Company, with appropriate authority, duties and responsibilities. The Executive
shall serve on the Company's Board of Directors during the Employment Period.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote substantially all of his attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued
<PAGE>
conduct of such activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Effective Date shall not thereafter be deemed
to interfere with the performance of the Executive's responsibilities to the
Company.
(b) COMPENSATION (i) BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") of no less
than 100% of the annual base salary paid to the highest paid executive of the
Company other than the Chairman or Chief Executive Officer of the Company (the
"Peer Executive"). Any increase in Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement. Annual
Base Salary shall not be reduced after any such increase and the term Annual
Base Salary as utilized in this Agreement shall refer to Annual Base Salary as
so increased. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control with the
Company.
(ii) ANNUAL BONUS. During the Employment Period, the Executive
shall receive an annual bonus ("Annual Bonus"), whether payable in cash or
otherwise, such that the sum of the Executive's Annual Base Salary and Annual
Bonus is no less than the sum of the annual base salary and annual bonus of the
Peer Executive.
(iii) RETIREMENT BENEFITS. Commencing immediately upon the
Executive's termination of employment for any reason, the Executive shall be
paid an annual retirement benefit pursuant to the terms of a nonqualified
supplemental retirement plan to be established (the "Retirement Benefit"),
provided, however, that such Retirement Benefit shall be at least equal to 25%
of the Executive's 1997 Compensation (as defined below), less any benefit
payable pursuant to any qualified defined benefit pension plan or other
nonqualified defined benefit retirement plan of the Company accrued after the
Effective Date. The Executive shall be fully vested in the Retirement Benefit
as of the Effective Date. For purposes of this Agreement, "1997 Compensation"
means the compensation (within the meaning of Section 61(a)(1) of the Internal
Revenue Code of 1986, as amended) includible in the Executive's gross income for
federal income tax purposes with respect to the calendar year 1997.
(iv) OTHER EMPLOYEE BENEFIT PLANS. During the Employment Period,
except as otherwise expressly provided herein, the Executive shall be entitled
to participate in, and shall receive awards under, all employee benefit, stock
incentive, welfare and other plans, practices, policies and programs, including
perquisites (collectively, "Employee Benefit Plan") applicable to the Peer
Executive on a basis no less favorable than that provided to the Peer Executive,
taking into account the other provisions of this Agreement. For purposes of all
Employee Benefit Plans, service rendered by the Executive to WFC shall be deemed
service with the Company, provided that service credit shall only be granted to
the Executive under the Company's qualified defined benefit plans to the extent
such credit is granted to employees of WFC on or after the Effective Date.
4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has
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occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the Executive's
duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the Company,
or
(iii) conviction of a felony or guilty or nolo contendere plea by
the Executive with respect thereto.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than two-thirds of the entire
membership of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to the Executive and the Executive
is given an opportunity, together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, the Executive is guilty of
the conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
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(c) GOOD REASON. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean in the absence of a written consent of the Executive:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 3(a) of this Agreement, or any other action by the Company which, in
the Executive's reasonable judgment, results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(iv) any failure by the Company to comply with and satisfy Section
10(c) of this Agreement.
For purposes of this Section 4(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
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Company notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD REASON; OTHER
THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of (1) the Executive's Annual Base Salary through the
Date of Termination to the extent not theretofore paid, and (2) the product
of (x) the highest annual bonus paid to the Executive for any of the three
years prior to the Date of Termination (the "Recent Annual Bonus") and (y)
a fraction, the numerator of which is the number of days in the fiscal year
in which the Date of Termination occurs through the Date of Termination,
and the denominator of which is 365, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1) and (2),
shall be hereinafter referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (1) the number of months
and portions thereof from the Date of Termination until the third
anniversary of the Effective Date, divided by twelve and (2) the sum of (x)
the Executive's Annual Base Salary and (y) the Recent Annual Bonus; and
(ii) for the remainder of the Executive's life and the life of his
spouse, the Company shall continue to provide medical and dental benefits to the
Executive and his spouse on the same basis as such benefits are provided to the
Executive immediately prior to the Date of Termination (collectively "Medical
Benefits");
(iii) any stock incentive awards granted after the Effective Date
shall vest immediately ("Stock Awards");
(iv) until the third anniversary of the Effective Date, the
Executive shall continue to be provided with the benefits described in Section
3(b)(iv) and shall be deemed to be an employee for purposes of such plans,
provided that the Executive shall not be entitled to additional awards under any
of the Company's incentive plans and shall cease to accrue additional benefits
under the Company's qualified and nonqualified retirement plans; and
(v) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies through the Date of
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Termination (such other amounts and benefits shall be hereinafter referred to as
the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. In addition, all Stock Awards shall vest
immediately. Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(b) shall include death benefits as in
effect on the date of the Executive's death with respect to the Peer Executive
and his beneficiaries and the continued provision of Medical Benefits to the
Executive's spouse.
(c) DISABILITY. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
In addition, all Stock Awards shall vest immediately. Accrued Obligations shall
be paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(c) shall include, and the Executive shall
be entitled after the Disability Effective Date to receive, disability and other
benefits as in effect at any time thereafter generally with respect to the Peer
Executive and the continued provision of Medical Benefits to the Executive and
his spouse.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive (x) his Annual Base Salary through the Date of Termination, and (y)
Other Benefits, in each case to the extent theretofore unpaid.
6. NON-EXCLUSIVITY OF RIGHTS. Except as specifically provided, nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 11(f), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
7. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the
6
<PAGE>
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, such amounts shall not be reduced whether or
not the Executive obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and expenses which
the Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").
8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 8) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. Notwithstanding the
foregoing provisions of this Section 8(a), if it shall be determined that the
Executive is entitled to a Gross-Up Payment, but that the Payments do not exceed
110% of the greatest amount (the "Reduced Amount") that could be paid to the
Executive such that the receipt of Payments would not give rise to any Excise
Tax, then no Gross-Up Payment shall be made to the Executive and the Payments,
in the aggregate, shall be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 8(c), all determinations required
to be made under this Section 8, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by KPMG Peat Marwick
LLP or such other certified public accounting firm reasonably acceptable to the
Company as may be designated by the Executive (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to the Executive within five days of the later of
(i) the due date for the payment of any Excise Tax, and
7
<PAGE>
(ii) the receipt of the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 8(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one
8
<PAGE>
or more appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the Executive,
on an interest-free basis and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 8(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 8(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
9. CONFIDENTIAL INFORMATION/NONCOMPETITION. (a) The Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. Except as expressly provided in
Section 9(c), in no event shall an asserted violation of the provisions of this
Section 9 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
(b) During the Employment Period and for one year thereafter, the
Executive will not directly or indirectly, own, manage, operate, control or
participate in the ownership, management, operation or control of, or be
connected as an officer, employee, partner, director or otherwise with, or have
any financial interest in, any business principally engaged in the commercial
banking business in California which is in material competition with the
business
9
<PAGE>
conducted by the Company. Ownership for personal investment purposes only of
less than 5% of the voting stock of any publicly held corporation shall not
constitute a violation hereof.
(c) In the event of a breach or threatened breach of Section 9(a), the
Executive agrees that the Company shall be entitled to injunctive relief in a
court of appropriate jurisdiction to remedy any such breach or threatened
breach, the Executive acknowledges that damages would be inadequate and
insufficient. In the event of a breach of Section 9(b), the Company's
obligation to pay the Retirement Benefit shall cease while the Executive is in
violation of Section 9(b) and the Retirement Benefit shall commence again when
the Executive is no longer engaged in activity prohibited by Section 9(b) but
such benefit shall thereafter be reduced by 50%.
(d) Any termination of the Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 9.
10. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
10
<PAGE>
IF TO THE EXECUTIVE:
Rodney L. Jacobs
c/o Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94104
IF TO THE COMPANY:
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(iv) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) From and after the Effective Date this Agreement shall supersede any
other employment, severance or change of control agreement between the parties
with respect to the subject matter hereof.
11
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Rodney L. Jacobs
--------------------------------
RODNEY L. JACOBS
NORWEST CORPORATION
By /s/ Richard M. Kovacevich
-----------------------------
12
<PAGE>
Exhibit 23.4
[KPMG Peat Marwick LLP Letterhead]
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
Norwest Corporation
We consent to the use of our report dated January 15, 1998 incorporated
herein by reference and to the references to our firm under the headings
"THE MERGER" and "EXPERTS" in the Joint Proxy Statement-Prospectus.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
September 11, 1998
<PAGE>
Exhibit 23.5
[KPMG Peat Marwick LLP Letterhead]
INDEPENDENT ACCOUNTANT'S CONSENT
The Board of Directors
Wells Fargo & Company
We consent to the incorporation by reference in the Joint Proxy
Statement-Prospectus included in the registration statement (No. 333-XXXX) on
Form S-4 of Norwest Corporation of our report dated January 19, 1998 with
respect to the consolidated balance sheet of Wells Fargo & Company and
Subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, changes in stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1997, which
report appears in the December 31, 1997 annual report incorporated by
reference in the 1997 Form 10-K of Wells Fargo & Company, and to the
references to our firm under the headings "THE MERGER" and "EXPERTS" in the
Joint Proxy Statement-Prospectus.
/s/ KPMG Peat Marwick LLP
San Francisco, California
September 11, 1998
<PAGE>
Exhibit 24.1
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Les Biller
-----------------------------------
Les Biller
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ J.A. Blanchard III
-----------------------------------
J.A. Blanchard III
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ David A. Christensen
-----------------------------------
David A. Christensen
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Susan E. Engel
-----------------------------------
Susan E. Engel
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ William A. Hodder
-----------------------------------
William A. Hodder
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Lloyd P. Johnson
-----------------------------------
Lloyd P. Johnson
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Reatha Clark King
-----------------------------------
Reatha Clark King
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Richard M. Kovacevich
-----------------------------------
Richard M. Kovacevich
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Richard S. Levitt
-----------------------------------
Richard S. Levitt
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Richard D. McCormick
-----------------------------------
Richard D. McCormick
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Cynthia H. Milligan
-----------------------------------
Cynthia H. Milligan
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Benjamin F. Montoya
-----------------------------------
Benjamin F. Montoya
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Ian M. Rolland
-----------------------------------
Ian M. Rolland
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint RICHARD M. KOVACEVICH, STANLEY S. STROUP and JOHN T.
THORNTON, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Registration Statement on
Form S-4 or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by said Corporation with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration under
the Securities Act of 1933, as amended, of a maximum of 960,000,000 shares of
Common Stock of the Corporation, adjusted for any change in the number of
outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the merger of Wells Fargo & Company with the Corporation, or
a wholly-owned subsidiary of the Corporation, and to file the same, with all
exhibits thereto and other supporting documents, with said Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 28th day of July, 1998.
/s/ Michael W. Wright
-----------------------------------
Michael W. Wright
<PAGE>
Exhibit 99.3
[Goldman, Sachs & Co. Letterhead]
September 11, 1998
Board of Directors
Norwest Corporation
Sixth & Marquette
Minneapolis, Minnesota 55479-1016
Ladies and Gentlemen:
Attached is our opinion letter (the "Opinion Letter") dated September 11,
1998 with respect to the fairness from a financial point of view to the
holders of the outstanding shares of Common Stock, par value $1 2/3 per share
(the "Norwest Shares"), of Norwest Corporation ("Norwest") of the exchange
ratio of 10 Norwest Shares for each share of Common Stock, par value $5.00
per share, of Wells Fargo & Company ("Wells Fargo") pursuant to the merger
(the "Merger") contemplated by the Agreement and Plan of Merger dated as of
June 7, 1998 by and between Wells Fargo and Norwest.
The Opinion Letter is provided for the information and assistance of the
Board of Directors of Norwest in connection with its consideration of the
transaction contemplated therein and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent.
In that regard we hereby consent to the reference to the Opinion Letter under
the captions "SUMMARY--Opinions of Financial Advisors," "THE
MERGER--Background of the Merger" and "THE MERGER--Opinion of Norwest's
Financial Advisors" and to the inclusion of the Opinion Letter in the
Registration Statement on Form S-4 of Norwest dated September 11, 1998 which
includes the Joint Proxy Statement-Prospectus filed in connection with the
Merger. In giving such consent, we do not hereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
<PAGE>
Exhibit 99.4
[Goldman, Sachs & Co. Letterhead]
September 11, 1998
Board of Directors
Wells Fargo & Company
420 Montgomery Street
San Francisco, California 94163
Ladies and Gentlemen:
Attached is our opinion letter (the "Opinion Letter") dated September 11, 1998
with respect to the fairness from a financial point of view to the holders of
the outstanding shares of Common Stock, par value $5.00 per share (the "Wells
Fargo Shares"), of Wells Fargo & Company ("Wells Fargo") of the exchange ratio
of 10 shares of Common Stock, par value $1 2/3 per share, of Norwest Corporation
("Norwest") to be received for each Wells Fargo Share pursuant to the merger
(the "Merger") contemplated by the Agreement and Plan of Merger dated as of June
7, 1998 by and between Wells Fargo and Norwest.
The Opinion Letter is provided for the information and assistance of the Board
of Directors of Wells Fargo in connection with its consideration of the
transaction contemplated therein and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent.
In that regard we hereby consent to the reference to the Opinion Letter under
the captions "SUMMARY--Opinions of Financial Advisors," "THE MERGER--Background
of the Merger" and "THE MERGER--Opinion of Wells Fargo's Financial Advisors" and
to the inclusion of the Opinion Letter in the Registration Statement on Form S-4
of Norwest dated September 11, 1998 which includes the Joint Proxy
Statement-Prospectus filed in connection with the Merger. In giving such
consent, we do not hereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/Goldman, Sachs & Co.
- -----------------------
GOLDMAN, SACHS & CO.
<PAGE>
[CREDIT SUISSE FIRST BOSTON CORPORATION LETTERHEAD]
CONSENT OF
CREDIT SUISSE FIRST BOSTON CORPORATION
We hereby consent to the use of our name and to the description of
our opinion letter, dated September 11, 1998, under the caption "Role of
Financial Advisors; Opinion of Wells Fargo's Financial Advisors" in, and
to the inclusion of such opinion letter as Appendix F to, the Joint Proxy
Statement-Prospectus of Norwest Corporation and Wells Fargo & Company,
which Joint Proxy Statement-Prospectus is part of the Registration
Statement on Form S-4 of Norwest Corporation. By giving such consent, we
do not thereby admit that we are experts with respect to any part of such
Registration Statement within the meaning of the term "expert" as used
in, or that we come within the category of persons whose consent is
required under, the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated
thereunder.
/s/ CREDIT SUISSE FIRST BOSTON CORPORATION
CREDIT SUISSE FIRST BOSTON CORPORATION
New York, New York
September 11, 1998
<PAGE>
Exhibit 99.6
----------------------
COMPANY #
CONTROL #
----------------------
NORWEST CORPORATION
SIXTH AND MARQUETTE, MINNEAPOLIS, MINNESOTA 55479 PROXY
- -------------------------------------------------------------------------------
(PLEASE DETACH HERE)
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF NORWEST CORPORATION
("NORWEST") FOR USE AT THE SPECIAL MEETING OF STOCKHOLDERS ON
TUESDAY, OCTOBER 20, 1998.
By signing this proxy, you revoke all prior proxies, and you appoint Cynthia
J. Gray, Stanley S. Stroup, and John T. Thornton, and each of them, attorneys
and agents with full power of substitution, to vote all shares of common
stock, par value $1-2/3 per share ("Norwest Common Stock") of Norwest held of
record by you at the close of business on September 9, 1998, which you would
be entitled to vote if personally present at the Special Meeting or at any
adjournments or postponements thereof, as you specify on this proxy card:
(SEE REVERSE FOR INSTRUCTIONS ON HOW TO VOTE BY TELEPHONE)
(Continued, and to be signed and dated on the reverse side)
<PAGE>
- -------------------------------------------------------------------------------
VOTE BY TELEPHONE
CALL TOLL FREE ON A TOUCH-TONE TELEPHONE
1-800-240-6326
- -------------------------------------------------------------------------------
Your telephone vote authorizes Cynthia J. Gray, Stanley S. Stroup, and
John T. Thornton, and each of them, attorneys and agents, with full power
of substitution, to vote your shares in the same manner as if you had marked,
signed and returned your proxy card. THE DEADLINE FOR TELEPHONE VOTING IS
NOON (ET) ON OCTOBER 19, 1998.
1. Using a touch-tone telephone, dial 1-800-240-6326. You may dial this toll
free number at your convenience 7 days/week, 24 hours/day.
2. When prompted, enter the 3-digit Company Number located in the box on the
upper right hand corner of the proxy card.
3. When prompted, enter your 7-digit numeric Control Number that follows the
Company Number.
OPTION #1: To vote on ALL items as the Norwest Corporation Board of
Directors recommends and to authorize the proxies named above
to vote the proxy in their discretion with respect to any other
matters properly coming before the Special Meeting or any
postponements or adjournments: Press "1." When asked, please
confirm your vote by pressing "1." -- THANK YOU FOR VOTING.
OPTION #2: If you choose to vote on each item separately: Press "0." You
will hear these instructions:
Item 1: To vote FOR, press "1"; AGAINST, press "9"; ABSTAIN,
------ press "0".
Item 2: To vote FOR, press "1"; AGAINST, press "9"; ABSTAIN,
------ press "0".
PLEASE NOTE: Proposal 2 will be effective only if Proposal 1
is approved by the required stockholder vote and the Merger is
consummated.
When asked, please confirm your vote by pressing "1." -- THANK YOU FOR VOTING
IF YOU VOTE BY TELEPHONE, DO NOT MAIL BACK YOUR INSTRUCTION CARD AND PROXY CARD
PLEASE DETACH HERE
- -------------------------------------------------------------------------------
(continued from reverse side)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
<TABLE>
<S> <C> <C> <C> <C>
ITEM 1. PROPOSAL TO APPROVE THE ISSUANCE OF SHARES OF NORWEST COMMON STOCK, [ ] For [ ] Against [ ] Abstain
PURSUANT TO THE MERGER (THE "MERGER") OF WELLS FARGO & COMPANY
("WELLS FARGO") WITH AND INTO WFC HOLDING CORPORATION, A WHOLLY-OWNED
SUBSIDIARY OF NORWEST ("MERGER SUB"), UPON THE TERMS AND SUBJECT TO THE
CONDITIONS SET FORTH IN THE AGREEMENT AND PLAN OF MERGER, DATED AS OF
JUNE 7, 1998, AND AMENDED AND RESTATED AS OF SEPTEMBER 10, 1998 BY AND
AMONG WELLS FARGO, NORWEST, AND MERGER SUB.
ITEM 2. PROPOSAL TO ADOPT AMENDMENTS TO NORWEST'S RESTATED CERTIFICATE OF [ ] For [ ] Against [ ] Abstain
INCORPORATION TO CHANGE ITS NAME TO "WELLS FARGO & COMPANY," TO INCREASE
THE NUMBER OF SHARES OF AUTHORIZED NORWEST COMMON STOCK TO 4,000,000,000,
AND TO INCREASE THE NUMBER OF SHARES OF AUTHORIZED NORWEST PREFERRED STOCK,
WITHOUT PAR VALUE, TO 20,000,000.
ITEM 3. IN THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE SPECIAL MEETING OR ANY POSTPONEMENT OR ADJOURNMENTS THEREOF.
</TABLE>
Proposal 2 will become effective only if Proposal 1 is approved by the
required vote of stockholders and the Merger is consummated.
IF PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. IF NO
DIRECTION IS INDICATED WITH RESPECT TO THE ABOVE PROPOSALS, THIS PROXY WILL
BE VOTED FOR THE PROPOSALS SET FORTH IN ITEMS 1 AND 2 ABOVE AND IN THE MANNER
SET FORTH IN ITEM 3 ABOVE.
This proxy will be valid until the first of the following two dates to occur:
the date that is one year from the date shown below and the date the Special
Meeting is completed.
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated_________________, 1998
PLEASE SIGN EXACTLY AS NAME APPEARS ON PROXY
------------------------------------------------------
------------------------------------------------------
Signature(s) in Box
If held in joint tenancy, all persons must sign.
Trustees, administrators, etc., should include title
and authority. Corporations should provide full name
of corporation and title of authorized officer signing
the proxy.
<PAGE>
Exhibit 99.7
WELLS FARGO & COMPANY
420 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94163
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Paul Hazen, Rodney L. Jacobs and Robert K.
Jaedicke, and each of them, attorneys and agents with full power of
substitution to vote all shares of common stock, par value $5.00 per share
("Wells Fargo Common Stock") of Wells Fargo & Company ("Wells Fargo") held of
record by the undersigned at the close of business on August 14, 1998, which
the undersigned would be entitled to vote if personally present at the
Special Meeting to be held on October 2, 1998, and including at any
adjournments or postponements thereof, as follows:
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
1. Proposal to adopt the Agreement and Plan of Merger, dated as of
June 7, 1998, as amended and restated as of September 10, 1998, by and
among Wells Fargo, Norwest Corporation and WFC Holdings Corporation, a
Delaware corporation and a wholly-owned subsidiary of Norwest Corporation.
FOR / / AGAINST / / ABSTAIN / /
2. In their discretion with respect to any other matters as may
properly come before the Special Meeting.
IF PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. IF NO
DIRECTION IS INDICATED WITH RESPECT TO THE ABOVE PROPOSALS, THIS PROXY WILL BE
VOTED FOR THE PROPOSALS SET FORTH IN ITEM 1 ABOVE AND IN THE MANNER SET FORTH IN
ITEM 2 ABOVE.
This proxy will be valid until the sooner of one year from the date
indicated below and the completion of the Special Meeting or any postponements
or adjournments thereof.
DATED: _________________________________, 1998.
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY.
____________________________________________________
(Signature)
____________________________________________________
(Signature, if held jointly)
____________________________________________________
(Title)
WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC.,
SHOULD INDICATE THE CAPACITY IN WHICH SIGNING.
<PAGE>
EXHIBIT 99.8
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ Paul Hazen
-------------------------
Paul Hazen
<PAGE>
EXHIBIT 99.9
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ Rodney L. Jacobs
-------------------------
Rodney L. Jacobs
<PAGE>
EXHIBIT 99.10
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ Michael R. Bowlin
-------------------------
Michael R. Bowlin
<PAGE>
EXHIBIT 99.11
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ Edward M. Carson
-------------------------
Edward M. Carson
<PAGE>
EXHIBIT 99.12
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ William S. Davila
-------------------------
William S. Davila
<PAGE>
EXHIBIT 99.13
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ Philip J. Quigley
-------------------------
Philip J. Quigley
<PAGE>
EXHIBIT 99.14
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ Donald B. Rice
-------------------------
Donald B. Rice
<PAGE>
EXHIBIT 99.15
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ Judith M. Runstad
-------------------------
Judith M. Runstad
<PAGE>
EXHIBIT 99.16
[FORM OF CONSENT]
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ Susan G. Swenson
-------------------------
Susan G. Swenson
<PAGE>
EXHIBIT 99.17
[FORM OF CONSENT]
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ Daniel M. Tellep
-------------------------
Daniel M. Tellep
<PAGE>
EXHIBIT 99.18
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ Chang-Lin Tien
-------------------------
Chang-Lin Tien
<PAGE>
EXHIBIT 99.19
August 28, 1998
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
To the Board of Directors:
I hereby consent to being named as a person about to become a
director of Norwest Corporation ("Norwest"), in connection with the
consummation of the merger (the "Merger") of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into a wholly-owned subsidiary of
Norwest pursuant to the Agreement and Plan of Merger, dated as of June 7, 1998,
as amended, and restated as of ____________, 1998, among Wells Fargo, Norwest
and WFC Holdings Corporation, in the Registration Statement on Form S-4 filed
by Norwest with the Securities and Exchange Commission in connection with the
Merger (the "Registration Statement"), and to the filing of this consent as
an exhibit to the Registration Statement.
Sincerely,
/s/ John A. Young
-------------------------
John A. Young
